DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

SABBAVARAM, VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE: ROLE OF PROXIMATE CAUSE IN MARINE INSURANCE

SUBJECT: INSURANCE LAWS

NAME OF THE FACULTY: Mr. R. BHARAT KUMAR

Name of the Candidate: S. Krishna Vamsi

R0ll No.: 2017095
Semester: 8
 ACKNOWLEDGEMENT

I  w0uld like t0 express my special thanks 0f gratitude t0 my teacher Mr. R. Bharat

Kumar sir wh0 gave me the g0lden 0pp0rtunity t0 d0 the pr0ject 0f my interest 0n the t0pic,
which als0 helped me in d0ing a l0t 0f Research and I came t0 kn0w ab0ut s0 many new
things I am really thankful.

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 TABLE OF CONTENTS

1. INTRODUCTION.............................................................................................................. 3

2. RELATED CASE LAWS.................................................................................................. 5

3. CONCLUSION................................................................................................................ 22

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 INTRODUCTION

Insurance against known and future risks/perils will provide you financial security
and keep to some extent intact against losses you would occur in absence of insurance.
Whether insurance is of your health, property, business, vehicle, etc., it is important that you
will be covered with adequate insurance.

Causation is a fundamental component of insurance law. The insured desires

indemnity against the risk of certain types of losses, underwriters issue policies that provide
such indemnity in the event of certain perils, often with other perils being specifically
excluded. Any coverage provided by insurance policy is contingent upon there being a causal
connection between the loss and the covered peril.

In insurance loss or damage may cause may be product of various events or multiple
causes. A multiple event may give raise to a serious event, which causes loss to the insured
due to insured peril.

The doctrine of cause has been since very old age and the famous category of
material, formal, efficient and final causes, one involving the subtlest of distinctions. But the
idea of cause of occurrence, or production of an event or the bringing about a result, is an
idea perfectly familiar to the mind, and to the law, and it is in connection with that, that the
notion of proximate cause is introduced.

The insurance companies generally considered various things and events, while deciding
an insurance claim. They generally consider a chain of events, which have raised cause of
accident or cause of action which has been brought such incident. They try to establish a link
to find out the main cause behind the incident to satisfy them that the incident happed due to
genuine cause, which raised the event insured for.

“Proximate Cause:

(1) The cause having the most significant impact in bringing about the loss under a first-
party property insurance policy, when two or more independent perils operate at the
same time (i.e., concurrently) to produce a loss. Courts employ a set of proximate
cause rules to resolve causation disputes when a property policy states that it covers
or excludes losses “caused by” a peril and there is more than one peril at work in a
fact pattern. Under common law, whether the policy provides coverage depends on
which peril is chosen as the proximate cause. If the peril selected as the proximate

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 cause is covered, courts consider the loss to have been caused by the covered peril
and will hold that the loss is covered. If the peril selected as the proximate cause is
uncovered or excluded, courts consider the loss to have been caused by the uncovered
or excluded peril and will hold that the loss is not covered.

(2) As a principle of tort law, proximate cause refers to a doctrine by which a plaintiff
must prove that the defendant’s actions set in motion a relatively short chain of events
that could have reasonably been anticipated to lead to the plaintiff’s damages. If the
defendant’s actions were “proximate” or close enough in the chain of causation to
have foreseeably led to the plaintiff’s damages, courts will impose liability.
Otherwise, if the defendant’s actions set in motion a long, bizarre chain of events that
could not have reasonably been foreseen to lead to the plaintiff’s damages, courts will
not impose liability. In tort law, multiple actions by one or more defendants that are a
substantial factor in producing the loss can qualify as proximate causes.”

The interpretation of the Act makes it clear that the party who has insured the subject
matter of the insurance is liable only for the losses which have been proximately caused by
peril. The question of proximate cause has been discussed over and over, to understand what
actually can be considered a proximate cause. The English law on marine insurance is very
clear on the point of the proximate cause, though. And Since the Indian Law is based on the
English Law, the stand taken by them can act as an authority for the Indian Law also.
According to the English authorities, it is the cause proximate in effect which must be
considered instead of the proximity of time. In simple words proximate cause can be defined
as the dominant cause of the loss or damage. In the judicial pronouncement of Reischer v.
Borwich1, it was observed by the Court that the tugboat was insured against the risk of
collision or collision with any object. The tug boat was although not insured against the perils
of the sea. The tugboat had a collision, and it was damaged. The Court was of the opinion
that the assured was entitled to recover the loss from the insurer since the proximate cause of
the loss was a collision and it was a proximate cause in effect and not in time.

1
[1894] 2 QB 548 at p.550

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 RELEVANT CASES

CASE 1: A. Akooji Jadwat Pvt. Ltd. Vs. Oriental Fire and General Insurance Co. Ltd.
and Ors. MANU/WB/0041/1972

FACTS:

Pakistan waged war on India in 1965 and captured "M.V. Shakeela" near Chalna in
East Pakistan. She belonged to the plaintiffs and was mortgaged to the last defendant. She
was covered by a valued policy of Rs. 10 lacs by the Insurer-defendants against the perils of
"Capture, seizure, arrest, restraint or detainment and the consequences thereof or any attempt
thereat; and from the consequences of hostilities of warlike operations, whether there be a
declaration of war or not". She was condemned as a lawful prize by the Prize Court at Dacca
and was made over to the Government of Pakistan in lieu of her sale. Thereafter, a suit was
filed in the Court of the subordinate Judge at Khulna in East Pakistan against the plaintiffs by
their Pakistani agents claiming over Rs. 2 lacs from the plaintiffs and she was attached in the
hands of the Government of Pakistan pursuant to an order of that court. Then an agreement
was entered into by and between the two Governments for her exchange with the "Elahi
Bux", a Pakistani merchant ship arrested by our Navy during the hostilities, but these two
vessels were not ultimately exchanged.

ISSUES:

Was the alleged loss or claim for which the suit has been filed covered by the Policy of
Insurance?

REASONING:

The insuperable obstacles that stood on the way of the plaintiffs from recovering her and they
were irretrievably deprived of the vessel and there can be no doubt that she became an actual
total loss to them. The Insurers were in no way in a better position than the plaintiffs. All
hope of her recovery was extinguished and the spes recuperendi was totally vanished on
October 18, 1965. The "Sakeela" was lost and she was lost forever so far as the law of Marine
Insurance is concerned. Her possession was taken away from the plaintiffs by capture on
September 5 and this dispossession continued uninterrupted right upto this day and therefore
her loss was proximately caused by the perils insured against on this day and on this day she
was not under any attachment of any Civil Court whatsoever. And the Insurers must pay her
agreed value to the plaintiffs. She was not actually sold and the Order for her sale was

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rescinded but that does not mean that she ceased to be an actual total loss because once there
is an actual total loss it is an actual total loss for all time to come under the law of Marine
Insurance.

CONCLUSION:

Price of a ship of her nature had gone up by leaps and bounds and the plaintiffs for this
reason were vitally interested in getting her back and for this purpose they have rendered all
possible assistance to the Insurers.

CASE 2: Dilip Kumar Ghosh vs. New India Assurance Co. Ltd. and Ors.
MANU/WB/0038/1990

FACTS:

Dilip Kumar Ghosh the petitioner herein carries on business under the name and style
of ‘Jayer Exports’ as sole proprietor thereon having its office and place of business at Village,
Santoshpur, Police Station, Maheshiala District 24-Parganas. The main business of the
petitioner is the manufacturer of surgical dressings, medical bandages, absorbent cotton wool
and various other types of cotton products required in medical profession for surgical
purpose. The petitioner firm exports these products to various overseas customers in foreign
countries. The petitioner performed all obligations and requirements for supply of the said
goods to a foreign country. The petitioner also insured the goods with the respondent No. I,
who agreed to insure the said goods and contracted for the insurance by its Policy No.
2312100641(2). The said Policy was issued at Calcutta on September 8, 1981. The amount of
insurance has been fixed by the parties at £ 23,328.

ISSUES:

Whether a writ in the nature, of Mandamus can at all be issued directing payment of claim,
arising out of Policy of Insurance?

REASONING:

reliance was sought to be placed by the respondents on the bailee clause, namely clause 9 of
the insurance policy, but this ground not having been taken in the letter dated December 2,
1987 cannot be allowed to be taken at this stage of hearing of the writ petition, He submits
that the respondents are not entitled to rely on any ground other than those mentioned in the
letter dated December 2, 1987 for justifying the repudiation. it can be observed that the

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Supreme Court in that case has not laid down any hard and fast rule, as to whether the
Insurance Company could not be directed to make payment had there been any lapse on the
part of the Insurance Company where the petitioner's claim is covered by the relevant clauses
of the policy. the damage caused to the cargo was not because of the delay on the part of the
petitioner but because the ship was abandoned by the crew which came within the purview of
all risks and the respondents are duty bound to pay the insured sum.

CONCLUSION:

This Court is of the view that the claim of the petitioner is otherwise justified and,
accordingly, the respond dent-Insurance Company should be directed! to pay the amount of
insurance, which is covered by the policy.

CASE 3: Bajaj Allianz General Insurance Co. Ltd. and Ors. vs. The State of Madhya
Pradesh MANU/SC/0410/2020

FACTS:

The Respondent purchased a Transit Marine Insurance Policy from the Appellant to
cover the transportation of a Helicopter. The Appellant set out the transit route for the
transportation of the helicopter by air, sea and road. The policy Schedule issued by the
Appellant indicated that the policy was issued for transportation of the helicopter with
standard packaging. The helicopter was transported in a knocked down state by air to New
Delhi. The helicopter was cleared by the customs and was shifted to a hangar at New Delhi.
The helicopter was inspected by a representative of the manufacturer during routine
inspection and the window of the crew door was reported to be damaged. The Respondent
sought the permission of the Director General of Civil Aviation to fly the helicopter to
Bhopal but was denied permission on account of the damage to the window of the crew door.
The Respondent informed the Appellant that upon inspection, the tail boom of the helicopter
was found to be damaged. A surveyor was appointed by the Appellant to assess the alleged
damage to the window of the crew door and the tail boom of the helicopter who concluded
that damage to tail boom had not occurred during transit. The Appellant repudiated the claim
of the Respondent by a letter dated 11 July 2006 on the ground that the loss that occurred to
the helicopter was after the duration of the policy. The Respondent filed a consumer

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complaint before the State Commission seeking compensation from the Appellant for
wrongful repudiation of the claim and towards the loss sustained by the Respondent.

ISSUES:

Whether insurance can be claimed for the damaged goods?

REASONING:

For the Respondent to prove its case, a mere assertion that the loss incurred during the course
of transit was not sufficient. The burden of proof lies on the Respondent to show that the loss
incurred was covered within the terms of the policy and that on a balance of probabilities
there existed a proximate cause between the loss incurred and the helicopter being in transit.
The Respondent had adduced no evidence to supports its case. The Respondent had on the
balance of probabilities failed discharge its burden that the damage to the helicopter incurred
during the course of transit. No proximate cause had been shown between the damage to the
helicopter and the helicopter being in a state of transit. Hence, it was difficult for this Court to
come to the conclusion that the damage to the helicopter incurred during the course of transit.

CONCLUSION:

The interpretation placed on the terms of the insurance policy was manifestly incorrect and
that the impugned orders of the National Commission and State Commission were
unsustainable.

CASE 4: Contship Container Lines Ltd. vs. D.K. Lall and Ors. MANU/SC/0181/2010

FACTS:

M/s D.K. Lall Enterprises, a sole proprietary concern, claims to have received an
order for export of iron furniture and iron handicraft items from M/s Natural Selection
International, a Spanish purchaser of those items. A similar order for export of miniature
paintings is also said to have been received by the said concern from M/s Pindikas another
concern located in Spain. The case of M/s D.K. Lall Enterprises (hereinafter to as the
'Exporter') is that all the items meant for export in terms of the above orders were packed in
122 different cartons for shipment to the purchasers in Spain. According to the exporter while
miniature paintings were packed in one carton meant for export to M/s Pindikas, the iron
furniture items meant for export to M/s Natural Selection International were packed in 121

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other cartons. These packages were, according to the Exporter, checked and cleared by the
Customs Authority at Jodhpur and finally stuffed in one simple container, for which purpose
the exporter hired the services of M/s Samrat Shipping & Transport System Pvt. Ltd. through
its local agent who forwarded the container to Bombay where it was put on board CMBT
Himalaya, a vessel belonging to M/s Contship Container Lines Ltd.-appellant in C.A. No.
6232 of 2004. It is noteworthy that the exporter had obtained a Marine Cargo/Inland transit
insurance policy to cover risks enumerated in the policy.

ISSUES:

Whether purchaser have power to file a case against insurance company for the loss?

REASONING:

The National Commission has, in the instant case, recorded a clear finding the correctness
whereof has not been disputed before us that the insurance cover obtained by the exporter
envisaged goods being despatched on CIF basis whereas the goods were, in fact, sent on FOB
basis. This was a material departure which breached the duty of utmost good faith cast upon
the exporter towards the insurance company. If the proposal for insurance had disclosed that
the goods will be sent on FOB basis, the question whether the supplier had any insurable
interest in the goods and if he had what premium the company would charge for the same
may have assumed importance. Be that as it may, the duty to make a complete disclosure not
having been observed by the exporter, the National Commission was justified in holding that
the insurance company stood absolved of its liability under the contract and in dismissing the
petition qua the said company.

CONCLUSION:

The Bill of Lading does not mention either the nature or the value of the goods. That being
so, compensation of rupee equivalent of 666.67 Special Drawing Rights was the only amount
that could be awarded by the Commission to the shipper. Inasmuch as the Commission
awarded US $1800 it committed a mistake that calls for correction.

CASE 5: Patel Shanabhai Darubhai and Co. vs. The Oriental Insurance Co. Ltd.
MANU/CF/0004/2011

FACTS:

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 The Complainant in this Original Petition is a registered partnership firm, in business
as a grain merchant. The petition relates to a transaction of import of 188.613 tons of pigeon
peas from a seller in Singapore, but this consignment was actually loaded in Myanmar and
was being shipped to India. A significant part of the goods carried in this ship, "M v. Jaipur"
could reportedly not be unloaded due to certain problems relating to their condition.
Eventually the vessel "M v. Jaipur", flying Singapore flag, had itself to be auctioned. The
incident pertains to the year 1998. The Complainant M/s. Patel Shanabhai Darubhai &
Company (herein after referred to as the Complainant) claims interest in this consignment
through a transaction of High Sea sale between its original purchaser M/s. Ranchhodray Pulse
Mills, Vasad (hereinafter referred to as RPMV) and the Complainant. The case of the
Complainant is that the consignment was purchased by his vendor M/s. RPMV on 11.04.1998
from his seller in Singapore. The Consignment was loaded from Yangon Port in Myanmar for
India. M/s. RPMV had insured this consignment with the Opposite Party for ` 24.5 lacs under
a transit insurance policy of 13.02.1998.

ISSUES:

Whether the petitioner is eligible to claim interest?

REASONING:

the Respondent has not been able to establish with evidence the ground for repudiation of the
claim and the claim has been repudiated unjustly. Accordingly, the complaint is allowed. The
OP/Oriental Insurance Co. is directed to pay the Complainant the value of the lost
consignment. However, this payment shall be limited to the amount paid by the complainant
as consideration under the High Sea Sale agreement i.e. "CIF + 2%" or the insured value of
the consignment, whichever is less. The same shall be paid by the Respondent within a period
of three months and shall carry an interest of 6% from the date of repudiation.

CONCLUSION:

The Respondent grossly deficient in service in not settling the claim. Hon'ble Supreme Court
upheld this decision of the National Commission. shall also pay to the complainant ` 1 lakh
towards legal costs.

CASE 6: Lkar Global Merchant vs. Oriental Insurance Co. Ltd. MANU/SJ/0003/2018

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FACTS:

The Complainant in his complaint has alleged that he runs the proprietorship firm
through its proprietor Mr. Raj Lotlikar and that he is the owner of barge M.V. Kaustubh
bearing Regn. No. MRH-500 registered with Captain of Ports - Mormugao, Goa on
22.4.1975, which was built by M/s. Chowgule & Co. Pvt. Ltd., Sirigao, Goa, hereinafter
referred to as the "said vessel". The case of the Complainant is that the said vessel was sea
worthy, properly manned and duly insured with the Opposite Party under the Marine Hull
Insurance Policy No. 131700/22/2012/87 under ITC Hulls 1.10.1983 with 3/4ths collision
liability amended to 4/4th collision liability and the insurance premium was paid regularly.
The policy was active at the time of accident.

ISSUES:

Whether the petitioner is eligible to claim interest on the insured amount?

REASONING:

The Complainant in the present case, has succeeded on all the fours in discharging the burden
of proof and firmly establishing his case as against the Opposite Party herein with the help of
convincing and cogent documentary evidence produced on record. It is only fit and proper to
hold that the evidence of the Complainant read with his pleadings and Affidavit, certainly
inspires more credibility and confidence bearing remarkable degree of coherence and
consistency all throughout. The Opposite Party, on the other hand has miserably failed to
substantiate their main allegations justifying their any act/s leading to repudiation of the
legitimate claim of the Complainant. Hence, we are duty bound to hold the Opposite Party
herein, absolutely and wholly liable at law. We, therefore, unhesitatingly, hold that all the
aforesaid acts of commission and omission on the part of the Opposite Party herein, for the
reasons stated earlier, unmistakably amount to 'deficiency in service' as defined under the
provisions of the Consumer Protection Act, 1986.

CONCLUSION:

In the result, court inclined to allow the present complaint in terms of prayer (a) thereof with
rate of interest.

CASE 7: Krishnapatnam Port Company Ltd. vs. United India Insurance Company Ltd.
and Ors. MANU/CF/0090/2015

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FACTS:

The complainant took a Crawl Cat Dredger on hire from the Government of India and
obtained a Marine Hull Insurance Policy in respect of the said Dredger, for the period from
10.05.2004 to 09.05.2005. The said Dredger is alleged to have submerged in the Sea at
Krishnapatanam Village in Andhra Pradesh on 26.12.2004, due to Tsunami which hit India,
taking several lives and destroying properties worth hundreds of Rupees. The insurance
company was informed of the loss and was requested to appoint a surveyor to assess the loss.
Though a surveyor was appointed, the claim was not paid. The insurance company informed
the complainant that since damage to the Dredger was caused solely due to an earthquake in
the Indian Ocean Floor, the claim was not admissible under the policy. Being aggrieved from
the stand taken by the insurance company, the complainant is before this Commission,
seeking a payment of Rs. 1,53,50,000/- along with interest @ 18% per annum. The
complainant is also seeking compensation amounting to Rs. 25.00 lacs, due to the delay in
settling the claim.

ISSUES:

Whether the Policy issued is subject to Marine Hull Risk as per ITC Port Risk Clause?

REASONING:

he insurance company took the stand that the loss to the boiler and other equipment was not
caused by fire but by the stoppage of the electric supply, due to short circuit in the switch
board. According to the insurance company, it was thermal shock caused due to stoppage of
electricity which had damaged the boiler and equipment and that was the proximate cause for
the damage. The contention of the insurance company was that firstly there was no fire and
secondly in any case, the fire was not the proximate cause of the damage. Dealing with the
question as to what does proximate cause mean, the Hon'ble Supreme Court held that it is not
the cause which is nearest in time or place but the active and efficient cause that sets in
motion a train or chain of events which brings about the ultimate result without the
intervention of any other force working from an independent source. On facts it was held that
fire was the efficient and active cause of the damage.

CONCLUSION:

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Since the loss to the complainant occurred on account which is not prescribed in clause,
which was an excepted cause in the policy, the insurance company is not liable to reimburse
for the said loss.

CASE 8: Skandia Insurance Co Ltd v Skoljarev MANU/SJ/0037/1979

FACTS:

The appellant's argument as to the onus of proof of seaworthiness of the vessel at the
commencement of the voyage was, in relation to the facts and circumstances of this case,
misconceived. The onus of proof in truth played no part in the resolution of the case. The
respondents, not being able to point to any contribution of the elements to account for the
entry of water into the hull of the vessel, had perforce to rely on the inference that that entry
into a seaworthy vessel was due to or itself amounted to a peril of the sea. That is to say, to
attribute the loss of the vessel to a peril of the sea necessarily involved, in the circumstances
of this case, a conclusion that the vessel was seaworthy. As in this case the actual cause of the
entry of the sea water was not found, there was no room for the view that, if the vessel were
unseaworthy, the loss was none the less not due to her unseaworthiness. Thus, as part of the
proof of the cause of the loss, the respondents needed to establish that the vessel was
seaworthy when put to sea.

ISSUES:

Whether the petitioner can claim compensation?

REASONING:

It was an immaterial error in the circumstances of this case. The reasons given by the Full
Court for upholding the primary judge on the issue of unseaworthiness did not depend upon
the onus of proof. They amounted to a positive rejection of the appellant's case and a finding
that the Zadar was seaworthy when she left port. The Full Court's judgment affirmed the
judgment of the primary judge which in my view arrived at a correct conclusion on the issue
of causation.

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CONCLUSION:

it is somewhat surprising that the respondents did not plead an alternative case of loss due to
a latent defect under cl. 4 (a) of the policy. In view of the way in which the case has been
conducted this is not now material. The primary judge found no latent defect and, although
the Full Court expressed doubts as to the correctness of the finding, it was not put forward as
a possible cause of loss in the argument in this Court.

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 CASE 9: United India Insurance Co. Ltd vs Sbk Shipping Private Ltd, WP. 138/2012

FACTS:

The respondent company is engaged in the business of providing barges for

transporting materials like Iron Ore, etc. from the port to the ships. They owned four steel
barges bearing registration Nos.CGE 50, WAI 185, WAI 206 and WAI 217. The respondent
entered into an insurance contract with the appellant on 5.11.2004, insuring the four barges
against damages, etc. Clause 4 of the contract states that the insurance covers loss or damage
to the subject matter caused by perils of the seas, rivers, lakes or other navigable waters. It
also covers loss caused by other actions such as fire, violent threat and piracy. Clause 5 of the
Contract states that the insurance shall not cover loss, damage, liability or expenses.

ISSUES:

Whether insurance can be claimed by damage caused by tsunamia?

REASONING:

It is not disputed that policy covers loss caused by perils of the sea. When the direct cause for
the damage sustained by the barge in question is Tsunami, based on an indirect cause and
especially taking note of the fact that for the other barges which were also damaged during
the same Tsunami on the same day, the claim of the petitioner was accepted, for this
particular barge alone, the petitioner's claim cannot be rejected.

CONCLUSION:

The damage occurred only due to the giant tidal waves that hit the barge and we are of the
firm view that the proximate cause for the damage is the peril of sea and the excepted cause
earthquake had occurred thousands of miles away in Indonesia and it can by no stretch of
imagination be treated as a proximate cause for the damage that occurred to the barges.

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 UNDERSTANDING THE CONCEPT OF PROXIMITY CAUSE

CASE 10: New India Assurance Company Ltd. vs. Zuari Industries Ltd. and Ors.
MANU/SC/1586/2009

FACTS:

On 8.1.1999 at about 3.20 p.m. there was a short circuiting in the main switch board
installed in the sub-station receiving electricity from the State Electricity Board, which
resulted in a flashover producing over currents. The flashover and over currents generated
excessive heat. The paint on the panel board was charred by this excessive heat producing
smoke and soot and the partition of the adjoining feeder developed a hole. The smoke/soot
along with the ionized air traveled to the generator compartment where also there was short
circuiting and the generator power also tripped. As a result, the entire electric supply to the
plant stopped and due to the stoppage of electric supply, the supply of water/steam to the
waste heat boiler by the flue gases at high temperature continued to be fed into the boiler,
which resulted in damage to the boiler. As a result the respondent-complainant approached
the Insurance Company informing it about the accident and making its claim. Surveyors were
appointed who submitted their report but the appellant-Insurance Company vide letter dated
4.9.2000 rejected the claim. Hence the petition before the National Commission.

ISSUES:

Whether the doctrine of proximity cause be applied?

REASONING:

There is no direct decision of this Court on this point as to the meaning of proximate cause,
but there are decisions of foreign Courts, and the predominant view appears to be that the
proximate cause is not the cause which is nearest in time or place but the active and efficient
cause that sets in motion a train or chain of events which brings about the ultimate result
without the intervention of any other force working from an independent source.

CONCLUSION:

By the terms of the policy the premises in question was insured against "such loss or damage
by fire to the property." It was held by the High Court that this did not cover damage
resulting from the disturbance of the atmosphere by the explosion of a gunpowder magazine a

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mile distant from the premises insured. The court is in respectful disagreement with the said
judgment as the predominant view of most Courts is to the contrary.

CASE 11: Alka Shukla vs. Life Insurance Corporation of India MANU/SC/0596/2019

FACTS:

The spouse of the Appellant obtained three insurance policies from the Respondent. The
spouse of the Appellant, while riding his motorcycle, experienced pain in the chest and
shoulder, suffered a heart attack and fell from the motorcycle. Spouse of Appellant had died
by time that he had been admitted to hospital. The insurance claim was settled in respect of
the basic cover of insurance. However, the insurer repudiated the claim under the accident
benefit component of the insurance policy on the ground that the death of the insured had
occurred due to a heart attack and not due to an accident. The Appellant filed a consumer
complaint before the District Forum. The District Forum allowed the complaint and directed
the Respondent to pay the accident benefit under the three policies together with interest. The
State Commissioner affirmed order of District Forum. In a revision by the insurer, the
National Commissioner reversed the judgment of the District Forum, and set aside award of
compensation in terms of the accident benefit.

ISSUES:

Whether the injury was proximately caused by the accident?

REASONING:

The plain reading of the policy is to be accepted as our guide. Under the policy, in order for
the complainant to prove her claim, she must show direct and positive proof that the accident
of the assured falling from his motorcycle caused bodily injury by external/outward, violent
and visible means. The complainant will have to prove that the accident and the injuries
sustained as a result were a direct or proximate cause of her husband's death.

CONCLUSION:

There is no material on record to indicate that the assured sustained specific injuries as a
result of a fall from the motorcycle or that the injuries were caused by outward, violent and
visible means, which was the sole and proximate cause of his death. There is no direct nexus
or causation between the assured suffering a heart attack and injuries sustained in an accident
by outward, violent and visible means.

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CASE 12: Mamtaj Bi Bapusab Nadaf and Ors. vs. United India Insurance CO. and Ors.
MANU/SC/0725/2010

FACTS:

The claimants-respondents in M.F.A. No. 5843 of 2003 are the legal representatives of one
Bapusab Nadaf and the claimants-respondents in M.F.A. No. 5844 of 2003 are the legal
representatives of Basappa Gurappa Hipparagi, who were workmen engaged in uploading
Maize (foodgrain) from a tractor-trailer. When Maize was being unloaded from the tractor to
an underground storage bin ('Hagevu'), both the labourers climbed the grocery pit in order to
clean the same for storing Maize and while cleaning they fell into the grocery pit. They
shouted from inside that they were suffocating, a rope was released to them but they did not
catch it and they died due to asphyxia. These facts are not disputed.

ISSUES:

Whether the injury was proximately caused by the accident of vehicle?

REASONING:

The vehicle was not involved in the accident and the death of the workmen by no stretch of
imagination can be said to have any proximate or direct connection with the vehicle. The
High Court also observed that the mere fact that Maize was brought to the spot where the
workmen had died in the insured vehicle, would not render the Insurance Company liable in
respect of the death, the cause of which was not proximate to the actual user of the vehicle. In
the present case, the use of the vehicle was not even claimed as being a ground on which the
liability is said to be fastened on the Insurance Company.

CONCLUSION:

On a plain reading of the above quoted Explanation, the Insurance Company cannot be held
liable for the death of the workmen and therefore, the Insurance Company cannot be held
liable to pay compensation to the appellants.

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 CASE 13: Peacock Plywood Pvt. Ltd. vs. The Oriental Insurance Co. Ltd.
MANU/SC/8742/2006

FACTS:

Appellant herein agreed to purchase 4000 cu. mt. of 'Sabha Log' (logs) at a total price of US
$6,00,000/- from a Malaysian firm. 474 pieces of logs were loaded on a vessel known as
'Indera Pertama' (vessel) at the port of Western Sabah, Malaysia for their delivery at Calcutta.
The ship left the Malaysian Port with cargo on 16th February, 1988. The logs were insured by
Appellant with Respondent - Insurance Company for a sum of Rs. 39,90,122/- against the
peril and/ or risk of non-delivery of said goods. The policy contained Institute Cargo Clause
(C). It also expressly included the risk of non-delivery of even single piece of log.

ISSUES:

Whether the loss occurred comes under category of ‘constructive total loss’ as contained in
Section 60 of the Marine Insurance Act, 1963?

REASONING:

Interpretation of 'constructive loss' contained in Section 60 is subject to any express provision

in the policy. The definition of constructive total loss, therefore, as contained therein would
be subject to any other clause which may be in the policy. The policy contained a clause
which was not in commensurate with the said provision. We, in a case of this nature, have to
give effect to the terms of insurance. Non-delivery of goods may be on any account. It need
not always be a 'case of reasonably abandoned'. The meaning of the expression 'peril insured
against' would depend upon the terms of the policy. The policy was extended to a case where
the costs of transportation would be more than the value of the goods. Marine Insurance Act
is subject to the terms of insurance policy. Where the insurer takes additional premium and
insure a higher risk, no restrictive meaning thereto need be given. A term of the policy must
be given its effect. While construing a contract of insurance, the reason for entering there into
and the risks sought to be covered must be considered on its own terms.

CONCLUSION:

It is also not a case that the servants of the assured were privy to the un-seaworthiness as
provided for in Clause 5.5.1 of the insurance policy. There has been no evidence to that
effect.

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 CASE 14: New India Assurance Co. Ltd. vs. Priya Blue Industries Pvt. Ltd.
MANU/SC/0282/2011

FACTS:

The Respondent-complainant at the relevant time was carrying on ship breaking and scrap
dealing business. It had under a Memorandum of Agreement dated 2.6.1997 purchased and
imported to Alang, a very large bulk ore and oil carrier by the name of "Vloo Arun" for the
purpose of scrapping (ship breaking/demolition) from one M/s. Ruby Enterprises Inc.
Belgium. There is no controversy that the Respondent has taken a marine insurance policy for
hull and machinery on 4.6.1997 for the said vessel. The policy was obtained after taking
possession of the vessel for covering only 9 kms. distance between Alang Anchorage to
Alang Ship Breaking yard. Insurance cover was for a sum of Rs. 25.70 crores for which a
premium of Rs. 1,14,280/- was paid. As per the special condition it was Institute Voyage
Clause (hulls) dated 1.10.1983 as attached with a specific condition, but to cover and/or
Constructive Total Loss only including salvage and sue and labour and expenses.

ISSUES:

Whether impugned judgment of National Commission suffers from any infirmity?

REASONING:

The proximate and dominant cause of the vessel becoming a total loss was the stranding on a
rocky shoal prior to arriving at the destination. The stranding itself was due to heavy weather
encountered on the "funeral" voyage to the ship-breaking yard. The stranding was accidental
and fortuitous in nature. Both heavy weather and stranding are perils of the sea. The
proximate cause of the loss is an insured peril, falling under Clause 4.1.1 of Institute Voyage
Clauses Hulls, 1/10/83 wordings (Clause 285), which covers loss of or damage to the subject-
matter caused by, `perils of the seas rivers, lakes or other navigable waters. The parties have
satisfied ourselves that the loss was neither caused proximately nor concurrently, by any of
the excluded perils listed in Section 55 of the Marine Insurance Act, 1963, (MIA 1963), read
in conjunction with the terms and conditions of the Policy of Insurance. The parties have also
satisfied ourselves that the loss was not caused proximately or concurrently by perils
enumerated in the Paramount Exclusions of Clauses 20, 21, 22 and 23 of the Institute Voyage
Clause Hulls 1.10.83 wordings.

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CONCLUSION:

Thus it is not a case of non-consideration of any evidence available on record by the

Commission. The findings and conclusions drawn by the National Commission are based on
proper appreciation and elaborate consideration of the entire material available on record.
The Commission did not commit any error in appreciating the evidence available on record.
The contention urged before us in this appeal is accordingly rejected.

CASE 15: Shyam Cold Storage vs. National Insurance Company Ltd. and Ors.
MANU/RC/0026/2007

FACTS:

the complainant against the opposite party-National Insurance Company Ltd. on 30.6.2004
with the prayer that the opposite party be directed to pay to the complainant a sum of Rs.
26,11,627, as claim amount, as assessed by the Surveyor for the loss of stock of potatoes due
to fire which had taken place in the cold storage premises of the complainant on 28.5.2003,
along with interest at the rate of 18% p.a. from the date of fire accident till payment was
made and further, the complainant be awarded a sum of Rs. 7,50,000 towards business loss,
Rs. 5,00,000 for Bank interest and standing charges and Rs. 50,000 as cost of litigation. The
further case of the complainant is that a report about the incident of fire was also lodged by
the complainant in the Police Station Sanganer, Jaipur and information of that incident of fire
was also given by the complainant to the opposite party Insurance Company on 29.5.2003
and upon this, a Surveyor M/s. R.K. Singhal & Company Pvt. Ltd., New Delhi was appointed
by the opposite party-Insurance Company to assess the loss suffered by the complainant.

ISSUES:

Whether the proximate and immediate cause for loss of vegetables by fire which had taken
place in the cold storage premises of the complainant?

REASONING:

It is held that proximate and immediate cause for the loss of stock of potatoes was fire which
had taken place on 28.5.2003 and, therefore, the claim for loss of potatoes was also covered
under the fire insurance policy in question as it was the direct result of fire and the Surveyor
has rightly observed so in the final survey report Annexure 3 and letters Annexure 10 and

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Annexure 11 and thus, rejection of the complainants claim for loss of potatoes for Rs.
26,11,627, as assessed by the Surveyor, was patently arbitrary and unwarranted and it
amounted to deficiency in service on the part of the opposite party Insurance Company.

CONCLUSION:

The second ground taken by the opposite party-Insurance Company for repudiating the claim
of the complainant for loss of potatoes placing reliance on proviso to Sub-section (2) of
Section 64 of Insurance Act also cannot be sustained and the same stands rejected. The
complainant is allowed in the manner that the opposite party-National Insurance Company
Limited is directed to pay to the complainant.

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 CONCLUSION

The question of proximate cause has been discussed over and over, to understand
what actually can be considered a proximate cause. The English law on marine insurance is
very clear on the point of the proximate cause, though. And Since the Indian Law is based on
the English Law, the stand taken by them can act as an authority for the Indian Law also.
According to the English authorities, it is the cause proximate in effect which must be
considered instead of the proximity of time. It was observed by the Court that the tugboat was
insured against the risk of collision or collision with any object. The tug boat was although
not insured against the perils of the sea. The tugboat had a collision, and it was damaged. The
Court was of the opinion that the assured was entitled to recover the loss from the insurer
since the proximate cause of the loss was a collision and it was a proximate cause in effect
and not in time.

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