State Consumer Disputes Redressal Commission
Rajhans Impex Private Ltd. vs Bajaj Alianz General Insurance Co. Ltd. on 28 September, 2021
Details DD MM YY
Date of Judgment 28 09 2021
Date of filling 23 12 2009
Duration 05 09 2011
BEFORE THE CONSUMER DISPUTES REDRESSAL COMMISSION,
GUJARAT STATE AT AHMEDABAD.
Court-3
Complaint NO. 52 of 2009 Dt: 28.09.2021
Rajhans Impex Private Ltd.
Plot No. 8, GIDC Phase II, Dared,
Jamnagar. ...Complainant
Vs.
Bajaj Allianz General Ins. Com.
6th Floor, Prasham Building,
Office No. 601 to 606, Near Dharam Cinema,
Kasturba Gandhi Road,
Rajkot. ...Opponent
Appearance: Mr. S. C. Shah, Ld. Advocate for the Complainant
Mr. V. P. Nanavaty, Ld. Advocate for the Opponent
Coram: (Shri S. N. Vakil, Judicial Member)
(Smt. J. Y. Shukla, Member)
Order by Shri S. N. Vakil, Judicial Member
1. This is against repudiation of insurance claim.
2. Case of the complainant is that it had exported (1) CDA 360 round Brass Rods ½ Hard Temper, as per ASTM B/16 weighing 40,503.322 LBS (18.372 MT) worth US $ 1,16,703 vide invoice No. RTPL/EXP/26/2008/09 dated 24.07.2008 and (2) CDA Brass 36,206.514 LBS (16.423 MT) worth US $ 1,03,807.21 vide Invoice No. RTPL/EXP/29/2008/09 dated 01.08.2008, to STEBCO INC, 259 New Road Parisppany NJ 07054 USA; packed up to industry standards in 40 and 36 wooden boxes in 1x20 containers loaded in containers No. ECMU K.S.P CC-09-52 Page 1 of 15 2236517 and OOLU 1206204 with derail No. 990413 and OOLAGM 7320 respectively, departed from Mundra Port to New York respectively in vessel LAHORE EXPRESS 813 on 26.07.2008 with Bill of lading dated 26.07.2008 and in Vessel APL ALMANDINE 8132 on 05.08.2008 with Bill of lading dated 05.08.2008. The goods under invoices dated 24.07.2008 and 01.08.2008 were insured with the opponent - Bajaj Allianz General Insurance Co. Ltd. vide Marine Cargo Specific Voyage Policies respectively bearing No. OG/08/2222/1006/20000003 dated 24.07.2008 for US $ 128374 equivalent to Indian Rs. 54,87,986/- for premium of Rs. 3,586/- and bearing No. OG/09/2222/1011/00000074 dated 09.08.2009 (? 2008) for US $ 1,14,188 equivalent to Indian Rs. 48,81,537/- for premium of Rs. 3,173/-. The policies cover all risk of loss or damage to the said goods insured as per "Insurance Cargo Clause (A); inter alia on warehouse to warehouse basis, and complainant‟s insurable interest in the subject goods continued even after the goods were delivered to the consignee and the consignee having not paid the price as the premium was paid by the complainant. The goods were treated in accordance with the fumigation treatment requirements of importing company, were packed in wooden boxes as per "Industry Standard", vide certificate dated 31.01.2009 issued by PATEL WOODEN INDUSTRIES, JAMNAGAR, it was declared that the consignment was verified free of impervious surface/ layers such as plastic wrapping etc., vide certificate by PEST CONTROL (INDIA) Pvt. Ltd. Every cure and precaution was taken before packing the goods till it was placed in containers. At destination containers and the cases containing the goods were found water stained and corroded during the transit in the sea. The buyers, K.S.P CC-09-52 Page 2 of 15 consignee immediately informed the complainant who in turn immediately informed the opponent and surveyor was appointed to inspect and asses the loss. Opponent‟s surveyor at USA conducted the survey. Thereafter the goods were delivered at consignee‟s premises on 4.09.2008 and 11.09.2008 respectively. The survey of both goods was held on 25.09.2008 together or jointly by opponent‟s surveyor EWIG INTERNATIONAL MARINE CORPORATION (EWIG for short)-opponent‟s agent at port of discharge. At destination port wet strain / corrosion damage to subject Brass Rods were reported to have been found as per primary surveyor‟s report and adjusters M/s. EWIG, and as per the said survey report the condensation/ moisture was found within the original packing due to the wooden case being constructed of green (non-dried) lumber. The complainant has disputed and challenged the said finding of surveyors. The complainant preferred claim, and informed the opponent at regular intervals, but the opponent never replied any of emails and all of a sudden rejected / repudiated the claim by letter dated 06.01.2009 on the ground that "as such the loss/damage/depreciation to the goods is due to the inadequate packing/ rusting which are clear exclusions under the policy as stated above, therefore the claim is not admissible and hence stand repudiated", (wrongly) referring to special exclusion clause No.7 which excluded the rusting, oxidation and discoloration unless caused by the perils insured under ICC (B). The complainant had furnished the certificate of Patel Wooden Industries showing that the goods were strictly as per guidelines and provisions of International Trades Standards as laid down under ISPM 15, followed the world over. The complainant also exported similar products to Poland, under the K.S.P CC-09-52 Page 3 of 15 same packing method and material then, which was received there in absolutely sound condition. The opponent realizing that it would be difficult to press into Service Exclusion Clause 4 of ICC (A) 4.3 and 4.4, unjustifiably referred to special exclusion Clause No.7 contained in the certificate of insurance, to which the complainant immediately protested by Email dated 17.04.2009 pointing out that the complainant opted for ICC Clause A (All Risk Policy under Open Cover), which contention remained undisputed throughout, for which all risk would be covered and claim payable even apart from stains, discoloration and corrosion, rusting having been found on the subject either allegedly due to humidity, condensation or moisture found with the original packing due to wooden case being constructed of green lumber or otherwise. The opponent rejected the request to reconsider, reiterating that earlier decision is proper. Despite all above resubmitted and also that earlier similar type of insurable claim was settled by National Insurance Co. in sister Concern‟s complainant, it was turned down. It was also pointed out by email dated 16.04.2009 that not ICC Clause B but only ICC Clause A (All Risk Policy under Open Cover) was applicable. The consignee was good enough to undertake to clean and recondition the subject goods. It was brought to opponent‟s notice by letter dated 10.08.2009, and asked to reconsider and review the claim. The surveyors themselves, after receiving and scrutinizing earlier reports found that condensation was due to fresh water wetting", and issued certificate dated 28.07.2009 to that effect incorporating the amount of expenses incurred for reconditioning/cleaning $ 38,007.01 and for transportation $ 6615 for NY to port to Cleveland, and that the opponent is legally liable to pay for K.S.P CC-09-52 Page 4 of 15 the damage to goods and for expenses as per the statement of loss. In view whereof, sending them all, $ 44,622 with 18% was asked for by letter dated 10.08.2009. It was not paid nor despite legal notice, dated 01.09.2009. It wrongly denied claim by letter 06.10.2009 that the goods having been delivered to the consignee at the port of discharge the complainant had no insurable interest over the subject goods the risk wherein having been passed over to the consignee. Insurable interest remained with the complainant all throughout as the premium was paid by the complainant and the policy was taken from the opponent covering the risk of complainant‟s goods. For these deficiency, the complainant claims US $ 44622.01 or its equivalent amount in Indian Rupees at the prevailing rate with 18% interest from 10.11.2008, Rs. 25,000/- as compensation and cost of this complainant.
3. The defence, vide w.v., is of denial. The complainant had availed a Marine Open Cover bearing No. OG/08/2222/1006/0000003 for the period from 02.08.2007 to 01.08.2008 for Sea Transmit in accordance with the terms and conditions thereof as well as the special conditions printed the face of the Marine Open Cover. The complainant had intimated that on arrival of the cargo wet stain/corrosion damaged to the subject insured brass rods were found. The survey and assessment was conducted by the surveyor and adjustors M/s. EWIG International Marine Corporation, New York, which found that said damage occurred due to humidity condensation/ moisture found within the original packing due to the wooden cases being constructed of green (non-dried) lumber. The contents of the survey report was evaluated, claim processed and was repudiated on 06.01.2009 in view of the specific conditions of exclusion K.S.P CC-09-52 Page 5 of 15 of the policy. ICC (A): „4.3 Loss, damage or expenses caused by insufficiency or unsuitability of packing or preparation of the subject matter insured; 4.4. Loss, damage or expenses caused by inherent vice or nature of the subject matter-insured.‟ Apart from above, the claim was repudiated in terms of exclusion appearing insurance certificate on the grounds that the policy excludes loss or damage due to rusting, oxidation and discoloration unless caused by ICC B Perils as per rusting oxidation and discoloration clause. It was proved as per the survey report that loss/damage to the goods was due to inadequate packaging, rusting- clearly excluded. The complainant had knowledge with respect to the terms and conditions of the policy, it having produced the said insurance certificate and never objected to it. The complaint is put to strict proof with respect to contents of ISPM-15, which speaks about process or treatment to remove or kill pests to avoid introduction and spread of pests. The surveyor found results of silver nitrate tests negative thereby ruling out ingress of water during the transmit, who moreover, did not find any indication of ingress of Sea or other water causing rusting/oxidation of consignment. The policy covers such occurrences only when caused by any of the perils covered under ICC B which has not operated as per findings stated above. The complainant having availed commercial service cannot complain under the Consumer Protection Act, nor is it maintainable under summary jurisdiction. The complainant has no locus standi to file this complaint the risk having been passed over at the point when the consignments were delivered to the consignee at the part to discharge. As per International Contract of Sale - INCOTERMS - (CIF), the complainant ceased to have any insurable K.S.P CC-09-52 Page 6 of 15 interest in the goods once risk in goods passed over to the consignee whilst on board the ships rail. It is denied that the consignment was packed as per industry standards. Findings of the surveyor clearly demonstrated otherwise. The surveyor after close scrutiny found that wet strain, corrosion damaged to the brass bars/rods were result of moisture found within the original packing due to the wooden cases being constructed of green (non-dried) lumber and not due to water strain and corrosion during transit as alleged. The surveyor did not find any evidence to suggest that the damage, conditions were due to fortuitous circumstances during transit while specifically observing that the consignment was a full container load. The complainant has not produced any evidence to prove that the damage was due to risks covered under the policy. It is incorrect statement that the surveyor found that the condensation was due to fresh water. The complainant with oblique motive claimed the same as could be seen from letter (page 72) because the complainant has initiated the loss on account of fresh water. The complainant is put to strict proof thereof. The complainant has not disclosed the exchange rate of $ as Marine insurance certificate at INR 42.75. Rest is denied. The claim was rightly repudiated. There is no deficiency in service. Complaint be dismissed.
4. Complainant‟s counter affidavit is to the effect that repudiation is without application of mind, which itself is deficiency in service. Letter dated 06.01.2009 (not 06.01.2008) gives different reasons than in reply to advocate‟s notice dated 01.09.2009. The opponent has failed to discharge its burden. Clause ICC (B) of the policy is not at all applicable, which is also pointed out by the surveyor. The surveyor informed that Clause ICC K.S.P CC-09-52 Page 7 of 15 (B) was applied by the insurance Company and not by the surveyor and surveyor‟s certificate dated 28.07.2009 and it is clear from certificate by the certificate dated 28.07.2009 that loss/damage to brass rods was due to fresh water. Therefore, opponent‟s decision is contrary to terms and condition of policy. The policy copy produced by the complainant at page- 41, 42, 43, 44 is different than the copy of policy produced by the opponent with different (page 111) and terms and conditions on page 112 to 135. It would show the conduct of the opponent officers as to how they are acting in arbitrary and illegal manner and rejecting genuine claim of the consumers, which is nothing but deficiency as the policy did not mention the conditions namely ICC (B). However, the opponent has repudiated by the condition wrongly. The opponent has produced on record copy of survey report of EMIC. However, it has not proved its contents, hence the same is not admitted and the claim cannot be denied. The complainant has made claim as per the assessment of loss made by the said surveyor hence the insurance company cannot deny the claim. It is denied that the complainant has used any improper packing material and that was cause of damage, or that certificate issued by M/s. Patel Wooden Industry dated 31.01.2009 is not proper and that was reason for damage to goods, or the complainant cannot maintain the claim and loss is caused to the consignee. The surveyors themselves found that the condensation was due to fresh water wetting, issued certificate dated 28.07.2009 and also incorporated the amount of expenses incurred for reconditioning as also additional charge for NY port to Cleveland. The insurance company is wrongly relying upon the cause of damage as recorded in survey report dated 10.11.2008 and to have K.S.P CC-09-52 Page 8 of 15 reconsidered the claim in view of assessment certificate dated 28.07.2009 and paid the claim.
5. Heard advocates Shri S. C. Shah, for the Complainant and Shri V. P. Nanavaty, for the Bajaj Alliance General Insurance Co. Ltd. Read written submission.
6. The repudiation letter by the opponent Bajaj Alliance Gen. Ins. Co. Ltd. addressed to M/s. Stebco Inc. with CC to Rajhans Impex Pvt. Ltd. - the claimant dated 06.01.2008 with respect to policy No.: OG-08-2222-1006- 00000003, claim No.: OC-09-2204-1011-00000001, Damage Item: Brass Rods, Cause of Loss: Rusting/Corrosion, B/L No: ANLCANL8MUN0201 & OOLU2008004850, is: "This has reference to the above claim intimation, for which the survey was conducted by Surveyors & Adjusters M/s EWIG International Marine Corporation, New York. From their report, it was observed that green (wet) lumber had been used to fabricate cases, creating damp atmosphere within the wrappers. There is no external ingress of water or fortuity during the journey. It was FCL consignment which was intact and silver nitrate test found negative. As per surveyor, wet stain / corrosion to the brass rods are result of humidity condensation / moisture found within the original packing due to the wooden cases being constructed of green (non dried) lumber. We would like to draw your attention towards exclusion clause 4 of ICC (A) which states as under: 4.3 loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject matter insured. 4.4 loss damage or expense caused by inherent vice or nature of the subject matter insured. Apart from above, there is special exclusion $ 7 in insurance certificate which excludes the rusting, oxidation and K.S.P CC-09-52 Page 9 of 15 discoloration unless caused by perils insured under ICC (B). It is noted that none of the ICC B perils occurred. As such the loss / damage / depreciation to the goods, is due to inadequate packing / Rusting which are clear exclusions under policy as stated above and therefore the claim is not admissible and hence stand repudiated." The complainant in his complaint alleges that it has disputed and challenged the said finding of the said surveyor and asked that the survey report cannot be looked into, there being no affidavit of the surveyor. The argument is not acceptable for the reason that the report of the surveyor EWIG International Marine Corporation (EIMC) has been produced by the complainant himself. EWIG in its report certify that they did at the request of Messrs. Stebco Inc. (the import). Certificate by Patel Wooden Industries, dated 31.01.2009 is to the effect that wooden packing supplied by them for this was strictly as per guidelines and provision of International Trade Standards as laid down under ISPN-15, which is followed by countries world over. Now, it is clear that the certificate does not displace the finding of the surveyor, IPSM-15 is for paste control and does not relate to wooden case whether dry or wet.
7. For the complainant it is argued that the risk clause covers all risk of loss of or damage to the subject matter insured and in support submits National Insurance Co. Ltd. Vs. Mangalagowri Cashew Industries, (2006) 2 CPJ 32 (NC) wherein cashew nuts germinated during transport, it was held that it covers risk from warehouse to warehouse and it is comprehensive insurance policy with additional of institute Cargo cause- A which inter alia, provides a specific underwriting that the insurance covers all risk of loss or damage to the specific matter insured. K.S.P CC-09-52 Page 10 of 15 Mangalagowri Cashew Industries, (Supra) does not help the complainant because, the further words are „expert as provided in Clause 4, 5, 6 and 7‟. Now, the institute Cargo Clause-A in its risk Clause-1 says " the insurance covers all risk of loss of or damage to the subject matter insured except as provided in Clause 4, 5, 6 and 7 below." The exclusions Clause 4.3 thereof is "loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject matter insured (for the purpose of this Clause 4.3 „packing‟ shall be deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of this insurance or by the assured or their servants)". Aforesaid surveyor‟s report specifically found "Cause of Loss:
in our opinion wet stain/corrosion damage to the subject brass bars/rods are the result of moisture found within the original packaging due to the wooden cases being constructed of "green" (non-dried) lumber. The situation was exacerbated by wrapping the cases in fabric with little ability to "breath", then placing the wrapped cases in a closed container. There is no evidence to suggest that the damage/condition was due to a fortuitous circumstance during transit." These reports contained photographs also from which photographs No.3, 5, 6, 7, 8 also tend to support the surveyor‟s finding. The said survey report dated 10.11.2008 shows that silver nitrate field tests, where possible, were not reactive indicating fresh water damages. The statement of loss pursuant to cleaning of the rules dated 28.07.2009 by the State surveyor under the head details of loss is also Brass Rods with fresh water wetting damages (condensation). Now, it is clear that the damages by sea water or fresh K.S.P CC-09-52 Page 11 of 15 water does not take the case out of the aforesaid exclusion clause as to packaging.
8. For the complainant it is contended that they obtained policy with Institute Cause A only and not Institute Cause B as also disputed when for the insurance company written "as the policy is subject to Rusting, Oxidation and discoloration clause which says that this policy excluded Rusting & .. etc losses unless caused by perils insured under ICC (B).
Claim is for rusting. „It is clear that none of the ICC B perils have been operated, thus claims is not tenable‟. By saying „you have mentioned ICC Clause B which is not applicable to our policy as we have opted „ICC Clause A (All Risk Policy under Open Cover)‟. We fail to understand why the conditions of Clause B are pointed, when we have opted for wider cover i.e. „ICC Clause A‟. Hence there is no doubt / question for any EXCLUSIONS related to „Clause B‟. Now, marine open cover, below the Commodity Exclusion under the „Cargo details‟ provides „Rusting Oxidation and Discoloration clause‟; „Applicable clause and commodity warranty are attached with the open cover‟ and under the „clauses‟ writes, subject to the to the undernoted clauses, endorsements, special conditions and warranties attached which form part of the Open Cover. Any loss or damage due to rust or contamination is excluded unless caused by an insured peril.(1) Institute Cargo Clause (A) (2) Institute Strike Clause (Cargo) (3) Institute War Clauses (Cargo) (4) Institute Radio-Active Contamination Exclusion Clause (5) important Notice (6) Institute Classification Clause (7) Open Cover Schedule (8) Excess: The first _____% of the consignment value for each and every claim (9) Cargo ISM Endorsement. (10) Institute War Cancelation Cause (11) Seals intact K.S.P CC-09-52 Page 12 of 15 Clause (Applicable To FCL Consignments Only) (12) Shortage in Weight Clause (13) Rusting Oxidation And Discolouration Clause (14) Warranted packed to withstand the intended journey (15) Policy Cancellation clause. ... ... ... „Therefore, the policy was that applicable clause including (13) Rusting Oxidation and Discoloration Clause. Now, the Rusting, Oxidation and Discoloration Clause provide "This policy excludes Rusting, Oxidation and Discoloration unless caused by the perils insured under Institute Cargo Clause (B)". Institute Clause B under Risks Clause 1.2 (1.2.3) provides „entry of see lake or river water into vessel craft hold conveyance container liftvan or place of storage‟. Therefore, the loss is clearly excluded, no such water see, lake or river, having entered into the vessel craft, hold, conveyance, container, liftvan or place if storage.
9. For the reason stated the repudiation cannot be held to be unjustified but justified only.
10. The repudiation letter has nowhere raised the question of insurable interest with the exporter the complainant hereof. The stamp below the invoices that the bills for the amount shown on this invoices has been negotiated / sent for the collection, would not no such ground having been raised in repudiation letter, be any ground to argue that the complainant once sold the goods and received payment by the consignee, the consignor has lost the insurable interest and cannot lodge the claim vide citation in Parthbbhai Pravinbhai Ganatra Vs. Tata Aig General Insurance Co. Ltd., Revision Petition No. 3599 of 2011, decided on 07.06.2018, which says: ‟17. Coming to the first question, it is seen that the complainant has already received the payment from the consignee as is implied from the affidavit dated 27.05.2010 of the complainant referred K.S.P CC-09-52 Page 13 of 15 to by the learned counsel for the respondent above. The argument of the complainant is that the consignee can ask to refund the amount. However, no such document has been filed to prove that the consignee has asked refund of the paid amount and therefore, complaint cannot be decided on presumptions‟. Now, the policy is also covering warehouse to warehouse risk and therefore also the contention of the insurance company cannot be upheld vide Mangalagowri Cashew Industries, (Supra). In the said matter policy Institute Clause A under the transit clause provides, „Duration Clause 8, 8.1 This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either 8.1.1 on delivery to the Consignees or other final warehouse or place of storage at the destination named herein, 8.1.2 on delivery to any other warehouse or place of storage whether prior to or at the destination named herein, which the Assured elect to use either ... ... ... 8.1.3 on the expiry of 60 days after completion of discharge overside of the goods hereby insured from the oversea vessel at the final port of discharge, whichever shall first occur‟ and more particularly marine policy schedules read Mundra Port India of NY, USA, by sea and further to consignee warehouse. ... ... therefore contention by the Insurance Company is not acceptable.
11. For the reason stated the complaint fails.
12. It is pertinent to note that the survey was carried out at the instance of the consignee. The letter of repudiation dated 06.01.2008 was also addressed to consignee with CC to the complainant.
K.S.P CC-09-52 Page 14 of 15
FINAL ORDER
i) Complaint No. 52 of 2009 is dismissed.
ii) No order as to costs.
iii) Copy of the judgment be provided to the parties free of charge.
Pronounced in the open Court today on 28th day of September, 2021.
(J.Y.Shukla) (S.N.Vakil)
Member Judicial Member
K.S.P CC-09-52 Page 15 of 15