State Consumer Disputes Redressal Commission
Thakkar Exim vs Tata Aig Gen. Ins. Co. Ltd on 29 March, 2023
Details DD MM YYYY
Date of Judgment 29 03 2023
Date of Filing 05 08 2014
Duration 24 7 8
IN THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION
STATE OF GUJARAT
COURT -1
CONSUMER COMPLAINT NO. 217 OF 2014
COMPLAINANT: THAKKAR EXIM
(A proprietary firm through Proprietor N H Thakkar)
Rajdev Street, Sanganva Chowk,
Rajkot- 360001
V/s
OPPONENT: TATA AIG GEN. INSURANCE COMPANY LIMITED
2nd Floor, Amrish, Opp. G T Sheth High School,
Nr. K K V Hall Circle, Kalawad Road,
RAJKOT 360005.
CORUM: Hon'ble Mr. Justice V P Patel, President
Hon'ble Ms. A C Rawal Member
Appearance: Mr. R V Sakaria Advocate for Complainant Mr. V P Nanavaty Advocate for Opposite Party (Order by Hon'ble Mr. Justice V P Patel, President) [1]. The complaint has been filed under Sec. 12 read with Sec. 17 of The Consumer Protection Act, 1986 (herein after referred as "Act" or "The Act") and prayed that the opponent be directed to pay US $ 31768 equivalent to INR Rs.20,42,682/- with interest @ 18 % p.a. from 3/2/2014 till realisation, cost of litigation and Rs. 1,00,000/- towards compensation for harassment and hardship caused to the complainant.
Rnm cc2172014 Page 1 of 14Facts of the complaint:
[2]. That the complainant is a proprietorship firm engaged in the business of export and import whereas the opponent is a licensed insurer company regulated by IRDA, carrying on general insurance business in India. That the complainant had availed Open Marine Policy vide Policy No. 0830012116 for the period from 25/4/2013 to 24/4/2014 to cover annual turnover of total consignment value of Rs.7,00,00,000/- with a condition of reinstatement of sum insured utilisation or depletion of sum insured. That the policy so obtained was All Risk Policy with SRCC & War and basis of valuation was CIF/FOB/CIF+ 10% on agreed value basis. That it is general practice in Open Marine Policy, where the insured declares consignment and value in advance using / through e-marine. That complainant had therefore declared consignment on 23/9/2013 for Invoice No. TE038/26/13 dated 16/8/2013 for which declaration certificate no. F689384332 was given. That the certificate so given was covering insured goods i.e. 5200 bags of Non Basmati rice (25 % Broken) in 10 separate containers described in Bill of Lading dated 14/09/2013 for shipping bill dated 3/9/2013 and subject material was to covered under transit risk from Kolkata India to Tamatave Port of Madagascar. That the name of consignee was declared as ETS Mohammed Tamatave, Madagascar and invoice value of goods declared was US$ 1,14,400/-/- (with fix exchange rate of US $ 1 = INR 64.30) on CIF basis and the insurance cover was granted for the agreed value of Rs. 81,70,791.20. That the stuffing activity of container was undertaken by Central Warehousing Corporation in presence of the agent of the seller from whom the complainant purchased export goods and being consignor complainant had no control over the said authority.
[3]. That the consignment was covered under ICC-Clause A of Marine Insurance Policy and the clauses thereof remains standard since it is drafted by Lloyds of London. It is alleged that the complainant was given only schedule of policy and not supplied full text of policy which includes detail terms and conditions of the policy. It is alleged that the consignment covered under above referred certificate sustained damage during transit and loss was intimated by consignee to Lloyds agent at Madagascar and also as opponent's office at AIG South Africa, the opponent insurer appointed R. Duponsel& Co. as Surveyor and Loss Assessor and on the basis of observation made by him the opponent came out with self-suited exclusions to repudiate legitimate claim. That the consignee had extended fullest co-operation in investigation and assessment of claim and submitted all required papers demanded by surveyor. The complainant also had submitted necessary papers to insurer as and when called for. The said surveyor had observed vide his report dated 12/11/2013 that 22 bags were missing, whereas 1422 bags were found damaged and became unfit for human consumption and shall have to destroy. The value of loss therefore taken at US$31284/- plus US$ 3128 Rnm cc2172014 Page 2 of 14 (being 10% in addition) means US $ 34412 (rounded off) and applying exchange rate of Rs. 64.30 it comes to Rs.22,12,717.32. However, thereafter insurer had series of communication with regard to cause of damage and it's coverage under the policy and subsequently insurer had repudiated claim vide letter dated 3/2/2014. It is alleged that surveyor and insurer had presumed cause of loss without there being any solid base for the same. It is also alleged further that repudiation of insurance claim was based on whimsical, illogical and on flimsy grounds which is unjust and arbitrary in nature and seems to have exercised rights for avoiding its liability under the contract of insurance. The complainant had also issued legal notice and called upon insurer to settle claim but when no reply received filed this complaint and prayed for relief as mentioned above. Together with complaint, the complainant has filed affidavit in support, copy of declaration under open marine policy, schedule of policy, copy of sale Contract, Copy of invoice, bill of lading, shipping bill, letter of consignee intimating loss, correspondence exchanged between insured and insurer, surveyor report provided by insurer, repudiation letter, and authority letter from consignee and notice to insurer.
Defence:
[4]. On 11/8/2014, this Commission ordered to admit complaint for adjudication and also further ordered to issue notice returnable on 14/08/2014. On service of notice, the opponent insurer filed appearance through advocate and also filed detail reply (page 83) and contended therein that the subject matter of complaint is requiring detail evidence and therefore it would not be proper to exercise summary jurisdiction for adjudication of this complaint. It is also contended that complaint is not legally tenable qua the insurer and therefore it should be dismissed. It is submitted that complainant had arranged to export consignment of 10 FCL containers containing 5200 bags of Non Basmati Rice from Kolkata port to Toamassina - Madagascar by sea. The complainant had obtained Marine Cargo Open Policy as per ICC-A Clause and consignment was declared through e-marine facility where declaration certificate is auto generated through web enabled program. It is submitted that insured consignment reached destination port de Toamassina on 9/10/2013 and containers were delivered to the consignee's premises located 1, Boulevard Joffre, Anjoma, Tomasina. The un-stuffing activities were conducted in the presence of a survey agent from the cabinet of Consultancy appointed by the forwarding agent to act for and on behalf of the consignees. At the destination, out of 5200 bags, 1422 bags were found in damaged / mildewed condition and 22 bags found missing. The surveyor visited the place of consignee on 21/10/2013 at Ets Mohammad's premises where it was found that damages due to infiltration of water through rusted parts of the roof. The attendant of un-stuffing operation informed consignee that walls and floor of all containers were lines with Kraft paper, that there were desiccant bags inside the containers and that all the ventilation holes inside the containers were covered with Rnm cc2172014 Page 3 of 14 adhesive tapes. Therefore, the surveyor had asked for pre-loading report and container cleanliness certificate prior to stuffing. The consignee provided bill of lading which do not have such information. The surveyor was therefore unable to say about pre-loading condition of the cargo. On visual verification of external condition, it was found that there were traces of impact, rust and dents on various areas on the front and side panes but there were no holes. When the doors of containers were opened, droplets of water were observed inside the containers and the Kraft paper lining on the walls and sides of the floor were humid. The surveyor noted a foul odour and many bags were mildewed stained. Samples from the goods collected and sent to laboratory to assess usefulness of material and it was found that it is not fit for human consumption. Thus the surveyor concluded that mildew was probably caused by condensation due to lack of air flow inside container since bags were stored up to high or ingress of water through gaskets as many bags in the front rows were pressed / crushed against the doors which could have rendered the container not water proof. The salinity tests proved negative results.
[5]. It is submitted that when the report of surveyor obtained, claim was processed and revisited the terms and conditions of policy which revealed that claim is not admissible under policy and therefore intimated vide letter dated 3/2/2014 mentioning therein that policy excludes mould, mildew, fungus, and infestation loss unless it is caused by ICC-B perils and also excludes wet damages, moisture and contamination losses. It is submitted that complainant has procured policy through insurance broker and therefore it is not true to suggest he was not aware of the contents of policy. The opponent reproduced ICC-B perils in reply and submitted that there is no deficiency in service on the part of insurer and therefore complainant is not entitle to any amount though prayed for. The insurer has submitted copy of Marine Cargo Open Policy, copy of declaration certificate, surveyor report and letter of repudiation and affidavit of surveyor.
Rejoinder:
[6]. The complainant has filed affidavit in rejoinder and submitted that facts stated in reply of insurer is not acceptable. It is submitted that it is not true in absence of proof that the loss had happened due to excluded perils as it canvassed by the insurer. It is not true and correct that surveyor had asked for preloading report at any point of time from the insured. It is also denied that consignee had only provided bill of loading. It is further submitted that it was " All Risk Policy" wherein it is categorically mentioned list of documents which require for claim processing and in such list nowhere it is mentioned that Preloading report or certificate of cleanliness would be necessary. The complainant thereafter served interrogatory questions to surveyor which was replied on oath.Rnm cc2172014 Page 4 of 14
[7]. Parties have submitted written submissions which are on record.
[8]. Arguments of Complainant Advocate:
(a). Mr. R V Sakaria, advocate for the complainant submitted that consignment was insured under Marine Cargo Open Policy which is "All Risk Policy". It is submitted that the Central Warehousing Corporation is a professional body having expertise in stuffing containers etc. and when complainant has hired it's services, the moment, goods were handed over to Central Warehousing Corporation for stuffing activity, role of insured comes to an end because it is beyond his control to direct or supervise its activities. Therefore, it is not correct to say that pre loading activity was not done properly unless concrete proof to that effect has been produced on record. It is well established principles of interpretation of contract that a party who has undertaken an obligation, on receipt of required consideration, and more particularly when it is mentioned in the document to cover "All Risk" exclusion thereof becomes exceptional one and therefore Terms & Conditions mentioned in the contract are required to be strictly interpreted mainly against that party. Therefore, if insurer wants to exercise its right through exclusion clause, burden is upon the insurer to prove existence of such fact which entitles it to avoid Contract of Insurance. It is submitted that surveyor did not have confirmed cause of loss, but it is his presumption that in absence of any other cause this may be the reason of loss. Thus, the observation is based on assumption and presumption which cannot be used for avoiding liability especially "All Risk Policy". Before coming to a confirm conclusion surveyor has not confirmed entry of water in the container or lift van through silver nitrate taste. All though it is mentioned that salinity test had negative results but no such document is produced on record. Thus, unless the insurer proves through corroborative proof that cause of damage was excluded under policy, the loss that was caused to the complainant, is required to be indemnified by the insurer as it is under contractual obligation to do so. Generally, marine insurance policies are issued as "All Risk Policy"
because the moment consignment delivered to shipper for transportation, the insured has no control over it. In such a case, it is insurer, who has to prove that repudiation made is justified in all respect. The insurer is failed to prove any specific cause that has caused loss to the complainant insured and therefore repudiation can be said arbitrary and unjust. The complainant should be paid the agreed value of the damaged consignment. Since, indemnification has been delayed unjustifiably, complainant must be paid interest on the amount of loss and also compensation for harassment and cost of litigation.
[9]. Arguments of Opponent:
Mr. Darshil Parikh for Mr. V P Nanavaty, advocate for the insurer submits that sum insured, nature of policy, declaration under policy, details of bill of lading, value of consignment and Rnm cc2172014 Page 5 of 14 details regarding transportation route etc are not in dispute. It is also not in dispute that loss has not occurred to insured but dispute is with regard to cause of loss. In insurance contract, the insurer is liable only when the loss has occurred due to insured peril. In the instant case, insured has proved loss but according to observation made by surveyor bags of Rice were damaged due to mildew which was probably caused due to condensation due to lack of air flow inside the containers. It was also observed that there could be ingress of water through door gasket. Referring photographs taken by surveyor he submitted that it could be seen that there was presence of dew and the Kraft liners on floor as well as on the sides were humid. The exclusion clause provides that mildew, if not because of ICC-B perils than it is excluded. He also further submits that even wet damages, moisture and contamination losses are not covered under the policy. According to him, complainant has yet not proved on record that the cause of loss observed by surveyor was covered within the policy. Regarding claim admissibility under clause ICC-B, he submits that surveyor in his report nowhere asserted that there was entry of sea, lake or river water in the container. There is no document even from shipper to prove that there was entry of sea, lake or river water. It is in these circumstances, he submitted that claim is not payable under policy and repudiation was justified. He relies upon judgment of Hon'ble Supreme Court in the matter between Bajaj Allianz Gen. Insurance Co. vs. State of Madhya Pradesh reported in AIR-2020-SC-2237 and Parthbhai Ganatra vs. Tata AIG Gen. Insu. Co reported at 2018-3-CPJ-450(NC). He finally submits that complaint should be dismissed as no deficiency in service proved.
[10]. Merits of the Case:
Heard both the advocates on facts and revealed that the entire complaint is revolving around whether cause of loss is covered within the scope of policy or it squarely falls within exclusion clause of policy. Obviously, to adjudicate issue of controversy between parties, it would be very much necessary to know what understood between parties of contract at the time of entering into contract and to gather such information one has to study, analyse and scrutiny of the policy document which would reveal scope of cover from the admitted evidence on record. The complainant has alleged that the insurer company never supplied full text of insurance policy and supplied only "Schedule of Policy". The complainant has produced copy of original Schedule of Policy (page 13 of compilation) issued from Rajkot office of the opponent insurer which bears office seal of the opponent company. On another, the opponent insurer also placed on record Certificate of Insurance (page 112 of compilation) which bears signature of same officer, same date of issue, same issuing office. It is most surprising that plain reading of these two sets of contract documents, details of both these documents are differing to a certain extent and not the same! There are differences in clauses, special conditions and warranties in both these set of documents. A document (Page 13 to Rnm cc2172014 Page 6 of 14
16) is produced by complainant along with complaint titled "Specific Marine Policy" (page
13) under the head "Clauses, special conditions and warranties" reads as under:
"Cargo ISM endorsement, Institute Cargo Clause (A) -1-1-82, Institute Classification Clause
-1/8/97, Institute Radioactive Contamination Exclusion clause -1/10/90, Institute Strike Clause (Cargo) -1/1/82, Institute Theft Pilferage & Non-delivery clause -1/12/82, Institute War clause (Cargo) -1/1/82, Termination of Transit clause (terrorism). Important Notice: warranted that goods will be despatched only by tarpaulin covered / closed vehicles / rail wagons" subject matter insured (commodity & packaging for AIU use only.96 & 050) Non Basmati Rice On page 14 (page no. 2 of 4) it reads as under:
" Annual estimated Turnover: Export Rs. 70,000,000.00 Initial sum insured: Export Rs. 30,000,000.00 Sending Limits: Rs. 6,000,000.00 Location Limits: Rs. 6,000,000.00 Basis of Valuation: CIF/FOB/C&F + 10% THIS INSURANCE IS SUBJECT TO THE FOLLOWING CLAUSES, SPECIAL CONDITIONS, WARRANTIES AND EXCLUSIONS AS PRINTED HEREIN OR ATTACHED HERETO.
TERMS OF COVER:
All Risks & war & Strikes, Inland Transit (Rail & Road) - class A (All risks), Strikes, Riots and Civil Commotion Clause (Inland Transit not in conjunction with Ocean going voyage), Limitation of liability clause, Institute Radioactive, Contamination, chemical, biological, bio-chemical and electromagnetic weapons exclusion clause 10.11.03, Termination of Transit Clause (Terrorism), Institute Cargo Clause (A) -1.1.82, Institute Strike Clause (Cargo)- 1.1.82, Institute Classification clause - 01.01.2001, Cargo ESM Endorsement, FOB Clause, Institute Replacement clause, Special Conditions /warranties/ Exclusions: Cargo ISM forwarding charging clause, Excluding unexplained shortages, Excluding shortages/damages from sound packages/sealed intact containers, Warranted trucks/wagons should be properly covered with tarpaulin, Warranted cargo to be containerised in fully enclosed containers and de-stuffing at final destination only. Excluding mould, mildew, fungus and infestation losses unless caused by ICC-(B)/ ITC -(B) perils only.
Excluding wet damages, moisture, and contamination losses,
Excluding hook damages, Excluding Bulk/ Break Bulk Cargo from the scope of policy,
Warranted that all items are new, Set and Pair Clause
Excluding rusting, oxidation and discoloration losses unless caused by ICC-(B) / ITC-(B) perils, Excluding denting, chipping, bending, twisting, scratching and edge deformation unless caused by ICC-(B) / ITC- (B) Excluding electronic, electrical and mechanical de-arrangement unless caused by ICC-(B) perils / ITC-(B) perils, Institute Cyber attack Exclusion Clause (10/11/2003)"Rnm cc2172014 Page 7 of 14
On another hand, policy document produced by opponent insurer (page 94 to 97) titled "Marine Cargo Open Policy" shows as under:
"..... XXXX Interest Insured: upon consignment said to contain (Rice &Besan 50 kg Plastic bag each), clothes, plastic chair, Home Appliances & Corrugated sheets Period: From 25/4/2013 to 24/4/2014 BDI or any date prior to expiry date on which the sum insured /premium is exhausted by shipments/ declarations or until cancelled as provided for in terms of the cancellation conditions of this policy.
Packing: plastic bag /standard and Customary
Conveyance: Per Rail / Road, Sea
Voyage: XXXXX
XXXXXX
Terms of Cover: All Risks & War & Strikes"
All other details remain the same as complainant's copy. However, at page 112 there is document titled "Certificate of Insurance" wherein "Clauses, special Conditions and warranties" reads as under:
"Institute Cargo Clause -A -1/1/82 CL252, Institute Strike clause (cargo) -1/1/82 CL256, Institute War Clause (Cargo) 1/1/82 CL255, Institute Classification Clause -1/1/2001-CL354, Cargo ESM Endorsement, Institute Radioactive Contamination, Chemical, biological, Biochemical and Electromagnetic Weapons Exclusion clause 10.11.03 CL370, Institute Cyber Attack Exclusion Clause 10.11.03 CL380, Institute Theft Pilferage & Non-delivery Clause - 1/12/82 CL272, Termination of Transit Clause (terrorism), Institute Standard Conditions for Cargo contracts -1/4/82, Important Notice:" subject matter insured (Commodity and Packaging for AIU use only 96 & 050) Non Basmati Rice.
[10.1] Thus, it is clear that there are certain details which are not exactly the same as it was given to complainant in document of contract of Insurance. How these two different sets of documents are available which bears signature of same officer of insurer that is not understood. It is well established principle that where there are two different versions of contract available, the version which would enlarge the scope of coverage and is beneficial to insured that interpretation would be accepted as the agreed terms of contract of insurance because entering into contract was intended to indemnify the loss that causes unexpectedly. It is important to note here that in contract document possessed by the complainant, important notice describes obligation on insured for mode of packing, whereas in contract document of insurer it is kept blank. It is more serious because the insurer has repudiated the claim raising an issue with regard to warranty as to loading and suitability of packing.
[11]. It is not in dispute that insured had availed insurance coverage which was "All Risks Policy"
and therefore while considering coverage and exclusion, widest possible meaning should be accepted as coverage and exclusion is an exception. The insurance company has repudiated claim vide letter dated 3/2/2014 which reads as under:
Rnm cc2172014 Page 8 of 14"we refer to the above claim reported to our office based on the documents made available to us and the survey report, we have the following observations.
1. A consignment of 10 nos. FCL containers containing 5200 bags of Non Basmati Rice was exported from Kolkata India to Madagascar.
2. At destination out of the above containers of 5200 bags around 1442 bags were found to have received in damaged and mildewed conditions and 22 bags missing.
3. The damages could have been attributed to infiltration of water through the rusted parts of the roof. "Infiltration of water into container host on top in rusted condition of metal" Damages caused by water during transport.
4. During survey foul smell emanated from the bags. The floors of all the containers were lines with Kraft paper. The ventilation holes inside the containers were covered with adhesive tapes.
5. The surveyor has opined the cause of loss was due to condensation inside the containers aggravated by lack of air flow from the ventilation holes being taped and or ingress of water through door gaskets since many bags in the front rows were pressed flush against the doors (over stuffing).
6. Salinity tests proved negative results.
7. The consignment is insured vide open policy no. 0830012116 as per ICC-A clause. The policy has the following exclusion which state as under-
The Policy excludes mould, mildew, fungus and infestation losses caused by ICC-B perils only Excluding wet damages, moisture and contamination losses.
Excluding unexplained shortages.
In view of the forgoing, we regret, therefore, that we are unable to consider your claim. Should you believe that we have overlooked any material fact or circumstances, or should you wish to present an alternative interpretation of any relevant policy provision, please draw the same to our attention for our further consideration within 15 days of receipt of this letter.
The foregoing declination of insurer's liability is issued on the facts as presently known. We reserve the right to extend or modify this declination should additional facts or circumstances become known to us. None of the foregoing shall be taken as a waiver of, nor create estoppel to invoke any right, defense or limitation available to the insurer under the policy of insurance, at law or otherwise all of which are expressly reserved hereby.
If no representation/ clarification is received by us within 15 days of receipt of this letter, the claim will be finally treated as repudiated on the grounds clearly mentioned in the letter"
[12]. This makes it clear that insurer has relied upon the report of surveyor and observations made therein. What is expected from the insurer is to taste the admissibility of claim on the basis of facts, circumstances and true spirit of entering into contract of insurance. The basic fact that it was claim under "All risks Policy" is not considered at all. The relevant provision on which reliance is placed is reads as under:
"warranted that cargo to be containerised in fully enclosed containers and de-stuffing at final destination only. Excluding mould, mildew, fungus and infestation losses unless caused by ICC-(B) / ITC-(B) perils only. Excluding wet damages, moisture and contamination losses."
From the above wordings, obligations of the complainant insured is limited only.
[a]. That cargo should be fully containerised [b]. That de-stuffing only at final destination.
Rnm cc2172014 Page 9 of 14[12.1]. It is not in dispute that it was not fully containerised. On the contrary observation of surveyor is that it was intact Cargo. It is also not in dispute that de-stuffing was arranged at final destination only. Thus, the insured's obligation was over. So far exclusion is concerned it is for the insurer to establish that loss was due to excluded perils. To ascertain limited obligation once again, it is to be kept in mind, "Important Notice" written in document given to complainant reads as under:
"warranted that goods will be despatched only by tarpaulin covered / closed vehicle / railway wagons"
[12.2]. In the instant case, it is to be kept in mind that Marine Cargo Open Policy issued and produced here by the opponent insurer (page 94) obligation of insured is mentioned in following words: Packing: Plastic Bag /standard and customary.
It is not in dispute that insured has taken adequate care for the compliance of his part of obligation. It is also an admitted fact that claim is not repudiated because of any breach of condition on the part of complainant but it is repudiated for alleged non coverage of cause of loss in policy. The exclusion clauses in "All Risk Policy" required to be interpreted differently and unless there is concrete proof of "existence of excluded peril", the claim is required to be admitted.
[13]. In the instant case, no doubt, the surveyor has reported that he has observed mildewed or mildewed stained bags. He also observed that there may be "ingress of water" through rusted roofs. How and when "ingress of water" entered is yet not established. Once the goods exported were containerised in plastic bags and loaded on vessel, the "ingress of water"
would not have been possible except some events that might have taken place during transit. Being unaware of any such event / incidence, insured cannot be compelled to lead evidence in this regard. It is case of insurer that if mildew, mould, fungus or infestation is because of ICC- (B) perils then it is covered otherwise it is not. In a sense, it is exclusion to exclusion.
Meaning thereby it is included if caused by ICC-B perils. Now mildew was because of ICC-B perils or not is not certain because there is no concrete proof. Burden lies on insurer to prove that it is because of excluded perils since it claims repudiation of policy on this very ground. To avoid liability under Contract, insurer must prove existence of that fact which entitles it for the exercise of its right. Thus, when insurer applies exclusion clause, it is obligatory on its part, to prove with concrete proof that cause of loss was no other reason but the perils excluded. This obligation has not been discharged by the insurer in this case and it has simply relied upon the observations made by the surveyor. According to surveyor, loss or damage because of mildew, how mildew caused that nobody knows and therefore it is mere presumption of surveyor that it may not be because of ICC-B peril. The surveyor also observe Rnm cc2172014 Page 10 of 14 that there are possibilities of "ingress of water" through gasket and if it is so, the loss might be because of wet damage which is also not covered in the policy. Apart from all other things, it is certain that the surveyor also is not sure about the cause of loss but shown probabilities and therefore he has applied two different exclusion clauses. Here, loss or damage is certain but reason behind the "cause of loss" is not certain. Whether mildewed, mould or infestation was due to any other peril or because of reasons mentioned in ICC-B perils is not certain. It is well established principles of law of insurance that where cause of loss is not certain and if, there are more than one probabilities of cause of loss available, a peril which falls in exclusion clause should be avoided unless proved by concrete evidence. Therefore, it is for the insurer to establish that cause of loss is beyond the scope of perils mentioned in ICC-(B).
[14]. The wordings used in ICC-(B) peril reads as under:
"This insurance covers, except as provided in Clauses 4,5,6 and 7 below, 1.1. Loss or damage to the subject matter insured reasonably attributable to 1.1.1 fire or explosion 1.1.2 vessel or craft being stranded grounded sunk or capsized 1.1.3 overturning or derailment of land conveyance 1.1.4 collision or contact of vessel craft or conveyance with any external object other than water 1.1.5 discharge of cargo at a port of distress 1.1.6 earthquake, volcanic eruption or lightning 1.2. Loss of or damage to the subject matter insured caused by 1.2.1 general average sacrifice 1.2.2 jettison or washing overboard 1.2.3 entry of sea lake or river water into vessel, craft, hold, conveyance, container, lift van or place of storage.
1.3 Total loss of any package lost overboard or dropped whilst loading on to, or unloading from, vessel or craft.
XXXXXX"
It is the insurer who has to establish that mildew, infestation, ingression of water etc was not because of aforesaid reason then only it can apply exclusion clause to avoid liability. Nothing has been proved by the insurer and therefore repudiation cannot be said justified looking from any angle. In this case, the only base of evidence is surveyor's report that had an occasion to see Cargo at the port of destination. The surveyor also had filed affidavit and he was cross examined through interrogatory questions. Apart from other questions there are three questions which throw some light as to what extent his report can be relied upon.
" 9. Is it true that the loss to the consignment is caused by the peril covered under the policy?
It is subject to insurance policy terms and conditions by insurance company to the complainant.
10. Is it true that the loss to the consignment is caused by the ICC-B perils during the whole course of transit?Rnm cc2172014 Page 11 of 14
No. It is not correct. The loss was not caused by ICC-B perils during the whole course of transit.
11. Is it true that you have not made any comment with regard to admissibility of liability under the policy?
The admissibility of liability under the policy would be subject to insurance policy and its terms and conditions"
Surveyor's answer in Q. No.10 makes it further clear that according to him loss was not caused on account of ICC-B perils. Therefore, reason must be other than perils covered in ICC- B. Thus, it has to be established on record by insurer through any other evidence, which proves beyond doubt, the cause, which is not falling within the scope of ICC- B. The surveyor has tried to avoid clear answer in other two questions. It is in this circumstances it can be said that surveyor's opinion is based on presumptions from the observations made by him. It is also interesting to note that even complainant has no occasion to see the condition of goods at that point of time and therefore placing burden on complainant to prove is not in good taste. The insurer can provide concrete evidence through surveyor but in this case failed to do so. The insurer ought not to have blindly followed opinion of surveyor. So far stuffing activity is concerned, the insured had hired services of professional warehousing corporation and therefore unsuitability of containerised activity is to be accepted as proper unless proved otherwise. Insurance claim cannot be rejected on "presumption" as to existence of excluded perils. One of the contentions of insurer through surveyor is that the insured's representative failed to provide pre-inspection report so as to establish cleanliness and thorough packing. The complainant's stand is that it was never demanded and he refers page 112 (certificate of insurance) where insurance company has mentioned that in case of claim following documents should be provided to insured and in this Pre-inspection report is not mentioned. This makes clear that it was not necessary for settlement of claim.
[15]. There is another way of looking. In all 5200 bags were exported and out of these only 1422 bags were found damaged. All these bags were stored in five different containers. Had it been because of substandard packing, as it alleged through different words, the remaining bags also would have been damaged which is not. That itself speaks about the standard and customary packing. The only obligation is under the contract for use of plastic bags / standard and customary packing. The surveyor has not raised any doubt for the packing of those saved bags. Thus, it can be inferred that when it was supplied, packing was standard and customary and warranty will not operate against insured.
[16]. Once it is established that surveyor has no concrete reasons to frame his opinion but it has presumed that it might be because of excluded perils. This observation cannot be sustained in law to repudiate somebody's legitimate right. Thus, when loss is covered by the policy, according to sound principles of indemnification, the insured is entitle to indemnification to Rnm cc2172014 Page 12 of 14 the extent actual loss suffered by him. It is not in dispute that complainant had supplied 5200 bags out of which 1422 bags were damaged and 22 bags were found missing therefore entitle to amount equivalent to value of damaged goods. The complainant has submitted copy of commercial invoice which suggests that price of the goods was US$ 440 /MT. Considering each bag of 50 kg total damaged goods comes to 71100 kg = 71.10 MT. Therefore total loss would be of US$ 31284 (71.10 x 440 = 31284) and it will be Rs. 20,11,561/- (rounded off) considering exchange rate was Rs. 64.30 /US$. Therefore, insurer is liable to pay Rs.20,11,561/- towards indemnification. Although complainant has claimed in the complaint that insurance was for CIF + 10 % but it was misreading on the part of complainant. As such it is C & F + 10 % and not CIF + 10% as claimed by the complainant. It is not in dispute that complainant had supplied material on CIF basis and therefore he is entitled up to the loss mentioned above. The complainant being commercial enterprise, not entitle for compensation for harassment and mental agony.
[17]. The next issue is who is entitle for the loss amount. Usually in movable goods, it is law that ownership passes to possession holder. In such a case, it is the consignee who will get benefit of the same. Page 55 of the compilation is a letter written by the consignee to insured consignor to register claim on their behalf. It is also not in dispute that contract of insurance was executed between insurer and insured complainant and therefore being hirer of service complainant has legitimate right to claim insurance amount.
[18]. Mr. Darshil Parikh, advocate for opponent insurer referred judgment of Hon'ble Supreme Court in the matter between Bajaj Allianze General Insurance vs. State of Madhyapradesh (AIR-2020-SC- 2237) and submits that mere assertion that loss occurred during transit is not sufficient. He submitted that Hon'ble Apex Court referred (1985) 2 All ER 712 wherein it has been observed as under:
"... it requires a judge of first instance, before he finds that a particular event occurred, to be satisfied on the evidence that it is more likely to have occurred than not. If such a judge concludes, on a whole series of cogent grounds, that the occurrence of an event is extremely improbable, a finding by him that it is nevertheless more likely to have occurred than not, does not accord with common sense. This is especially so when it is open to the judge to say simply that the evidence leaves him in doubt whether the event occurred or not, and that the party on whom the burden of proving that the event occurred lies has therefore failed to discharge the burden"
Mr. Parikh also further referred that " for the respondent to prove its case, a mere assertion that the loss is occurred during the course of transit is not sufficient. The burden of proof lies on the respondent to show that the loss occurred was covered within the terms of policy and that on a balance of probabilities there exist a proximate cause between the loss incurred and helicopter being in transit." Mr. Parikh submits that complainant has not proved any existence of probabilities Rnm cc2172014 Page 13 of 14 with proximate cause of loss and therefore not entitle to insurance amount. We are not in agreement with the submission canvassed because in the case referred there was report that there were two separate damages and there was no co-relationship amongst two. So far second damage concerned it was clear opinion that it cannot occurred during transit but prior to test flight. Thus the loss was not covered in marine policy. In the instant case, loss has occurred undoubtedly during transit but cause of loss may or may not be covered within the scope of policy and surveyors has presumed (without there being any concrete evidence) and concluded that it may be because of excluded perils. Surprisingly, if the said peril is caused because of another peril than it would have been covered within the scope of policy is the condition. Thus, finding of surveyor does not inspire credibility to rely upon. In this case, it is all risk policy, therefore, unless the insurer establishes excluded coverage substantially, benefits always goes in favour of insured. The another judgment he referred is Parthbhai Ganatra vs. Tata AIG Gen. however in this case, the surveyor had carried out silver nitrate test to ascertain whether consignment was affected by sea water and it was found that it was not because of sea water. In the case in hand, no such test was carried out therefore factually it differs. Both these judgments are not helpful to insurer and therefore insurer failed to prove that loss was because of excluded peril and we therefore pass following order:
ORDER The complaint no. 217 of 2014 is hereby partly allowed.
The opponent insurer is directed to pay the complainant the sum of Rs. 20,11,561/- (equivalent to US $ 31284) together with interest at the rate of 8 % from the date of complaint till realisation.
The complainant is also entitle to litigation cost from the opponent insurer which is quantified at Rs. 10000/-
Pronounced by circulation today on this 29th day of March, 2023.
Mrs. A C Rawal Mr. Justice V P Patel
Member President.
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