National Consumer Disputes Redressal
Smt. Ishrat Parveen vs Export Credit Guarantee Corporation Of ... on 1 October, 2012
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI ORIGINAL PETITION NO. 424 OF 2002 Smt. Ishrat Parveen, W/o Sri Abdul Rab, Prop. M/s. Parveen Carpets Ram Sahaipur, Bhadohi, District Sant Ravidas Nagar, Bhadohi, U.P. .Complainant Versus Export Credit Guarantee Corporation of India Ltd. Registered office at Express Towers, 10th Floor, Nariman Point, Mumbai 400 021 And having Branch amongst other places Including at P.C.F. Plaza Building, Nadesar, Varanasi, U.P. .........Opposite party BEFORE HONBLE MR. JUSTICE J.M. MALIK, PRESIDING MEMBER HONBLE MR. VINAY KUMAR, MEMBER For the Complainant : Mr. Mrigank Prabhakar, Advocate For the Opposite party : Mr. Santosh Paul, Advocate with Ms. Mohita Bagati, Advocate PRONOUNCED ON: 01.10.2012. ORDER
PER MR.VINAY KUMAR, MEMBER Complainant Smt. Ishrat Parveen has filed this complaint as proprietor of a business of export of woolen carpets and druggets. The subject matter of the present complaint arises from the alleged export order of 29.6.2000 received from M/s. Everest SA of Chile. As per the complaint petition, the goods were inspected by one D.S.Mukherji, local agent of the buyer, on 7.7.2000 and put on board the ship for Chile on 24.7.2000. In the meanwhile, two policies were obtained from the OP/Export Credit keeping this Export Credit Guarantee Corporation of India Ltd (ECGCIL) for coverage of the shipping risk and buyers credit limit. Both became operational w.e.f. 10.7.2000.
2. It is stated in the complaint petition that the cargo reached its destination in Chile but was lying at the port as the consignee did not have the original Bill of Lading (B/L) and for that reason, could not take the delivery. The Complainant took the assistance of the Embassy of India in Chile, later in February 2001, and was advised by them to take legal action against the agent of the buyer namely, Prakash Chandra Khatri. The Indian Embassy also informed on 9.3.2001 that the buyer had given a letter of 21.2.2001 alleging that they had been authorized by the Complainant through a letter to take delivery of the goods without furnishing B/L. As per the complaint petition, it was a forged and fabricated document and the signature of the Complainant had been forged on the alleged letter.
3. As per the complaint petition, efforts to find other buyers for the cargo having failed, the Complainant made a claim against the OP/ECGCI on the following grounds:-
a) Under the agreement between the OP and the Complainant, refusal to accept the goods or non-payment by the buyer was covered under policy No.40014/2000.
b) The OP had already been informed about the effort to find an alternate buyer.
c) The claim could not have been rejected as a fraudulent buyer is also covered under the terms and conditions of the policy taken from the OP.
d) The foreign buyer, M/s. Everest S.A. had been guaranteed by the Opposite party itself. The Complainant suffered huge losses because the buyer turned out to be fraudulent/cheat.
4. The complaint petition makes the following prayer:-
a) That the OP may be directed to pay Rs.29,32,009.00 to the complainant.
b) The opposite party may be directed to pay further and pendentelite interest @ 25% per annum with quarterly rest.
c) Cost of this case may be awarded to and in favour of the complainant.
d) Any other relief which may be deemed fit and proper in the facts and circumstances of this case, may be awarded to the complainant.
5. De hors the case of the complainant, OP ECGCIL has taken the stand that the case of the Complainant is based on a fake purchase order, as the foreign buyer had denied placing any order on the Complainant. The alleged loss was not occasioned by any risk covered under the Shipments (Comprehensive Risk) Policy. The policy provides cover against genuine credit risk to which exporters are exposed. It does not cover loss occasioned by bogus transactions.
6. As alleged, the Complainant failed to take proper care and prompt action to safeguard the goods despite specific instructions given by the OP in their letter of 3.11.2000. This was a violation of condition 7 (a) of the policy. Further, the foreign buyer has categorically informed the OP that no purchase order was placed by them on the Complainant. Therefore, when the document came to their bank they did not accept them. In this situation, after coming to know that the foreign buyer had not cleared the document, the Complainant was obliged under the terms of the policy to institute legal proceedings against the foreign buyer. Failure of the Complainant to take such action, was a violation of Proviso (d) in the policy and amounted to an attempt to defraud the OP.
7. Under the contract of insurance with the OP, the Complainant was required to declare the default of the foreign buyer, as per clause 8 (b) of the policy.
Failure to inform the OP in this behalf brings clause 19 of the policy in operation, under which liability of OP is excluded.
8. We have carefully considered the pleadings, evidence and the documents produced on behalf of two parties. Mr. M. Prabhakar, Advocate has been heard on behalf of the Complainant and Mr. Santosh Paul, Advocate, on behalf of the OP, Export Credit Guarantee Corporation of India Ltd.
Learned counsel for the Complainant emphasized that orders were placed by the local agent of the foreign buyer.
He referred to the relevant clause in the Risks Insured section of the relevant policy issued by the OP, under which failure or refusal of the buyer to pay for the goods is a covered risk.
The counsel also argued that the obligation of the insured as per Clause 7 of the policy has also been discharged by the Complainant. On the other hand, the counsel for the OP/ECGCIL vehemently argued that it was a case of fake purchase order generated to defraud the OP. The foreign buyer has informed the OP in writing that he never placed any order on the Complainant. Counsel for the OP also informed that the credit limit on the foreign buyer M/s. Everest SA was cancelled on 18.10.2000 due to adverse information received by the Corporation against it. The Complainant was promptly informed about this action.
9. In the affidavit evidence of Sri Abdul Rab, Proprietor, Parveen Carpets, it is stated that the consignment was shipped on 24.7.2000, wide B/L No. MOLU 396230327. Until 13.10.2000, he had no information about the arrival of the consignment at the destination, when he got an email (addressed to DS Mukherjee) from the buyer seeking extension of time for payment till the third week of November. Allegedly, the complainant wrote to ICF Shipping and Orient Shipping companies and enquired about the cargo. Along with the affidavit, a letter of 11.11.2000 written by M/s Orient Shipping Agency to the complainant, has been brought on record. It informed that the goods had reached on 16.9.2000 and were still lying at the port, as the consignee had not received the original B/L.
10. Significantly, the affidavit of Sri Abdul Rab states in Paras 16 and 17 that I state that they buyer M/s. Everest S. A Chile had contacted the complainant on 15/11/2000 and requested for original B/L. Consequently me i.e. the complainant had sent an e-mail on 20/11/2000 to the buyer for payment with copy to the opposite party and to the buyers main Agent at Jaipur Shri Ratan Singh.
I state that the Banker of the buyer, M/s.
CORP BANCA returned the documents on 20/11/2000 to the complainants Banker i.e. the Allahabad Bank, International Banking Branch, Taksal Theatre, Varanasi, on the ground that the Buyer/consignee, M/s. Everest S.A., had refused to accept and withdraw the documents.
This fact was brought to the notice of the opposite party vide form No.205, on 11-12-2000.
Thus, admittedly the complainant was contacted by the buyer on 15.11.2000 with a request for the original B/L. On 20.11.2000, he sent the email seeking payment. He could not have demanded payment if he had not authorized delivery of the consignment. Yet, before that on 7.11.2000 (as per para 13 of the same affidavit) he had already submitted Form 205 to the OP making a claim for the value of the consignment, on the ground that payment from the buyer had not been received within 90 days of dispatch of cargo i.e. within 23.10.2000. The complainant has made no effort to explain this conduct.
11. Further, as per para 18 of the affidavit I state that I the complainant vide my registered letter dated 28.11.2000 had requested to the Consulate General, Ministry of External Affairs, New Delhi to persuade the buyer i.e. M/s Everest SA for payment of the price of goods sent.
This is another clear admission that without ensuring payment for it, the complainant had permitted delivery of the consignment to the buyer. Else, there could have been no basis for seeking payment. However, what has remained unexplained is the fact that after admittedly seeking help of our Embassy in Chile on 28.11.2000 to persuade the buyer to pay for the goods sent, the complainant was taking assistance of the Indian agents (DS Mukherjee and Ratan Singh) of the same defaulting foreign buyer, to sell the consignment to M/s Empressa Imports/Exports of Paraguay on 18.12.2000 and M/s Saud Abdullah of Riyadh on 30.3. 2001. The details are in paras 19 and 20 of the complainants affidavit.
12. Further, in para 22 of the affidavit of the complainant, it is claimed that the buyer had forged the letter of authority and alleged that it was sent to him by the complainant himself. The affidavit says It is submitted that the same was forged and fabricated on the following grounds--
a.
The alleged letter was not typed on genuine letter pad of the complainants firm.
b.
The phone/fax 27256 which was printed on the said letter pad belonged to the (inspection) agent Sri Deo Shankae Mukherjee of the buyers M/s Everest SA.
c.
The signature of the complainant was forged on the alleged letter.
13. The affidavit claims that the complainant issued legal notice to the buyer and their agent in India on 31.3.2001.(para
24). Thus, it is clear from the Complainants own account, that his reaction was too late and too little, as he had sought the intervention of the Consulate of India in Chile to secure his payment, as far back as 28.11.2000.(para 18). No explanation is forthcoming as to why he had to wait for four long months to even issue a legal notice, when goods had been allegedly, got released by the foreign buyer by forging the signature of the complainant (para 22).
Therefore, we have no hesitation in holding that the claim of forgery of signature is a mere afterthought and does not go with the admissions of the complainant, discussed above.
14. As per the written response of the OP, they were informed by M/s. Everest S.A. in its letter of 21.2.2001 that the Complainant had approached them and sought their help in release of the goods. As the buyer wrote, The same letters were sent to the shipping companies for the release of good without original Bill of Lading. On the one hand, the Complainant filed criminal complaint No. 1431 of 2001 against the partner and the Indian agent of M/s. Everest S.A. under Section 120- A, 420, 467, 468 and 471 of IPC in the Court of Chief Judicial Magistrate, S. R. Nagar. On the other, he simultaneously, tried to resell the goods through the same agent. By no stretch of imagination, this can be the conduct of a seller who is seeking legal remedy against a buyer who has taken delivery of the goods through forged documents and without payment.
15. In para 14 of the complaint petition, it is stated that the OP by their letter of 18.10.2000 had informed that due to certain adverse information received by them about the foreign buyer (M/s. Everest SA) the credit facility for the buyer had been temporarily suspended. By a subsequent letter of 24.10.2000 the OP had informed that they had recalled the credit facility in relation to this buyer. In the meanwhile, the goods had already been shipped on 24.7.2000. The Complainant had therefore alleged that the withdrawal of credit facility should not apply to the shipment already made.
According to OP, this is deliberate attempt to mislead, as the OP had soon thereafter given detailed instructions to the Complainant in their letter of 3.11.2000 to take prompt action. At that point of time, the OP had not learnt that M/s. Everest SA had denied placing the order on the Complainant.
Allegedly, the Complainant kept corresponding with the Embassy of India in Chile, Corp Banca and the OP, without taking up the matter with the foreign buyer and without institution of any proceedings against them.
16. Placing very substantial reliance on the communications received from M/s. Everest SA to it OP/ECGCI, has vehemently denied any obligation under the policy on the ground of attempt to defraud and failure to comply with the conditions.
The OP has also urged that the complaint should be dismissed as the Complainant has not approached the Commission with clean hands.
17. In order to see whether there was any deficiency of service on the part of the OP, we need to consider the grounds on which the claim of the Complainant had been rejected by the OP. The claim filed by the complainant on 7.11.2000, for payment was rejected by the OP in their letter of 4.6.2002. The ground for repudiation of the claim is explained in this letter in the following terms:-
As you have not taken any care/prompt action to safeguard the goods inspite our advise vide our letter dated 03.11.2000. In this connection, you may refer our clause 7 (a) of the Policy Bond that use all reasonable and usual care, skill and farethought and take all practicable measures, including any measures which may be required by the Corporation to prevent or minimize loss.
As such we found from letter dated 01.02.2002 that the goods may be damaged, therefore, it could not be sale out to alternate buyer. In this Connection, you have been informed vide our letter dated 05.02.2002 that if they fail to take prompt action to safeguard the goods and the goods are damaged, you may claim for the same with insurance Company and Corporations liability is not attracted at this stage.
In view of the above, you have failed to minimize the loss and take necessary action to safeguard the goods and observe necessary care and prudence as required under clause 7(a) of the policy as mentioned above. Therefore, the claim under policy is not tenable and regret our liability due to above mentioned lapses.
18. The above communication clearly shows that it was for failure to safeguard the goods despite the advice of the ECGCIL given to the Complainant in their letter of 3.11.2000. The advice was categorical and clear. The Complainant had been advised to:-
Safeguard the goods by shifting them to bonded warehouse.
If negotiations fail, locate an alternate buyer and/resell the goods with our prior approval.
If re-import is a better option, you may bring back the goods with our prior approval.
This advice was given nearly three months before the foreign buyer wrote to the OP, informing that it had not placed any export order on the Complainant. As examined in the foregoing paras, instead of moving the goods to a safe location, the Complainant allowed their delivery to the foreign buyer, without any payment. This would be prior to 28.11.2000 when he sought help of the Indian Embassy in Chile to pursuade the buyer to pay for the goods sent. Yet, for some unexplained reason, the Complainant wrote to ECGCIL on 15.3.2002 that he suspected that his consignment may have been damaged by insect infestation as in the case of another exporter.
19. It also needs to be viewed in the background of the following communications from the ECGCIL to the complainant--.
a) the Complainant was informed by a the letter of 11.10.2000 from Mr. B.L. Bhatacharjee, Branch Manager, ECGCIL that the foreign buyer had defaulted in making payments to few other exporters also.
b) 18.10.2000, the export credit facility for the foreign buyer was suspended by the OP.
c) 24.10.2000, the export credit facility for the foreign buyer was withdrawn.
The OP had thus, sufficiently cautioned the Complainant about the conduct of this foreign buyer and given clear directions about the way forward. However, the records disclose that the Complainant was far from being cautious in dealing with the buyer. In fact, contrary to his obligation and to the advice of the OP, the complainant was working with the foreign buyer, keeping the OP in dark.
20. The affidavit evidence of the Complainant itself shows that on 13.10.2000 the complainant received a request on behalf of foreign buyer for extension of time for payment, till the third week of November. This was followed by another request on 15.11.2000 for original Bill of Lading. As discussed earlier in this order, the Complainant apparently allowed the goods to be released to the foreign buyer without B/L. This has been confirmed by the foreign buyer itself in correspondence with the OP. It also derives support from the fact that few days later, on 20.11.2000, the Complainant e-mailed the local agent of the foreign buyer on seeking payment for the goods. There would be no cause to send this e-mail, had the complainant not been aware of the delivery.
21. Admittedly, on 16.11.2000, the Complainant wrote a letter to OP (Annexure P-15) informing that there was no news about the arrival of the goods at the destination nor was any payment received for the same. The letter even requested the OP to give addresses of few alternate buyers in Chile to whom the goods could be resold. But, significantly this letter made no mention of the fact that a day earlier, on 15.11.2000, the foreign buyer had contacted the complainant and sought the original Bill of Lading !
22. From the detailed examination above, it is clear that the complainant had completely failed to take reasonable care of the goods as well as to take measures to prevent or minimized loss. On the contrary, evidence on record clearly establishes that the conduct of the Complainant was against the specific advice given to him by the ECGCIL in their letter of 311.2000. Records also establish that the Complainant filed a claim under the policy on 7.11.2000 and thereafter actively cooperated with the foreign buyer to release the consignment, without payment. All along, while the OP had kept the Complainant advised and informed, the latter had failed to keep the OP informed about its direct contact with representative of the foreign buyer, whether for release of the consignment, or seeking payment for it or for search of alternate buyers.
23. We thus have a case where the Complainant has not only violated conditions of the policy given by the ECGCIL but has actively kept the ECGCIL in the dark about dealings with the foreign buyer. Therefore, the Complainant has not come to this Commission with clean hands.
For such matters, Honble Supreme Court of India has laid down in S.P. Chengalvaraya Naidu (dead) by LRs Vs. Jagannath (dead) by LRs & Ors., (1994) 1 SCC 1 has observed;
The courts of law are meant for imparting justice between the parties. One who comes to the Court, must come with clean hands. We are constrained to say that more often than not, process of the Court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, whos case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation.
24. Therefore, in our view, rejection of the claim of the complainant by the ECGCIL is fully justified in the facts and circumstances of this case. The OP has committed no deficiency of service in this behalf. The Original Petition No.424 of 2002 is consequently dismissed with cost of Rs.25000/-. The same shall be paid by the Complainant into the Consumer Legal Aid Account of this Commission within three months. Delay, if any, shall carry interest at 10% per annum.
.Sd/-
(J.M.MALIK,J.) PRESIDING MEMBER Sd/-.
(VINAY KUMAR) MEMBER s./-