State Consumer Disputes Redressal Commission
Sameen Ahmed Khan Hyderabad vs Central Warehousing Corporation And ... on 27 November, 2008
A A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD. C. C. 32/2005. Between: Sameen Ahmed Khan Managing Director M/s. Sameens Leather Garments Pvt. Ltd., 5-9-201/2, Chirag Ali Lane Hyderabad-500 001. *** Complainant And 1. The Regional Manager Central Warehousing Corporation Regional Office-Warehousing Sadan Behind Gandhi Bhavan Nampally, Hyderabad. 2. The Regional Manager The Oriental Insurance Company Ltd., Snehalatha Building, Greenlands Road Begumpet, Hyderabad. *** Opposite Parties Counsel for the Appellant: Mr. Wasim Ahmed Khan Counsel for the Respondent: Mr. B. Ramesh (R1) Mr. R. Brizmohan Singh (R2) QUORUM: HONBLE SRI JUSTICE D. APPA RAO, PRESIDENT & SMT. M. SHREESHA, MEMBER
THURSDAY, THE TWENTY SEVENTH DAY OF NOVEMBER TWO THOUSAND EIGHT Oral Order: (Per Honble Justice D. Appa Rao, President) ***** Complaint filed u/s 17 of Consumer Protection Act seeking recovery of Rs. 31,17,040/- being the amount illegally with-held besides Rs. 10 lakhs towards compensation and costs.
The case of the complainant in brief is that he is an exporter doing business under the name and style of Sameen Leather Garments Pvt. Ltd. While so, on 4.1.2000 he exported leather garments worth Rs. 1,06,05,175/- through State Bank of India to Northern Field at Illinois, USA. However, as the buyer did not make payment the consignment was brought back to Hyderabad on 7.7.2000. The said consignment was stored with R1 Central Warehousing Corporation (CWC) and insured with R2.
While so on 23.8.2000 due to floods, the flood water entered into CWC at Kukatpally completely damaged the consignment. When he claimed the said amount enclosing the customs bill of entry Dt. 17.11.2000 confirming the value of the consignment at Rs. 1,09,96,939/- besides the certificate issued by A.P. Leather Technology confirming that the goods have been completely damaged, opposite party No. 1 by its letter Dt. 1.2.2002 sent a cheque for Rs.
21,25,542/- though it informed that the claim was settled for Rs. 74,96,572/-. They reduced 25% of the claim without any ground whatsoever. It is arbitrary, whimsical and unreasonable. The remaining amount of Rs. 46,12,935/- was paid on 1.7.2003. By letter Dt. 9.8.2002 they informed that 25% of the claim was deducted as the goods were made and exported on specific order besides passage of time. The amount was received under protest. There was delay of 4-1/2 years in settling the claim. It was not even finalized. Even from the approved claim, 10% amounting to Rs. 7,49,658/- was deducted towards salvage value. When the entire stock was damaged the question of deducting the amount towards salvage will not arise. Even otherwise R1 auctioned the goods for Rs. 17,100/-. Since the bidder did not turn up, again it was auctioned, which fetched Rs. 3,600/-. All this amounts to unfair trade practice. Due to deliberate inaction, and delay for 4-1/2 years, he had sustained loss. He sold some of his properties in order to discharge his debts. In fact opposite party No. 1 agreed to pay the amount directly to the bankers. Therefore, the complainant filed this complaint seeking the above said amounts.
Opposite Party No. 1 CWC resisted the case. While denying the claim it alleged that it was only a custodian of the goods. It had insured the goods which were damaged due to floods, an act of god. If at all the complainant can claim it is against opposite party No. 2 the insurance company or buyer of the goods. The claim against it was unjustified. The leather goods were sold and delivered to Northern Fields at Illinois, USA. The buyer accepted the consignment. Under these circumstances the complainant could be termed as unpaid seller can lay a claim against the buyer. This was filed in order to make wrongful gain. Since he could not recover the amount from the buyer, he filed this complaint. Pending settlement of claim, it paid an adhoc amount of Rs. 21,33,980/- vide cheque bearing No. 179100 Dt. 2.2.2002. and Rs. 46,12,935/- vide cheque bearing No. 193021 Dt. 1.7.2003. The entire claim of the complainant was fully settled. The AGM, SBI Overseas Branch, GPA of the complainant issued stamped receipt towards full and final settlement. Though it issued a letter Dt. 11.8.2003 directing the complainant to take delivery of salvage and damaged stocks, he did not take. Therefore it was disposed of by public auction as permitted by the Customs, CFS, Kukatpally. The entire settlement was in accordance with Surveyor Report. Opposite Party No. 2 the insurance company had settled the claim as per the procedure. M/s. Aditi Consultants Pvt. Ltd., Surveyors, New Delhi was appointed by the insurance company which assessed the damage at Rs. 74,96,572/- stating that extent of damage was total with probable salvage of 10%. A sum of 25% was deducted for deterioration in quality due to passage of time and the market value as existed on the said date. This complaint was filed in order to harass them. Final settlement was made. Therefore, it prayed for dismissal of the complaint with costs.
Opposite Party No. 2 the insurance company filed counter denying its liability. The complainant cannot be termed as consumer within the meaning of Section 2(d)(ii) of the Consumer Protection Act, 1986. There is no privity of contract between it and the claimant. By paying Rs. 5,50,83,987/- on 18.3.2003 in favour of CWC the liability if any stands discharged. It has issued a policy covering all the godowns and warehouses. The coverage is in respect of damage to the concerned goods and has no connection whatsoever to any kind of taxes or duties in relation to those goods stored with CWC. When it was informed that on 23/24.08.2000 flash floods caused damage to the container freight stations, bonded warehouses of CWC at Kukatpally it appointed M/s. Aditi Consultants and N.V.P. Sharma & Associates to survey the loss and submit its report. As per their report an amount of Rs. 3 crores was initially paid on 6.11.2001 with a direction to CWC to pay the amount to its clients including the complainant, on prorata basis. CWC informed that an amount of Rs. 2 crores was disbursed as against Rs. 3 crores released by it. Therefore, it called upon CWC by letter Dt. 17.2.2003 to send the receipts obtained from its clients in respect of Rs. 2 crores that was already disbursed in order to take up the issue with regard to the amount illegally retained by it without disbursing. In the meantime another sum of Rs. 2,40,83,987/- was released in favour of CWC by cheque No. 33892 Dt. 18.3.2003 along with discharge voucher. Accordingly, the discharge voucher was submitted. CWC being the Central Government undertaking should maintain its dealings above board and act as a model organization. It had failed to obtain receipts from its clients showing release of amount. They cannot illegally retain the amount. It is for CWC to release the amounts deposited in full and final discharge of the liability under the policy. It was not due any amount under the policy.
Therefore, it prayed for dismissal of the complaint with costs.
The complainant in proof of his case filed affidavit evidence and got marked Exs. A1 to A41. Refuting his evidence R1 filed affidavit evidence of Sri V. Nageswara Rao, Regional Manager, CWC, Hyderabad and R2 filed affidavit evidence of Sri Y. Ramulu, Regional Manager, Oriental Insurance Company, Hyderabad and filed Exs. B1 to B9.
The points that arise for consideration are :
1.
Whether CWC is entitled to deduct 25% of claim on the ground of passage of time and 10% towards salvage?
2. Whether the insurance company is liable to pay any amount under the policy?
3. Whether the complainant is entitled to any amount, if so, to what amount?
It is an undisputed fact that the complainant had exported the leather garments worth Rs. 1,09,96,939/- to a buyer in USA as the buyer did not pay the amount the consignment was kept in the custody of Customs and CWC evidenced under Ex. A20. The insurance company opposite party No. 2 issued Ex. B1 policy covering all the godowns, warehouses and stocks stored at container freight station of CWC against fire, perils including floods.
It is also not in dispute that on 23.8.2000 there were flash floods in Hyderabad resulted in complete damage to the consignment in the warehouse of CWC. The entire consignment consisting of leather garments of the complainant were destroyed beyond retrieval. The A.P. Leather Technology certified that the goods have been completely damaged and of no use vide Ex. A18.
It is also not in dispute that the complainant paid required service charges, taxes and insurance premium evidenced under receipt Ex. A20.
When CWC claimed the amount towards loss by virtue of terms of the policy, the insurance company appointed M/s. Aditi Consultants and N.V.P. Sharma & Associates to survey the loss They estimated the loss at Rs. 5,40,83,987/-. The amount was paid with a direction to CWC to pay the amount to various persons who had stocked their goods, on prorata basis.
Though CWC denied its liability but it has paid an amount of Rs. 67,46,915/- as against the claim of Rs. 1,09,96,939/- under two spells. The reason for repudiation of rest of the claim was that the surveyor had deducted 25% of the value of the claim on the ground of passage of time and further 10% towards salvage value. Obviously, it could not deny the payment having received the entire amount from the insurance company. It is important to note that for the loss occasioned on 23.8.2000, eighteen months thereafter on 1.2.2002 for the first time CWC released a part of the amount. The complainant had requested the CWC to reassess and release the remaining amount by way of letters. However CWC struck to its earlier assessment made by letter Dt. 5.12.2002. Contrary to their own stance, two years thereafter on 9.8.2002 CWC released second instalment of Rs. 46,12,935/- after deducting 25% of the value i.e., Rs. 38,66,698/- on the ground that export was made on a specific order besides passage of time. When the complainant submitted representations requesting not to deduct 25% by letter Dt. 22.7.2002, CWC however deducted Rs.
7,49,658/- by way of letter Dt.
13.11.2003 towards 10% salvage value.
Evidently the entire goods were damaged beyond retrieval as opined in the report Ex. A18 by the A.P. Government Leather Technology. There is no reason why 25% of the amount was deducted on the ground of passage of time. The complainant has put in its claim immediately after the damage.
CWC had taken its own time in settling the claim. After dodging for a period of two years, it has deducted 25% on the ground of passage of time. It is its own fault. Equally so with the deduction of 10% towards salvage value. We may state that when the goods were auctioned by R1, it fetched an amount of Rs. 3,600/-. Had salvage value was really 10% of the value of the goods, it could not have fetched that meager amount. When CWC could recover only Rs.
3,600/- in an auction deducting at Rs.
7,49,658/- towards salvage value is undoubtedly farcical without any basis. For the fault of CWC the complainant should not be penalized. CWC could not explain the reason as to how 25% of value could be deducted towards passage of time and 10% towards salvage could be deducted from the claim. This is evidently to appropriate the amount unjustly having received it from the insurance company. It amounts to unlawful enrichment.
Importantly, when insurance company had paid the entire amount for the loss sustained, CWC ought not to have appropriated the entire amount without paying compensation to the parties affected. Admittedly CWC did not file the correspondence between it and the insurance company in regard to payment of amounts towards loss of consignment in their godowns. It is obvious, if the report is filed it would reveal that the complainant was awarded full amount by the insurance company.
It is not as though CWC did not claim the amount from insurance company. When claim was made by CWC, the insurance company released an amount of Rs. 3 crores. When demand was made for remaining Rs. 2 crores under Ex. B2 letter Dt. 17.2.2003, the insurance company requested CWC to send us the receipts obtained from depositors for Rs. 2 crores to enable us to take the matter with our higher authorities.
CWC in turn under Ex. B3 informed that We once again request you to advice the Surveyors to reassess the loss of stock relating to the following parties:
1) M/s. Shri Shakti LPG Ltd., 2)
M/s. Sameen Leather Garments Pvt. Ltd.,
3) M/s. Bernhard Marking Pvt. Ltd., (in respect of Bond No. 394) The name of the complainant was also mentioned therein. CWC finally by its letter Dt. 25.2.2003 (Ex. B6) requested the insurance company to release balance of Rs. 2 crores and odd informing that they would send the acknowledgements from all the depositors. Ex. B7 reply Dt. 18.3.2003 by the insurance company shows that altogether Rs. 5,42,83,987/- was released. Despite the insurance company requested to send the receipts evidencing payment to the depositors CWC did not send those receipts. Whatever be the defence of CWC, it could not prove that the amount claimed by the complainant was not paid by the insurance company and as such in turn it could not pay the amount to the complainant. At any rate CWC could show as to why it did not pay the amount claimed by the complainant. Unless they give adequate reasons for deducting 25% on the ground of specific export order and passage of time and 10% towards salvage value the deduction of said amount is ex-facie unjust. The complainant is entitled to the said amount.
It is CWC that is liable to pay.
In case CWC is entitled to as a matter of right, it can recover from the insurance company if it could prove that the insurance company had not paid the amount. The insurance company in its counter specifically alleged that CWC, being a Central Government undertaking ought not to have retained the amounts of the complainant when it was paid by them. It is unethical and immoral.
To sum up the complainant having lost goods when it was kept with CWC and the insurance company having paid, CWC is liable to pay remaining amount which was deducted illegally. Since we intend to award interest on the balance of amount, and since part of the amount was already paid, we do not intend to award any compensation towards mental agony. The component of interest would take care the loss if any towards delayed settlement etc. In the result, the complaint is allowed in part, directing opposite party No. 1 CWC to pay Rs. 31,17,040 + Rs. 7,49,658 = Rs. 38,66,698/-. The complainant is entitled to the said amount with interest @ 9% p.a., from the date of complaint i.e., from 29.4.2005 till the date of realization with costs computed at Rs. 10,000/-. Time for compliance four weeks. The case against Opposite Party No. 2 insurance company is dismissed. No costs.
PRESIDENT LADY MEMBER Dt. 27.11.
2008APPENDIX OF EVIDENCE WITNESSES EXAMINED FOR COMPLAINANT OPPOSITE PARTIES None None DOCUMENTS MARKED FOR COMPLAINANT:
Ex. A1;
22.09.1997 Insurance policy schedule.
Ex. A2;
25.08.2000 Letter of CWC to complainant Ex. A3; 01.02.2002 Sanction order of CWC in favour of complainant Ex. A4; 07.05.2002 Letter of CWC to complainant about reassessment.
Ex. A5; 07.08.2002 Letter of CWC to complainant about settlement of Claim.
Ex. A6; 09.08.2002 Letter of CWC to complainant Ex. A7; 23.08.2002 Letter of CWC to complainant about release of balance amount.
Ex. A8; 05.12.2002 Letter of CWC to complainant intimating rejection of Reassessment by insurance company.
Ex. A9; 02.12.2002 Letter of insurance company to CWC Ex. A10 30.06.2003 Sanction order of CWC Ex. A11; 11.08.2003 Letter of CWC to complainant Ex. A12; 31.07.2004 Letter of CWC to complainant Ex. A13; 18.10.2004 Letter of CWC to complainant Ex. A14; 14.12.2000 Receipt for Rs. 24,092/-
Ex. A15; 04.01.2000 Packing list.
Ex. A16; 04.01.2000 Exchange control declaration Ex. A17; 25.09.2000 Sample slip of CWC Ex. A18; 26.09.2000 A.P. Govt. Inst. Of Leather Technology report Ex. A19; 20.09.2000 Notice u/s 48 of Customs Act issued to complainant Ex. A20; 28.11.2000 Bill of entry for home consumption Ex. A21; 14.05.2000 Fax letter from Northern Field Investment & Holding Inc. USA, addressed to complainant Ex. A22; 04.01.2000 Letter from Northern Field Investment & Holding Inc. USA, addressed to complainant Ex. A23; 22.04.2002 Certificate issued by SBI, Abids, Hyderabad Ex. A24; 24.04.2003 Letter of CWC to SBI, Abids, Hyderabad Ex. A25; 26.09.2000 Letter of complainant to Container Freight Station Kukatpally, Hyderabad.
Ex. A26; -- Inspection Report Ex. A27; 14.12.2000 Invoice for Rs. 10,486/-
Ex. A28; 27.04.2000 Bill of lading Ex. A29; 04.12.2000 Letter of SBI, Abids, Hyderabad to CFS, Kukatpally Ex. A30; 27.11.2000 Letter of SBI, Abids, Hyderabad to CFS, Kukatpally Ex. A31; 04.09.2002 Letter of complainant to CWC Ex. A32; 18.10.2002 Letter of complainant to CWC Ex. A33; 25.11.2003 Letter of complainant to CWC Ex. A34; 26.12.2003 Letter of complainant to CWC Ex. A35; 16.02.2004 Letter of complainant to CWC Ex. A36; 15.04.2004 Letter of complainant to CWC Ex. A37; 31.05.2004 Letter of complainant to CWC Ex. A38; 22.07.2002 Letter of complainant to CWC Ex. A39; 10.06.2004 Letter of complainant to CWC Ex. A40; 10.07.2004 Letter of complainant to CWC Ex. A41; 30.09.2004 Letter of complainant to CWC DOCUMNTS MARKED FOR OPPOSITE PARTIES :
Ex. B1; --- Policy terms and conditions Ex. B2; 17.02.2003 Letter of insurance company to CWC Ex. B3; 07.11.2002 Letter of CWC to insurance company Ex. B4; 26.11.2002 Letter of Surveyors to insurance company Ex. B5; 02.12.2002 Letter of insurance company to CWC Ex. B6; 25.02.2003 Letter of CWC to insurance company Ex. B7; 18.03.2003 Letter of insurance company to CWC Ex. B8; -- Letter of CWC to insurance company Ex. B9; 18.03.2003 Receipt for Rs. 2,40,83,987/-
PRESIDENT LADY MEMBER Dt.
27. 11. 2008