National Consumer Disputes Redressal
Sonarome Pvt. Ltd. vs Export Credit Guarantee Corporation Of ... on 16 February, 2024
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 400 OF 2017 (Against the Order dated 27/01/2017 in Complaint No. 62/2011 of the State Commission Karnataka) 1. SONAROME PVT. LTD. REP. BY ITS DIRECTOR MR. NITESH S. GULHATI, PLOT NO. 34/35/36, KIABD INDUSTRIAL AREA, DODDABALLAPUR, BANGALORE-561203 ...........Appellant(s) Versus 1. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED REP. BY ITS BRANCH MANAGER, NO. 15-16, VAYUDOOTH CHAMBERS, 4TH FLOOR, TRINITY CIRCLE, M.G. ROAD, BANGALORE-5600001 ...........Respondent(s)
BEFORE: HON'BLE MR. SUBHASH CHANDRA,PRESIDING MEMBER HON'BLE DR. SADHNA SHANKER,MEMBER FOR THE APPELLANT : MS. NEHA MATHEN, PROXY COUNSEL WITH AUTHORITY LETTER FOR THE RESPONDENT : MR. S. K. PATTJOSHI, SR. ADVOCATE WITH MR. ARVIND GUPTA, ADVOCATE MR. MOHIT BIDHURT, ADVOCATE MR. S. BOSE AND MRS. PRERNA SINHA, ADVOCATES Dated : 16 February 2024 ORDER DR. SADHNA SHANKER, MEMBER
1. This appeal has been filed under section 19 of the Consumer Protection Act, 1986 in challenge to the Order dated 27.01.2017 of the State Commission in complaint no. 62 of 2011, whereby the complaint was dismissed.
2. We have heard the learned proxy counsel for the appellant on authority (hereinafter referred to as the 'complainant') and the learned senior counsel assisted by learned counsel for the respondent (hereinafter referred to as the 'insurance company') and perused the record including the State Commission's impugned Order dated 27.01.2017 and the memorandum of appeal.
3. The appeal has been filed with reported delay of 04 days.
In the interest of justice and considering the reasons given in the application for condonation of delay, the short delay in filing the appeal is condoned.
4. The brief facts leading to the present appeal are that the complainant, a company involved in the manufacturing business of flavours and fragrances and exporting its manufactured goods, obtained an insurance policy of shipments (comprehensive risks) from the insurance company for its exports/shipments. The said policy covers all the shipments exported between 01.11.2007 to 31.10.2009. As per the terms and conditions of the policy, the complainant is required to pay each premium separately, in respect of each shipment sent to the buyer. The complainant submitted its claim with the insurance company in compliance with the policy with respect to four shipments to buyer M/s Overseas Flavor and Fragrances Ltd., Ghana during the period of the policy.
5. The claim was repudiated by the insurance company on six grounds, primarily, on the ground that declarations of the shipments made were beyond the time specified in clause 8(a) of the policy and then the claim itself was received after two years being beyond the time as stipulated in clause 19(d) of the said policy. Being aggrieved the complainant filed a complaint before the State Commission.
The State Commission vide impugned Order dated 27.01.2017 upheld the repudiation and dismissed the complaint.
6. Aggrieved by the said Order of the State Commission, the complainant filed the instant appeal before this Commission.
7. Learned proxy counsel for the complainant has argued that the complainant had produced the requisite invoices to prove the transactions and that the payments were genuinely due from its customer but the insurance company has gone ahead and rejected the claim on the technical ground of delay in complying with certain conditions of the insurance policy and the repudiation is baseless and not sustainable in the eye of law. She further argued that the complainant made all good faith efforts to recover payments due from the buyer and its representative made multiple visits to the buyer's house in Ghana to pursue payments and also approached the Indian High Commission at Ghana seeking help for repayment from the buyer and ultimately stopped making shipments to the buyer when it was known that the payments were not forthcoming. It is further argued that the complainant notified the insurance company about the defaults on payment initially on 31.10.2007 and then on 26.11.2007. She further argued that the recovery agency expressed its inability to recover dues from the buyer. The claim which could have been filed earlier was delayed only because of insurance company's inaction. To support its contentions, learned proxy counsel has placed reliance on the following decisions for the proposition that the claims and rights shall not be denied by taking a hyper technical objection.
(i) Gurmel Singh vs. Branch Manager, National Insurance Co. 2022 SCC Online SC 666
(ii) Gurshinder Singh vs. Shriram General Insurance Co. Ltd. & Anr. AIR 2020 SC 1395
(iii) Om Prakash vs. Reliance General Insurance & Anr. (2017) 9 SCC 724
(iv) United India Insurance Company vs. Yash Site Development Pvt. Ltd. National Commission (09th May 2019)
(v) Brahampal vs. National Insurance Company, Supreme Court (7th August 2020)
8. Learned counsel for the complainant has highlighted the decision of Hon'ble Supreme Court in the case of Gurshinder Singh vs. Shriram General Insurance Co. Ltd. & Anr. AIR 2020 SC 1395 wherein the court has said that "if the claimant is denied the claim merely on the ground that there is some delay in intimating the insurance company about the occurrence of the theft, it would be taking a hyper technical view." Further, she also relied on an IRDA Circular dated 20.09.2011 which states that "The insurer's decision to reject a claim shall be based on sound logic and valid grounds. It may be noted that such intimation clause does not work in isolation and is not absolute. One needs to see the merits and good spirit of the clause, without compromising on bad claims."
9. Learned counsel for the insurance company submitted that the complainant had not paid the premium for all the ten shipments and 06 shipments were not even declared to the insurance company resulting in non-payment of premium for the same and that the complainant declared remaining 04 shipments with a delay in violation of clause 8(a) of the policy bond. He argued that Clause 10(a) of the policy categorically provides that no premium shall be deemed to have been paid by the insured in respect of a shipment unless the same has been duly declared in the relevant monthly shipment declaration and such shipment declaration is duly submitted in time. He further submitted that the claim was lodged by the complainant only on 14.08.2009 i.e. with delay in clear violation of Clause 19(d) of the policy. He further submitted that the complainant continued to make shipments to the buyer when payment for earlier shipments remained overdue is clear disregard of clause 7(c) of the policy bond and letter dated 08.02.2008 of the insurance company. He further submitted that the engaging the services of debt collection agency does not in any way impose any restriction on the insured from filing claim with the insurance company. It is further submitted that there are catena of judgments passed by the Hon'ble Supreme Court which have held that while construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertake to indemnify the loss suffered by the insured on account of the risks covered by the policy, its terms have to be strictly construed to determine the extent of the liability of the insurer. Further, he submits that endeavor of the court should always be to interpret the words used in the contract in the manner that will best express the intention of the parties.
10. In support of its contention, he placed reliance on the decision rendered in the case of Export Credit Guarantee Corpn. Of India Ltd. Vs. Garg Sons International (2014) 1 SCC 686 :
"11. The insured cannot claim anything more than what is covered by the insurance policy. "the terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely." The clauses of an insurance policy have to be read as they are. Consequently, the terms of the insurance policy, that fix the responsibility of the insurance company must also be read strictly. The contract must be read as a whole and every attempt should be made to harmonize the terms thereof, keeping in mind that the rule of contra proferentem does not apply in case of commercial contract, for the reason that a clause in a commercial contract is bilateral and has mutually been agreed upon. (Vide : Oriental Insurance Co. Ltd. v. Sony Cheriyan AIR 1999 SC 3252; Polymat India P. Ltd. v. National Insurance Co. Ltd., AIR 2005 SC 286; M/s. Sumitomo Heavy Industries Ltd. v. Oil & Natural Gas Company, AIR 2010 SC 3400; and Rashtriya Ispat Nigam Ltd. v. M/s. Dewan Chand Ram Saran AIR 2012 SC 2829)."
11. The issue which falls for our consideration is as to whether the repudiation of the claim in respect of four shipments was correct or not.
12. It is seen that through a letter dated 04.03.2010, the claim of the complainant was rejected by the insurance company on the following grounds:
"Ref: CLM/14726/2009-10 Date: 4th March 2010 M/s Sonarome Pvt Ltd Plot Nos. 34/35/36, KIADB Indi Area Doddaballapur Bangalore 561 203.
Dear Sirs, Sub: Claim on a/c of M/s Overseas Flavours and Fragrances Ltd, Ghana This has reference to your claim lodged with us on the above subject buyer and various correspondences in this regard. In this regard, we observe the following:
1. Out of the 10 shipments made and for which the claim is lodged, 6 shipments are not declared to us resulting in non-payment of premium for the same.
2. With regard to the 4 shipments (now under claim) declared, it is observed that -
a. Shipment dated 16-4-2006 was declared on 7-6-2006 1.e. with a delay of 23 days b. Shipment dated 4-5-2006 was declared on 21-11-2006 i.e. with a delay of more than 5 months i.e. after the occurrence of default.
c. Though the shipment was made on DA 45 days terms, the same was declared as DP terms of payment resulting in short payment of premium.
3. Against the shipment dated 11-10-2006 for Rs. 36,36,068/- for which claim is lodged, the Bank has certified in the claim form that the amount has been fully received.
4. Two shipments dated 4-4-2006 were made on DP terms (TT) and as such, the buyer should have made immediate payment after shipment. Further shipments were made to the buyer when payments for shipments made in April 2006 were over due. As per terms and conditions of the policy, shipments made to the buyer when payments for earlier shipments were overdue are not covered.
5. As per terms and conditions of the Policy, a declaration of overdue payments on all such shipments in respect of which the payment due from the buyer remained wholly or partly unpaid after having become overdue for not less than thirty days as at the close of the preceding month. In this case, the declaration of overdue payments was made to the Corporation with a delay of more than one and half years.
6. As per terms and conditions of the Policy, the Corporation shall cease to have any liability in respect of the invoice value of any shipment or part thereof if the policy holder has failed to duly lodged a claim within two years from the respective due date of payment. It is observed that the claim has been lodged after the expiry of two years from the due date of payment."
13. It is an admitted fact that the claim was filed for four items, as culled out from the chart provided by the counsel for the complainant, as under:
Date Name and Address of Buyer Gross InvoiceValue Premium paid Date of filing Declaration Due date for filing Declaration Delay 16-04-2006 Overseas Flavour & Fragrance 29,53,480 25,400 06-06-2006 15-05-2006 22 days 04-05-2006 Overseas Flavour & Fragrance 22,69,172 7,715 20-11-2006 15-05-2006 158 days 11-10-2006 Overseas Flavour & Fragrance 36,36,068 27,270 20-11-2006 15-11-2006 5 days 19-10-2006 Overseas Flavour & Fragrance 4,06,194 3,046 20-11-2006 15-11-2006 5 days
14. The main contention of the learned counsel for the insurance company is that the insurance policy is very clear and categorical and lays down the time for giving declaration of shipments in clause 8(a) of the policy bond. Further, as per clause 10(a) of the policy unless the declaration is submitted in time it will be deemed that no premium for the said had been paid. It was also pointed out that as per clause 19(d) of the policy the insurance company shall cease to have any liability if the insured fails to lodge a claim in the prescribed form within two years from the respective due dates of payment.
15. Learned proxy counsel for the complainant has tried to explain the delay in filing the claim on the ground that they were taking steps to recover the amounts due by visiting the High Commission in Ghana, pursuing the buyer and hiring a Debt Collection Agency suggested by the insurer to recover the amounts and only in the end of 2008 when the Debt Collection agency expressed its inability to collect the amount, the claim form was filed.
16. On consideration of the above, we are of the view that even if we consider the IRDA circular and the decision of the Hon'ble Supreme Court in the case of Gurshinder Singh vs. Shriram General Insurance Co. Ltd. & Anr. (supra), in respect of delay in filing the declaration wherein the delay is less than 30 days, however, the delay of more than two years in filing the claim form in violation of clause 19 of the policy does not fall in the same category. The reasons given by the complainant for the delay in filing the claim over two years are not acceptable because while taking steps for recovering the money, nothing prevented the complainant for filing the claim form within the period as prescribed in the policy. The repudiation on account of delay in filing the claim in view of the clear terms of clause 19(d) of the insurance policy cannot be said to be a technical view of the matter. As rightly pointed by the counsel for the insurance company that clause 19(d) is very clear in the contract and ratio of decision rendered in Export Credit Guarantee Corpn. Of India Ltd. Vs. Garg Sons International (supra) would apply.
17. In view of the same, we find no reason to interfere with the impugned order of the State Commission. The appeal is dismissed. All pending I.A.s stand disposed of.
...................................... SUBHASH CHANDRA PRESIDING MEMBER ............................................. DR. SADHNA SHANKER MEMBER