State Consumer Disputes Redressal Commission
M/S Nancy Overseas, Importers & ... vs Export Credit Guarantee Corporation Of ... on 16 September, 2013
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
Consumer Complaint No.14 of 2012
Date of institution : 24.02.2012
Date of decision : 16.09.2013
M/s Nancy Overseas, Importers & Exporters, 2-B, Model House, near
4 Khamba Road, Ludhiana-141 001 through its Prop. Smt. Inderjit
Kaur.
.......Complainant
Versus
1. Export Credit Guarantee Corporation of India Ltd., 10th
Floor, Express Towers, Nariman Point, Mumbai-400 021
through Sh. N. Shankar, Chairman-cum-Managing Director.
2. Export Credit Guarantee Corporation of India Ltd., Surya
Kiran Complex, 2nd Floor, The Mall, Ludhiana through Sh.
Rahul, Branch Manager.
......Respondents
Consumer Complaint under Section 17 of
the Consumer Protection Act, 1986.
Quorum:-
Hon'ble Mr. Justice Gurdev Singh, President.
Shri Baldev Singh Sekhon, Member.
Mrs. Surinder Pal Kaur, Member.
Present:-
For the complainant : Shri Inderjit Singh Bhatia, Advocate For the opposite parties : Shri B.B. Bagga, Advocate. JUSTICE GURDEV SINGH, PRESIDENT :
The complainant, M/s Nancy Overseas, which is a sole proprietorship concern, has filed the complaint through its Sole Proprietor Inderjit Kaur, for directing the opposite parties to pay a sum of Rs.57,00,000/- on account of the insured value along with interest at the rate of 18% per annum from the date of lodging of the claim i.e. 3.2.2010 till the payment thereof and Rs.10,00,000/- on account of Consumer Complaint No.14 of 2012. 2 damages for deficiency in service, which caused undue harassment, mental tension, inconvenience, financial and business loss to her. She averred therein that she is carrying on the business of export. She purchased a Shipment (Comprehensive Risks) Policy dated 16.11.2007 for Rs.60,00,000/- from the opposite parties, which was valid from 15.11.2007 to 30.11.2009. She received export order from M/s Import Ishwar Impex DI Singh Jarnail via Piacentine 12 San Paolo DI Scapizolo Brascia, Italy (in short, "the buyer") for the supply of various goods. She applied for credit limit against the buyer to opposite party No.2 and deposited the requisite fee, vide letter dated 5.1.2008 for a sum of Rs.57,00,000/- for the shipment made on or after 4.1.2008 on terms of payment after acceptance of documents, shipment of direct delivery and shipments by Air directly consigned to the buyer. She submitted request for the amendment of the enhancement of the credit limit. She received letter dated 14.5.2008 from opposite party No.2 intimating that the policy fell within the jurisdiction of the Jalandhar Branch and, as such, it suspended the earlier sanctioned limit. She replied that letter, vide reply dated 16.5.2008 and gave clarification and also enclosed the revised proforma invoice duly confirmed by the buyer. Opposite party No.2 felt satisfied with the explanation given by her and reinstated the guarantee and credit policy and issued amended Credit Limit Approval, vide letter dated 11.6.2008, whereby the period of 30 days was enhanced to 60 days. She sent shipment worth Euro 102221.12, Consumer Complaint No.14 of 2012. 3 vide invoice dated 24.03.2008, to the buyer on 60 days DA basis from the date of B/L date, vide Bill of Lading dated 20.6.2008. She sent Shipment Declaration Form No.203 dated 7.7.2008 duly filled up and signed along with the balance premium amount of Rs.30,000/- by means of cheque dated 7.7.2008 drawn on Punjab National Bank, Ludhiana and requested opposite party No.2 to adjust Rs.37,085/- as premium; as there was a credit balance of Rs.10,000/- in her account.
The bill was not paid on issue date by the buyer and she reported the default to opposite party No.2 in Form No.205, being the monthly declaration of payment delayed beyond 30 days. In reply, she received letter dated 26.9.2008, vide which she was directed to ascertain the reasons for the non-payment by getting the bill noted and protested through Notary and not to make further shipment to the buyer till the earlier commitments were released. She sent letter dated 7.1.2009 to the Embassy of India in Italy to get the Bill paid and also took up the matter with the buyer for payment and also took up the matter with the Debt Recovery Agency (Dun Bradstreet, Cedex, Italy). She was supplied Policy Claim Form by opposite party No.2, vide letter dated 12.1.2009 and she submitted duly filled up claim form along with the requisite documents, vide letter dated 13.1.2010, which was duly received by opposite party No.2 on 3.2.1010 and the acknowledgement of the receipt thereof was made, vide letter dated 4.3.2010. More documents were called from her and she submitted those documents. The letter received from the side of opposite party No.2 was duly Consumer Complaint No.14 of 2012. 4 replied by her. When she enquired about the status of her claim, vide e-mail dated 19.7.2010, she was shocked to receive the letter dated 5.8.2010 regarding rejection of her claim by opposite party No.2 on flimsy grounds mentioned therein. She approached the officials thereof at Ludhiana branch and requested for review of the decision as her genuine claim was rejected wrongfully and illegally. That local branch kept on putting off the matter on one pretext or the other. She submitted detailed reply, vide letter dated 17.2.2011 on all the issues raised by opposite party no.2 in communication dated 5.8.2010. The reasons mentioned for rejection of her claim are frivolous in view of the justification submitted by her regarding the change of bank's address, copy of Valid Credit Limit Approval etc. The Bill of Exchange duly noted and protested by Notary Public in Italy and duly certified by her bankers was also submitted to opposite party No.2 to meet the objection raised by it. Still her representation was rejected and opposite party No.2 reiterated its earlier stand regarding the rejection of her claim. She made another representation explaining the position but that was also rejected. There was no misrepresentation or suppression of facts by her and she had complied with all the directions so issued by opposite party No.2 and, as such, the reasons so disclosed by opposite party No.2 could not have been made the basis for the rejection of her claim. The stand taken by the opposite parties that no cover was available for want of sufficient credit balance is not available to them as opposite party No.2 had Consumer Complaint No.14 of 2012. 5 accepted the premium by adjustment of a sum of Rs.37,085/-. Even after the adjustment of that premium, a balance of Rs. 2,915/- was left in her account. The objection raised by that opposite party regarding the value of the transaction not being commensurate with the income/sales reported in the Income Tax Returns was duly clarified by her and the same could not have been made a valid ground for rejection of her claim. She had lodged the claim for the loss suffered on account of "default of the buyer" and not for any disputed liability where the value of transaction was required to be determined for any undisputed portion. The rejection on the ground of delay in getting the bill of exchange noted and protested is also fallacious. When the noting and protesting of the bill has been done after putting so much efforts and cost it was stated by opposite party No.2 to be of no use. The second representation was made by her after getting the bill noted and protested, which was bound to result in some delay and the review of repudiation of that claim could not have been denied on the ground of that delay. On account of the wrong and illegal rejection of her claim, she suffered undue harassment, mental tension and financial loss and that also amounts to deficiency in service on the part of the opposite parties. Before filing the complaint, she got issued legal notice dated 3.11.2011 calling upon the opposite parties to settle the claim as per established norms and to recall their decision dated 5.9.2010 but no detailed reply thereof was given. In all these circumstances, she was compelled to file the complaint in which Consumer Complaint No.14 of 2012. 6 besides the payment of the insured value of Rs.57,00,000/-, she also made a prayer for issuing directions to the opposite parties to pay compensation of Rs.10,00,000/-.
2. The opposite parties filed a joint written reply in which they admitted that the complainant submitted a proposal to them on 15.11.2007 for issue of Shipment Policy. Accordingly the Policy was issued and a credit limit of Rs.57,00,000/- on documents against acceptance (DA)-30 days on account of buyer was issued by them and the same was subject to the terms and conditions of that approval and the policy. They also admitted that Form No.205 was received from the side of the complainant on 25.9.2008 and that they called for requisite documents from the complainant from time to time. They also admitted that the claim of the complainant was rejected, vide letter dated 5.8.2010 and the representations made by her thereafter were also rejected. They also admitted that the complainant was advised by them, vide letter dated 26.9.2008 to get the bill noted and protested. They denied the other averments of the complainant and pleaded that the entire subject-matter of the complaint is commercial in nature and, therefore, the complainant is not a consumer as per Section 2(1)(d) of the Consumer Protection Act, 1986 and, as such, the complaint is not maintainable. The Export Guarantee Corporation was established by the Government of India to promote the genuine exports from the country by providing export credit insurance and trade related services to Indian exporters and banks. The policy in question was Consumer Complaint No.14 of 2012. 7 issued to the complainant relying upon the proposal form submitted by her. As per Section 28 of the terms and conditions of the Policy, the strict compliance of the terms and conditions was a condition precedent for fastening any liability to them. Such a policy is given on the condition that the insured has, as at the date of issue of the policy, disclosed and would at all times during the operation of the policy promptly disclose all the facts in any way affecting the risks insured. The complainant suppressed and concealed the material facts and furnished highly misleading information almost with regard to all relevant aspects of the matter. Even the address furnished by her to them was found to be incorrect and all the letters sent at that address were returned with the remarks of the postal officials that there was no such person on that address. The turnover of Rs.2.50 Crore was mentioned in the proposal form and the same was found to be absolutely incorrect and misleading. As per the Certificate of the Bank, the export turnover of the complainant for the relevant period was nil. She also concealed the fact that the registered office of her concern was at Jalandhar. She did not disclose the name of her husband in the proposal form. It was specifically brought to her notice, vide letter dated 19.11.2007 that the name of one Mrs. Inderjit Kaur was appearing in their Specific Approval List (SAL) and in her reply dated 23.11.2007, she informed that said Inderjit Kaur appearing in the S.A.L. was some other person having no connection with her. The enquiry conducted by them disclosed that Inderjit Kaur appearing Consumer Complaint No.14 of 2012. 8 in the S.A.L. was the complainant herself, being the guarantor, in respect of another export firm M/s Jaggi Brothers International, Jalandhar of which her husband, Paramjit Singh, was a partner and the same had defaulted in the repayment of loans taken from the Punjab and Sind Bank, Jalandhar and they had to pay the claim of that bank on account of the default of that firm, which resulted losses to them. The Income Tax Returns submitted by the complainant also disclosed the above said facts. She with apparent intention to conceal the relevant facts did not disclose the name of her husband in the proposal form. Had she disclosed that fact at the relevant time, they might not have issued the policy in her favour. In fact, the policy was obtained by deliberately providing false and misleading declaration and by concealing the relevant facts. As a result thereof, the policy became void as per clause 1 of the terms and conditions and no benefit can be derived by the complainant under such a policy. As per Section 64 VB of Insurance Act, 1938 read with clause 10(b) of the terms and conditions of the policy, it is mandatory that premium has to be paid by the insured before the risk under the policy begins to start. The shipment in question was made on 20.6.2008 and sufficient premium to cover the shipment was not paid by the complainant on or before that date. Thus, the complainant violated that term and condition also. The law of the land requires that noting and protesting of the bills should be got effected upon dishonour of the bill. The complainant got the bill noted and protested with inordinate delay thereby Consumer Complaint No.14 of 2012. 9 impairing the possibility of the recovery from the buyer. In all these circumstances, they were justified in repudiating the claim of the complainant. As per clause 5 of the letter dated 28.11.2007, the representations against the rejection of the claim were to be made within three months of the receipt of such communication. The claim of the complainant was rejected on 5.8.2010 and the letter to that effect was received by her on 7.8.2010. The representation was made by her on 22.2.2011, which was delayed one and was not liable to be considered as per the terms of the policy.
3. In support of the averments made in the complaint, the complainant proved on record her affidavit Ex.CA and documents Ex.C1 to Ex.C34. On the other hand, the opposite parties proved on record the affidavit of A. Augustus Ex.R-1 and authority letter Ex.R-2.
4. We have carefully gone through the averments of the parties, the evidence produced by them and have also heard learned counsel on their behalf.
5. It was submitted by the learned counsel for the complainant that Shipment (Comprehensive Risks) Policy (in short, "the policy") was duly issued by the opposite parties in the name of the complainant after she fulfilled all the formalities. As per the terms of that policy, before shipment of the goods to the buyer, she applied for the Credit Limit of Rs.60,00,000/- and paid the premium accordingly. From the evidence on the record, it stands proved that the objections were raised by the opposite parties, after she made that application, which were Consumer Complaint No.14 of 2012. 10 duly explained and the opposite parties agreed to enhance the credit limit. From the evidence produced by the complainant, it also stands proved that the premium of Rs.37,085/- in respect of the enhanced limit of Rs.60,00,000/- was duly paid and the same was accepted by the opposite parties. Towards that amount, a cheque of Rs.30,000/- was given and a sum of Rs.10,000/- was lying deposited in the account of the complainant. Once the policy had been issued and the opposite parties agreed for the enhancement of the credit amount, they were bound to reimburse the complainant for the loss suffered by her in exporting the goods to the buyer. It has not been denied by the opposite parties that the goods were exported to the buyer, who refused to pay the price thereof. As per the advice given by the opposite parties the bill of lading was got noted and protested through the Notary Public. It also stands proved on the record from the letter Ex.C-12 that the complainant had written to the Indian Embassy in Italy regarding the overdue/unpaid invoice and had also avail of the services of the Debt Recovery Agency. She, thus, complied with all the conditions of the policy and, as such, the opposite parties were bound to allow her claim. They were not justified in rejecting the same on the grounds mentioned in the repudiation letter. The grounds, as stated therein, stands nullified from the evidence produced by the complainant. By not paying the claim, the opposite parties are guilty of deficiency in service and that caused mental harassment, Consumer Complaint No.14 of 2012. 11 financial loss and loss of time to the complainant for which she is entitled to the compensation as claimed in the complaint.
6. On the other hand, it was submitted by the learned counsel for the opposite parties that the claim made by the complainant was rightly repudiated as she failed to comply with the terms and conditions of the policy and all the grounds as mentioned in the repudiation letter are valid and stand proved from the evidence produced on the record. The complainant obtained the policy by concealing the material facts, which she was required to disclose at the time of submission of the proposal form and had she disclosed those material facts, the decision of the opposite parties in accepting or rejecting the proposal form was bound to be effected. The total premium for the enhancement of the amount of Rs.60,00,000/- was not paid and from the evidence produced by the complainant herself, it stands proved that she had paid only Rs.30,000/- towards the premium of Rs.37,085/-. The name of the complainant was in the SAL ist of the opposite parties as she had stood guarantor for the firm of her husband, Paramjit Singh, who was defaulter of the opposite parties. She did not disclose the name of her husband in the proposal form so that it might not be detected that her own name and the name of firm of her husband were mentioned in the SAL. Had that fact come to the notice of the opposite parties at that time, they would not have accepted the proposal form and issued the policy. He further submitted that as per the terms and conditions of the policy, the complainant was under a Consumer Complaint No.14 of 2012. 12 legal obligation to use all reasonable and usual care and to take all practical measures to prevent or minimize the loss and to institute legal proceedings against the buyer to take control of the goods or to recover the costs and the damages etc. As per law of the land, she was required to get the bill of lading noted and protested through the Notary Public after the price had not been paid by the buyer within the agreed time. She failed to fulfil those legal obligations and thus, violated the terms and conditions of the policy. Her claim was rejected on all these grounds and in these circumstances it is to be held that the same was validly rejected.
7. The complainant in her affidavit Ex.CA deposed about all the facts, as stated by her in the complaint. She proved on record the policy as Ex.C-1. The policy was issued on 16.11.2007. The policy was issued in view of the proposal submitted by the complainant on 15.11.2007. Before the shipment of the goods, the complainant had asked the opposite parties for credit limit enhancement as is clear from the reply dated 14.5.2008 Ex.C-3, which was sent to her by the opposite parties. A number of queries were raised by the opposite parties as they entertained a doubt regarding the information furnished by the complainant. That letter was replied by the complainant, vide letter dated 16.5.2008 Ex.C-4. She gave reply to the queries as raised by the opposite parties. It was only thereafter that the credit limit of Rs.57,00,000/- was approved by the opposite parties, vide letter dated 12.6.2008 Ex.C-5. In view of that evidence, we do not find any merit Consumer Complaint No.14 of 2012. 13 in the averments made by the opposite parties and the submissions raised by their counsel that there were misstatement of facts in the proposal form and had those facts come to their knowledge, they might not have issued the policy. However, this concealment of material information can be said to be only regarding the registered office of the concern of the complainant and the name of the banker, as is clear from the letter Ex.C-3.
8. After that approval for the credit limit of Rs.57,00,000/- was given, the complainant filled up form No.203 regarding the payment of premium and the same has been proved on the record as Ex.C-8. The total amount of premium was Rs.37,085/- and a cheque of Rs.30,000/- was deposited by the complainant and the details of that cheque are given in this Form. As per the statement of account Ex.C-9, a sum of Rs.10,000/- was standing to her credit and thus, it is to be held that full premium was paid by her.
9. From the affidavit of the complainant and the documents proved on the record, which consists of the Commercial Invoice Ex.C-6 and the Ocean Bill of Lading Ex.C-7, it stands proved that the goods by way of shipment of consignment were sent to the buyer and received by him. It has not been disputed by the opposite parties that after the shipment of the consignment and dishonouring of bill of Exchange, the complainant lodged a claim with them for the payment of the sum of Rs.57,00,000/-. Correspondence was exchanged between the parties regarding that claim, which has been proved on the record as Ex.C-11 Consumer Complaint No.14 of 2012. 14 and Ex.C-13 to Ex.C-20. After that correspondence, the claim of the complainant was rejected, vide letter dated 5.8.2010 Ex.C-21. The representation made after the receipt of that letter by the complainant was proved on the record as Ex.C-22. It is admitted case of the parties that the said representation was rejected. The letter, vide which the representation was rejected is dated 15.4.2011 and was proved on the record as Ex.C-27. The complainant tried to meet all the grounds so stated in the letters by submitting a detailed reply dated 28.5.2011 Ex.C-28.
10. As can be made out from all these letters of the opposite parties, the claim of the complainant was rejected on the following grounds:-
i) Incorrect information with respect to the address, the details of which were provided along with the proposal form;
ii) Sufficient credit balance was not available in the deposit premium account to account for the premium of the shipment under claim;
iii) The value of the transaction reported did not commensurate with the income/sales reported as per the Income Tax Returns;
iv) The name of Inderjit Kaur appearing in the S.A.L. and non-providing of information by the complainant so as to find out as to whether she was the same Inderjit Kaur or not;Consumer Complaint No.14 of 2012. 15
v) The non-disclosing of the information by the complainant that she was the guarantor on account of M/s Jaggi Brothers International, Jalandhar of which her husband was the partner.
vi) Submission of incorrect information concealing the vital information and suppressing material information.
vii) The noting and protesting of the bill had been done with inordinate delay thereby diluting the delivery process of the claim.
11. So far as the first two grounds are concerned, as already discussed above, those could not have been made the ground for the rejection of the claim of the complainant. After the submission of the reply of the complainant regarding the change of address of the bank etc., the opposite parties decided to continue with the policy. The full premium had been paid by the complainant as she paid Rs.30,000/- by means of cheque and Rs.10,000/- was already lying deposited in her premium account.
12. The ground that the value of transaction did not commensurate with the income/sales reported in the income tax returns is not valid for rejection of the claim as there is no such term and condition in the policy. Learned counsel for the opposite parties could not point out to any of the correspondence between the parties on the basis of which it may be concluded that it was ever brought to the notice of the Consumer Complaint No.14 of 2012. 16 complainant that the claim to be made by her under the policy could have been rejected on the said ground.
13. The opposite parties have not stated the fact that Inderjit Kaur, whose name appeared in their S.A.L. was the complainant herself, for the first time, in their written reply. Legal notice was served by the complainant upon the opposite parties Ex.C3, which was duly replied and the reply so given was proved on the record by the complainant herself as Ex.C-34. It was mentioned in that reply that the name of the complainant was appearing in S.A.L. as she was the guarantor of M/s Jaggi Brothers International, Jalandhar, which was a firm and her husband, Paramjit Singh was one of the partners of that Firm. The addresses as disclosed by that Inderjit Kaur and Ranjit Singh were the same. It was also stated in the reply that the policy was obtained on the basis of deliberately providing false and misleading declaration of S.A.L. The stand of the opposite parties to that effect, as taken in the written reply, has already been discussed above. After these facts had been brought to the notice of the complainant before the commencement of the evidence, she was required to prove on record that her name never figured in S.A.L. She did not depose about that fact in her affidavit Ex.C-8. This omission in her affidavit is very material. On the other hand, from the affidavit of A. Augustus Ex.R-1, it stands proved that the name of the complainant appeared in the S.A.L. and she deliberately did not disclose the name of her husband in the proposal form submitted by her for obtaining the policy. It is Consumer Complaint No.14 of 2012. 17 pertinent to note that the complainant tried to give explanation of the grounds so mentioned in the letters Ex.C-23 and Ex.C-27 by means of her letter Ex.C-28 and which have been reproduced above but the same is silent regarding these facts. It means that she had nothing to say about that fact and she impliedly admits that she is the wife of Paramjit Singh, the name of whose firm was appearing in S.A.L. and her name was also figured therein as guarantor of that firm. No doubt, she has been able to reply the query of the opposite parties regarding the change of the registered address of her concern and the name of the bank but it can be inferred that she changed the registered address of her concern and the banker so that the above said facts may not come to the knowledge of the opposite parties. It was not denied at the time of arguments that she did not disclose the name of her husband in the proposal form. From all these facts, it can well be inferred that she intentionally suppressed the information regarding the name of her husband and that their names appeared in the S.A.L. Had these facts come to the notice of the opposite parties that was certainly bound to affect their judgment in accepting or rejecting the proposal. They would not have been issued policy in favour of a person whose name was appearing in S.A.L., as in those lists the names of those persons are incorporated, who indulge in unfair trade practices regarding the export of the goods. The information so suppressed by her was material and was suppressed with the intention of obtaining undue Consumer Complaint No.14 of 2012. 18 advantage and to commit a fraud upon the opposite parties. That was a valid ground for the rejection of her claim.
14. The complainant proved on record Form No.205 Ex.C-10, which contains the details of the buyer, the date on which the bill was drawn and the due date of payment. The date on bill drawn was 20.6.2008 and the due date of payment has been mentioned as 20.8.2008. According to Section 99 of the Negotiable Instruments Act, 1881, when a bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may cause such dishonor to be noted by a Notary Public upon the instrument or upon a paper attached thereto or partly upon each. Such note is required to be made within a reasonable time after dishonour and must specify the date of dishonour, the reason, if any, assigned for such dishonour. Therefore, the complainant was required to get the bill of exchange noted or protested by a Notary Public within reasonable time of the date of payment i.e. 20.8.2008. As per the letter dated 26.9.2008 Ex.C-11, the complainant was required by the opposite parties to ascertain the reason for non-payment by getting the bill noted/protested through a Notary and to inform them the reason. The reply dated 7.10.2008 given to that letter is on the record but never tendered in evidence by the complainant. The same is silent about getting the bill noted and protested through the Notary. No evidence was produced by the complainant for proving that she ever complied with the provisions of Section 99 of the said Act or the direction as given by the opposite Consumer Complaint No.14 of 2012. 19 parties within reasonable time. That amounts to breach of the terms and conditions of the insurance policy as according to clause (7) thereof she was to use all reasonable and usual care and to take all practical measures to prevent or minimize the loss and to institute legal proceedings against the buyer to take control of the goods and/or to recover the costs and the damages etc. It is not the case of the complainant that she ever instituted any legal proceedings for recovery of the price of the goods from the buyer. Therefore, the opposite parties were justified in repudiating her claim on that ground also.
15. From our above discussion, we conclude that the opposite parties validly repudiated the claim of the complainant and, therefore, it cannot be held that there was any deficiency in service on their part. We find no merit in this complaint and the same is hereby dismissed. However, no order is made as to costs.
16. The arguments in this case were heard on 03.09.2013 and the order was reserved. Now, the order be communicated to the parties.
17. The complaint could not be decided within the statutory period due to heavy pendency of court cases.
(JUSTICE GURDEV SINGH) PRESIDENT (BALDEV SINGH SEKHON) MEMBER (MRS. SURINDER PAL KAUR) September 16 , 2013 MEMBER Bansal Consumer Complaint No.14 of 2012. 20