Supreme Court ruled that insurers are not liable for losses resulting from unseaworthiness if a ship is dispatched in an unfit state. The ruling stressed that mere insurer awareness of a warranty breach doesn't automatically imply waiver unless explicitly stated.

The court held that parties seeking insurance coverage based on a Classification Certificate for a vessel must notify the Classification Society about any shortcomings before certificate issuance. Insurance relies on the assumption that the Society thoroughly assessed the vessel pre-certification.

The appeal stemmed from the National Consumer Disputes Redressal Commission (NCDRC) denying a maritime insurance claim of ₹16 crores to a party whose vessel and cargo were lost due to a mishap. The appellant failed to reveal previous damage to the main port engine when obtaining class certification.

The court noted the appellant's failure to establish no breach of warranty class and supported the NCDRC's conclusion. Consequently, the Supreme Court upheld the NCDRC's decision, dismissing the appeal.

The case involved the appellant acquiring an ₹8 crore maritime hull insurance policy in 2005-06. Following engine damage in 2006, the engine was temporarily repaired due to replacement time constraints, with the insurer providing ₹1 crore for repairs. The appellant then obtained a 2006-07 policy after an American Bureau of Shipping survey granted a class certificate. However, the vessel sank after a collision, and the insurer appointed a surveyor.

The surveyor found that the appellant hadn't disclosed prior damage to the engine and that failure to report damages would suspend the class certificate. The court underscored the importance of transparent reporting and good faith in insurance issuance, highlighting that the appellant could have informed the insurer about the unused advance. This approach would've allowed them to present their case genuinely.

The verdict stressed the foundational role of trust in insurance contracts and emphasized that parties must act transparently. Had the appellant followed a candid approach, their plea might have been more valid.

Case Title: Hind Offshore Pvt Ltd v. IFFCO General Insurance Co. Ltd.

Click here to read/download Judgment