Calcutta High Court
National Insurance Co. Ltd vs Sethia Oil Industries Ltd. And Anr on 20 April, 2026
Author: Debangsu Basak
Bench: Debangsu Basak
OCD-7
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL APPELLATE DIVISION
ORIGINAL SIDE
AD-COM/6/2024
WITH CS-COM/43/2024
NATIONAL INSURANCE CO. LTD.
-Versus-
SETHIA OIL INDUSTRIES LTD. AND ANR.
Present :
The Hon'ble Justice DebangsuBasak
-And-
The Hon'ble Justice Md. ShabbarRashidi
For the Appellant : Mr. SaumyenDatta, Adv.
Ms. DolonDasgupta, Adv.
For the Respondent : Mr. Sakya Sen, Sr. Adv.
Mr. Rudrajit Sarkar, Adv.
Mr. Jai Kumar Surana, Adv.
Mr. Abhimonyu Roy, Adv.
HEARD ON : 20.04.2026 DELIVERED ON : 20.04.2026 DEBANGSU BASAK, J.:-
1. The appeal is at the behest of the defendant and directed against
the judgment and decree dated March 13,2024 passed in CS-
COM/43/2024. By the impugned judgment and decree, learned
Trial Judge decreed the claim of the respondent for damages.
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2. Learned Advocate appearing for the appellant submits that, the
appellant is an insurance company. A contract of insurance was
entered into being Exbt.-A valid from April 13, 2004 to the
midnight of April 12, 2005. Sum insured was Rs.10 crores. He
draws the attention of the Court to Clause 2 of such contract of
insurance being Exbt.-A. According to him, Clause 2.1 provides
that in no case, the insurance cover should extendto loss, damage
or expenses attributable to willful misconduct of the assured.
3. Learned Advocate appearing for the appellant refers to the
document marked as exhibits at the trial. He submits that, it is
established from Exbt.-E and Exbt.-L that there was overloading of
the tanker carrying rise bran oil.According to him, therefore, such
fact comes within the purview of Clause 2.1 of the contract of
insurance being Exbt.-A and, therefore, the repudiation of the
claim made by the appellant was correct.
4. Learned Advocate appearing for the appellant submits that, the
learned Trial Judge misconstrued and misapplied the ratio of 2004
(3) SCC 297 (National Insurance Co. Ltd. vs. Swaran Singh
&Ors.), 1996 (4) SCC 647 (B. V. Nagaraju vs. M/s. Oriental
Insurance Co. Ltd.) and 20916 (3) SCC 100 (Laxmi Chand vs.
Reliance General Insurance.)
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5. Learned Advocate appearing for the appellant draws the attention
of the Court to the provisions of Section 113(3)(b) of the Motor
Vehicles Act, 1988. He submits that, the Act of 1988 prohibits
overloading of a vehicle. In the facts and circumstances of the
present case, he submits that, the plaintiff i.e., the respondent no.1
herein caused the tanker concerned which met with an accident to
be overloaded within the meaning of Section 113(3)(b) of the Act of
1988. Therefore, according to him, since, the plaintiff did the same
willfully, it will come within the meaning of willful misconduct as
contemplated under clause 2.1 of Exbt.-A.
6. Learned Senior Advocate appearing for the plaintiff submits that,
Exbt.-L, is the Marine Survey Report. He submits that, one
straysentence of such Marine Survey Report, in Exbt.-L does not
establish that the appellant, as, insurance company, was able to
discharge the burden of proof as enunciated in Swaran Singh
(supra), B. V. Nagaraju (supra) and Laxmi Chand (supra). He
submits that, there is no evidence on record to establish that the
cause of the accident was due to the alleged overloading of the
tanker concerned. He draws the attention of the Court to the
evidence placed on record.
7. Learned Senior Advocate appearing for the respondent no.1
submits that, the tanker of the respondent no.1 met with an
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accident due to rash and negligent driving of the offending vehicle.
The tanker over-turned due to the attempt by the driver of the
tanker to avoid a head-on collision. He submits that, the proximate
cause of the accident is not the alleged overloading of the tanker
but the rash and negligent driving of the offending vehicle.
Therefore, on such count also the claim of the respondent no.1
cannot be denied.
8. Learned Senior Advocate appearing for the respondent no.1
submits that, Exbt.-L was introduced in evidence during the cross-
examination of the witness of the appellant. He submits that, no
person came to the witness box to establish the contents of Exbt.-L
at the trial. Therefore, the contents of Exbt.-L, should not be
taken as sacrosanct. According to him, the stray sentence in
Exbt.-L cannot be used for the purpose of validly repudiating the
claim made by the respondent no.1 as against the appellant in
terms of Exbt.-A.
9. Learned Senior Advocate appearing for the respondent no.1 draws
the attention of the Court to Exbt.-K being a letter dated August
30, 2006. He submits that, by such letter, the appellant called
upon the respondent no.1 to produce evidence duly certified by
respective authorities that the tanker was carrying the consignment
of the declared capacity. He submits that, the burden of proof was
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on the appellant. The appellant was trying to shift the burden of
proof on the respondent no.1 which is not permissible in law.
10. A policy of insurance was entered into between the appellant
and the respondent no.1 valid from April 13, 2004 to the midnight
of April 12, 2005. Sum insured was Rs.10 crores. Such contract
of insurance was tendered in evidence and marked Exhibit ‘A’.
Clause 2.1 of Exbt.-A is relevant and is as follows:
“2.1 loss damage or expense attributable to willful misconduct of
the Assured.”
11. Carrying of oil through the tanker of the respondent no.1 was
covered by Exbt.-A for the period and for the sum as noted above.
The terms and conditions of the contract of insurance appears
from Exbt.-A.
12. A tanker of the respondent no.1 met with an accident on
National Highway No.6 at Village- Mayurbhanj, P.O. Pandhara
near Jharpokaria Police Station, District- Mayurbhanj, Orissa at
about 12:30 hours on January 18, 2005.
13. A survey was conducted with regard to the damages suffered by
the respondent no.1 due to such accident. Survey report was
tendered in evidence through cross-examination of the witness of
the appellant. Cross-examination was at the behest of the
respondent no.1 who is the plaintiff to the suit. Consequently, the
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survey report was marked as a document of the respondent
no.1/plaintiff.
14. Exbt.-L being the Marine Survey Report speaks of the accident.
It is of the view that, the tanker of the respondent no.1 while
proceeding on National Highway No.6, observed another vehicle
coming from the opposite direction at high speed. In order to
avoid a head-on collision, the driver of the tanker applied brakes.
As a result, the truck slipped dragged towards right hand side of
the road and finally capsized in upside down condition. Due to
the violent impact of the accident, manhole cover of 5 tank
compartments fell off and the contents went running to waste.
15. At two places in Exbt.-L, Marine Survey Report concluded that,
the cause of the accident was due to overloading of the cargo in
the tanker. One conclusion is specific. While the same
conclusion, at a different place of the same Exbt.-L is slightly
diluted.
16. In B. V. Nagaraju (supra) the insured truck was carrying
passengers while the policy of insurance did not cover carrying of
9 passengers. It observed that, lifting of persons by the driver or
cleaner of the vehicle without the knowledge of the vehicle owner,
cannot be said to be such a fundamental breach that the owner
should, in all events, be denied indemnification. It noted that
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misuse of the vehicle was not so fundamental in nature so as to
put an end to the contract of insurance, unless some factors
existed which, by themselves went to contribute to the cause of
the accident. No such contributing factor was found in the facts
of that case.
17. Swaran Singh (supra) noted that, a breach on the part of the
insured must be established by the insurer to show that not only
the insured used or caused permitted to be used the vehicle in
breach of the Act of 1988, but also the damage he suffered flowed
from such breach.
18. Laxmi Chand (supra) after referring to Swaran Singh (supra)
and B.V. Nagaraju (supra) observed that, the insurance company
in order to avoid liability must not only establish defence claimed
in the proceeding concerned,but also establish the breach on the
part of the owner/insured of the vehicle for which the burden of
proof would rest with the insurance company. In the facts of that
case it was held that, the insurance company did not produce any
evidence on record to prove that the accident occurred on account
of overloading of passengers in the goods carrying vehicle.
19. Cause of accident, therefore, assumes significance. In view of
the grounds for repudiation of the policy of insurance to the Exbt.-
A being the policy of insurance allows the insurance company to
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repudiate the claim in the event the insured is guilty of willful
misconduct. In the facts and circumstances of the present case,
the tanker which met with the accident, was overloaded beyond its
carrying capacity. Learned Trial Judge noted that, the carrying
capacity of the tanker was 16 M.T while it was laden with a cargo
of rice bran oil to the extent of 26.640 MT.
20. The three authorities of the Supreme Court noted above require
the insurance company to establish that the insured was in
fundamental breach of the contract of insurance, the insured used
or caused or permitted to be used the vehicle in breach of the Act
of 1988 and that, the damage the insured suffered flowed from
such breach. The owner of vehicle must partake in the breach of
the Act of 1988, or it must be with his knowledge.
21. Few facts are established through Exhibit-L. The fact that, the
tanker was overloaded is established. It was loaded by the plaintiff
is established. Knowledge of the plaintiff as to the overloading is
also established. The cause of the accident was stated to be
overloading of the tanker in Exhibit-L.
22. Independent of Exhibit-L, the invoice of the respondent no.1
being Exhibit-A established that, the tanker was carrying rice
bran oil of 26.640 MT.
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23. Exhibit-L was introduced in evidence while cross-examining
the witness of the appellant. As noted above, the cross-
examination was done by the respondent no.1. The respondent
no.1, therefore, cannot now contend justifiably that, the contents
of Exhibit-L are not true and correct and that the contents of
Exhibit-L cannot be relied upon by the Court. When, a witness is
confronted in cross-examination, with a document, then the party
who is tendering such document in cross-examination, accepts
the existence of such document as also the contents thereof. As
against the party, who is cross-examining the witness, the
contents and existence of such document stands established.
24. In the facts of the present case, the appellant as the
Insurance Company is not denying the existence of the contents of
Exhibit-L. Exhibit-L, again as noted above, was introduced by the
respondent no.1 through the witness of the appellant. Therefore,
the respondent no.1 cannot be permitted to contend that, the
contents of Exhibit-L are not true and correct.
25. Exhibit-L, states that the cause of the accident was
overloading of the tanker. In our view, therefore, the cause of the
accident stands established. The cause of the accident is
overloading of the tanker. Tanker was loaded by the plaintiff and
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therefore the overloading leading to breach of Section 113 of the
Act of 1988 is within the knowledge of the plaintiff.
26. The authorities of the Supreme Court noted above, observed
that in the events, it is established that the vehicle was used by
the insured with the object of the same being in violation of the
Act of 1988, the contract of insurance can be justifiably
repudiated. In the facts and circumstances of the present case, at
the trial, it was established that the tanker was overloaded by the
plaintiff, to its knowledge and that, the cause of the accident was
due to the overloading.
27. In our view therefore, the appellant was able to discharge its
burden of proof of establishing the cause of the accident as that of
overloading to the knowledge of plaintiff which is in violation of the
Act of 1988 and, therefore, falling within clause 2.1 of the contract
of Insurance being Exhibit-A.
28. In view of the discussion above, the impugned judgment and
decree is set aside.
29. We are informed that, pursuant to an interim order passed by
the Co-ordinate Bench, the amount covered under the impugned
judgment and decree was secured by the appellant.
30. Security lying with the Registrar, Original Side, to the credit of
the suit of the appeal, to be returned to the appellant. Registrar,
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Original Side, is at liberty to encash the fixed deposit, if so
created, prematurely. Registrar, Original Side will make over the
proceeds of such fixed deposit along with the accrued interest
thereon after deducting all costs and charges. Registrar, Original
Side will do so within a period of four weeks from date.
31. AD-COM/6/2024 is disposed of accordingly, without any
order as to costs.
(DEBANGSU BASAK, J.)
32. I agree.
(MD. SHABBAR RASHIDI, J.)
A/s./pkd