State Consumer Disputes Redressal Commission
M/S C J Shah & Co vs United India Insurance Co Ltd on 12 October, 2012
C-298-2011
BEFORE THE
HON'BLE STATE CONSUMER DISPUTES REDRESSAL
COMMISSION, MAHARASHTRA, MUMBAI
Complaint
Case No. CC/11/298
1. M/S C J SHAH & CO
105 BAJAJ BHAVAN 10 TH FLOOR,
NARIMAN POINT MUMBAI 400021
MAHARASHTRA
...........Complainant(s)
Versus
1. UNITED INDIA INSURANCE CO LTD
DO NO 1
UNIVERSAL INSURANCE BUILDING SIR P M ROAD
FORT MUMBAI 400021
MAHARASHTRA
............Opp.Party(s)
BEFORE:
HON'BLE Mr.Justice S.B.Mhase PRESIDENT
HON'BLE Mr. S.R. Khanzode Judicial Member
HON'BLE MR. Narendra Kawde MEMBER PRESENT:
Mr.U.B. Wavikar, Advocate for the Complainant.
None for the Opponent.
O R D E R Per Shri Narendra Kawde Honble Member:(1)
Complainant M/s. C.J. Shah & Co. (hereinafter referred to as the Complainant Company for the sake of brevity) is a partnership firm registered under the Indian Partnership Act 1961. Complainant Company has filed this complaint against the United India Insurance Company Ltd. (hereinafter referred to as the Opponent Insurance Company for the sake of brevity) alleging deficiency in service as the claim under Marine Cargo Specific Voyage Policy has been repudiated.(2)
The salient features giving rise to file this complaint are that, Complainant Company subscribed to Insurance policy No.020100/21/08/01/00002041 with sum assured of `2,12,22,432/-, issued by Opponent Insurance Co., extending the transit risk covered for the material called Hexane 580 MT imported from Israel to India, Kandla Mumbai Port. The Complainant Company imported 580 M.T. Hexane with insurance on CIF basis plus 10% for all risk including W.A.P.N.D. War risk, leakage, damage, denting and breaking due to whatsoever reason from suppliers warehouse to the warehouse of the Complainant Company. The said shipment was carried with Bill of Lading from Haifa Port ( Israel) to Kandla Port.
The sailing of the shipments commenced on 5th November, 2008 with required Cargo Manifest and Certificate of Analysis of the material Hexane.
During transit journey the said vessel (M.T. Karagol) was hijacked near the coast of Yemen by the Pirates and it was reported in the news media on 14.11.2008 and immediately on knowledge through BBC News the Complainant Company reported the incidence to the Opponent Insurance Company.
The Opponent Insurance Company had appointed first time M/s.W.K. Webster & Co. Ltd., London, the Surveyors for assessing the loss of the material. The vessel was released by the pirates on 12.01.2009 and thereafter, it was sailed and arrived at Kandla Port on 27.01.2009. After reaching the vessel at Kandla Port the Complainant Company found that there was shortage of material with contamination. This was informed by the Complainant Company to the Opponent Insurance Company and upon receiving this information Opponent Insurance Company appointed the Surveyor second time M/s.S.K. Singh & Associates. Sample from each consignment was sent for analysis to M/s.J.B. Boda Laboratory and the said laboratory had issued certificate stating that there was high presence of Benzene (contaminating elements) i.e. 1.31% in the imported material Hexane as against maximum allowable ratio of Benzene 0.20%. The Surveyor assessed the shortage of material to the tune of 13.182 Mts. as against the weight mentioned in the Bill of Lading.
(3)Upon receiving the survey report of M/s.S.K. Singh Associates in respect of shortage of material and the report of laboratory showing high presence of Benzene (contaminating elements), the Complainant Company lodged their preliminary claim on 30.01.2009. Later on detailed claim of `58,54,033/-
was submitted to the Opponent Insurance Company on 04.03.2009. The Opponent Insurance Company was directed to submit various documents required for settlement of the claim which was complied with by the Complainant Company on 05.06.2009. In a joint meeting arranged on 04.12.2009 at the Regional Office of the Opponent Insurance Company, the representative of Surveyor of M/s.W.K. Webster, London, was also present to discuss the settlement of claim. However, not satisfied, the Opponent Insurance Company raised certain doubts and referred the same for clarification from the Surveyor M/s.Wilson Surveyors & Adjusters Pvt. Ltd. on the point of contamination and shortage of the material.
The detailed report on both the points of shortage and contamination of material was submitted by the said Surveyor.
However, with continuous follow-up with the Opponent Insurance Company, no positive response was coming forward for settlement of the claim and with a view to minimize the loss, the contaminated Hexane with high level of Benzene was sold by the Complainant Company at discounted rate on 03.05.2010 and revised claim as discussed with the Opponent Insurance Company for `57,42,033/- was submitted on 10.06.2010. However, the Opponent Insurance Company repudiated the Insurance claim on 15.04.2011 stating that the product was of off specifications prior to shipment. Aggrieved with the repudiation of claim the Complainant Company filed consumer complaint claiming compensation of `57,42,033/- together with interest @15% per annum w.e.f. 30.01.2009 and compensation of `10,00,000/- together `50,000/- as cost of the litigation on 04.11.2011.
(4)The complaint was admitted on 24th November, 2011 and notice dated 13.12.2011 with R.P.A.D. was sent to the Opponent Insurance Company which was duly served and the acknowledgement received.
However, on the next date of hearing i.e. on 1st February, 2012 the Opponent Insurance Company though served preferred to remain absent and therefore, the complaint was ordered to be proceeded without written version of the Opponent Insurance Company.
At the next date of hearing i.e. on 4th April, 2012, the Opponent Insurance Company again preferred to remain absent and finally at the time of argument i.e. on 18th July, 2012 neither Opponent Insurance Company nor their Advocate was absent. Intimation of consequent hearing though displayed on the notice board of this Commission and uploaded on internet and also the officers of the Insurance Companies in general were given to understand to appear in all insurance matters, yet the Opponent Insurance Company preferred to remain absent and therefore, the complaint was proceeded ex-parte. After hearing Ld.Advocate Mr.Wavikar for the Complainant and perusal of the record placed before us, it was reserved for orders.
(5)The factual matrix in this case is that, the Complainant Company imported Hexane material from Haifa Port, Israel to Kandla Mumbai Port, India. The Transit Insurance Policy was purchased by the Complainant Company effective from 05.11.2008 to extend the transit insurance cover from the port of loading to the port of destination. The sum assured was to the tune of `2,12,22,432/-. As per the Bill of Lading the Hexane material was sailed through the vessel MT Kargo, on 05.11.2008 and it reached the port of destination at Kandla on 27.01.2009.
There was delay to cover the destination as the cargo carrying the material was hijacked in the sea of Yemen and vessel was in the custody of Pirates till 12.01.2009.
The Opponent Insurance Company appointed M/s.W.K. Webster & Co. Ltd., London as their first Surveyor for assessing the loss due to hijacking of the material by the Pirates. The said Surveyor reported that there was shortage of material and contamination as the Vessel was forcefully commanded by hijackers by changing the voyage by mishandling material. The Pirates were indulged in the malicious act in the property with an intention to damage the tank accessories and to contaminate the product.
(6)We observe that as per the record at the point of loading port the quantity of Hexane was 582.113 M.T. After reaching the material at Kandla Port, Surveyor M/s.S.K. Singh & Associates, assessed the quantity and ascertained that the shortage was worked out to 13.182 MTs., as against 582.113 M.T. measured at loading port at Haifa. It was further reported that the material was contaminated with Benzene contents of 1.61% after having analysed the same when reached to Kandla Port as per laboratory analysis report dated 29th January, 2009. Analysis Report of GESCO, the Agents for SGS dated 05.11.2008 conducted at loading port prior to shipment of the material, contents of Benzene were 0.00%. It was reported by the Surveyor M/s. Wilson Surveyors & Adjusters Pvt. Ltd. that all formalities were complied with by Complainant Company before loading, during loading and after loading of cargo and confirmed the quality of liquid before sailing of vessel for avoiding contamination. However, the Opponent Insurance Company repudiated the claim on 15th April, 2011, stating that the Benzene contents were 0.96%. The Benzene level as informed by the Opponent Insurance Company was 0.96% prior to shipment and therefore, the claim was repudiated stating that the Benzene level (element of contamination of Hexane) was beyond the permissible limit of 0.20% at the load port itself. Relying on the findings of RCA Laboratories, Mumbai, who analyzed the Benzene contents at the request of the Surveyor - M/s.Wilson Surveyors and Adjustors Pvt. Ltd., Mumbai and report dated 27.02.2009, which shows Benzene level 0.96% of the sample at load port shore tank and load port ship tank. The clarification was sought by the Opponent Insurance Company from the Surveyor by their letter dated 8th December, 2009. Said Surveyor M/s.Wilson Surveyors and Adjustors Pvt. Ltd., submitted their explanation on 18th January, 2010, stating that contamination loss is covered under the policy. However, to the query of Benzene presence of 0.96% at load port is not replied in a straightway in paragraph 2 of the reply dated 18th January, 2010, which is reproduced as below:
The condition of ships compartments where Hexane was loaded and quality of product before and after loading at the time of vessel sailed proved as under:
(a) -----
(b) The Hexane samples just before loading, from shore tank No.59 taken in presence of the shippers representative for quality control an ascertaining moisture content or for checking temperature. The testing done in a laboratory name and parameters of the Hexane at the loading point and produced report to the master of the ship to submit it to the end-users.
(c) Hexane sample before loading and during loading to check the quality, line clean liners and tank cleanliness. Testing is done in a laboratory. These samples were taken Ships First fool, Ships Tanks after loading in accordance with proper practice and that tests were done correctly and recorded the same as per Enshrined in the Institute of Petroleums Petroleum Measuring Manual on applying tank sealed individually and properly label recording details. The reports distributed to shipper, to make for remittance to receivers at port of discharge. The samples were jointly taken prepared and sealed along with Gadvi personnel retained with SGS for future record.
(d) ---
(e) ---
(f) As per Gadvi Special provisions to ASBATANK Charter party the list of Last cargoes last shipped has to submitted at the time of inspection of vessel and as per provision of this contract any cargo defined as black the vessel be rejected and they have to find alternative vessel to the same date and same tariff. This is the provision made to avoid contamination.
All these formalities were done before loading, during loading and after loading of cargo and confirmed the quality of liquid before sailing of vessel for avoiding contamination.
Thus, Laboratory report of GESCO, (the Agents for SGS, Haifa) mentions 0.00% Benzene presence in load port and on arrival in India at destination port it is mentioned 1.61% (as per report of M/s.J.B. Boda Laboratory). Detailed reasons for contamination are submitted by the said Surveyor justifying contamination. Permissible Benzene contents as per certificate of quality issued by SGS Haifa ( Israel) issued on 05.11.2008 prior to shipment of the said material clearly reflects result of Benzene presence as 0.00%. It is not understandable that RCA Laboratories based in Mumbai concluding the result of Benzene presence on 27.02.2009 of the sample at the loading port stating that the sample identification at loading port was 0.96%.
Certainly these findings are concluded by the said laboratory on 27.02.2009 and vouched by the representative of the said Surveyor. Said report is duly signed by M/s.SGS India Pvt. Ltd., M/s.Ericson & Richards ( Gujarat), M/s. Wilson Surveyors and Adjustors Pvt. Ltd., Mumbai, M/s. J.B. Boda Surveyors Private Limited, Gandhidham and Mr.Nilesh Mody of C.J. Shah & Co.
(7)It is further observed from the report dated 27.02.2009 filed by the principal surveyor M/S.W.K. Webster & Co. Ltd. that the contamination appeared to have occurred on the board of the vessel and most likely due to improper cleaning of the vessels tank/cargo line etc. The domestic surveyor M/s.S.K. Singh & Associates in whose presence after reaching the material at Kandla Port the laboratory tests were carried to ascertain the contamination due to presence of Benzene, the result of Benzene contents was found to be 1.61%. Said Surveyor M/s.S.K. Singh & Associates reported shortage of material due to operational handling losses at stages of operation on load port and discharge port.
The Opponent Insurance Company erroneously relied on RCA Laboratory report dated 27th February, 2009 for the presence of Benzene contents when apparently that was carried after reaching the material at Indian Port i.e. Destination Port and after a lapse of almost 10 months from the date of shipment. We do not find any supporting document to establish that the Benzene level or the percentage thereof was in excess of the permissible limit before shipment of the material at the loading port. Therefore, the ground on which the repudiation of the claim was decided is baseless and without any supporting material.
(8)What is pertinent to note that detailed claim was submitted by the Complainant Company on 04.03.2009. First Survey Report hijacking the shipment by the Pirates was submitted by the first Authorised Surveyors on 27.05.2009. Further clarification from the Surveyor about contamination and shortage of material was sought for by the Opponent Insurance Company which came to be explained and clarified and reported by the said Surveyor on 18.01.2010. The contaminated Hexane was sold at the discounted rate as explained by the Complainant Company to minimize the loss to the extent of 20% to 25% and the same was informed on 03.05.2010 to the Opponent Insurance Company. Revised claim reducing the discounted cost was submitted on 10.06.2010. Yet the Opponent Insurance Company repudiated the claim on 15.04.2011, i.e. almost after a period of nine months (from 10.06.2010 i.e. date of submitting the revised claim by the Complainant). Though apparently in this case cause of action arose on 27.01.2009 i.e. on certificate of analysis of the material by the laboratory which established contamination of Benzene in excess of permissible limit, yet this cause continued further because of the inaction on part of Opponent Insurance Company to settle the claim either rejecting or accepting the same within the prescribed time limit of 30 days after accepting all required documents as per provisions of Regulation 9 of I.R.D.A. (Policyholders interests) Regulations 2002.
The Opponent Insurance Company though there was a duty casts upon them to follow the said regulations to decide the claim either by rejecting or accepting within a period of 30 days after having received all the reports required for the purpose of settlement of the claim, they failed to do so. A useful reference can be made to Sub-Regulation 2 of the Regulation 9 which says that Surveyor in any case shall not take more than six months to furnish the report from the date of his appointment. Further, if any additional information is required, such information shall be called by the Insurance Company within 15 days from the receipt of the first survey report and the Surveyor is under obligation to make such additional report within the period of three weeks from the date of communication from the Insurer. After receiving final report or the additional report from the Surveyor, it is obligatory on the part of the Insurance Company to decide about the settlement of claim either by rejecting or accepting the same within a period of 30 days. In the case on hand, the final report/explanation on certain points from the Surveyor was received by the Insurance Company on 18.01.2010, however, the repudiation letter came to be issued on 15.04.2011. Thus, prescribed time limit under the regulation has been followed more in breach than in observance by the Opponent Insurance Company.
Therefore, the cause of action in the case on hand extended till repudiation of the claim i.e. on 15.04.2011.
In view of this, the complaint filed before us is well within the limitation.
(9)On careful scrutiny of the record we observe that the Complainant Company took timely steps to prove the loss suffered by them while material was in transit from load port to the port of destination.
There is no evidence to show that the Hexane material was contaminated due to Benzene contents in excess of permissible limit prior to shipment as relied upon by the Opponent Insurance Company.
On the contrary, certificate of quality recorded prior to shipment i.e. on 05.11.2008 at the load port, the Benzene contents shows 0.00% confirming that the material was not contaminated prior to shipment. The Benzene contents increased in excess of the permissible limit during transit due to delay in sailing of the vessel because of forceful commands of hijackers on vessel, mishandling of material and their indulgence in malicious act to damage the tank accessories to contaminate the product as reported by the authorized surveyor. Both the Surveyors attributed the cause of shortage of material by giving detailed report stating that the operational and handling loss at various stages of operations i.e. leakage, spillage etc. had occurred due to mishandling of the same by the Pirates while vessel was in unlawful custody.
(10)We have considered this case in its entirety and we find that the complaint has a substantive merit and the repudiation of the claim under the Insurance Policy is arbitrary and without any supporting documentary evidence. By repudiating the insurance claim the Opponent Insurance Company has incurred deficiency in service to the Complainant Company and hence, Complainant is entitled to get an amount of `57,42,033/- together with interest from the date of filing of the consumer complaint, i.e. from 04.11.2011. We hold accordingly and pass the following order:
O R D E R
(i) Complaint is partly allowed.
(ii) Opponent Insurance Company is directed to pay an amount of `57,42,033/- together with interest @10% per annum from the date of filing of the consumer complaint, i.e. from 04.11.2011 till realization of the entire amount.
(iii) Rest of the claims of the Complainant stand rejected as not specifically admitted.
(iv) In the given circumstances, parties to bear their own costs.
Pronounced on 12th October, 2012.
[HON'BLE Mr.Justice S.B.Mhase] PRESIDENT [HON'BLE Mr. S.R. Khanzode] Judicial Member [HON'BLE MR.
Narendra Kawde] MEMBER ep