National Consumer Disputes Redressal
M/S. Amira Foods (India) Ltd. vs National Insurance Co. Ltd. on 7 January, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI ORIGINAL PETITION NO. 23 OF 2000 WITH IA/7977/2014 (For filing Additional Documents) 1. M/s Amira Foods (India) Ltd. 25, Abul Fazal Road Bengali Road, New Delhi 110 001 2. M/s. Prodimporting Rice Ukraine 25, Saperno Slobodskaya Kiev, Ukraine Through Sh. D.K. Rastogi, Constituted Attorney 25, Abul Fazal Road Bengali Market New Delhi 110 001 Complainants Versus National Insurance Co. Ltd. Flat No. 101-106, 1st Floor BMC House, N-1, Connaught Place New Delhi 110 001 Opposite Party BEFORE: HONBLE MR. JUSTICE J. M. MALIK, PRESIDING MEMBER HONBLE DR. S. M. KANTIKAR, MEMBER For the Complainants : Ms. Meenakshi Arora, Sr. Advocate With Ms. Payal Chawla, Ms. Neha Tanwar, Mr. Vasav Anantharaman & Mr. Maneesh Gumbar, Advocates For Opposite Party : Mr. Joy Basu, Sr. Advocate With Mr. Maibam N. Singh & Mr. Madhurendra Kumar, Advocates PRONOUNCED ON 7th JANUARY, 2015 O R D E R
JUSTICE J.M. MALIK
1. This is perhaps, the oldest case of this Commission. The case was filed on 30.12.1999, but was registered on 06.01.2000. We have heard the counsel for the parties. They took about 7-8 hours, in concluding the arguments. The attainment of justice is the highest human endeavor even knowing well that Justice is not to be taken by storm, she is to be wooed by short advances.
2. The case of the complainant is this. M/s. Amira Foods (India) Ltd., the complainant No.1, is a Public Limited Company and transacts the business of procuring and exporting of rice and other food grains to buyers in foreign countries. Mr. Anil Chanana, is the Chairman of the said Complainant No. 1. M/s. Prodimporting Rice Ukraine, the complainant No.2, is also engaged in the business, inter alia, of import and export of food grains and more particularly of rice and is a Ukraine based Company. Sh.D.K. Rastogi, is its Power of Attorney, vide Annexure P-1.
3. The complainant No.2 had placed an order for import of rice from India, on complainant No.1, the consignor through M/s. Rasl Enterprises Inc., Arlington, USA and pursuant to the same, the complainant No.1 arranged to supply 2000 Metric Tonnes of Indian White Long Brain Double Polished Rice packed in PP Bags of 50 kgs, net each, and another cargo of 20 Metric Tonnes of Indian While Basmati Double Polished Rice packed in 5 kgs and 10 kgs bleached jute bags, vide copies enclosed as Annexure P-2 (colly).
4. The complainant No.1 insured the said cargo with the National Insurance Company Ltd., the Opposite Party (OP). In its marine cargo policy, dated 02.02.1998, issued in two parts covering the consignments Per MV BAYRAM ABI under Bills of Lading from Kandla to Nikolaev (Ukraine) insured for USD 719400 and USD 20900, respectively. Copies of the policies have been enclosed as Annexure P-3. The said policies covered the consignment against all risks, including the risk of theft, pilferage, non-delivery, shortage, etc.
5. The said insurance policy is subject to Institute Cargo Clauses A (ICC-A) which was attached to the policy. The said insurance under Institute Cargo Clauses A, attaches from the time the goods leave the warehouse at the place of inception of insurance and continues during the course of transit until delivery of the consignees or other final warehouse subject of Coast to certain limitation mentioned in the clause. These consignments were loaded at Port of Kandla vide two Bills of Lading which are annexed as Annexure P-4 (colly).
6. The Bill of Lading describes the Port of Discharge as Nikolaev (Ukraine). The said commodity was loaded on to the ship in good order and condition. The Bills of Lading clearly indicated that the freight was prepaid at the time of loading of the materials on to the ship. The cargo of the complainants left the port of Kandla on 20.02.1998, however, some other cargo belonging to some other Port, was discharged at Hodaidah between 27.02.1998 and 05.03.1998. Thereafter the Vessel sailed for Bourgass and reached there, on 19.03.1998. There was some dispute between the ship owners and the receivers/port authorities and the Vessel was upheld for some time at the port of Bourgass.
7. The OP confirmed that in the event the cargo is unloaded at the port of Bourgass, the consignment will be held covered for onward journey upto Nikolaev, the port of destination. Copy of the letter has been placed as Annexure P-5.
8. On 30.04.1998, the Vessel was reported to have sailed for port of destination Nikolaev, but at 10.15pm, it was detected that intermediate propeller shaft bearing, running hot and when the defect could not be rectified, the main engine was stopped. It was found that the lower housing drain cock screwed brass blank plug had fallen out and oil drained out. The Chief Engineer of the Vessel opined that if engine was run, then damage would probably be sustained to the main thrust and stern tube bearings. It consulted the owners of the Vessel, and was decided that the Vessel MV BaiRam Abi should be towed away to safety. The Salvage Agreement dated 02.05.1998 was entered into between the MV Bayram Abi, the said Vessel and MT Yarimca, the salvage vehicle which was sailing in the vicinity. Copy of the Salvage Agreement has been placed on record as Annexure P-6. The Vessel thereafter commenced its side towage on 02.05.1998 with the help of Vessel MT Yarimca. The Vessel Bayram Abi containing the Insurance Cargo was then anchored at the port of Karaderiz Eregli, Turkey. At the port, at the workshop considered the bearings to be beyond suitable repair and a set of new shells from the manufacturers in Japan was ordered.
9. In the meantime, the owners of the salvage Vessel filed an action in the Court of Eregli, Turkey, against the Vessel Bayram Abi for detention of the Vessel including cargo on it and determination of salvers remuneration. The order passed by the court on 06.05.98 has been placed on record as Annexure P-7. The Master of Vessel MV Bayram Abi subsequently declared General Average and complainant informed this fact to the OP vide its letter dated 07.05.98, copy of which has been placed on record as Annexure P-8. The OP was advised that the Tug Owners had demanded a sum of USD 5 million as security deposit from the cargo. However, OP displayed surprise and sought for the information vide copy of the letter dated Annexure P-9.
10. Complainant No.2, vide its letter dated 22.05.1998, asked the OP to take action to clear the situation as enough time had elapsed. After negotiations, the amount of security for cargo was reduced to USD 5 million, 20% of which was required by the Salver in the form of security from the cargo interests. Copies of said letters have been placed on record as Annexure P-10 (Colly). On 23.05.1998, the complainant No.1 and consignors advised the OP that since General Average was declared, it was the responsibility of the OP to provide necessary security to protect the cargo and ensure proper delivery. The deadline for deposit of security was given as 22.05.1998 by the Salvers. This information was given to OP by its own agents in UK, i.e., M/s. W.K. Webster & Co., London, on 24.05.1998. Copies of said letters have been placed on record as Annexure P-11 (Colly). On 29.05.1998, vide letter marked as Annexure P-12, Webster advised the OP to provide reasonable security to Salvers and to deal with the salvage claim directly for minimizing the OPs exposure to salvage. However, OP failed to provide the same. Permission was granted by the ship owners to inspect to inspect the cargo because enough time had elapsed, but this option was not given to the complainants by the OP. A Surveyor from the Salvage Association, London having been appointed by Webster inspected the ship on 30.06.1998 and satisfied himself that the salvage services were engaged by the ship for adequate reasons. The main controversy swirls around the question, who was to give the security, the OP or the Complainant No.1?.
11. It is alleged that the OP is liable under the insurance policy for contribution to salvers remuneration, but the OP continued to evade to discharge its responsibility leaving the cargo to continue to suffer deterioration under detention. On 09.06.1998, Webster informed OP that OP was liable for its proportion of the repairs of the Bayram Abi, in the event that General Average was legitimate. Copy of the said letter has been placed on record as Annexure P-13. The complainant No.1 advised Webster that the Turkish Court has decided that a Bank Guarantee for USD 140,000 should be provided as salvage security. Webster advised OP to furnish the security, vide its letter dated 09.07.1998. However, OP did not furnish the security. Copy of the said letter has been placed on record as Annexure P-14.
Webster also cautioned the OP to do the needful. Thereafter, to meet the requirements of Webster, complainant No.1 promptly sent all the required documents as per letters dated 10.07.1998 and 14.07.1998, copies of which have been placed on record as Annexure P-15 (Colly).
12. On 16.07.1998 and again on 21.07.1998, vide copies Annexure P-16 (Colly), the complainant No.1 again wrote to OP requesting there in to deposit USD 139,984 in cash or give an internationally valid insurance letter to remove the salvers lien on the cargo so that arrangements may be made for movement of cargo from EIregli to Nikolaev. On 30.07.1998, the complainant No.2 sent a fax message to Webster, received from UFUK stating that the ships insurers had granted their part of salvage liability but cargo interests had failed to do the like and hence the Vessel is now proceeding to Mersin where the cargo would be unloaded under custody. However, OP did not make an effort to secure release of insured cargo. On 30.07.1998, Webster wrote to the OP seeking their confirmation that they would give instructions to their Bank to issue Bank Guarantee for up to USD 140,000. Copies of letters have been placed on record as Annexure P-17 and P-18, respectively. On 31.07.1998, the Complainant wrote to OP stating that since the Vessel was declared general average, it is the responsibility of the Insurance Company to provide guarantees as required and requested for their immediate action to protect the cargo. Copy of letter dated 31.07.1998, has been placed on record as Annexure P-19. On the same day, i.e. 31.07.1998, Webster also wrote to OP to issue Bank Guarantee, copy of which has been placed on record as Annexure P-20.
13. On 07.08.1998 the OP wrote to Complainant No.1 stating that it appears that the position regarding liability is extremely doubtful and suggested that they act as uninsured and provide their own guarantee. Copy of said letter has been placed on record as Annexure P-21. On 10.08.1998, the complainant No.1 protested against the approach of OP and made it clear that OP was liable for salvage contribution and it should pay the same, immediately.
Copy of the said letter has been placed on record as Annexure P-22. However, since no steps were taken by OP, complainant No.2, on 07.08.1998, lodged a claim for total loss of cargo making OP liable to settle the claim. On 10.08.1998, complainant No.2 again sent a letter to OP giving details of the claim in the sum of ₹2,88,71,700/-.
On 10.08.1998, Webster also wrote to OP confirming the amounts payable by it in respect of salvage claim.
14. It is further stated that Complainant No.2, being the consignee had approached this Commission through Original Petition No.217 of 1999. However, this Commission observed that the complaint could not be maintained in that form as complainant No.2, consignee, was not a consumer and dismissed the same, as withdrawn, as requested by it. It is further explained that M/s. Rasl Enterprises Inc., USA, through whom the supply order was placed on complainant No.1 has paid the full value of the entire consignment to the complainant No.1. The certificate relating to it dated 05.02.1999 has been placed on record as Annexure P-27. In turn, the complainant No.2 paid to M/s. Rasl Enterprises Inc. USA, the full value of the insured consignment. Copy of the letter of M/s. Rasl Enterprises Inc., dated 05.01.1999 has been placed on record as Annexure P-28. It is submitted that the right, title and interest in the subject consignment and the documents pertaining thereto vest in the complainant No.2, as endorsed consignees.
15. It is stated that the complainants are consumers, within the meaning of Section 2(1)(d) of the CP Act, 1986. The complainant No.1 had already paid the requisite premium to OP in respect of insurance policies. The said premium was realized by Complainant No.1 in an approved manner from the complainant No.2. The insurance was also arranged for the benefit of complainant No.2. The Bills of Lading were endorsed in blank.
The value of consignments stand paid to the complainant No.1 and hence complainant No.2 has the right to institute this action. The OP has failed to discharge its liability as per the contract of insurance and also failed to act upon its duty. It also unreasonably allowed the insured cargo of food grains to lie in the ports for a considerable time, which caused deterioration in its value. It also failed in meeting its obligations under ICC-A of the policy for salvage charges and General Average and made the disposal of the cargo inevitable.
16. Ultimately, this complaint was filed before this Commission, on 30.12.1999, with the following prayers :-
1) A sum of ₹ 3,14,84,959/-
(equivalent to USD 740,300 @ ₹ 42.53) being the insured value of the rice shipped but not delivered at destination.
2) Interest @ 18% p.a. on ₹ 3,14,84,959/- from 14.09.1998 being the date of lodging the claim upto the date of this petition and thereafter upto the date of realization.
3) A sum of ₹ 10,00,000/- towards compensation for mental harassment and agony caused to the complainants.
4) A sum of ₹ 1,67,390/- towards expenses incurred in meeting the requirements of OP and their agents, M/s. Webster from time to time.
5) ₹ 50,000/- towards costs of this action, and
6) Such other and further relief which in the opinion of your Lordships may be deemed just and proper, for which act of kindness the Complainants shall ever pray.
DEFENCE :
17. The OP hotly contested this case. It has listed the following defences. Firstly, it has admitted that the said consignment was insured by it. Later, it has almost admitted the story recording the movement of the Vessel, advanced by the complainant. On 02.05.1998, the Salvage Agreement was entered into between MT Yarimca and MV Bayram Abi, which was executed on the basis of No cure, no Pay, Turkish Maritime Organisationship Salvage type of contract which was to be taken as an integral part and attachment of the said Salvage Agreement. It was further submitted that it appears that the salvage remuneration and charges were to be determined and settled by arbitration in Istanbul. The owners of the Salver Vessel filed an action in the court of Eregli, Turkey, against MV Bayram Abi for detention of the Vessel, including the cargo and determination of Salvers remuneration. The court passed an order on 06.05.1998 and granted the right of pledge and detention of Bayram Abi and her cargo in faovur of the owners of Salvers Vessel and it was also stated that the fee amounting to Turkish Lira 130,00,000 be collected from the Bayram Abi and give to the owners of Salver Vessel. The Master of the Vessel MV Bayram Abi declared General Average vide its letter dated 07.05.1998 as communicated by the complainant to the insurance company. It has also referred to letters dated 22.05.1998, 23.05.1998, 09.06.1998, 11.06.1998, 15.06.1998, etc.
18. It is averred that the Surveyors report dated 29.07.1998 submitted by the Salvage Association which conducted the survey of MV Bayram Abi on Board, is an important piece of evidence. The Head office of the Insurance Company vide its communication dated 06.08.1998 addressed to M/s. Amira Foods, observed that on perusal of various correspondence from Webster that the position regarding the liability was extremely doubtful.
It was assured that the complainant should act as if uninsured and provide the necessary Bank Guarantee to the Turkish Court through Webster, London. The complainant was required to get assistance from Websters. It was also specifically mentioned that claims, if any, would be examined only after the receipt of full details from the assured as well as Websters, regarding the casualties, on 06.08.1998. Copy of the letter dated 06.08.1998 has been placed on record as Annexure A. The OP also gave its clarification vide letter dated 21.08.1998, copy of which has been placed on record as Annexure B.
19. On 10.06.1999, Webster & Co., informed that the time for action against the ship owners is due to expire on or around 01.07.1999 and if the assured failed to take appropriate action to protect its position, they may prejudice their right to recovery. The same letter was followed by another reminder by Webster, on 21.02.2002. Thereafter, correspondence went on between the parties.
20. Again, this is not a consumer dispute. The amount already stands paid by the buyers.
The insurance policy specifically states that the insurance shall not inure to the benefit of the carrier or other bailee. The claim is not payable under Clause 2 of the ICC-A, for ostensible reason the Master of Bayram Abi declared General Average. The question of declaration of General Average was not appropriate and the break down was neither genuine nor was it something which could not have been easily repaired on Board, within a few hours. Consequently, it was unlikely that the adventure was of a fortuitous nature. Since the declaration of General Average was inappropriate, therefore the question of furnishing Guarantee did not arise.
21. Again, the ship which was apparently undergoing repairs was suddenly able to sail when the arbitration award came, the findings of which were, however, never communicated to the cargo interest. The question of providing security by the insurance company does not arise. According to Section 66 of the Marine Insurance Act, 1963, in this case, no average adjuster was appointed. Consequently, the OP does not become liable. It was for the complainant to provide the security. The information was sent to the insurer at appropriate time. The report sought by the complainant from Mr. A.G. Scott, who appears to be a Specialist in General Average Claims, also supports the case of the OP, but it is surprising to note that the complainant did not file the copy of the letter written to Mr. A.G. Scott. This is a suppression of fact.
All the letters sent by Webster support the case of the OP. The Bills of Lading clearly states that the same shall be adjusted / settled according to York-Angwerp Rules in London unless another place is agreed in the Charter. The complainant has violated the clauses of insurance policy, being clause Nos. 16, 17 and 18. The complainant failed to take measures to minimize losses and it did not act prudently, as advised by the insurer to preserve the cargo by furnishing the security which it did not do. The complaint is liable to be dismissed.
SUBMISSIONS AND FINDINGS:
22. We have heard the counsel for the parties, at length and perused their synopses. The OP has raised a number of objections. The following points are to be adjudicated by this Commission.
A) Whether, the complainants are consumers, under the C.P.Act, 1986?.
B) Whether, this Commission is barred by the principles of res judicata?
C) Whether, this case entails complicated and intricate questions of law and facts and whether, this case should be relegated to the Civil Court?
D) Whether, in absence of an Adjustor and his report, the present complaint is not maintainable?
E) Whether, the complainants are entitled to the claim sought in the complaint case?
23. We will decide these points, one by one.
A) Whether, the complainants are consumers? :
The key question which falls for consideration is whether the complainants have the characteristics of a consumer. The Counsel for OP pointed out that previously, the complainant No.2 of this case had filed a complaint case before this Commission. Para No. 16.1 of the present complaint is reproduced here as under :-
That the complainant No.2 being the consignee had approached this Honble Commission for redressal of its grievance with an original petition No.217 of 1999. This Honble Commission however observed that the petition could not be maintained in that form as the complainant No.2 consignee was not the consumer. The complainant No.2 therefore requested to dismiss the petition as withdrawn. The present petition is being filed by both the consignor, complainant No.1 who had effected the insurance policy with the opp.party and the consignee, Complainant No.2, who had secured the ownership rights over the subject matter on payment of the cost of goods to the consignor, complainant No.1, who had then endorsed through their bankers, the documents in favour of the consignee, complainant No.2.
Again, Para 17.1 of the said complaint, reads as under :-
That in turn the complainant No.2 have paid to M/s. Rasl Enterprise Inc., USA, the full value of the insured consignment. A copy of the letter dated 05.01.1999 of M/s. Rasl Enterprise Inc. is enclosed as Annexure P-28. It is submitted that the right, title and interest in the subject consignment and the documents pertaining thereto vest in the complainant No.2 as endorsed consignees.
Last, but not the least, para No.19 of the same complaint, further, reads, as under :-
That the complainants are consumers within the meaning of Section 2(1)(d) of the Consumer Protection Act. The complainant No.1 had paid requisite premium to opp.party in respect of the Insurance policies. The said premium was realized by complainant No.1 in an approved manner from the complainant No.2. The insurance was arranged also for the benefit of the complainant No.2. The Bills of Lading were endorsed in blank. The value of the consignments stands paid to the complainant No.1 and hence the complainant No.2 have a right to institute this action.
24. The learned counsel for the OP laid emphasis on the fact that this Commission, in the previous complaint bearing No.217 of 1997, filed by the complainant No.2, opined that the complainant No.2, is not a consumer and therefore, the same was dismissed as withdrawn. However, it appears that all the details were not put before the then Bench.
Copy of the order dated 03.11.1999, passed in OP 217/1997, has been placed before us, which reads as under :-
O R D E R The counsel for the complainant seeks permission to withdraw the complaint. The permission sought for is granted. Hence, the original petition is dismissed as withdrawn.
Sd/-(Suhas C. Sen)J Sd/- (R. Thamarajakshi) Sd/- (S.P.Bagla) Sd/- (C.L. Chaudhary) Sd/- (J.K. Mehra).
25. The learned counsel for the OP vehemently argued that no loss has occurred to the complainant No.1. Complainant No.2 has already been held that he is not a consumer. Consequently, by no stretch of imagination, the complainants can be said to be consumers.
26. For the following reasons, all these arguments must be eschewed out of consideration. Our attention was invited towards The Marine Insurance Act, 1963. Section 52(3) of the Marine Insurance Act, 1963, reads, as follows :-
52. When and how policy is assignable (1) A marine policy may be transferred by assignment unless it contains terms expressly prohibiting assignment. It may be assigned either before or after loss.
(2) Where a marine policy has been assigned so as to pass the beneficial interest in such policy, the assignee of the policy is entitled to sue thereon in his own name and the defendant is entitled to make any defence arising out of the contract which he would have been entitled to make if the suit had been brought in the name of the person by or on behalf of whom the policy was effected.
(3)A marine policy may be assigned by endorsement thereon or in other customary manner.
The sub-section (3) speaks of two forms
(i) by endorsement thereon or (ii) in other customary manner.
27. It appears that this fact was not brought to the notice of the previous Bench, which dealt with the case of the complainant No.2, earlier. This is also note-worthy that this question was never adjudicated upon by that Bench, finally. It clearly goes to show that the complainant No.1 has the right to assign the insurable interest in favour of complainant No.2. In this context, the judgment of Honble Apex Court in New India Assurance Co. Ltd. G.N. Sainani, 1997 (6) SCC 383, carries infinite importance. Para Nos. 14 & 15 of the said judgment, read, as under :-
14. The question that arises is if the assignee in the facts and circumstances of the present case could be said to be beneficiary so as to stake his claim under the policy. If we see the definition of "service" as provided under the Act it means and includes the provision of facilities in connection with the insurance as well. The complaint under the Act in the present case has to show that the service hired or availed of or agreed to be hired or availed of by the complainant suffers from deficiency in any respect. The complainant, of course, means a consumer and as we have seen above includes any beneficiary. "Deficiency" has been defined in clause (g) of section 2 of the Act as Under:
"(g) deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service."
15. The interest of the insured must exist in the case of marine insurance at the time of loss and the assured must have some relation to or concern in, the subject of the insurance. The service which the insurer offers is with reference to the goods and the insurable interest has to be in respect of the goods. To put it in other words, insurable interest in property would be such interest as shall make the loss of the property to cause pecuniary damage to the assured. To come under the scope of the word "consumer" as defined in the Act it should be possible for the assured to assign his insurable interest in the goods subject matter of the policy for the assignee as a consumer to enjoy; the benefit of the policy with reference to the goods which are insured. What has been assigned in the present case is the amount of loss suffered by the assured on account of short handing of the goods, meaning thereby that right to recover the loss is assigned to the assignee and not that any service is to be rendered under the policy by the insurer with reference to the goods. We are loading at the whole thing from the point of the consumer under the Act with reference to certain relevant provisions of the Marine Insurance Act. Unless the assignee has some insurable interest in the property subject matter of the insurance the time the policy terminates he cannot be beneficiary of any service required to be rendered by the insurer under the policy. Admittedly it was much after the goods had reached the port of destination and appropriated that the policy was transferred by the insured to the complainant to recover the amount of loss suffered by the assured. Thus, what is assigned is in effect a mere right to sue for the loss on account of short handing of the goods. It is difficult to see as to how it could be said that the respondent, that is the assignee. is the beneficiary of any service under the policy. He may, however, have right to recover the loss from the insurer by filing a suit in a civil court but certainly to seek remedy under the Act he must be a consumer. If the policy had been assigned during the course of its validity and before the goods were appropriated after their arrival at the port of destination, it could perhaps be said that the assignee had beneficial interest therein but not otherwise. By not extending the policy beyond a particular period. that is 60 days the insurer acted within the terms of the contract of insurance and on that account it could not be said that there was deficiency in service to be provided by the insurer under the policy.
28. The complainant No.1, the consignor, had insured the cargo with the OP on 05.02.1998 and on 21.02.1998. The said Bills of Lading in respect of the insured cargo were consigned to order and were blank endorsed. The complainant No.1 vide its letter dated 05.02.1999 issued a certificate to the following effect :-
To Whomsoever it may Concern This is to certify that Amira Foods (India) Ltd., 25, Abul Fazal Road, Bengali Market, New Delhi, have received payments from M/s. Russel Enterprises Inc., 333, South Glebe Road, 321, Arlington VA, 2204, USA, in respect of our Invoice No. AF/EXP/238/97-98, dated 31.01.1998 and AF/EXP/245/97-98, dated 14.02.1998 and goods shipped under B/L No. KDL/NIK/001 AND Kdl/nik/002 per M.V. BAYRAM ABI on or about 21st Feb., 1998.
On titles of the goods and on the documents in respect thereof vest absolutely in M/s. PRODIMPORTTORG RICE 25, SAPERNO SLOBODSKAYA, KIEV, UKRAINE.
29. The complainants in their book of Compilation for Convenience, referred to the following fax message, dated 04.08.1998, which runs as follows :-
AMIRA FOODS (INDIA) LTD.
25, Abul Fazal Road, Bengali Market, New Delhi TO:
W.K. WEBSTER & CO.
Sub : BAYRAM ABI TOWED TO EREGLI We refer your Fax No. JKS/TAG/98 GA 02077, dated 3rd August, 1998. We give the information as desired by you:
1.
The Original Bill of Lading No. KDL/NIK/001 dated 05.02.1998 for 2000 MTs of Indian White Long Grain Double Polished Rice PR 106 (15% broken) and KDL/NIK/002, dted 21st Feb., 1998, for 20 MTs of Indian Basmati Rice are in the possession of Prodimpporttorg Rice, Nikolaeve port, Suite 213, 34, Lesi Ukrainky Blvd, Kiev, Ukraine, Contact Person: Mr. Alexey Khvorostiany, Ph:
00-380-44-2653297 / 2659505, Fax : 00-380-44-2652804.
2.
B/Ls were consigned To Order and were blank endorsed.
Hope above information will meet your requirement.
We look forward to receive your further advice with regard to steps taken to protect our cargo.
Thanks and best regards Sd/-
D.K. Rastogi CC: Mr. Alexey Khvorostiany.
30. Counsel for the Insurance Company, OP, at the time of arguments, objected that this was an additional document, produced by the complainant, in the book, by name Compilation for Convenience.
However, it is not so, as this document was produced at the start of the arguments. The arguments continued for more than a week. No rebuttal evidence was produced by the OP in this respect at that time. The OP did not raise any objection that this fax message was wrong or manipulated or forged. This fax message was sent to the agent, W.K. Webster & Co., UK, of the OP.
31. This goes to show to prove that this case was consigned by the complainant No.1, but insured interest to complainant No.2. Last, but not the least, this case is supported by the evidence of Mr. Anil Chanana, the Chairman of complainant No.1, which also stands unrebutted on record.
32. It must be borne in mind that the risks covered under the Policy are clearly mentioned at 8.3 of the Institute Cargo Clauses (A), as under :-
8.3 This insurance shall remain in force (Subject to termination as provided for above and to the provisions of Clause 9 below) during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transshipment and during any variation of the adventure arising from the exercise of a liberty granted to shipowners or charternors under the contract of affreightment.
33. In the case of J.Aron & Co. Vs. Miall, (1928) 31 LIL R ep242 (CA), it was held that the policy was not by way of blank endorsed as is customary in marine insurance but the endorsement is made by words, that the claim shall be paid to them. Scrutton LJ., thought that it has the effect of assignment.
34. On 04.08.1998, the complainant No.1 wrote to Webster stating that Bills of Lading were consigned to order and were blank endorsed. On 05.08.1998, Webster & Co. wrote to OP that ship owners who were discharging cargo were Mersin, leading to total constructive loss. The complainants were told to proceed prudent uninsured only on 07.08.1998 (despite 05/06.08.1998 being working days) after total constructive loss had occurred.
35. The counsel for the complainant has also referred to an authority of the Honble Apex Court, reported in Spring Meadows Hospital Vs. Harjol Ahluwalia, (1998) 4 SCC 39 at para 12.
36. It is thus clear that the insurance policy was on and the matters were yet to be decided. The assignment of insurance was made during the pendency of the insurance policy. We therefore hold that the complainants are qualified to be consumers, under Section 2(1)(d) of the C.P. Act, 1986.
37. B) Whether, barred by principles of resjudicata?
We are unable to countenance the argument urged by the counsel for OP, in this respect. First of all, the question, whether, the complainant No.2 is a consumer or not, was not finally adjudicated, by the previous Bench, in the previous complaint. He was permitted to withdraw the case. That question remained open.
Moreover, this complaint was filed by a different party. Complainant No.1 was added as a new party. This complaint cannot be said to be barred by principles of res judicata. There was no adjudication of any kind, previously.
38. C) Complicated and intricate questions:
Undoubtedly, this case entails complicated and intricate questions of law and facts. The counsel for the complainants took four hours and counsel for the Insurance Company (OP) took three hours in completing their arguments. This case consists of 7-8 files/Volumes. The pleadings run in papers, without numbers. The argument advanced by the counsel for OP in this context does seem attractive at the first sight, but loses its sheen, the moment examined on the touchstone of the latest Supreme Court order. Moreover, we cannot loose sight of the fact that this case was filed as back as in the year 1999-2000. About fifteen years have elapsed, till now.
39. The counsel for the OP has invited our attention towards an authority of the Honble Supreme Court reported in Synco Industries Vs. State Bank of Bikaner & Jaipur and others, (2002) 2 SCC 1, wherein it was held at para No.3, as under :-
3. Given the nature of the claim in the complaint and the prayer for damages in the sum of rupees fifteen crores and for an additional sum of rupees sixty lakhs for covering the cost of travelling and other expenses incurred by the appellant, it is obvious that very detailed evidence would have to be led, both to prove the claim and thereafter to prove the damages and expenses. It is, therefore, in any event, not an appropriate case to be heard and disposed of in a summary fashion. The National Commission was right in giving to the appellant liberty to move the civil court. This is an appropriate claim for a civil court to decide and, obviously, was not filed before a civil court to start with because, before the consumer forum, any figure in damages can be claimed without having to pay the court fees.
This, in that sense, is an abuse of the process of the consumer forum.
40. This must be borne in mind that the principal question of claim of ₹ 15.00 crores was involved for which the Honble Apex Court thought that elaborate evidence, cross-examination and Experts evidence may be required. Consequently, this authority is inapplicable to the other questions involved therein.
41. The counsel for OP further referred to the cases of this Commission, in Jaya Shree Insulators Vs. West Bengal State Electricity Board, Original Petition No.255 of 1997, decided on 19.04.2002, The Bombay Dyeing & Manufacturing Co. Ltd., Vs. Union of India, Original Petition No.66 of 2000, decided on 30.08.2000 M/s. Amareswara Agri-Tech Ltd. Vs. The National Insurance Co. Ltd. & Anr., Original Petition No. 375 of 2001, decided on 20.08.2002.
42. However, in two other authorities of the Honble Apex Court, the Honble Supreme Court, has taken the opposite view, i.e., (1) in Dr. J.J. Merchant & Ors. Vs. Srinath Chaturvedi (2002) 6 SCC 635, at Para Nos. 10, 11 and 12, Page 642, it was held, as under :-
10. In the aforesaid case, the Court was dealing with a contention that services rendered by the medical practitioners are not intended to be included in the expression "service" as defined in Section 2(1)(o) of the Act. That contention was negatived by the Court. Further from this decision, it is apparent that it is within the discretion of the Commission to ask the complainant to approach the civil court for appropriate relief in case complaint involves complicated issues requiring recording of evidence of experts, which may delay the proceeding. But the court has specifically held that issues arising in the complaints in such cases can be speedily disposed of by the procedure that is being followed by the Consumer Disputes Redressal Agencies.
11. Further, under the Act the National Commission is required to be headed by a retired Judge of this Court and the State Commission is required to be headed by a retired High Court Judge. They are competent to decide complicated issues of law or facts. Hence, it would not be proper to hold that in cases where negligence of experts is alleged, consumers should be directed to approach the Civil Court.
12.
It was next contended that such complicated questions of facts cannot be decided in summary proceedings. In our view, this submission also requires to be rejected because under the Act, for summary or speedy trial, exhaustive procedure in conformity with the principles of natural justice is provided. Therefore, merely because it is mentioned that Commission or Forum is required to have summary trial would hardly be a ground for directing the consumer to approach the Civil Court. For trial to be just and reasonable long drawn delayed procedure, giving ample opportunity to the litigant to harass the aggrieved other side, is not necessary. It should be kept in mind that legislature has provided alternative, efficacious, simple, inexpensive and speedy remedy to the consumers and that should not be curtailed on such ground. It would also be totally wrong assumption that because summary trial is provided, justice cannot be done when some questions of facts are required to be dealt with or decided.
43. Similar view was also taken in (2) Ganesh Polytechs Ltd. Vs. Transport Corporation of India, 2000 (10) SCC 418.
44. This must be borne in mind that this is a case against the insurance company. In Harsolia Motors Vs. National Insurance Co. Ltd., 1 (2005) CPJ 27 (NC) (First Appeal Nos. 159, 160 & 161 of 2004, decided on 03.12.2004), this Commission, held, at para Nos. 13, 25 & 26, as under :-
13.
In Halaburys Laws of England, vol. 25, 4th Edition, the origin and common principles of insurance is discussed and in paragraph 3 it has been mentioned that it is based on principle of indemnity. Thereafter, relevant discussion is to the effect that most of contract of insurance belong to general category of contracts of indemnity. In the sense that insurers liability is limited to the actual loss which is, in fact, proved. The contract is one of indemnity and, therefore, insured can recover the actual amount of loss and no more.
25. Further, from the aforesaid discussion, it is apparent that even taking wide meaning of the words for any commercial purpose it would mean that goods purchased or services hired should be used in any activity directly intended to generate profit. Profit is the main aim of commercial purpose. But, in a case where goods purchased or services hired in an activity which is not directly intended to generate profit, it would not be commercial purpose.
26. In this view of the matter, a person who takes insurance policy to cover the envisaged risk does not take the policy for commercial purpose. Policy is only for indemnification and actual loss. It is not intended to generate profit.
[EMPHASIS SUPPLIED] Thus, the third point (C) too, goes against the OP.
45. (D) Effect of Non-appointment of Adjustor/ Who is liable?:
The learned counsel for the OP vehemently argued that an Adjustor was not appointed in this case. However, he argued that he was appointed, but for some reasons, he could not pursue the matter. He contended that an Adjustor is like a Liquidator and the loss is to be given on the basis of General Average. He contended that in absence of an Adjustor, the OP cannot be saddled with any burden. It was further contended that it is incorrect to suggest that the claim is payable under Clause 2 of the ICC-A, which reads, as under :-
This insurance covers general average and salvage charges adjusted or determined according to the contract of affreighment and / or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause except those excluded in clauses 4, 5 , 6 and 7 of elsewhere in this insurance.
46. The counsel for the OP has submitted that the General Average is a continuous and a continuing process. The following submissions were made in this respect:-
3.2 (a) The vessel Bayram Abi while sailing towards Ukraine (Nikolaev) with the cargo insured M/s. Amira Foods developed some mechanical problem on 30.04.1998.
It entered into a Salvage Agreement with Vessel Yarimca on 02.05.1998 and was towed to theport of Eregil, Turkey.
(b) At the Port, she was put up for repairs and parts to be replaced were ordered from Japan since as per ship owners information to W.K. Webster & Co., the damages were beyond repair.
(c) On detention of Bayram Abi, owner of salvor vessel Yarimca filed an action against Bayram Abi for detention of cargo and vessel.
(d) Then quite unexpectedly for no ostensible reason, the master of Bayram Abi declared General Average.
(e) A General Average loss is caused by a General Average Act which may be a sacrifice or an expenditure. The essential features are :-
i) The common adventure must be threatened by a real and imminent danger, i.e., the adventure must be in jeopardy.
ii) The General Average act must be voluntary and intentional and not inevitable.
Here the word voluntary does not connote the ordinary sense. It is an act of will under the pressure of necessity.
iii) Sacrifice and expenditure must be prudent, fair and reasonable.
iv) The loss must be extraordinary in nature. This means losses which occur in the ordinary course of the voyage are not General Average losses. Normal measures taken to fulfill the contract of affreightment, are not General Average losses because it is duty of the Master to ensure due performance of the voyage.
(f) Therefore, the question of declaration of General Average was not appropriate and the breakdown was neither genuine nor was it something which could not have been easily repaired on board within a few hours. Consequently, it was unlikely that the adventure was of a fortuitous nature. Since the declaration of General Average was inappropriate, therefore, the question of furnishing guarantee did not arise.
(g) The ship which was apparently undergoing repairs (as per ship-owners version the repairs would still be taking a considerable time), was suddenly able to sail when the arbitration award came, the findings of which were, however, never communicated to cargo interests. It is reiterated that the Insurance Company is not liable for the alleged General Average loss and, therefore, the question of providing any security at any stage to the insured, did not simply arise.
(h) The policy terms to be read in conjunction with Section 66 of the Marine Insurance Act, 1963 which gives the true import and meaning of a General Average Claim.
(i) Whether General Average should have been declared or not is a necessary concomitant which requires to be adjudicated for saddling the claim upon the insurer. Otherwise, all claims would be claimed under General Average.
(j) As per the Salvage Association Report, That had the Chief Enginer (if necessary with instruction from Owners Technical Department ) applied extra lubrication to the damaged bearing such as a mixture of grease and cylinder oil and increased coaling by see water spray from the fire main, it should have been possible to operate at reduced speed to the nearest port of Varna.
47. It is contended that since no General Adjustor was appointed, therefore, the OP is not liable for any liability. It was further argued that in the instant case, the insurance company should provide security for cargo interests, but the complainant has filed a number of documents in the form of responses from different insurance companies, and whether, such insurance companies would provide such security, in the event General Average is declared. It was also pointed out that United India Insurance Company was one of the insurance companies which had given the security for some other cargo, like the OP, which did not furnish the security. It was further contended that all the letters written by the Agent of the complainant, Webster & Co. clearly go to show that the security was to be furnished by the complainant No.1 itself.
48. The attention of this Commission was also invited towards the opinion of Mr. A.G. Scott, United Kingdom, who appears to be a Specialist in General Average Claims whose observations are also on similar lines. It was further contended that the complainants made a vain attempt to withhold the letter written by them to Mr. A.G. Scott. Had that letter been produced, it would have thrown light on questions which were being asked by the complainant. In absence of said letter, the situation does not begin to jell. The said letter was not even produced when it was pointed out during the final arguments.
It was explained that the OP was bound to pay security after the appointment of an Adjustor. OP could have given the security as per the dictates of the Adjustor. Moreover, the stand set up by the OPs also stand corroborated from the letters of the Webster & Co.
49. It was also contended that the position regarding the liability of the OP becomes extremely doubtful and the complainant No.1 was informed that it should act as if uninsured and provide necessary Bank Guarantee to the Turkish Court. It was further contended that the complainants have violated the following clauses of insurance policy, being Clauses 16, 17 & 18. The complainant No.1 failed to take such measures for purposes of averting or minimizing of losses failing to reserve all rights and also failed to act with reasonable dispatch. The Advice of the insurance company was correct that the complainant should act as a prudent uninsured, expeditiously, in view of clauses 16 and 18 and preserve the cargo by furnishing security, which it did not do.
50. Lastly, it was pointed out that Bill of Lading clearly states under clause of General Average, that the same shall be adjusted, stated and settled according to York-Antwerp Rules in London, unless another place is agreed in the Charter.
Further, cargos contribution to General Average shall be paid to the Carrier, even when such average is the result of a fault, neglect or error of the Master Pilot or the crew.
51. The counsel for the OP has placed reliance on an authority reported in Joseph Watson and Son, Limited Vs. Firemens Fund Insurance Company of San Francisco, 2 KBD 355, wherein it was held as under :-
Under a mistaken assumption of fire, the captain of a ship caused steam to be turned into the hold to extinguish the supposed fire, and so damaged the plaintiffs goods. On a claim by them for a general average loss against the defendants, as insurers :--
Held, that the peril being in fact non-existent, there was no general average loss and, secondly, even if there were, that the defendants were not liable, as the loss had not been caused through a peril insured against, such a peril having never existed.
Held, further, that the words loss ..
incurred for the purpose of avoiding, or in connection with the avoidance of, a peril insured against in s. 66, sub-s 6, of the Marine Insurance Act, 1906, did not operate to cover such a loss as this, but only losses collateral to the main process of avoiding a peril insured against.
52. All these facts and circumstances have left no impression upon us. The facts of this case are unique and unparalleled. Such like incident has, perhaps happened, for the first time. There is a lot of correspondence between the parties and Experts. We will mention few of these, which are germane and throw light on facts and law on the present controversy. This letter was written by W.K. Webster & Co. to National Insurance Co. Ltd., New Delhi, and others, on 29th May, 1998, which reads, as under :
In other words, in this case the salvor has chosen to request security from cargo, and cargo must provide reasonable security and although the arbitration will be decided with an award against the ship-owner for salvage services the salvor can then enforce the proportion of award due from cargo against security provided by cargo interests.
Therefore, in practice since the salvors have chosen to request security from cargo interest, there seems little option but to provide a reasonable security to salvors, and to actively deal with the salvage claim directly if at all possible for the purposes of minimizing your exposure to salvage.
53. Another letter was written by W.K. Webster & Co. to National Insurance Co. Ltd. New Delhi on 9th July, 1998, which reads, as under:
With reference to the above, and further to previous faces, we understand from Amira Foods Tax of 8 July 1998 that the Turkish court has decided that a bank gurantee for USD 140,000.00 approximately should be provided as salvage security.
We would suggest that although USD 140,000.00 seems still a little on the high side, as it is provision of security rather than settlement of the claim, it does not seem wholly unreasonalble.
The second item is of course that if the vessel was arrested cargo interests would most likely be stuck with Turkish jurisdiction which may not be too favourable, particularly in view of the fact that the Ship-owner is Turkish as well and the Turkish system for hearing cargo claims may be or may not be sophisticated and fair.
54. Again, another letter was written by Prodimporttorg-Rice to National Insurance Company on 28th July, 1998, which reads, as under :
.. The latest position is that Court has issued order to either deposit USD1,39,984/- in cash or give an international valid Insurance Letter to remove the lien from the cargo. You have been requested to do the needful. However, we have not received your confirmation with regard to either deposit of the money or a letter given to the court as per its order.
You are aware that our cargo has been in the above vessel for more than 5 months and we are of the opinion; that it may very soon become unfit for human consumption. We hereby lodge our claims on Insurance Company .
55. The following instructions were given by the Salvage Association, on 29th July, 1998 :
The vessel left Kandla on the 20 February 1998, discharged one consignment of cargo at Hodeidah, 27 February to 05 March 1998, and continued on voyage, passing through the Suez Canal on the 10 March 1998, to arrive at Kumkapi Anchorage, Istanbul, on the 13 March 1998. Whilst at Istanbul the main engine No. 4 cylinder liner, which was cracked, was renewed and on the 18 March 1998, the vessel sailed for Burgas where she arrived and anchored later the same day. (NB Apart from the above mentioned cracked main engine liner. The vessels propulsion machinery had reportedly operated throughout the voyage without problem).
On the 22 March 1998, the vessel berthed but was not allowed to commence cargo discharge, as no original Bill of Lading had been issued to the vessel at Kandla, and on the 04 April 1998, the vessel shifted back to the anchorage. The vessel re-berthed on the 28th April 1998, i.e. once the problems had been sorted out with the Charterers, and the second parcel of cargo was discharged, completing on the 30 April 1997.
At 1350 hours on the 30 April 1998, the vessel departed on passage for Nikolaev but at 2215 hours the 3rd, Engineer on watch informed the Chief Engineer that the intermediate propeller shaft after bearing was running hot. On checking, the Chief Engineer found the bearing housing to be excessively hot to the touch and noted there was no lubricating oil splashing against the Perspex sight / inspection cover located on the top of the housing and at 2217 hours the main engine was stopped. The inspection cover was removed and the tearing shell white metal was found severely wiped and heat discoloured.
56. One letter was written by Alexey Khvorosstiany to Mr. Jai Sharma, on 30th July, 1998, with a copy to National Insurance, New Delhi, which reads, as under :-
You are requested to kindly take immediate actions to protect our interest. It will be appreciated if you could let us know the actions taken by you for protecting our interests.
At it is evident from their fax that unless guarantee is given, the Cargo will not be released/ discharged.
57. Another letter was written by W.K. Webster & Co. to National Insurance Company on 30th July, 1998, its para runs, as follows:-
As previously stated, our intentions are as follows:
Firstly to challenge the salvage itself and the responding lien.
However, you will appreciate it will be difficult to prove that the salvage was concocted, and therefore if we fail on that score, we may have to peruse a recovery against the BAYRAM ABI and/or her sister ship.
58. W.K.Webster & Co. wrote a letter dated 30th July 1998 to the National Insurance Co. Ltd., New Delhi, and to the Complainant No. 1, which reads, as under :-
.. We are of the opinion that this may be partially caused by our collective refusal to place a Bank Guarantee up until now because firstly a wording was not available and secondly fustorically the amount demanded was unreasonable. The amount has now even reduced although we are still unable to obtain a wording.
However, our Instanbul lawyers have advised that the Court at Eregli is inexperienced, and may be reluctant to provide a wording, and/or will tend to change their minds rather frequently which will make the process rather cumbersome. Therefore, they suggest the way forward is to have Principals confirm they will instruct their Bank to instruct a Turkish correspondent bank of theirs to authorize them to issue a Bank Gurantee pursuant to the draft supplied by Yamaner & Yamaner our lawyers in Istanbut, for upto USD 140,000.00 on behalf of Nationals insured cargo, and for an amount to be advised in respect of United Indias cargo.
59. Again, another letter was written by Amira Foods (India) Ltd., Complainant No.1 to OP-National Insurance Company, on 31st July, 1998, which reads, as under :-
As per the message sent to you, H & M Insurance have provided guaranty on behalf of the Vessel and thereafter the Owner of the Vessel and Salver reached to an agreement removing the lien on the Vessel. The Vessel moved from Eregli to Istanbul and now on the way to Mersin as already communicated to you to discharge our rice cargo into the warehouse, due to failure in providing the guaranty on behalf of the cargo.
60. Next letter was written by W.K. Webster & Co. to National Insurance Company, OP, on 31st July,1998, that Bank Guarantee should be deposited to the Court urgently, or alternatively, cash deposits, in order that these awards can be secured. .
61. The complainant No.1 faxed the following message to W.K. Webster & Co:
1. The original bill of lading no. kdl/nik/001 dated 5.2.98 for 2,000 MTS of Indian White Long Grain Double Polished Rice per 106 (15% broken) and kdl/nik/002 dated 21st feb.,98 for 20 MTS of Indian Basmati Rice are in the possession of Prodimporttorg Rice, Nikolaeve Port, Suite 213, 34, Lesi Ukrainky Blvd., Kiev, Ukraine, Contact Person : Mr. Alexey Khvorostiany, Ph: 00 380 44 2653297 / 2659505 Fax: 00 380 44 2652804.
2. B/Ls were consigned to order and were blank endorsed.
Hope above information will meet your requirement.
We look forward to receive your further advice with regard to steps taken to protect our cargo.
62. Another letter was written by W.B . Webster & Co.
to National Insurance Company on 5th August, 1998, which reads as under :
Ship-owners UK lawyers have suggested that if security is not put up promptly that they may treat the Contract of Carriage as being frustrated. Their grounds for doing so would be on the basis that they were prevented from completing the contractual voyage since the court has ordered the discharge of cargo.
In the event that the Contracts of Carriage are frustrated it will therefore be necessary for cargo interests to meet the costs of forwarding cargo to destination. It is important to consider whether the costs involved in forwarding cargo to destination would be recoverable under the cargo insurance policy.
A policy of marine insurance is a policy on the adventure as well as on the cargo.
Frustration of the voyage would result in loss of the adventure which in turn potentially could give rise to a claim for constructive total loss. However, the voyage is being frustrated by detention and the risk of detention and not normally covered under the insurance policy. Therefore the costs of forwarding cargo to destination may not be recoverable under the policy.
We anticipate that your assured could raise arguments with regard to the reason for the cargo being discharged, that is to say failure to provide salvage security. It should be borne in mind that whilst underwriters have a liability to meet salvage charges under the insurance policy they are under no obligation to provide salvage security. This remains the responsibility of the assured although in many instances underwriters assist in the provision of security.
63. W.K.Webster & Co. writes to National Insurance Company, on 21st February, 2002, which runs as follows:-
. In the meantime, we can advise you that so far as the United India office is concerned, we have been dealing with their Head Office Technical Department in Chennai. Having reviewed the complaint issued by Amira Foods, we have the following brief comments.
Firstly, as you know salvage and General Average charges legitimately claimed are covered under your policy. Therefore, if the assured could show that a particular amount was payable by way of salvage, then he would be entitled to recover this from you. The same applies for General Average, although as far as we are aware we have never seen a General Average Adjustment in respect of this case. If a General Average Adjustment has been issued, however we would also suggest that it is quite likely that General Average could have been declined in any event. In such circumstances, obviously nothing would be payable under this term of the cover.
However, you will have noted from the Salvage Association report that the vessel should have been able to proceed at slow speed to a nearby port of safety, without requiring salvage assistance. Whilst this may not be relevant to your particular dispute, because cargo owners obviously are not in control of the ship, and therefore are not responsible for the shippers decision to arrange salvage on that basis, nonetheless we mention it for the sake of completeness because the contrary is mentioned in the complaint.
However, it is fundamental to cargo insurance cover that cover provided is by way of an indemnity, and furthermore, and most importantly in this case, there is no specific obligation on cargo insurance to provide security for General Average of salvage. In other words, the obligation is merely for cargo Insurers to indemnify the assured in respect of any amounts payable in respect of salvage of General Average.
Furthermore, it is open to the Insurers to advise the assured to act at a prudent uninsured, and thereafter the assured claims the losses suffered back from the insurers. Naturally the insured will bear the burden of proving that these losses fall within the terms of the cover provided.
Therefore, we believe it is open to you to argue that the assured were obliged to provide salvage and General Average security in the first instance, and they would simply reclaim those costs back from you. Indeed, in your advice to them to act as prudent uninsured, this would have put them on notice that it was their obligation to do so to minimise their losses.
Alternatively, in the event that you are found to have been responsible for lodging General Average salvage security, which we do not think to be the case, it would be open to you to argue that nevertheless the opponent, the cargo owner, failed to mitigate their loss by lodging their own security, and this was the cause of the loss of the whole cargo. Incidentally, we still are unaware of the fate of the cargo as per previous correspondence, as we consider the assured should be requested to advise what happened to the cargo and any proceeds of sale in Turkey.
We hope the foregoing is of interest to you. Should you require further clarification please do not hesitate to contact us.
64. The Expert had already anticipated that the OP would be in a soup and it has prepared the case like a defence counsel. He has resorted to one stratagem after another, somehow to evade this issue. He shifted his ground, whenever it seemed to his clients advantage. Though his knowledge about law does not appear to be abecedarian (ignorance), yet, he left no stone unturned to help his client, out of the way. The but and ben stand set up by M/s. Webster & Co., does not make it a reliable and trustworthy witness in this case. Its opinion is patient of two interpretations and it is well settled that the opinion given in favour of subject, i.e., the complainants will find favour with the Tribunal/Court. It is crystal clear that it is in a fix. Sometimes, it tries to save the insurance company, but in the same breath, it opines In summary, we anticipate difficulties in the future with claims from your insured for costs of forwarding cargo to destination in the event, the voyage is frustrated. This may be an issue that you wish to raise with your insured at the present time.
65. Lastly, the report of A.G. Scott, dated 03.04.2003, runs as follows:-
Whilst this is unwritten meantime law, written guidelines are provided by the Committee Maritime International, who publish rules governing General Average known at the York/Antwerp Rules. To be applicable, these Rules must be incorporated into the contract of carriage, either the Chart party or the Bill of Lading, which in fact is always done.
These Rules are regularly updated in the light of changing circumstances and my experience is in respect of cases arising under the York/Antwerp Rules1950, 1974 and 1994, the letter being the current Rules applicable.
When a Master declares General Average, a General Average Adjuster is appointed to determine firstly whether the event itself is a General Average event and secondly whether and what expenses were properly incurred and were justifiable and he would then proceed to apportion contributions due from the ship, the freight and the cargo.
As I have said above, I have been involved in some 50 cases of General Average involving as insured, Lloyds Underwriters, Indian, Pakistani, French, German and American Companies that they would supply a Bond to cover the possibility of the contributions once the General Average Adjuster had performed his task, and they invariably did so.
I emphasise that this Bond is a security pending subsequent finalization by the Average Adjuster and is normally provided within a few days of the incident, well before the Average Adjuster has been appointed.
I have researched the English Law cases on General Average, but cannot find any case comparable to yours, where the Underwriter has refused to put up a Bond and in my opinion this is because of the universal practice for Underwriters to place a Bond. Therefore the refusal to provide a Bond has never been in dispute because, as I have said. It is an invariable practice for all underwriters and insurance Companies to give one.
66. On the other hand, Mr. A.G. Scott appears to be a guileless witness. Nobody has picked up a conflict with his eminence. He has clearly stated in unequivocal and specific words that the insurance company / underwriters (which cannot be the insured), have to furnish the security. The very purpose of insurance stands defeated, if the needful is not done by the Insurance Company. The purpose of insurance companies is not to charge hefty premiums but to perform their duties, as well.
What is the use to bury your head under the sand? What we have garnered from the arguments advanced before us was that the insurance company (OP), got scared of astronomical amount of security, whopping fees of lawyers, etc. and could not swing into the action, at all.
67. It is difficult to fathom as to why, the OP did not take the action against the ship-owner. What is its role in appointment of Adjustor? Why, did not it compel the captain of the ship to get the Adjustor appointed. It watched the whole proceedings like a silent spectator. It twiddles its thumbs and did nothing.
68. Rule No. XXII of the York-Antwerp Rules, 2004, regarding General Adjustor, reads, as under :-
Treatment of Cash Deposits:
Where cash deposits have been collected in respect of cargos liability for general average, salvage or special charges, such deposits shall be paid without any delay into a special account in the joint names of a representative nominated on behalf of the ship-owner and a representative nominated on behalf of the depositors in a bank to be approved by both. The sum so deposited together with accrued interest, if any, shall be held as security for payment to the parties entitled thereto of the general average, salvage or special charges payable by cargo in respect of which the deposits have been collected. Payments on account or refunds of deposits may be made if certified to in writing by the average Adjuster. Such deposits and payments or refunds shall be without prejudice to the ultimate liability of the parties.
69. In this case, there was mention of Adjustor, but the Adjustor was not appointed at all. Consequently, all the arguments relating to Adjustor advanced by counsel for OP pale into insignificance. The main point is, in absence of an Adjustor, whether, it was the duty of the insurance company to furnish the security or not?.
70. Counsel for the complainants rightly argued that the policy clearly covers General Average and Salvage Charges which are all distinct, vide letter dated 31.07.1998. The policy clearly mentions that the insurance company will be liable for all the risks. It is also noteworthy that both the counsel admitted that Mr. A.G.Scott is an eminent expert, in this sphere. The above said opinion is of utmost importance.
71. The consignments of rice were sold and its price has vanished into thin air. The parties have failed to tell who has got this price of both the consignments of rice, but the behavior of both the parties is condemnable. If the amount of the complainant No.2, is withheld, it is going to tarnish the prestigious image of India, which we enjoy in the world. The rice consignments have not reached the consignee. The consignee would not remain silent but compel the consignor to pay back the money.
72. Consequently, we decide this complaint in favour of the complainants and against the Insurance Company-OP.
73. We, therefore, direct the Insurance Company-OP, to pay a sum of ₹3,14,84,959/- (Rupees Three Crores Fourteen Lakhs Eighty-Four Thousand Nine Hundred Fifty-Nine only), with simple interest @ 6% p.a. from the date of filing of this complaint, i.e. 30.12.1999, in favour of the complainants. The said amount be paid within 90 days from the date of receipt of copy of this judgment, otherwise, it will carry interest at the rate of 9% p.a., after the expiry of 90 days, till the realization of amount. There shall be no further order as to costs.
...
(J. M. MALIK, J) PRESIDING MEMBER ...
(DR.S. M. KANTIKAR) MEMBER dd/f