Bombay High Court
Tata Consumer Products Limited vs Ecgc Limited on 10 June, 2025
Author: Abhay Ahuja
Bench: Abhay Ahuja
2025:BHC-OS:9132
1-COMSS 2030 OF 1996.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL SUMMARY SUIT NO. 2030 OF 1996
TATA Consumer Products Limited,
A company incorporated under the
Companies Act, 1956 and having is
Registered Office at 1, Bishop,
Leroy Road, Calcutta 700 020. ...Plaintiff
Versus.
ECGC Limited,
A Government Company incorporated
Under the Companies Act, 1956 and
Having its Registered Office at Express
Towers, 10th Floor, Nariman Point,
Mumbai - 400 021 ...Defendant
Mr. Pradeep Sancheti, Senior Advocate along with Mr. Sandeep Parikh,
Mr. Arun Siwch, Ms. Priyanka Mitra and Mr. Karan Gandhi i/by Cyril
Amarchand Mangaldas, Advocate for the Plaintiff.
Mr. Dinesh Purandare along with Ms. Shanaya Dadachanji and
Ms. Resham S. i/by Manilal Kher Ambalal & Co, Advocate
For the Defendant.
CORAM : ABHAY AHUJA, J.
RESERVED ON : 9th NOVEMBER 2023
PRONOUNCED ON : 10th JUNE, 2025
JUDGMENT :-
1. The Plaintiff TATA Consumer Products Limited 1 is a company incorporated under the provisions of the Companies Act, 1956, carrying on business, inter alia as exporters of tea. 1
Formerly known as Tata Tea Ltd and then Tata Global Beverages Ltd.
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2. The Defendant is a Company incorporated under the provisions of the Companies Act, 1956 and a wholly owned Government of India undertaking set up in 1964 for the purpose of promoting the country's export promotion drive and its functions include issuing of guarantees to exporters in connection with recovery of their export proceeds. Rassik Woodworth Ltd. ("RWL") is a company incorporated under the Companies Act 1956 and the Seller. RVO Kazpischepromsyrio ("RVOK") is an organization in the Republic of Kazakhstan and the Importer. FACTUAL BACKGROUND
3. On 26th August, 1993, RWL (Seller) entered into a Contract bearing no. I-B/9-14/93 with RVOK (Importer) for the supply of 3000 Metric Tonnes ("MT") of Tea ("Export Contract")(Exhibit P-3). Clause 6 of the Export Contract stipulated the mode of payment and is reproduced as follows:
"6. Payment The payment for delivered goods shall be made by Barter Exchange of goods within 120 days from the date of delivery being affected by the Seller Plus interest for the period of non-payment 15% per year. The above terms will be covered by a guarantee for payment by the Ministry of Foreign Economic Relations of Kazakhstan.
For Barter Exchange of goods Buyer presently has available for offer goods as per supplement N2 to the present contract."
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4. On the same date, an addendum to the said Contract was executed between RWL and RVOK stipulating that if the said Contract for barter of goods could not be finalized for any reason, then RVOK was to pay for the Tea in U.S. Dollars within 120 days of the date of delivery with interest @ 15% per annum. ("First Addendum")(Exhibit P-4). The First Addendum is reproduced as follows:
"In case the payment terms as per clause 6 of the Contract No. I-B/9-14/93 dtd. 26.08.93 are not possible that is to say if the Contract for Barter supply of goods can not be finalized for any reason or if delivery /shipment under such a Contract is not made within the stipulated period, then the Buyer shall pay to the Seller for delivered goods in US Dollars within 120 days from the date of delivery being effected by the Seller. This payment is to made through remittance by the Buyer of the Contracted amount of delivered tea, plus interest 15% per year to the Bank Account of the Seller at Canara Bank Janpath New Delhi, India. The above payment will be guaranteed by the Ministry of Foreign Economic Relations of Kazakhstan. This addendum forms an integral part of the Contract No. I-B/9- 14/93 dtd. 26.08.93."
5. A further addendum of even date to the Export Contract was executed between RWL and RVOK allowing RWL to ship Tea and purchase barter goods from RVOK through nominated associates on account of RWL ("Second Addendum")(Exhibit P-5).
6. On 25th August, 1993, Guarantee was issued by the Ministry of Foreign Economic Relations of Kazakhstan ("the Ministry") in the event AVK/Kanchan Dhuri/Nikita Gadgil/KSG 3/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc RVOK is unable to meet its payment obligations under the Export Contract for any reason whatsoever (Exhibit P-8).
7. Earlier in and around September 1992, the Plaintiff obtained a policy from the Defendant bearing Policy No. CAL/POL/SCR/30679/70 covering export risks in respect of shipments effected during the Policy period which is 1st September 1992 to 31st August 1994. (As per Defendant's letter dated September 16, 1993 bearing Ref No CAL/PCL/SCR/30679/93 (Exhibit P-1).
8. On 16th September, 1993, the Defendant issued a letter bearing reference No. CAL/POL/SCR/30679/93, to the Plaintiff increasing the maximum liability under the said Policy from Rs. 20 Crores to Rs. 40 Crores which would take effect from May 26, 1993 (Exhibit P-2).
9. On 6th October, 1993, RWL issued letter to Plaintiff referring to the Export Contract and the Addendum and confirmed the assignment to the Plaintiff as a nominated associate to supply 1225 MT of Tea to the Importer (Exhibit P-6). Initially, RWL was to supply the entire quantity of 3000 MT of Tea. However, by way of second addendum, the supply of 1225 MT of tea was assigned by RWL to the Plaintiff, and the AVK/Kanchan Dhuri/Nikita Gadgil/KSG 4/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc supply of the remaining quantity of tea was assigned to M/s. Assambrook Exports Ltd.(now known as ABL Limited, "ABL") and M/s. Harrisons Malayalam Ltd ("HML") (Exhibit D-1/7).
10. On 7th October, 1993 the Defendant by its letter agreed to issue specific cover to the Plaintiff subject to the terms and conditions mentioned therein (Exhibit P-7). The terms and conditions are reproduced as follows:
"We have pleasure in approving above transaction subject to the following terms and conditions.
1. The payment for delivered goods shall be made by Barter Exchange of goods within 120 days from the date of delivery;
2. Our liability will arise only after default has been established on the guarantee of the Ministry ;
3. Percentage of cover will be 75% of the loss;
4. Waiting period for filing of claim will be 4 months from the due date of payment;
5. You have the right to export in your own name as per the Contract and the Bills of Exchange shall be raised in your name and also you have a right to recourse against buyer in the event of any default; and
6. A premium rate applicable will be at the rate of 151 paise per Rs. 100/- of the gross invoice value."
11. From 30th September, 1993 till 29th October, 1993 the Plaintiff effected 5 (five) shipments of the total value of US $ 3.185 million to RVOK (Exhibit P-11).
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12. On 26th June, 1994, a letter was issued by the Plaintiff to the Defendant lodging their claim with the Defendant for the amount due at the time. In the said letter, the Plaintiff acknowledged receipt of monies of Rs.1,05,34,020.25/- in respect of the shipments effected. However, other than the part payment, no further payments of the outstanding sum were made by RVOK to the Plaintiff. The Ministry also failed to pay the dues owed by RVOK as a guarantor (Exhibit P-9).
13. On 4th July, 1994, RWL issued a letter to the Defendant stating that the First Addendum was executed to safeguard RWL's interests. The said letter also enclosed a report which outlined the sequence of events, details of the problem faced in the barter exchange of goods, why the payment in US dollars was delayed, and the action taken by RWL in order to recover the amounts due (Exhibit P-10).
14. On 7th July, 1994 the Plaintiff lodged a formal claim of Rs. 7,48,42,700.71/- (75% of the then outstanding amount i.e. Rs.9,97,90,267.61/-) with the Defendant (Exhibit P-11).
15. On 5th August, 1994, the Plaintiff issued a letter requesting the Defendant to settle their claim expeditiously since all documentation AVK/Kanchan Dhuri/Nikita Gadgil/KSG 6/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc required by the Defendant for processing the Plaintiff's claim had been submitted (Exhibit P-12).
16. On 13th September, 1994 in reference to oral discussions with the Defendant, the Plaintiff issued a Letter to the Defendant responding to the queries of the Defendant, viz. That the contention on the ground that there has not been any barter of goods is untenable as the First Addendum which was submitted by the Plaintiff while applying for specific approvals forms an integral part of the Export Contract. Further the letter stated that since all necessary documents evidencing default on the part of the Ministry as well as why barter of goods did not take place have already been furnished, the Defendant's liability to settle the Plaintiff's claim has arisen (Exhibit P-13).
17. On 15th September, 1994 the Defendant issued a Letter of Repudiation to the Plaintiff (Exhibit P-14) repudiating their liability on the following two (2) grounds:
i. RVOK offered goods in barter exchange, however, the Plaintiff chose not to import goods offered by the Buyer for trade reasons, without consulting the Defendant; and ii. The loss suffered by the Plaintiff is a trade loss which is not covered by the Defendant.
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18. On 22nd September, 1994, Plaintiff issued a Letter in response to the Defendant's Letter dated 15th September, 1994 reiterating their position. Further, the Plaintiff once again requested the Defendant to make the payments due against its claim without any further delay (Exhibit P-15).
19. On 30th September, 1994, Defendant issued a Letter to the Plaintiff reiterating their grounds for repudiation and further stating that the guarantee issued by the Ministry was only a security for payment (Exhibit P-16).
20. On 10th November, 1994, Plaintiff issued a Letter to the Defendant clarifying its position and further stating that the Plaintiff failed to keep the Defendant informed of the Barter Exchange not going through is an untenable ground to reject the Plaintiff's claim (Exhibit P-
17).
21. On 6th March, 1995, the Plaintiff's Advocates issued a letter calling upon the Defendant to make payment to the Plaintiff of their claim with interest within a week from the date of the receipt of the said letter (Exhibit P-18).
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22. On 22nd March, 1995, Advocates for the Defendant in response to the aforesaid letter issued an Interim Reply, stating that they are taking detailed instructions from the Defendant and will revert upon receiving the same (Exhibit P-19).
23. On 25th April, 1995, Advocates for the Defendant issued a letter to the Advocates for the Plaintiff contending that the non-payment in hard currency was not a risk insured under the said Policy on the ground that the "approved" mode of payment under the said Policy was barter exchange. The said letter further stated that Defendant did not provide approval to the First Addendum which sought to permit payment in cash (Exhibit P-20).
24. On 8th August, 1995, Advocates for the Plaintiff issued a letter in response to the Letter dated 25 th April, 1995 denying the contentions of the Defendant (Exhibit P-21).
25. In the above factual background, the Plaintiff had filed the present Commercial Summary Suit on 12th June, 1996 for recovery its dues for a sum of Rs. 6,59,85,531.02/-.
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26. On 29th April, 1997 RWL issued a letter to the Plaintiff enclosing a demand draft of the sum of Rs.25,95,409/- on account of RVOK as further part payment for the export of tea in terms of the Export Contract (Exhibit P-26). On 4th June, 1997, RWL issued letter to the Plaintiff enclosing a demand draft of the sum of Rs. 17,07,000/- on account of RVOK as further part payment for the export of tea in terms of the Export Contract.
27. On 30th September, 1997, this Court had granted leave to the Defendant to defend the Suit unconditionally. Accordingly the Defendant has by its Written Statement filed on 14 th May, 1998 denied its liability.
28. As the Defendant repudiated their liability with respect to all three nominated associates, on 18 th December, 2003 ABL preferred a Writ Petition before a Single Judge Bench of the Hon'ble Calcutta High Court inter alia, praying for quashing of the Letters of Repudiation issued by the Defendant and direction to the Defendant to make payment of the dues under their Insurance Policy. The Ld. Single Judge of the Hon'ble Calcutta High Court allowed the Writ Petition and observed that there was nothing on the record to show that ABL was AVK/Kanchan Dhuri/Nikita Gadgil/KSG 10/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc liable to consult the Defendant prior to rejecting the payment by barter for any reason whatsoever. Thereafter, the Defendant herein preferred an Appeal before the Appellate Bench of the Hon'ble Calcutta High Court against the Order of the Ld. Single Judge allowing the Writ Petition and issuing the directions as prayed for by ABL therein. The Appellate Bench of the Hon'ble Calcutta High Court reversed the findings of the Single Judge bench holding that as ABL's claim involves disputed questions of fact, the same cannot be adjudicated in a Writ Proceeding under Article 226 of the Constitution of India. ABL preferred an Appeal against the Judgment of the Appellate Bench of the Hon'ble Calcutta High Court before the Hon'ble Supreme Court which was allowed (Exhibit P-22).
29. As the Defendant repudiated their liability with respect to HML, HML filed a Recovery Suit against the Defendant herein being O.S. No.1367 of 1998 for monies under its Insurance Policy before the Hon'ble Subordinate Judge's Court, Ernakulam at Kerala. On 26 th October, 2007 a judgment and decree was passed in favour of HML. Being aggrieved by the said Decree, the Defendant herein preferred an appeal before the Hon'ble Kerala High Court. The Hon'ble Kerala High Court dismissed the appeal and placed reliance on the findings of the AVK/Kanchan Dhuri/Nikita Gadgil/KSG 11/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Ld. Single Judge of the Hon'ble Calcutta High Court in the case of ABL v. ECGC which was upheld by the Hon'ble Supreme Court (Exhibit P-
23).
30. On 22nd April, 2009 this Court permitted the Plaintiff to amend the Plaint and bring on record the Hon'ble Supreme Court Judgment of Assam Brook Ltd. v. ECGC Ltd (2004) 3 SCC 553 ("ABL judgment") and the Kerala High Court Judgment of ECGC Ltd. v. Harrisons Malayalam Ltd Order dated 26th October 2007 in R.F.A. No. 147 of 2003 ("HML judgment") as ABL and HML had also obtained export risk policies from the Defendant and their claims were also repudiated and rejected by the Defendant on identical grounds.
31. By Additional Written Statement filed on 23 rd June, 2009 the Defendant has denied that issues involved in the present suit were also involved in the petition filed by ABL and the suit filed by HML or that the Plaintiff is entitled to a decree in terms of the reliefs sought on the basis of judgment in those proceedings.
32. By Order dated 6th May 2014, this Court has framed the following issues:
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(1) Whether the issues arising in the Suit are finally
decided by the Hon'ble Supreme Court in the matter of ABL International Ltd v. ECGC & others (reported in (2004) 3 SCC
553) as well as by the Appellate Bench of the Kerala High Court in the matter of ECGC v. Harrisons Malayalam Ltd in favour of ABL International Limited and Harrisons Malayalam Ltd?
(2) If the answer to Issue No.1 is answered in affirmative then whether the Plaintiff is entitled to a decree as prayed for in the Suit?
(3) In the event of Issue Nos. 1 and 2 being answered in the negative, whether the claim made by the Plaintiff is covered by the Insurance Policy dated 22nd September 1992 (Exhibit A to the Plaint) and the letter of approval dated 7 th October 1993 read with the two addenda to the Contract dated 26th August 1993 (Exhibits C and D to the Plaint) and that the Defendant is liable to make payment to the Plaintiff under the Policy and Cover?
(4) In the event of Issue Nos.1 and 2 being answered in the negative, whether Plaintiff is entitled to the monetary claim made in the particulars of claim to the Plaint or any other amount from the Defendant?
(5) In the event of Issue Nos. 1 and 2 being answered in the negative, whether the Plaintiff is entitled to interest at the rate of 15% p.a. on the monetary claim made in the particulars of claim?
(6) What order?
33. On 27th August, 2014, this Court passed Order marking the Documents of the Plaintiff.
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34. By Order dated 21st June, 2017, the Statement of Claim of the Plaintiff was amended in light of further payments received by the Plaintiff, and the claim stood reduced to Rs. 4,39,05,715.31/- being 75% of the balance outstanding dues excluding interest.
35. By Additional Written Statement filed on 10 th July, 2017, the Defendant has denied the amended claim of the Plaintiff.
36. On 15th September, 2017 Affidavit of Evidence of Plaintiff Witness Mr. Amitava Ranjan Sen, who was the Head, Group Treasury Services with the Plaintiff was filed.
37. On 5th February, 2020, the Court passed Order marking the Affidavit of Evidence of Plaintiff Witness as Exhibit P-24 and marked the pending documents in the Plaintiff's Compilation of Documents.
38. From 21st December 2022 to 04th April 2022, Plaintiff's Witness Mr. Sen was examined by the Defendant.
39. On 20th June, 2022, Order was passed by this Court marking the Letter dated 9th October 1993 from RWL to one R.K.Khosla and its AVK/Kanchan Dhuri/Nikita Gadgil/KSG 14/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc enclosures tendered on behalf of the Defendant during the cross examination of PW-1 Mr Sen as Exhibit D-1.
40. On 30th June, 2022 the Defendant filed the Affidavit of Evidence of Mr. Lakshmi Narayan Sahu, Assitant General Manager-Buyer, Underwriting Department at Defendant's Mumbai Head Office. By Order dated 21st July, 2022 the Affidavit of Evidence of Defendant Witness Mr. Sahu was marked as Exhibit D-1/1.
41. On 28th July, 2022, the Documents in the Defendant's Compilation of Documents were marked as Exhibit.
42. From 23rd August 2022 to 30th August 2022, Defendant's Witness Mr. Sahu was examined by the Defendant.
43. Thereafter, I have heard the learned Senior Counsel at length on 11th October 2023, 13th October 2023, 25th October 2023, 26th October 2023, 8th November 2023. Extensive submissions have been canvassed by the learned counsel appearing for the parties. Mr. Pradeep Sancheti, learned Senior Counsel has made submissions on behalf of Plaintiff. Mr. Dinesh Purandare, Learned Counsel (now learned Senior Counsel) has AVK/Kanchan Dhuri/Nikita Gadgil/KSG 15/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc made submissions on behalf of the Defendant. The arguments were concluded on 9th November 2023 with liberty to the parties to file Written Submissions within a period of two weeks. On 11 th December 2023, the learned Counsel sought extension of time to file Written Submissions. On 22nd December 2023, the Learned Counsel for both parties sought the leave of the Court to tender the Written Submissions accordingly Written Submissions were filed on 22nd December 2023. SUBMISSIONS ON BEHALF OF PLAINTIFF.
44. Mr. Sancheti, the learned Senior Counsel appearing for Plaintiff would submit that claim of the other two nominated associates ABL and HML were also rejected by the Defendant on identical grounds. He would submit that the Plaintiff has filed the present suit whereas ABL preferred a Writ Petition before the Hon'ble Calcutta High Court and HML filed a Recovery Suit before the Subordinate Judge's Court, Ernakulam at Kerala. That by the decision in ABL International Ltd. V. ECGC & Ors2 the Hon'ble Supreme Court reinstated the Judgment of the Ld. Single Judge and held that there was nothing on record to show that ABL under the contract of insurance was liable to consult the Defendant therein who is also the Defendant herein prior to rejecting 2 (2004) 3 SCC 553 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 16/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc payment by barter for any reason whatsoever. Learned Senior Counsel, has placed reliance on Paragraphs 31 to 51 of the judgment submitting that the same are applicable to the present case as well.
45. Mr. Sancheti has taken this Court through the interpretation and findings by the Hon'ble Supreme Court in the case of ABL International Ltd. V. ECGC & Ors (supra), on the payment Clause 6 of the Export Contract (Exhibit P-3), the First Addendum to the Export Contract (Exhibit P-4), the Second Addendum to the Export Contract (Exhibit P-
5), the Insurance Policy (Exhibit P-1), the Letter of Specific Approval (P-
7) and the repudiation of claim by the Defendant.
46. Further, Mr. Sancheti submits that, the Defendant's Letter of Approval dated 7th October 1993 (Exhibit P-7) in the present Suit, is identical to the Letter of Approval given by the Defendant to the other nominated associates. That the Letter of Approval dated 8 th September, 1993 issued to ABL has been quoted by the Hon'ble Supreme Court in its judgment and that Clause 3A of the Letter of Approval dated 08 th September 1993 is identical to the Clause 2 of Exhibit P-7 viz. "Our liability will arise only after default has been established on the guarantee of the Ministry."
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47. Mr. Sancheti would further submit, the Recovery Suit filed by HML on similar facts was decreed in favour of HML and an Appeal preferred by the Defendant therein who is also the Defendant herein before the Hon'ble Kerala High Court came to be dismissed. Mr. Sancheti has pointed out that Hon'ble Kerala High Court had placed reliance on the decision in the case of ABL International Ltd. V. ECGC & Ors (supra) of the Hon'ble Supreme Court and held that the factual matrix in the cases of ABL and HML are in no way different and accordingly dismissed the Appeal preferred by ECGC upholding the judgment and decree passed by the Subordinate Judge's Court.
48. Mr. Sancheti has submitted that the Kerala High Court Judgment has quoted the Letter of Approval dated 07 th October 1993 (Exhibit A20 therein) issued by the Defendant to HML, submitting that this Letter of Approval is identical to the Letter of Approval given to the Plaintiff herein.
49. Mr Sancheti has also taken this Court through the judgment of the Hon'ble Supreme Court, viz. paragraphs 2, 35, 39 to 51 and through the judgment of the Hon'ble Kerala High Court, particularly paragraphs 1, 2, 4, 6, 7, 8 to highlight the points of similarity. Learned AVK/Kanchan Dhuri/Nikita Gadgil/KSG 18/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Senior Counsel has further submitted that the following facts are similar to all 3 (three) nominated associates and submitted that the same cannot be disputed by the Defendant:-
(a) The Guarantee given by Ministry of Foreign Economic Relations (Ministry) (Exhibit P-8);
(b) RBI was kept in the loop with respect to failure of barter in order to effect necessary changes for banking transaction;
(c) Ministry of Foreign Economic Relations forwarded same letter dated March 18, 1994 and admitted its liability that it has defaulted for its own reasons;
(d) RVOK offered only some goods for barter and not all items included in the schedule;
(e) Claim was made before the Defendant for compensation for loss suffered by the Nominated Associates;
(f) Part Payment of the consideration by RVOK in US Dollars.
50. Mr. Sancheti, learned Senior Counsel has laboured to bring out the points of similarity with present Suit, the ABL judgment as well as the HML judgment on the aspects including the risks insured under the ECGC policy, the payment clause in the principal contract, the First addendum, Second addendum, the Defendant's letter of approval, the AVK/Kanchan Dhuri/Nikita Gadgil/KSG 19/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Guarantee given by the Ministry, the letter to the RBI, the Ministry's letters, the offer by RVOK of some items for barter, the claims made before the defendant, repudiation letter dated 15 th September, 1994, the Defendant's letter dated 30th September, 1994 as well as the fact of part payment of the consideration by RVOK in US Dollars.
51. Mr. Sancheti would further submit that there cannot be any doubt that both the aforesaid decisions squarely apply to the present Suit. Learned Senior Counsel would rely on the judgment of the Apex Court in Hari Singh v. State of Harayana3 and judgment of the Gujarat High Court in Najuddin Karimuddin Shaikh v. Commissioner of Police, Sural & Ors.4 and submit that like cases should be decided alike, otherwise in same questions of law or same set of facts different persons approaching a court can get different orders, leading to judicial anarchy. Mr. Sancheti would also place reliance on the judgment of Chairman-Cum-M.D., F.C.I.L. & Anr. v. Regional Labour Commissioner & Ors5 and Ramachandra Barathi v. The State of Telangana6 to butress the submission that law declared by the Hon'ble Supreme Court is binding on all courts by virtue of Article 141 of the Constitution of India.
3(1993) 3 SCC 114 4 1989 SCC OnLine Guj 55 5 2016 SCC OnLine All 2504 6 Order dtd. November 21, 2022 passed in SLP (Crl.) No. 10356 of 2022 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 20/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc
52. Mr. Sancheti submits that since the documents are common, identical (similar) and have already been interpreted in the ABL and HML Judgments in favour of the other nominated associates, the Issues No. 1 and 2 be answered in affirmative. Mr. Sancheti, learned Senior Counsel has further submitted that interpretation of a contract is a question of law and since the Hon'ble Supreme Court in the ABL judgment has decided the question of law with respect to the particular clauses of the contracts and since the Plaintiff has discharged its burden of proving the similarity of issues, the onus shifts on the Defendant to prove otherwise. Learned Senior Counsel placed reliance on the following judgments:
i. Sir Chunnilal V. Mehta & Sons, Ltd. v. Century Spinning and Manufacturing Co. Ltd.7 ii. Anil Rishi v. Gurbaksh Singh8
53. Mr. Sancheti has taken this Court through the correspondence between the parties with respect to the claim of the Plaintiff and has submitted that (i) the Plaintiff by Exhibit P-9 informed the Defendant regarding the non-payment on their exports by RVOK to which no reply has been received by the Defendant. (ii) that by the Claim Form 7 1962 SCC OnLine SC 57 8 (2006) 5 SCC 558 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 21/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc submitted on July 7, 1994 (Exhibit P-11) the Plaintiff has lodged its formal claim with the Defendant wherein the Plaintiff has provided the details of outstanding bills, mentioning the details of the premium paid by the Plaintiff. Mr. Sancheti has submitted that no reply was received from the Defendant on their claim. Mr. Sancheti submits that the Defendant has failed to show any demand for original bills was made by the Defendant on their claim. Mr. Sancheti has submitted that the Plaintiff has issued letters at Exhibit P-12 and P-13 on the Defendant to settle their claim without delay.
54. Mr. Sancheti submits that by the letter at Exhibit P-14, the Defendant has repudiated the claim of the Plaintiff on the ground that the Plaintiff chose without consulting with the Defendant not to import the goods offered in barter and therefore the same is a trade loss which is covered by the Policy. That no other ground has been mentioned. That Exhibit P-16, Exhibit P-19 and Exhibit P-20 are further letters sent on behalf of the Defendant in which the same ground that export transaction was approved only to the extent that the payment would be made by a barter exchange and that no approval was granted to the addendum clause which permitted payment in cash. Mr. Sancheti submits that the correspondence between the Plaintiff and the AVK/Kanchan Dhuri/Nikita Gadgil/KSG 22/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Defendant clearly suggests that the only ground raised by the Defendant is with respect to the Plaintiff's action in declining the goods offered by RVOK and the same being a trade loss.
55. Further, Mr. Sancheti submits that the Defendant cannot set up additional grounds now for rejection of the Plaintiff's claim which are beyond the grounds set out in its Letter of Repudiation. Learned Senior Counsel would rely upon the judgment of the Hon'ble Supreme Court in the case of Galada Power and Telecommunication Limited v. United India Insurance Company Limited & Anr 9 and Saurashtra Chemicals Limited v. National Insurance Company Limited .10 Mr. Sancheti would submit that the Defendant has attempted to raise grounds which are well beyond the ground taken in the letter of repudiation dated September 15, 1994 (Exhibit P-14). While the aforesaid ground of the Plaintiff's refusal to import goods offered by RVOK without consulting the Defendant which the Defendant has termed as a trade loss has been held by the Hon'ble Supreme Court and the Hon'ble Kerala High Court as unsustainable, the Defendant is barred in law from pleading any further additional grounds for the first time in this present Suit.
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56. Mr. Sancheti would further submit that the Defendant's Cross Examination of the Plaintiff's witness has travelled far beyond the pleadings and consequently the Defendant cannot be permitted in law from raising new contentions. Reliance is placed on the judgment of the Hon'ble Supreme Court in Bachhaj Nahar v. Nilima Mandal And Another.11
57. Further, Mr. Sancheti submits that Export Contract is not disputed. The first and the second addendum to the Export Contract is also not disputed. It is also not disputed that the Plaintiff has exported tea to the Kazakh Corporation viz RVOK. It is also not disputed that the barter exchange of goods did not materialize between the Plaintiff and the Buyer. The fact that the Kazakh Corporation did not pay the consideration for the tea received by it in cash in US Dollars is also not in dispute. That the Ministry failed to honor its guarantee is also not disputed. Mr. Sancheti would submit that in the light of the admitted fact, and the findings of the Hon'ble Supreme Court in the case of ABL International Ltd. V. ECGC & Ors (supra), the claim made by the Plaintiff is covered by the Insurance Policy dated September 22, 1992 and the Letter of Approval dated October 7, 1993 and therefore the 11 (2008)17 SCC 491 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 24/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Defendant is liable to make payment to the Plaintiff under the insurance policy and cover.
58. Mr. Sancheti, Learned Senior Counsel submits that the Defendant has in their submissions, submitted that payments against the exports of tea were to be received by RWL and were to be distributed amongst the nominated associates proportionately and therefore Plaintiff ought to have proved what amounts were received by RWL. Learned Senior Counsel would further submit that if the Defendant wanted to show that RWL has received any additional amount, they could have issued a witness summons to RWL for production of documents. That Defendant had all the requisite details from RWL as well as the documents submitted by the three nominated associates. Mr. Sancheti submits that therefore once the Plaintiff has disclosed and brought on record all amounts received by the Plaintiff pursuant to the tea exported, prior to and after the filing of the present suit, the burden of proving the negative has shifted onto the Defendant.
59. Further, Mr. Sancheti submits that the payment clause in the Contract (clause 6 of Exhibit P-4) stipulates an interest at the rate of 15% p.a. That the suit arises out of a commercial transaction and hence AVK/Kanchan Dhuri/Nikita Gadgil/KSG 25/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc the rate of further interest can exceed 6% as is provided for in the proviso to Section 34(1) of the Civil Procedure Code, 1908, the letter issued by the Plaintiff to the Defendant dated June 26, 1994 (Exhibit P-
9) and the formal claim form (Exhibit P-11) filed by the Plaintiff with the Defendant will serve as Notice u/s. 3(1)(b) of the Interest Act, 1978.
60. Further, Mr. Sancheti submits that the plea of fraud and/or misrepresentation cannot be raised by the Defendant for the first time at the stage of final arguments as the same is not their pleaded case. Reliance is placed by Mr. Sancheti on the decisions of the Supreme Court in Ranganayakamma & Another v. K.S. Prakash and Others 12 and Placido Francisco Pinto (D) by Lrs and Another v. Jose Francisco Pinto and Another13 to submit that when fraud, misrepresentation, undue influence is alleged, the same is required to be specifically pleaded and if the pleadings/evidence are not indicative of any instance of fraud/misrepresentation, the said plea cannot be orally argued.
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61. Mr. Dinesh Purandare, the learned Counsel (now learned Senior Counsel) appearing on behalf of the Defendant would submit that the Defendant has rightly repudiated the claim of the Plaintiff. He further submits that the standard risk cover assumed by the Defendant, with respect to exports to various countries including Kazakhstan were not covered under the Defendant's Shipment (Comprehensive Risks) Policy (SCR) bearing no. 30679 , unless the insured had applied for and obtained from the Defendant, specific written approval for each of such shipments. Under the scheme of the policy export to many countries are considered as patently bad risks or fraught with very high risk owing to bad economic and/or political situations in those countries. Such countries were categorized as "Restricted Cover Countries" in Annexure I and special conditions were applicable to "Restricted Cover Countries" as set out in Annexure II of the Policy. (Exhibit D-1 and D-2)
62. Referring to the Affidavit of Evidence of the DW-1, Mr. Purandare submits that after the disintegration of USSR in the year 1992-1993 which weakened economic and financial condition of the countries which were part of erstwhile USSR and limited the international banking arrangements or any hard currency reserves for them. In light AVK/Kanchan Dhuri/Nikita Gadgil/KSG 27/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc of the same, with effect from January 24, 1992 the Defendant placed Kazakhstan under "Restricted Cover Countries" and cover for shipments to Kazakhstan was upon specific prior approval by the Defendant subject to strict compliance of the special terms and conditions to be duly stipulated based upon the Export Contract and the mechanism for recovering of export price.
63. Mr. Purandare submits that the object of such a provision is to ensure that the Defendant is not saddled with risks and to afford the Defendant an opportunity to contain the loss arising out of such risks by stipulating additional/special conditions in respect of cover for such shipments. Hence, in the usual course of its business policy and practices, Defendant first assesses the risk involved in exports to a country excluded from cover under the Insurance Policy. That based on the representation and application for specific approval, the Defendant considered the risk involved in receiving payment from Kazakhstan in hard currency as extremely bad and the Defendant was not ready to accept such a risk. The Defendant, however, noticed that Kazakhstan was in a reasonably good position at the relevant time to offer each of the goods mentioned in the list appended to the Export Contract which were offered in barter. It was the barter method of payment that the AVK/Kanchan Dhuri/Nikita Gadgil/KSG 28/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Defendant primarily relied upon. As a fall-back option, a Sovereign Guarantee from the Government of Kazakhstan was obtained by RWL. The Defendant accepted the risk and insured the Exporter, on the condition that the Exporter was to have a direct right of recourse against RVOK for enforcing the Contract of Barter.
64. Mr. Purandare would submit that the Defendant considered barter exchange as foundational to assume risk is clearly proved by the contemporaneous Board resolution ratifying the Insurance contract (Exhibit D-1/7). That as per the standard practice followed by the Defendant, the acceptance of the Plaintiff's proposal was placed before the Board of Directors of the Defendant on February 10, 1994, when the transaction was ratified and the Board Note placed all the relevant details of the Export Contract. Mr. Purandare would submit that it is unequivocally demonstrative that Defendant's specific approval letter dated 7th October 1993 clearly mandates Barter Exchange as imperative for claiming under the Contract of Insurance in the event of any loss arising on account of any issued risk. Mr. Purandare would further submit that RWL also understood the amended Clause 6 of the Export Contract to mean that barter was the primary means of securing payment and referred to Letter dated 2 nd September 1993 (Exhibit D-
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1/3) which mentions that "non finalisation of barter supply contracts or non-delivery of such goods for any reason whatever." Mr. Purandare would emphasize that this does not contemplate that the Exporter would of its own volition and without any default of the buyer, refuse to accept barter as a means of payment and contend that only reasonable interpretation of this clause is that if the buyer for any reason whatsoever fails to deliver the goods or does not finalize the contract of barter, it is only then that the liability of the buyer to pay in US Dollars would arise.
65. Mr. Purandare would submit that any subsequent arrangement between the buyer and Exporter/Plaintiff would not bind the Defendant and the aforesaid clause does not entitle the Exporter or Plaintiff to refuse the offer for barter exchange for no fault attributable to the Buyer.
66. Mr. Purandare would submit that the judgments referred to in Issue No.1 of the Hon'ble Supreme Court and Hon'ble Kerala High Court are not relevant till such time the Plaintiff does not prove that it was entitled to unilaterally alter the contract of Insurance and not inform the Defendant about the same when the Defendant has made barter exchange as the first and foremost condition for assuming risk.
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67. Mr. Purandare would submit that the Plaintiff has alleged that facts, circumstances, defense, documents and evidence in the present suit are the same as the Judgments delivered by the Hon'ble Supreme Court in ABL International Ltd. V. ECGC & Ors (supra) and Hon'ble High Court of Kerala in Harrisons Malayalam Ltd v. ECGC (supra) but has failed to bring on record the papers and proceedings of the Writ Petition by ABL International Ltd and the papers and proceedings filed by Harrisons Malayalam Ltd. That the Plaintiff has failed to bring on record what is proved and pleaded before the Hon'ble Supreme Court and High Court of Kerala. Learned Counsel would contend that as the record and proceedings of the Writ Petition and the Suit are not brought before this Court, the issues arising the present suit ought to be determined basis the facts, circumstances, documents and evidence placed before this Court. The decisions relied upon by the Plaintiff do not dispense the requirement of examining new pleas, particularly when they go to the root of the matter and were neither urged nor decided earlier.
68. Mr. Purandare further submits that the Plaintiff has failed to discharge its burden of proof to show that in fact the Hon'ble Supreme Court and the Hon'ble High Court of Kerala have delivered their AVK/Kanchan Dhuri/Nikita Gadgil/KSG 31/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc judgments on the same set of facts, circumstances, evidences and defenses of the Defendant as pleaded in the present Suit.
69. Mr. Purandare would submit that Plaintiff's assertion that the Defendant being a party to the cases ought to have produced documents through cross-examination and as the Defendant has not done the same, adverse inference ought to be drawn against the Defendant under Section 114 of the Evidence Act, 1872 as unsubstantiated. Learned Counsel would contend that as the proceedings are not documents which are in the exclusive custody of the Defendant and as these are public documents under Section 74 of the Evidence Act, 1872, no adverse inference can be drawn against the Defendant.
70. Mr. Purandare would submit that this Court ought not to embark on an exercise as to what would have transpired in the facts and circumstances pleaded in the two judgments. Learned Counsel would further submit that the judgments delivered by the Hon'ble Supreme Court and Hon'ble High Court of Kerala are limited only to interpretation of documents on the facts and circumstances pleaded in them. The present suit is an original proceeding and therefore conclusions arrived at by the Hon'ble Supreme Court and Hon'ble High AVK/Kanchan Dhuri/Nikita Gadgil/KSG 32/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Court of Kerala do not bind the Defendant in the present suit. To buttress the aforesaid submission the Defendant places reliance on the decision of the Hon'ble Supreme Court in Bharat Petroleum Corporation Ltd & Anr. V. N.R. Vairamani & Anr14
71. Mr.Purandare would submit that the claim lodged by the Plaintiff with the Defendant was in respect of the losses caused by events which were not covered under the Insurance Policy read with the Letter of specific approval dated 7th October 1993 (Exhibit P-7). Learned Counsel would further submit that, the Defendant while examining the claim of the Plaintiff discovered that the Plaintiff had brought about the peril insured against into operation through its own wilful acts.
72. Mr. Purandare would submit that the Insurance Policy issued to the Plaintiff specifically excludes risks that arise on account of any willful act of the insured/Exporter/Plaintiff. Learned Counsel would draw attention of this Court to the Insurance Policy more particularly paragraph (xi).
73. Mr. Purandare would submit that the establishment of default of guarantee of the Ministry of Kazakhstan in a case when the Plaintiffs 14 (2004) 8 SCC 579 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 33/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc declined to accept the payment by way of barter exchange was not covered by the letter of specific approval by the Defendant. Mr. Purandare would further submit that evidence on record proved that Plaintiff had made deliberate false representation and did not intend to take recourse to barter as a method of payment since the very inception of the contract and thereby has breached the clauses 2 and 7 of the Letter of Insurance Policy. Learned Counsel would point out that the evidence of PW-1 has confirmed that barter was never intended to be a mode of payment and that on the date of the Export Contract i.e. 26 th August 1993, Plaintiff had decided that it was not going to look at barter and wanted to opt for payment in US Dollars and therefore the Addendum to the Export Contract was drawn on the same day. Learned Counsel would submit that the Plaintiff has failed in its duty of full disclosure relating to the risk involved and on this ground alone the Defendant is entitled to avoid the contract of insurance. To buttress the submission that Insurance Contracts are based on the principle of Utmost Good Faith and there should not be any misrepresentation of material facts which was the basis on which risk was assumed by the Defendant has relied on the judgment of Manmohan Nanda v. United India Assurance Co Ltd. & Anr.15 15 (2022) 4 SCC 582 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 34/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc
74. Mr. Purandare would contend that the Plaintiff has breached the terms of the Insurance Policy by:-
(i) Not consulting the Defendant at the time of refusing the offer for barter made by Buyer directly affecting the risk insured by the Defendant,
(ii) Not maintaining the right of recourse against the Buyer on default.
75. Mr. Purandare would submit that this breach is neither technical nor illusory but the same is founded on sound commercial principles. It may be that barter exchange was not commercially profitable for the Plaintiff however, as an insurer who had undertaken the risk, the Defendant was entitled to mitigate its loss by taking charge of the goods offered for barter and then selling the same either in the Indian or International market for whatever price that could be obtained. That Defendant could have stepped into the shoes of the Plaintiff (Subrogation) taken the goods and sold the same. Learned Counsel would also contend that on a mere reading of the letter dated 7 th October 1993 (Exhibit P-7) it is clear that the Plaintiff was required to keep all options open for Defendant's right to subrogation. The Plaintiff's right of recourse against the foreign buyer and Kazakhstan government were to be kept alive by the Plaintiff and the Plaintiff AVK/Kanchan Dhuri/Nikita Gadgil/KSG 35/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc ought to have filed legal proceedings in Kazakhstan against the Buyer for the bills of exchange. That admittedly, no action is taken by the Plaintiff and the Defendant as on date is left with no remedy/recourse against the defaulting Buyer. Mr. Purandare would further submit that failure to perform its part of the promise under the Contract of Insurance, disentitles the Plaintiff to any relief under the Contract of Insurance. Reliance is placed on the judgment of Economic Transport Organization v. Charan Spinning Mills Pvt Ltd. And Another 16 to canvass the submission that subrogation does not terminate nor put an end to its right of the assured to sue the wrongdoer and recover the damages for loss.
76. Mr. Purandare would submit that if according to the Plaintiff, the payments to Plaintiff were routed through a third party and Plaintiff was entitled to some money, then Plaintiff ought to have proved that such money was in fact not received from RWL, which the Plaintiff has failed to do. That no efforts were made by the Plaintiff to bring on record the account of RWL to show the amounts received by RWL from the foreign buyer towards Plaintiff's export of tea. Learned Counsel would further contend that the Plaintiff ought to have summoned 16 (2010) 4 SCC 114 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 36/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc witness from RWL or summoned the account of RWL with Canara Bank, New Delhi duly certified under the Bankers Books Evidence Act, 1891.
77. Mr. Purandare would conclude his arguments by submitting that the Plaintiff has failed to prove the amount received from the foreign buyer and therefore Issue No. 4 and 5 ought to be decided in favour of Defendant and the Plaintiffs claim be rejected as unproved. That Plaintiff is not entitled to any interest and the Defendant has rightly repudiated the claim of insurance.
CONCLUSION
78. Before proceeding further, it would be apposite to address the controversy raised by the Defendant with regard to Exhibit P-5. The Defendant had on an earlier occasion raised an objection with respect to the copies of the second addendum (Exhibit P-5) produced by the Plaintiff by which RWL was allowed to ship tea to RVOK through its nominated associates. The said controversy is inconsequential and immaterial to the dispute between the parties and rather frivolous as admittedly the Defendant has acknowledged the nomination of the Plaintiff, ABL and HML by RWL. This is evident from the following documents :
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(i) letter dated October 06, 1993 issued by RWL nominating the
Plaintiff with copy marked to ECGC;
(ii) letter dated October 07, 1993 issued by ECGC to the Plaintiff
acknowledging the nomination of the Plaintiff by RWL; and
(iii) Board Note dated February 10, 1994 by way of which ECGC's Board of Directors admitted to the said nomination.
79. Moreover, any objection raised against Exhibit P-5 cannot be countenanced for the reason that by Defendant's Statement of Admission and Denial of Documents, the Defendant has explicitly admitted the existence and contents of the said document and therefore such objections cannot be raised at the time of final arguments.
80. Further, the controversy sought to be raised by the Defendant with respect to Exhibit P-10 is inconsequential and immaterial to the dispute between the parties and therefore, the question of drawing an adverse inference raised by the Defendant would not arise as:
(i) Exhibit P-10 is a letter dated July 04, 1994 issued by RWL to ECGC which contains annexures, which in turn refer to certain annexures within the same. While ECGC has admitted to the receipt of the letter, it is their claim that Annexure 'C' to Annexure 'A1' was not part of the letter received by it.
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(ii) The Plaintiff states that Annexure 'C' to Annexure 'A1' is a
document containing the quantities of tea exported by each of the nominated associates. As the said nomination has been admitted by ECGC and further ECGC has not disputed the quantities of tea exported by the Plaintiff, the said Annexure 'C' is inconsequential and immaterial to the present dispute. In my view, therefore, the alleged non-receipt by ECGC or absence of the said documents or the rejection by ECGC of the Plaintiff's claim for payment of monies under the contract of insurance, does not have any bearing on the Plaintiff's claim.
81. Moving ahead, the uncontroverted facts pertaining to the contract for supply of tea and the contract of insurance can be summarised as under:-
(a) Export Contract (same in this and other two matters)
(i) Rassik Woodworth Limited (RWL-seller) entered into a contract with RVO Kazpischepromsyrio, a Kazakhstan Corporation (RVOK-
buyer) on August 26, 1993 for the supply of tea with the mode of payment being barter exchange of goods (the "Contract").
(ii) On the same date as that of the Contract, the mode of payment came to be amended, whereby if barter could not be finalized for any AVK/Kanchan Dhuri/Nikita Gadgil/KSG 39/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc reason, RVOK was to make payment in US Dollars. Further, the payment was guaranteed by Ministry of Foreign Economic Relations of Republic of Kazakhstan (the "Ministry"). The addendum noted that it formed an integral part of the Contract.
(b) Nominated Associates (except names and quantities for the nomination-the other part is identical) :
(i) By a further addendum, RWL was allowed to ship tea to RVOK through its nominated associates.
(ii) RWL nominated three separate associates i.e. the Plaintiff, Assam Book Ltd. ("ABL"), and Harrisons Malayalam Ltd. ("HML").
(c) ECGC Policy (same terms and conditions in this and other two matters)
(i) The nomination made by RWL was communicated to and is to the express knowledge of ECGC viz. the Defendant. The Defendant's Board of Directors duly approved the nomination and thereafter the three nominated associates had obtained identical insurance policies from the Defendant in relation to the Contract.
(d) There was no Barter Exchange (same fact in this in the case of ABL and HML)
(i) As barter exchange of goods could not be finalized, RVOK did make part-payment in US Dollars in accordance with the amended AVK/Kanchan Dhuri/Nikita Gadgil/KSG 40/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Contract.
(ii) After default of the balance outstanding payment by RVOK and as the Ministry also failed to honour its guarantee, the Plaintiff, ABL and HML filed claims with ECGC under the contract of insurance.
(e) Rejection of Claim (grounds for repudiation are identical in all three matters-only dates are different)
(i) ECGC rejected the Plaintiff's claim on the ground that the Plaintiff chose not to import the goods offered by RVOK without consulting it thereby allegedly incurring a trade loss not covered by the Insurance Policy issued by ECGC.
(ii) The Claims of ABL and HML were also rejected by ECGC on identical grounds. The Plaintiff filed the captioned Suit against ECGC whereas ABL preferred a Writ Petition before the Hon'ble Calcutta High Court ("Calcutta HC"), and HML filed a Recovery Suit before the Subordinate Judge's Court, Ernakulam at Kerala.
82. The ABL Judgment of the Hon'ble Supreme Court reinstated the Judgment of the Single Bench of the Hon'ble Calcutta High Court holding that there was nothing on record to show that ABL under the contract of insurance was liable to consult ECGC prior to rejecting payment by barter for any reason whatsoever. The Hon'ble Supreme AVK/Kanchan Dhuri/Nikita Gadgil/KSG 41/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Court on an interpretation of the Insurance Policy also held as follows :
(i) Barter was not the sole mode of payment; ECGC had knowledge of the same and it had insured all modes of payment.
(ii) There were only two conditions precedent for making ECGC liable to pay for the insured risk, firstly, default on the part of RVOK;
and secondly, failure on the part of the Ministry to fulfill their guarantee. The present Suit also concerns the same two conditions precedent.
(iii) The use of words "any reason" in the said amended clause includes the reasons of refusal by ABL to accept the goods offered in barter;
(iv) That, the grounds for repudiation of the policy are unsustainable.
(v) There is no requirement of external aid, much less any oral evidence to interpret the terms of contract; and
(vi) The Hon'ble Supreme Court, thereupon, reinstated the order of the Single Judge Bench which directed ECGC to settle the claim of ABL in terms of the policy dated September 30, 1993 with interest at 12%.
83. HML filed a Recovery Suit before the Subordinate Judge's Court, Ernakulam, Kerala. The Suit was decreed in favour of HML. Being aggrieved by the said decree, ECGC preferred an Appeal before the AVK/Kanchan Dhuri/Nikita Gadgil/KSG 42/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Hon'ble Kerala High Court which came to be dismissed vide the HML Judgment. The findings of the said judgment are as follows :
(i) The undisputed and disputed facts in the HML Judgment are similar to the facts of this Suit.
(ii) There was no oral evidence led by HML in the Suit.
(iii) HML's claim was decreed in the Suit with interest at 9% from June 09, 1995 till the date of the Suit and thereafter at 6% till the date of realisation.
(iv) The risk relating to the export tea to Kazakhstan was subject to six conditions as per ECGC. The six conditions are identical in this Suit. The first two conditions which are the bone of contention in the captioned Suit are reproduced in paragraph 4(iii) of the HML Judgment.
(v) The first addendum is an integral part of the Contract and ECGC was aware of the same. The two conditions on which the repudiation was made are unjustifiable. It is observed that the grounds of repudiation taken by ECGC are identical in this Suit.
(vi) The Hon'ble Kerala High Court placed reliance on the ABL Judgment of the Hon'ble Supreme Court and held that the facts and circumstances in the cases of ABL and HML are in no way different and accordingly dismissed the Appeal preferred by ECGC upholding the AVK/Kanchan Dhuri/Nikita Gadgil/KSG 43/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc judgment and decree passed by the Subordinate Judge's Court, Ernakulam, Kerala.
84. It is observed that the other defenses raised by the Defendant in their written statements have been considered and rejected by the Hon'ble Supreme Court in the ABL Judgment and the Hon'ble Kerala High Court in the HML Judgment. The following defenses taken by the Defendant in this Suit have already been dealt with in the ABL Judgment and HML Judgment and rejected. The following table annexed as Annexure-2 to the written submissions of the Plaintiff bear a testimony of the same :-
Sr. Particulars Written ABL ECGC v.
No. Statement Internationa Harrisons
dated May l Ltd. v. Malayalam
14, 1998 ECGC Ltd., Kerala
(2004) 3 HC, PCOD,
SCC 553 Ex. P-23 at
PCOD, Ex.P- pg.
22 at pg.336
1. In terms of Clause 5 of Para 4(a) Refers to Fact noted in
the Policy r/w the third and (b) @ risk policy in Para 2 @ Pg. column of Annexure Pgs.185-186, para 2 - 6th 369-370 and "I" and Special Vol. I of line from Findings :-
Condition No.7 of Final the top @ Para 6 @ Pg.
Annexure 2 of the Compilation pg.344 - 374 - 382,
"Schedule of Premium Vol. II of
Rates" attached to and Final
forming part of the Compilation
Policy, exports to
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various countries
including Kazakhstan
were not covered
under the insurance
policy, unless the
insured had applied for
and obtained from the
Defendant, specific
written approval for
each of such shipment.
2. Kazakhstan was one of Para 4 (b) @ Para 2 - 4th
the countries under Pg. 187 Vol. last line @
'Restricted Cover' and I of Final Pg. 369 and
cover for shipments to Compilation 370
Kazakhstan was
subject to prior
approval by the
Defendant.
High risk area
3. Plaintiff is restricted by Para 4(c) Fact noted Fact noted in
terms of the conditions and (d) @ in Para 2 @ Para 2 - Pg.
imposed by the specific pgs. 186- Pg. 344. 370.
cover granted by the 187, Vol.I of Finding :- Finding :-
Defendant to the Final Para 50 and Para 6 @ Pg.
Plaintiff in terms of Compilation 51 @ Pg. 374-382,
their approval letter 360, Vol. II Vol. II of
dated October 07, of Final Final
1993 which inter alia Compilation Compilation
provided that the
payment of delivered
goods shall be made by
barter exchange of
goods within 120 days
from the date of
delivery.
4. Plaintiff's action in Para 4(f) @ Fact noted Fact noted in
declining to accept pg.189-190, in Para 2 @ Para 2 @ Pg.
goods offered in barter Vol. I of pg.344, 370 and
was a wilful act that Final Findings in Finding and
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brought about the peril Compilation Para 41, 42, interpretation
insured against into 44, 45 @ in Para 5-6 @
operation and that the pgs. 357- 373-382,
said act on part of the 358 and Vol.II of Final
Plaintiff absolved the Conclusion Compilation
Defendant of all in Para 51
liability under the @ pg. 360-
policy and is a trading 361, Vol.II
loss. Further, while of Final
refusing the barter and Compilation
opting for accepting
payment in US $, the
Plaintiff never
informed or sought the
specific approval of the
Defendant.
85. The facts and circumstances in the the ABL judgment are identical to the facts and circumstances of this Suit: the contract and its two addenda are the same and it is only the nominated associate which is different in the two cases; the grounds of repudiation taken by the Defendant are also identical in both the cases. The ABL and the HML judgments apply to this Suit. That no material disputing these facts and circumstances have been brought on record by the Defendant. Reliance of the Defendant on the decision of the Hon'ble Supreme Court in Bharat Petroleum Corporation Ltd. & Anr. v. N.R. Vairamani & Anr (supra) does not assist the case of the Defendant. This Court has already discussed above as to how the factual matrix and the defences are identical to the decisions on which reliance is placed.
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86. In Hari Singh Vs. State of Haryana (supra), the Hon'ble Supreme Court has observed that it is a basic principle of administration of justice that like cases should be decided in a like manner or alike. It is a sound rule and practice, otherwise on the same question of law or same set of facts different persons approaching a Court can get different orders leading to judicial anarchy as opposed to achieving harmony in the judicial system. Paragraphs 10 and 12 of the said decision are usefully quoted as under:-
"10. It is true that in the system of justice which is being administered by the courts, one of the basic principles which has to be kept in view, is that courts of coordinate jurisdiction, should have consistent opinions in respect of an identical set of facts or on a question of law. If courts express different opinions on the identical sets of facts or question of law while exercising the same jurisdiction, then instead of achieving harmony in the judicial system, it will lead to judicial anarchy. But before any such principle is applied it must be held that the earlier order passed by this Court dismissing the special leave petition of the co-accused amounts to a judgment or an affirmance of the findings of the High Court, about the manner of the occurrence, participation of the different accused persons and the nature of offence committed by them.
12. It is a basic principle of the administration of justice that like cases should be decided alike. It is a very sound rule and practice otherwise on same question of law or same set of facts different persons approaching a court can get different orders. But can the appeal of an accused, who has been granted special leave to appeal, be dismissed on the ground that the special leave petition filed on behalf of a co-accused with more or less similar charges has already been rejected by this Court, although this Court is satisfied that either such accused whose appeal is being heard is entitled to acquittal or ought to have AVK/Kanchan Dhuri/Nikita Gadgil/KSG 47/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc been convicted for a different offence with a different sentence. The doctrine of precedent is not applicable to an order passed by this Court rejecting a special leave petition. Any such order cannot be held to be stare decisis so that it is binding on us."
87. In Najuddin Karimmuddin Shaikh Vs. Commissioner of Police, Surat and Ors (supra), the Hon'ble Gujarat High Court had held that the ratio of a decision of the Hon'ble Supreme Court on an identical fact situation is binding on Courts under Article 141 of the Constitution of India. Paragraphs 9 and 10 of the said decision are relevant and are usefully quoted as under :-
"9. The facts situation in the present case is almost identical. Consequently, the ratio of the aforesaid decision of the Supreme Court squarely gets attracted in the present case and would nullify the present order of detention on the very same grounds which appealed to the Supreme Court in Chhagan Kahar's case (supra). However, the learned counsel for the respondents tried to salvage the situation by submitting that the Supreme Court, in the aforesaid case, had no opportunity of referring to Section 6 of the PAS A Act which reads as under:--
"6. Where a person has been detained in pursuance of an order of detention under Sec. 3 which has been made on two or more grounds, such order of detention shall be deemed to have been made separately on each ground and accordingly --
(a) such order shall not be deemed to be invalid or inoperative merely because one or some of the grounds is or are --
(i) vague
(ii) non-existent
(iii) not-relevant
(iv) not connected or not proximately connected with such person, or
(v) invalid for any other reason whatsoever, and it is not, AVK/Kanchan Dhuri/Nikita Gadgil/KSG 48/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc therefore, possible to hold that the Government or the Officer making such order would have been satisfied as provided in Sec. 3 with reference to the remaining grounds or grounds and made the order of detention;
(b) the Government or the officer making the order of detention shall be deemed to have made the order of detention under the said section after being satisfied as provided in that section with reference to the remaining ground or grounds."
10. It was submitted that if Section 6 of the PASA Act was noticed by the Supreme Court, it would have possibly held that if some of the grounds for holding the detenu a bootlegger have become irrelevant because the earlier order based on them was quashed by the High Court, the detention order could have been sustained on the remaining grounds which were not suffering from such infirmity namely the fresh grounds which emerged after the quashing of the earlier order of detention and the order of detention could have been treated to have been passed on these valid grounds as per the provisions of Section 6 of PASA Act. It is not possible for us to consider this argument. We cannot conjuncture as to what would have been the decision of the Supreme Court if Section 6 of the PASA Act was cited before the Supreme Court. It is not open to us to undertake that exercise. The ratio of the decision of the Supreme Court on the identical facts situation is binding on us under Article 141 of the Constitution of India. If at all, it will be for the respondents to request the Supreme Court to constitute a larger bench for reconsidering the aforesaid decision in the light of Section 6 of the PASA Act. So far we are concerned, we are bound by the decision of the Supreme Court in Chhagan Kahar's case (supra). Following the said decision, therefore, this petition will have to be allowed."
88. In Chairman-Cum-MD., F.C.I.L and Anr Vs. Regional Labour Commissioner and Others (supra) the Hon'ble Allahabad High Court has observed that the law declared by the Hon'ble Supreme Court is binding on all courts by virtue of Article 141 of the Constitution of AVK/Kanchan Dhuri/Nikita Gadgil/KSG 49/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc India and once a question arising out of identical facts and circumstances has been decided by the Hon'ble Supreme Court, judicial propriety forbids the High Court to re-appraise the questions all over again at the instance of similarly placed parties. Paragraphs 10 to 16 of the said decision are usefully quoted as under:-
"10. It would be relevant to record at this stage that the controversy which had arisen in the matter of Kashi Prasad Tripathi and was dealt with by the Apex Court on 05.5.2015, was identical to the questions, which have been raised by the petitioner employer in this petition. The judgment of the Hon'ble Supreme Court was delivered in identical facts and circumstances and the Apex Court has been pleased to hold that the High Court was not required to have interfered with calculation made by the authorities under the Payment of Gratuity Act. It has categorically been observed that the High Court should not have interfered with the calculation of payment of gratuity and adhoc payment with interest. Once identical questions raised, at the instance of other workers similarly placed, have been adjudicated by the Hon'ble Supreme Court the question is that whether this Court is required to re-consider the cause afresh.
11. Learned counsel for the petitioner submits that the directions of the Hon'ble Supreme Court in Special Leave Petition No. 972 of 2014 appears to have been made in exercise of jurisdiction under Article 142 of the Constitution of India and the questions raised on merits are left untouched, and therefore, this Court is required to adjudicate the questions on merits. Learned counsel has relied upon the judgment of the Hon'ble Supreme Court in State of U.P. v. Synthetics and Chemicals Limited : (1991) 4 SCC 139, as well as Government of India v. Workmen of State Trading Corporation : (1997) 11 SCC 641 : 1999 AIR (SC) 1532.
12. Learned counsel with reference to the aforesaid judgments contends that since there is no adjudication of the AVK/Kanchan Dhuri/Nikita Gadgil/KSG 50/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc cause on merits, the mere grant of relief in favour of worker by the Apex Court is not liable to be treated as a binding precedent in the facts of the present case.
13. Sri. Shekhar Kumar Yadav, learned counsel appearing for the respondent nos. 1 and 2 and Sri. H.C. Singh, learned counsel appearing for the respondent no. 3, as well as other counsel appearing for the parties in connected matters, have contended that the issues which have been raised by the petitioner employer was thereafter pressed again by way of review petition filed by the petitioner employer, which came to be rejected by the Hon'ble Supreme Court vide following order dated 13.8.2015:--
"We have gone through the review petition and the relevant documents. In our opinion, no case for review is made out. The review petition is, accordingly, dismissed. Consequently, all the applications are dismissed."
14. Petitioner employer thereafter preferred a curative petition before the Hon'ble Supreme Court, which was also rejected on 3.3.2016 vide following order :--
"We have gone through the Curative Petition and the relevant documents. In our opinion, no case is made out within the parameters indicated in the decision of this Court in Rupa Ashok Hurra v. Ashok Hurra, reported in (2002) 4 SCC 388. Hence, the Curative Petition is dismissed."
15. The grounds of review and curative petitions have been placed before this Court by the counsel for the respondents. The perusal of the record goes to show that the grounds taken in review and curative petitions are virtually the same, which are grounds urged to challenge the orders in the present writ petition.
16. Law declared by the Hon'ble Supreme Court is binding on all Courts by virtue of Article 141 of the Constitution of India. Once on identical facts and circumstances, the question as to whether adhoc payment is to be counted for payment of gratuity has been raised and decided by the Hon'ble Supreme Court by holding that the High Court ought not to have interfered with the determination of gratuity, in exercise of AVK/Kanchan Dhuri/Nikita Gadgil/KSG 51/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc jurisdiction under Article 226 and 227 of the Constitution of India, and thereby affirmed the inclusion of adhoc payment under the definition of wages for the purpose of computation of gratuity payable to employee and such order having been reaffirmed with dismissal of review and curative petitions, judicial propriety forbids this Court to re-appraise the questions all over again at the instance of the same employer."
89. In my view, therefore, the decision of the Hon'ble Supreme Court in the ABL judgment would need to be followed with respect to the interpretation of the contract and its addendum as the decision of the Hon'ble Supreme Court on identical/similar facts and circumstances has a binding precedential value under Article 141 of the Constitution of India: the Contract and its two addenda being the same, the grounds of repudiation taken by the Defendant also being identical and only the nominated associates being different.
90. In this view of the matter, the contract between RWL and RVOK dated 26th August, 1993 (Exhibit P-3) and the even dated Addenda (Exhibits P-4 and P-5), the insurance policy (Exhibit P-1), the letter dated 7th October, 1993 issued by the Defendant granting specific cover to the Plaintiff subject to the six conditions therein (Exhibit P-7), the formal claim form dated 7th July, 1994 submitted by the Plaintiff to the Defendant (Exhibit P-11) and the repudiation letter dated 15th September, 1994 (Exhibit P-14) can be decided by interpretation of AVK/Kanchan Dhuri/Nikita Gadgil/KSG 52/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc contract which is a question of law. This principle has been settled by a five Judges bench of the Hon'ble Supreme Court in the case of Sir Chunilal V. Mehta and Sons Ltd. Vs. Century Spinning and Manufacturing Co., Ltd (supra), where it has been observed that it is well settled that the construction of a document which is the foundation of the rights of parties necessarily raises a question of law. Paragraph 2 of the said decision is relevant and is usefully quoted as under:-
"2. It is not disputed before us that the question raised by the appellant in the appeal is one of law because what the appellant is challenging is the interpretation placed upon certain clauses of the managing agency agreement which are the foundation of the claim in suit. Indeed it is well settled that the construction of a document of title or of a document which is the foundation of the rights of parties necessarily raises a question of law."
91. The Hon'ble Supreme Court in Anil Rishi Vs. Gurbaksh Singh (supra), while dealing with the distinction between burden of proof and onus of proof has held that ordinarily the burden of proof would be on a party who asserts the affirmative of the issue and thereafter, after evidence is gone into, the onus shifts and rests upon the party against whom the judgment would be given, if no further evidence were to be adduced by either side. Paragraphs 9, 10 and 19 of the said decision are usefully quoted as under:-
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"9. In terms of the said provision, the burden of proving the fact rests on the party who substantially asserts the affirmative issues and not the party who denies it. The said rule may not be universal in its application and there may be exception thereto. The learned trial Court and the High Court proceeded on the basis that the defendant was in a dominating position and there had been a fiduciary relationship between the parties. The appellant in his written statement denied and disputed the said averments made in the plaint.
10. Pleading is not evidence, far less proof. Issues are raised on the basis of the pleadings. The defendant-appellant having not admitted or acknowledged the fiduciary relationship between the parties, indisputably, the relationship between the parties itself would be an issue. The suit will fail if both the parties do not adduce any evidence, in view of Section 102 the Evidence Act. Thus, ordinarily, the burden of proof would be on the party who asserts the affirmative of the issue and it rests, after evidence is gone into, upon the party against whom, at the time the question arises, judgment would be given, if no further evidence were to be adduced by either side.
19. There is another aspect of the matter which should be borne in mind. A distinction exists between a burden of proof and onus of proof. The right to begin follows onus probandi. It assumes importance in the early stage of a case. The question of onus of proof has greater force, where the question is which party is to begin. Burden of proof is used in three ways : (i) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; (ii) to make that of establishing a proposition as against all counter evidence; and
(iii) an indiscriminate use in which it may mean either or both of the others. The elementary rule is Section 101 inflexible. In terms of Section 102 initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same."
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92. Once the Plaintiff has discharged his burden of demonstrating the similarities of issues and the relevant underlying facts, the onus has shifted onto the Defendant, however, no facts contrary to discharge the burden to prove that the facts in the Suit are distinct and different from those in the ABL / HML Judgments have been brought before me. The Defendant has merely raised bald contentions and failed to adduce any documentary evidence in support. The witness of the Defendant (Mr. Sahu) in his examination-in-chief does not appear to have adverted on this aspect. When called upon, Mr. Sahu has failed to bring forth any evidence and or documents which show any difference between the case of ABL and HML and the Plaintiff. I am, therefore, of the view that the aforementioned documents are similar and have already been interpreted in the ABL and HML Judgments in favour of the other two nominated associates and the defences put forth by the Defendant have been considered and rejected. The basic principle of administration of justice as elucidated above is that like matters should be decided alike.
93. In fact, in response to questions 23, 25 and 50 reproduced as under, Mr. Sahu has confirmed that payments have been made to ABL and HML pursuant to the ABL and HML Judgments:-
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"Q.23: Are you aware whether the Defendant have made payment to ABL International Ltd and Harrisons Malayalam Ltd. pursuant to the issuance of the judgment at Exhibits P-22 and P-23 respectively?
Ans: I am not aware.
Q.25: Can you check and let us know on the next occasion, whether the Defendant has made the payments as referred to in Q.23?
Ans: I will check. If I get the information, I will provide the same.
Q.50: Can you now answer Q. No. 25?
Ans: Yes. The payment has been made to ABL International Ltd and Harrisons Malayalam Ltd."
94. It has been brought to the notice of this Court that after Question 25 was asked on 23rd August 2022, Mr. Purandare, learned Counsel for the Defendant had objected to the question on the ground that whether payment to the other nominated associates was made by the Defendant or nor is not relevant to the facts of the present case and not relatable to any issues framed. As can be seen, the answer given by the Defendant's witness on 23rd August 2022 was that he will check and if he gets information he will provide the same. However, as noted above, on 24th August 2022 when Question 50 as above, was asked to the Defendant's witness, the Defendant's witness has clearly answered in the affirmative that the payment has been made to ABL and HML. In view of the said answer, the objection raised by Mr. Purandare becomes AVK/Kanchan Dhuri/Nikita Gadgil/KSG 56/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc infructuous. Moreover, this Court has clearly observed that the documents referred to in paragraph 10 above have already been interpreted in ABL And HML Judgment in favour of the other two nominated associates and the defenses put forth by the Defendant have been considered and rejected.
95. The judgment of the Hon'ble Supreme Court of India in the matter of ABL and the judgment of Hon'ble Kerala High Court in the matter of HML are squarely applicable to the captioned Suit. Consequently, the submissions made and contentions raised by the learned Counsel on behalf of the Defendant with respect to the two issues are hereby rejected. Accordingly, Issues no. 1 and 2 are answered in the affirmative.
96. The Plaintiff has also taken strong objection to the setting up of additional grounds by the Defendant for rejection of the Plaintiff's claim, submitting that they are beyond the grounds set out in the letter of repudiation.
97. In Galada Power and Telecommunication Limited Vs. United India Insurance Company Limited and Another (supra), the Hon'ble AVK/Kanchan Dhuri/Nikita Gadgil/KSG 57/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Supreme Court has observed that if a letter of repudiation did not mention an aspect, the same could not be taken as a stand when the matter is decided. Paragraphs 13 and 18 are relevant and are usefully quoted as under:-
"13. The National Commission has relied upon Clause 5 and on that basis has rejected the claim by putting the blame on the complainant. The letter of repudiation dated 20-9-1999, which we have reproduced hereinbefore, interestingly, does not whisper a single word with regard to delay or, in fact, does not refer at all to the duration clause. What has been stated in the letter of repudiation is that the claim lodged by the complainant does not fall under the purview of transit loss because of the subsequent investigation report. It is evincible, the insurer had taken cognizance of the communication made by the appellant and nominated a surveyor to verify the loss. Once the said exercise has been undertaken, we are disposed to think that the insurer could not have been allowed to take a stand that the claim is hit by the clause pertaining to duration. In the absence of any mention in the letter of repudiation and also from conduct of the insurer in appointing a surveyor, it can safely be concluded that the insurer had waived the right which was in its favour under the duration clause. In this regard, Mr. Mukherjee, learned Senior Counsel appearing for the appellant has commended us to a decision of the High Court of Delhi in Krishna Wanti v. LIC, wherein the High Court has taken note of the fact that if the letter of repudiation did not mention as aspect, the same could not be taken as a stand when the matter is decided. We approve the said view.
18. In the instant case, the insurer was in custody of the policy. It had prescribed the clause relating to duration. It was very much aware about the stipulation made in Clauses 5(3) to 5(5), but despite the stipulation therein, it appointed a surveyor. Additionally, as has been stated earlier, in the letter of repudiation, it only stated that the claim lodged by the insured was not falling under the purview of transit loss.
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Thus, by positive action, the insurer has waived its right to advance the plea that the claim was not entertainable because conditions enumerated in duration clause were no satisfied. In our considered opinion, the National Commission could not have placed reliance on the said terms to come to the conclusion that there was no policy cover in existence and that the risks stood not covered after delivery of goods to the consignee."
98. The aforesaid decision in the case of Galada Power and Telecommunication Limited Vs. United India Insurance Company Limited and Another (supra) has been followed by the Hon'ble Supreme Court in the case of Saurashtra Chemical Limited Vs. National Insurance Company Limited (Supra) and the Hon'ble Supreme Court has observed that an insurance company cannot travel beyond the grounds mentioned in the letter of repudiation. Paragraphs 20 to 23 of the said decision are usefully quoted as under:-
"20. Insofar as issue No. (2) is concerned it is undisputed that the letter of repudiation did not even remotely mention anything about violation of duration Clause stipulated in Clause (6) (i) of the General Conditions of Policy. The Respondent-insurer repudiated the claim solely on the ground that since spontaneous combustion did not result into fire and loss had not been caused by fire as stipulated by policy conditions, there was no liability under the policy. It was for the first time the Respondent-insurer raised the issue of delayed intimation of claim and violation of stipulation of Clause 6(i) of the General Conditions of Policy in its reply filed before NCDRC.
21.This Court in the case of Galada Power Ltd. has elucidated upon issue (2) as under:
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"13....It is evincible, the insurer had taken cognizance of the communication made by the Appellant and nominated a surveyor to verify the loss. Once the said exercise has been undertaken, we are disposed to think that the insurer could not have been allowed to take a stand that the claim is hit by the clause pertaining to duration. In the absence of any mention in the letter of repudiation and also from the conduct of the insurer in appointing a surveyor, it can safely be concluded that the insurer had waived the right which was in its favour under the duration clause. In this regard, Mr. Mukherjee, learned Senior Counsel appearing for the Appellant has commended us to a decision of the High Court of Delhi in Krishna Wanti v. LIC, wherein the High Court has taken note of the fact that if the letter of repudiation did not mention an aspect, the same could not be taken as a stand when the matter is decided. We approve the said view. (Emphasis supplied)
22. Undoubtedly, as mentioned supra, this Court in Sonell Clocks has distinguished Galada Power on facts and held that the appointment of a surveyor cannot, as a matter of law, be construed as a waiver of the terms and conditions of the insurance policy. However, in Sonell Clocks, the insurer had taken a specific plea in the repudiation letter that the loss was not conveyed within the stipulated period. Hence the singular issue before this Court was only whether the insurer had waived the condition as to delay in intimation by appointing a surveyor. This Court in Sonell Clocks did not have the occasion to consider whether the insurance company could have raised delay as a ground for repudiation for the first time before the consumer forum.
23. Hence we are of the considered opinion that the law as laid down in 'Galada' on issue (2), still holds the field. It is a settled position that an insurance company cannot travel beyond the grounds mentioned in the letter of repudiation. If the insurer has not taken delay in intimation as a specific ground in letter of repudiation, they cannot do so at the stage of hearing of the consumer complaint before NCDRC."
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99. It is observed that the Defendant by way of its first written statement has attempted to raise grounds which are well beyond the ground taken in the letter of repudiation dated 15 th September, 1994.
In the said letter as can be seen, the only ground of repudiation taken is, "The buyer also did offer the goods in barter exchange. You, however, chose without consulting the Corporation not to import the goods offered by the buyer may be for trade reasons. As a result, the bills have remained unpaid. This is clearly a trade loss, which is not covered by the Corporation. We are therefore, not in a position to entertain your claim, which is hereby rejected."
100. Moreover, from a bare perusal of the insurance policy and by the ABL/HML judgments it can be seen that the Defendant is barred in law from pleading any additional grounds for the first time during the proceedings of this Suit. The Defendant was in possession of the Policy and the Letter of approval and had the opportunity to raise additional grounds/defences. By omitting to do so, the Defendant has waived its right to advance additional defences and grounds. That these additional grounds are not an elaboration of the ground of repudiation as has been contended but are different grounds which have stood waived. Accordingly, the ground is not sustainable, and the additional AVK/Kanchan Dhuri/Nikita Gadgil/KSG 61/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc defences cannot be considered to come to the conclusion that the claim of the Plaintiff is not covered under the policy and letter of approval.
101. Also the approach of the Defendant while cross-examining the Plaintiff's witness, Mr. Amitava Ranjan Sen cannot be permitted. The broad line of questioning adopted by the Defendant during the cross- examination fo the Plaintiff's witness is as follows:-
(a) Viability of barter as a mode of payment.
(b) Mitigation of losses by the Plaintiff.
(c) Nomination of the Plaintiff by RWL as an associate.
(d) Payment to the Plaintiff through RWL.
(e) Commercial understanding with RWL.
(f) Default on guarantee and follow-up regarding payment with the
Republic of Kazakhstan.
(g) Demands to RVOK for payment and request for RWL to follow-up
(h) Bills.
102. By undertaking the aforesaid line of cross-examination the Defendant has sought to set up a new and additional defences/grounds justifying repudiation of the Plaintiff's claim. None of these defences / grounds were taken by the Defendant in its letter dated 15th September, 1994. The terms of the contract are clear and no external aid is required for the interpretation of the same. It is not the pleaded AVK/Kanchan Dhuri/Nikita Gadgil/KSG 62/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc case of the Defendant that at the time when the Plaintiff took the specific approval from the Defendant, the Plaintiff had a different intention which should have been disclosed to the Defendant and that the non disclosure of the same was a breach of the principle of uberrimae fidei and therefore, the insurance policy stands vitiated. No evidence has been laid to that extent by the Defendant. A new defence cannot be culled out from the answers given by the PW-1 in his cross- examination. Any questioning in the cross-examination must have the foundation in the pleadings and in the present case the said foundation in the Defendant's pleading are absent. If it was the pleaded case of the Defendant then the Plaintiff would have laid evidence of the person who negotiated the contract as opposed to the PW-1 who is the only person who applied for the insurance policy cover as per the contract given to him. In the case of Bachhaj Nahar Vs. Nilima Mandal and Anr. (supra), the Hon'ble Supreme Court has held that any evidence laid in the absence of the foundational premises laid in the pleadings ought not to be considered by the Court. Accordingly, the Defendant cannot be permitted to raise new contentions on the basis of cross-examination of the Plaintiff's witness no. 1 as having travelled beyond the Defendant's pleading.
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103. Coming to Issue No. 3, the Plaintiff has submitted that the contract is admitted. That the first addendum to the contract amending the mode of payment is admitted. The second addendum to the contract whereby the Plaintiff, ABL and HML were nominated as associates by RWL under the Contract is admitted. That the actual export of tea by the Plaintiff is admitted. That the fact that barter exchange of goods did not materialize between the Plaintiff and the buyer is admitted. That the fact that there was only part-payment of the total consideration payable by the buyer is admitted and the fact that the Ministry failed to honour its guarantee is also admitted.
104. The aforesaid facts are admitted facts. The findings in paragraphs 31 to 51 of the ABL judgment and paragraphs 1, 2, 5 to 9 of the HML Judgment have been adopted by the Plaintiff and it has been submitted that the same be treated as Plaintiff's submission on the interpretation of the contract read with the two addenda and as to why the repudiation by the Defendant is illegal.
105. In the light of the admitted facts, the Plaintiff's submissions and the findings of the Hon'ble Supreme Court in the ABL judgment as adopted by the Plaintiff leads to a conclusion that the claim made by AVK/Kanchan Dhuri/Nikita Gadgil/KSG 64/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc the Plaintiff is covered by the insurance policy dated 22 nd September, 1992 (Exhibit P-1) and the letter of approval dated 7 th October, 1993 (Exhibit P-7) read with the two addenda to the contract (Exhibits P-4 and P-5). In my view, therefore, the Defendant is liable to make payment to the Plaintiff under the insurance policy and the cover and issue no. 3 is also answered in favour of the Plaintiff.
106. As regards issue No. 4, whether the Plaintiff is entitled to monetary claim as per the revised particulars of claim to the Plaint, it is observed that the Plaintiff had filed the Suit on 12th June, 1996 for recovery of Rs. 6,59,85,531.02 as set out in the Statement of Claim (Exhibit T). After the filing of the Suit, the Plaintiff received further amount of Rs.25,95,409/-vide letter dated 29 th April, 1997 (Exhibit P-
26) and Rs.17,07,000/- vide letter dated 4th June, 1997 (Exhibit P-25) from RWL on account of the buyer. Accordingly, the claim of the Plaintiff was revised and stood reduced to Rs.4,39,05,715.31 being 75% of the balance outstanding dues excluding interest. As on 15th September, 2014, the Plaintiff claimed to be entitled to a sum of Rs. 18,43,67,961/- including interest at the rate of 15% p.a. The Defendant admittedly has not raised any dispute with respect to the receipt of the amounts by the Plaintiff.
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107. The Plaintiff has disclosed and brought on record all the amounts received by the Plaintiff pursuant to the tea exported by him prior to and after the filing of the Suit. That any contradiction to the same would have to be proved by the Defendant as the burden of proving the negative has shifted upon the Defendant. It had been submitted on behalf of the Defendant that payments against the exports of tea were to be received by RWL and were to be distributed amongst the nominated associates proportionately. In my view, if the Defendant wanted to show that RWL had received any additional amount, witness summons should have been issued to RWL and having failed to do so, the Defendant has not been able to discharge the burden of proving the negative. In my view, therefore, the Plaintiff is entitled to the claim as per the revised particulars of the claim to the Plaint.
108. With respect to the argument of the Defendant regarding the payment due and outstanding to the Plaintiff, it is not the Defendant's case that the Plaintiff has received full payment and therefore it is not entitled to its claim in this Suit, nor has it disputed that the Plaintiff exported the goods. The Plaintiff communicated its claim to the Defendant by letter dated June 26, 1994 and this is positive evidence led by the Plaintiff. During the course of submissions, it is the case of AVK/Kanchan Dhuri/Nikita Gadgil/KSG 66/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Defendant also that payments were to be received by RWL and were to be distributed amongst the nominated associates proportionately. Admittedly, by Exhibit D-1/5, RWL had also informed the Defendant that it had not received payment. It is not a ground of repudiation of the Defendant that the Plaintiff has received either the entire amount or more than the amount stated in the Plaint, and it is therefore not entitled to its claim. Both the amounts received by the Plaintiff after the filing of the captioned Suit have not only been disclosed, but in fact the claim has been reduced by amending the Plaint. The Defendant, therefore, had full notice of the Plaintiff's claim and the basis thereof. There is nothing in the cross-examination of PW-1 to show that the Plaintiff's word should be disbelieved or that the Plaintiff has received any further amount from RWL. The burden of proving the negative cannot lie on the Plaintiff. If the Defendant wanted to show that RWL has received any additional amount, they could have issued a witness summons to RWL for production of the relevant documents as they had all the requisite details from RWL as well as the claim form so submitted by the Plaintiff. It is an admitted position that the other two decrees have been honoured and paid off by the Defendant. Needless to add, if any further amount was received by RWL or ABL and HML, then the decretal amounts in the aforesaid two cases would also have been AVK/Kanchan Dhuri/Nikita Gadgil/KSG 67/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc reduced and the Defendant would have been in a position to show that, however, that is not the case.
109. Coming to the Issue no. 5 regarding the entitlement of the Plaintiff to interest at the rate of 15%, it is observed that the payment clause (Clause 6) in the contract stipulates the interest rate of 15% p.a. (Exhibit P-4). The Suit admittedly arises out of the commercial transaction and therefore, further interest can exceed 6% as is provided for in the proviso to Section 34(1) of the CPC. The letter issued by the Plaintiff to the Defendant dated 26 th June, 1994 (Exhibit P-9) and the formal claim form (Exhibit P-11) filed by the Plaintiff with the Defendant can be said to be a notice served under Section 3(1)(b) of the Interest Act, 1978. The Hon'ble Supreme Court in the case of ABL Judgment had directed the Defendant to settle the claim of ABL in terms of the policy dated 30 th September, 1993 with interest at the rate of 15% p.a. As the present Suit arises out of a commercial transaction and as Section 34 (1) of the Civil Procedure Code,1908 as amended by the Commercial Courts Act provides that Court in a commercial transaction can provide rate of further interest exceeding 6% but not exceed the contractual rate, I am of the view that Plaintiff is entitled to interest @15% p.a this being a commercial transaction and as the claim AVK/Kanchan Dhuri/Nikita Gadgil/KSG 68/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc of the Plaintiff has remained unsettled since 1996 though the claim of the other nominated associates who stood on the same footing as the Plaintiff in this case have been settled by the Defendant. Accordingly, I am of the view that the Defendant be directed to pay interest in terms of the policy at the rate of 15% p.a.
110. In view of the above discussion, the submissions made on behalf of the Defendant with respect to the other three issues cannot be sustained.
111. Regarding costs, the Plaintiff has submitted that under Section 35 of the Code of Civil Procedure, 1908 ("CPC") as amended by Section 16 of the Commercial Courts Act, 2015, in any commercial dispute, the Court has the discretion to determine :
(a) whether costs are payable by one party to another;
(b) the quantum of costs; (c) when they are to be paid.
112. That, the Plaintiff is seeking costs in terms of the schedule / statement of costs incurred by the Plaintiff during the course of the proceedings of the Suit as on 4 th December 2023 quantified at Rs.1,73,23,096/-.
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113. The expression "costs" in Section 35 of the CPC would be a reasonable cost relating to the fees and expenses of the witnesses incurred, legal fees and expenses incurred and other expenses incurred in connection with the proceedings. The Section stipulates that the general rule is that the unsuccessful party will be ordered to pay costs to the successful party and any deviation from the said general rule will require the Court to make an order recording reasons in writing for the said deviation.
114. The said schedule of costs contains the legal fees of the Advocate for the Plaintiff / Senior Counsel / Counsel as well as the Court Commissioner. The Suit is a commercial dispute. I have also perused the schedule / statement of costs statedly incurred by the Plaintiff during the course of proceedings annexed as Exhibit C to the written submissions of the Plaintiff and I am of the view that the Plaintiff be granted costs of Rs.1,73,23,096/- as per the said schedule of costs as incurred by the Plaintiff, in as much as, they appear to be reasonable in the absence of any contrary material being brought to my notice.
115. The Defendant has sought to raise a plea of fraud and / or misrepresentation. The Hon'ble Supreme Court in the case of AVK/Kanchan Dhuri/Nikita Gadgil/KSG 70/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc Ranganayakamma and Another vs. K.S.Prakash and Others (supra) has while relying upon Order VI Rule 4 of the CPC held that when fraud is alleged, the particulars thereof are required to be pleaded. Paragraphs 39 and 40 of the said decision are usefully quoted as under:
"39. Another aspect of the matter cannot also be lost sight of. Order 6 Rule 4 of the Code of Civil Procedure reads as under :
"4. Particulars to be given where necessary-- In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, willful default, or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading."
40. When a fraud is alleged, the particulars thereof are required to be pleaded. No particular of the alleged fraud or misrepresentation has been disclosed."
116. The Hon'ble Supreme Court in the case of Placido Francisco Pinto (D) by Lrs. and Another vs. Jose Francisco Pinto and Another (supra) has held that in all cases in which a party alleges misrepresentation, fraud or undue influence, their pleadings shall state the particulars with dates and items an if the pleadings / evidence are not indicative of any instance of fraud / misrepresentation, the plea cannot be orally argued. In the written statement, as can be seen, there are no pleadings of fraud or misrepresentation much less any AVK/Kanchan Dhuri/Nikita Gadgil/KSG 71/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc particulars. Admittedly, no issue of fraud and/or misrepresentation has been framed. Moreover, the plea of fraud and/or misrepresentation is sought to be raised for the first time at the stage of final arguments without any pleadings or supporting particulars. Accordingly, the said plea bereft of any pleading or requisite particulars as required under Order VI Rule 4 of the CPC is only to be rejected as untenable. In view of what has been held as above, the reliance placed on the decision of the Hon'ble Supreme Court in Manmohan Nanda v. United India Insurance Co. Ltd. & Anr. (supra) does not lead any assistance to the case of the Defendant.
117. The Defendant has also alleged breach of Clause (2) of the Insurance policy viz. disclosure of fact. The ground of repudiation is that the Plaintiff refused to accept barter exchange of goods which implies that the Plaintiff informed the Defendant of the same. Therefore, as the Defendant was already informed of the same, the question of non-compliance of Clause (2) of the Insurance policy by the Plaintiff would not arise.
118. Clause (2) does not speak of any form of consultation with the Defendant but only speaks of keeping the Defendant informed which AVK/Kanchan Dhuri/Nikita Gadgil/KSG 72/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc has been done vide letter dated 4 th July 1994 (Exhibit D-1/5). There is no other clause which speaks of consultation either. In fact, the aspect of no prior consultation has been expressly dealt with and rejected by the Hon'ble Supreme Court in ABL judgment in paragraph 51 which is usefully quoted as under :
"51. From the terms of the contract, we have noticed in Clause (6), as amended by the addendum, consideration by way of barter of goods is not the sole consideration. The said clause contemplates alternate modes of payment of consideration, one of them being by barter of goods and the other by cash payment in US $. The terms of the insurance contract which was agreed between the parties were after the terms of the contract between the exporter and the importer were executed which included the addendum, therefore, without hesitation we must proceed on the basis that the first respondent issued the insurance policy knowing very well that there was more than one mode of payment of consideration and it had insured failure of all the modes of payment of consideration. From the correspondence as well as from the terms of the policy, it is noticed that existence of only two conditions have been made as a condition precedent for making the first respondent Corporation liable to pay for the insured risk, that is, (i) there should be a default on the part of the Kazak Corporation to pay for the goods received; and
(ii) there should be a failure on the part of the Kazakhstan Government to fulfill their guarantee. This is clear from the terms of the insurance contract read with the letter of the first respondent dated 8th September, 1993 wherein at Clause 3-A, it is stated : "Our liability will arise only after default has been established on the guarantee of the Ministry." From the above, it is clear both the grounds as put forth by the learned counsel for the respondent before us as well as in the two letters of AVK/Kanchan Dhuri/Nikita Gadgil/KSG 73/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc repudiation issued by the first respondent are unsustainable.
In our opinion, the first respondent insured the export risk of the appellants in regard to the non payment of the consideration for the tea exported whether it arose from the non fulfillment of the barter clause or for the non fulfillment of the cash payment clause. The argument advanced on behalf of the respondent that the appellants refused to accept the barter by goods offered by the Kazak Corporation which amounted to a default under the contract on the part of the appellants has no legs to stand in view of the clear language of the amended Clause 6 of the agreement which as noted above, states that the obligation of the buyer, namely, Kazak Corporation to pay for the goods received by it in US $ arises when payment by barter fails for "any reason whatever". The use of the words "any reason whatever" in the said amended clause includes the reasons of refusal by the appellants to accept the goods offered in barter. On the face of the said language of amended clause, there could be no room for two opinions at all in regard to the liability of the first respondent to pay for the loss suffered by the appellants even in cases where payment by barter fails at the instance of the appellant. The learned counsel for the respondent contended for a correct interpretation of this amended clause and the other clauses of the contracts i.e. The contract of export and the contract of insurance between the parties there is need for oral evidence being led without which a proper interpretation of this clause is not possible, therefore, it is fit case in which the appellants should be directed to approach the Civil Court to establish their claim. We find no force in this argument. We have come to the conclusion that the amended Clause 6 of the agreement between the exporter and the importer on the face of it does not give room for a second or another construction than the one already accepted by us. We have also noted that reliance placed on Sub-clause (d) of the proviso to the insurance contract by the Appellate Bench is also misplaced AVK/Kanchan Dhuri/Nikita Gadgil/KSG 74/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc which is clear from the language of the said clause itself. Therefore, in our opinion, it does not require any external aid, much less any oral evidence to interpret the above clause. Merely because the first respondent wants to dispute this fact, in our opinion, it does not become a disputed fact. If such objection as to disputed questions or interpretations are raised in a writ petition, in our opinion, the courts can very well go into the same and decide that objection if facts permit the same as in this case. We have already noted the decisions of this court which in clear terms have laid down that mere existence of disputed questions of fact ipso facto does not prevent a writ court from determining the disputed questions of fact."
119. Therefore, the argument of the Defendant does not fall within the ambit of the clause because its repudiation is on the ground that the Plaintiff chose not to import the goods without prior consultation with ECGC.
120. The Defendant has also sought to raise a defence with respect to the bills not being accepted / discounted or that the original bills had not been provided. It is clear from Exhibit P-11 that the bills have been discounted as stated in the formal claim form of the Plaintiff certified by the bank. It is not even a ground of repudiation that the bills were not accepted or discounted or that the originals of the bills were not provided to the Defendant. In fact, the originals of the bills were not even demanded at the relevant time by the Defendant. Whatever AVK/Kanchan Dhuri/Nikita Gadgil/KSG 75/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc enquiries the Defendant had to make at the relevant time while considering the claim of the Plaintiff, it made and no objections were raised in respect of the bills not being accepted / discounted or that the originals of the bills had not been provided. Moreover, the defence of that the bills not being accepted / discounted or that the original bills not having been provided cannot, in my view, be raised for the first time after thirty years during the cross-examination of PW1.
121. With respect to the argument of the Defendant regarding subrogation, it is settled law that subrogation takes effect as a matter of law and as a matter of contract only upon payment of the claim amount under the Insurance policy. There could be no subrogation unless the Defendant first complies with its obligation to make the payment under the Insurance policy. The printed proforma of the claim form clearly supports this where the obligations mentioned therein arise only on payment by the Defendant (Exhibit P-11). In fact, the entire edifice of the argument of the Defendant based on the right of subrogation presupposes that the Defendant is liable to make payment and must make payment. This is the view of the Hon'ble Supreme Court in the case of Economic Transport Organization, Delhi vs. Charan Spinning Mills Private Limited and Another (supra) . Paragraph 20 of AVK/Kanchan Dhuri/Nikita Gadgil/KSG 76/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc the said decision is relevant and is usefully quoted as under :
"20. Section 140 of the Contract Act, 1872 deals with the principle of subrogation with reference to the rights of a surety/guarantor. It reads :
"140. Rights of surety on payment or performance.- Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that is liable for, is invested with all the rights which the creditor had against the principal debtor. "
122. There is also no dispute about the entitlement of the Defendant on payment of its insurance claim. In fact, on the other hand, if the contention is that by reason of the Plaintiff's alleged failure to take action, the Defendant has become entitled to repudiate the claim, then the same is only an afterthought as there is no such ground raised in the letter of repudiation by the Defendant. Accordingly, this submission of the Defendant also does not hold any water.
123. In view of the above discussion, the other contentions raised on behalf of the Defendant are rejected.
124. In view of the findings as above, Issue Nos 1 to 6 are are accordingly answered as follows:
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No. Issue Answer/Findings
1. Whether the issues arising in the Suit are finally decided by the Affirmative
Hon'ble Supreme Court in the matter of ABL International Ltd v. ECGC & others (reported in (2004) 3 SCC 553) as well as by the Appellate Bench of the Kerala High Court in the matter of ECGC v. Harrisons Malayalam Ltd in favour of ABL International Limited and Harrisons Malayalam Ltd?
2. If the answer to Issue No.1 is answered in affirmative then Affirmative whether the Plaintiff is entitled to a decree as prayed for in the Suit?
3. In the event of Issue Nos 1 and 2 being answered in the negative, Answered in favour whether the claim made by the Plaintiff is covered by the of Plaintiff as per Insurance Policy dated 22nd September 1992 (Exhibit A to the the above Plaint) and the letter of approval dated 7 th October 1993 read discussion. with the two addenda to the Contract dated 26 th August 1993 (Exhibits C and D to the Plaint) and that the Defendant is liable to make payment to the Plaintiff under the Policy and Cover?
4. In the event of Issue Nos. 1 and 2 being answered in the negative, Answered in favour whether the Plaintiff is entitled to the monetary claim made in of Plaintiff as per the particulars of claim to the Plaint or any other amount from the above the Defendant? discussion.
5. In the event of Issue Nos. 1 and 2 being answered in the negative, Answered in favour whether the Plaintiff is entitled to interest at the rate of 15% p.a. of Plaintiff as per on the monetary claim made in the particulars of claim? the above discussion.
6. What order? Suit is Decreed AVK/Kanchan Dhuri/Nikita Gadgil/KSG 78/79 ::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 ::: 1-COMSS 2030 OF 1996.doc
125. On the basis of the findings recorded above, I hold that the claim of the Plaintiff is covered by the Insurance Policy dated 22 nd September, 1992 and the letter of approval dated 07 th October, 1993 and the Plaintiff is entitled to the monetary claim as per the revised Particulars of Claim at the interest rate of 15% p.a. along with costs as above computed.
126. Accordingly, the following order is passed:-
ORDER i. Suit is decreed in terms of prayer clause (a), which reads thus:
"(a.) That the Defendant be ordered and decreed to pay to the Plaintiff a sum of RS.18,43,67,961/- as per the revised particulars of claim hereto annexed and marked as Exhibit-T1 with further interest on Rs. 4,39,05,715.31 at the rate of 15% p.a. from 16th September, 2014 till payment and costs of the suit."
ii. In view of the above discussions in Paragraphs No. 111 to 114, it is clarified that Costs of Rs.1,73,23,096.00/- be paid by the Defendant to the Plaintiff.
iii. Decree be drawn up expeditiously.
(ABHAY AHUJA, J.)
Digitally
signed by
NIKITA
NIKITA YOGESH
YOGESH GADGIL
GADGIL Date:
2025.06.21
17:57:29
+0530 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 79/79
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