State Consumer Disputes Redressal Commission
Cross Tarde Links vs Ecgc Ltd. & Ors on 17 August, 2023
FA NO.273/2022
CROSS TRADE LINKS V. ECGC LTD.
IN THE DELHI STATE CONSUMER DISPUTES
REDRESSAL COMMISSION
Date of Institution:28.12.2022
Date of hearing:04.05.2023
Date of Decision: 17.08.2023
FIRSTAPPEAL NO.273/2022
IN THE MATTER OF
CROSS TRADE LINKS
Flat No.130, Site No.4,
VikasPuri, New Delhi.
...Appellant
(Through:Mr. Abhishek Yadav, Advocate)
VERSUS
1. ECGC LIMITED
10th Floor, Express Tower,
Nariman Point, Mumbai - 400 021.
2. ECGC LIMITED
Regional Office,
4th Floor, Tower -3,
NBCC Office Complex, East Kidwai Nagar,
New Delhi -110023.
...Respondent
(Through:Ms. Babita Kushwaha,
Advocate)
CORAM:
HON'BLE JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
HON'BLE MS PINKI, MEMBER (JUDICIAL)
MR. J.P. AGRAWAL, MEMBER
DISMISSED PAGE 1 OF 12
FA NO.273/2022
CROSS TRADE LINKS V. ECGC LTD.
Present: None for the parties.
PER: HON'BLE JUSTICE SANGITA DHINGRA
SEHGAL,PRESIDENT
JUDGMENT
1. The facts relevant for the disbursal of the present case as per the District Forum are as under:
"1. The present complaint has been filed against OP for rejection of complainant's insurance claim for loss suffered in exports made by Complainant to buyer. The complainant had availed of shipment comprehensive risk (SCR)Policy from OP vide Policy no. 0270002963 for the period 01/10/2015 to 30/09/2016 which was renewed on 26/10/2016 valid for 01/10/2016 to 30/09/2017 for total sum insured to 10 Crores on payment of payable premium of Rs.10,000/- made to OP whereby OP was to provide 90% coverage with maximum liabilities of OP limited to 10 crores. As per the Terms & Conditions of Policy, the Complainant was required to get a credit limit approved by OPs on buyers to whom exports was to be made by the Complainant and this risk of non-payment by the buyers was insured by OP to the extent of credit limit issued by OPs. The complainant accordingly applied for a credit limit approval to OP for the buyer. Accordingly vide a letter dated 24.05.2016 a credit limit of Rs.2,00,00,000/- was approved against M/s CJC Logistic (PTY) Ltd. Johannesburg, Republic of South Africa (buyer) with percentage cover of 90%. The credit limit was applicable to shipment made on or after 20/05/2016, thereby risk of non- payment by buyer was duly insured by the OPs to the extent of credit limit issued by OPs for insolvency/or protracted default of buyer(CJC). The complainant received two purchase orders from buyer for readymade garments on 24/02/2016 and 26/04/2016 DISMISSED PAGE 2 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
which four invoices were raised in April, 2016 for order dated 24/02/2016 and 05 invoices on the buyer in August 2016 for order dated 24/05/2016. However, the buyer defaulted in making payment against first consignment and OP rejected the complainant's request for extension of due date vide letter dated 28/10/2016. The buyer defaulted in payment of second consignment as well for which reasons the complainant visited the buyer in South Africa to get the dues clear but finding no avenue to realize payment, the Complainant engaged Debt Collection Agency MNS Credit Management Group Pvt. Ltd. on 12/04/2017 for recovery of dues from the buyers.
Thereafter, the complainant filed statement of claim with OP on 12/04/2017 for a sum of Rs. 2,60,20,122/- being 90% of the loss of Rs. 2,89,11,247/- which was the total loss suffered pertaining to both shipments. However, OP vide repudiation letter dated 23/04/2018 rejected the claim of the Complainant for reasons of lack of due diligence and efforts to minimize the loss in violation of clause 7(a) and (d) of policy bond and also with respect to shipment dated 17/05/2016 and 24/09/2016 and lack of initiation of legal action against buyer by the Complainant etc. The complainant made first representation dated 07/05/2018 to OP against the rejection but the representation was rejected by OP vide letter dated 04/08/2018 citing irregularities/discrepancies in purchase order, consignment, documents and invoices drawn with respect to shipment and bills dated 26/04/2016, 17/05/2016 and 24/09/2016 in violation of clause 7(a), (c) and (d) of policy bond apart from expiry of import license of Amity Impacts on 19/05/2016 much before shipment dated 24/09/2016 as also non- submission of SAD500 which is a customer declaration form used in South Africa for delivery of consignment for which reason debt has not been acknowledged by the buyer. The Complainant thereafter made second representation dated 05/11/2018 with OP which was again rejected by OP vide letter dated 05/03/2019 reiterating the stand taken by it in its previous rejection letter dated 04/08/2018. Thereafter the complainant kept pursuing the matter with OP through meetings and telephonic conversation and vide email dated 28/12/2020 to Complainant, OP asked for documents Bank Realization Certificate(BRC) and Foreign Inward DISMISSED PAGE 3 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
Remittance Certificate(IFRC) in respect of payment received for the shipments(at least two shipments for each buyer) from all Four buyers i.e. Amity Impacts, MNS Commercial Brokers, LLC Dubai, CJC Logistic(PTY Ltd.) and Kimono General Trading LLC, Dubai. The complainant accordingly reply e-mail dated 29/12/2020 provided the BRC to the OP with respect to each buyer and mentioned in the said email that it's Bank(Punjab and Sindh Bank} has not issued any FIRC of any of the exports Bills as where was no practice to do so. However, OP vide a final rejection letter dated 27/01/2022 rejected the claim of Complainant with respect to all shipments made to the all Four buyers. The complaint has alleged that the rejection of claim by OP is in violation of Master Manual on Processing and Settlement of claims under short Term Policies (Manual as well as IRDA guidelines dated 20/09/2011 in its circular. Therefore, feeling aggrieved by the arbitrary, illegal, whimsical, supercilious, irrational and unjustified rejection of claim by OP, the present complaint has been filed by the Complainant against OPs for issuance of direction of OP to release the Complainant insurance claim Amount of Rs.2,60,20,122/- along with interest as per IRDA Regulation 2017 and Rs.5 lacs as compensation for mental agony and harassment.
2. The said complaint filed by the complainant under the Consumer Protection Act, 2019 was dismissed by the Ld. District Commission vide its orderdated 24.11.2022 on the ground of limitation, holding as under:
"6. After having exhaustively dealt with the settled proposition of law onlimitation as has been discussed in the legal discourse, let usreexamine the chronology of events culminating in the filing of complaint from the date of cause of action. Records reveal that Causeof action first arose in 2016 when payments for shipments made by Complainant got stuck at the end of respective buyers and thecomplainant lodged a claim with OP in 2017 which was rejectedbetween 2017-2018 after which from March, 2019 onwards till end of December, 2020, there was total silence between the parties.
DISMISSED PAGE 4 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
7. In cases of this nature, the cause of action is based on source of injury and, in the present instance, the source is rejection of claim & representations made their against and the injury is "loss of money". The very essence of continuity in cause of action is that there shouldbe an act which creates a continuous source of injury and the doer of the act should be held responsible and liable for continuation of the said injury. To put it in plain terms "continuous cause of action simplymeans continuous source of injury". On a careful examination, wehardly see any presence of these two elements in the instant case soas to sustain the plea of continuity in cause of action, for, the allegedinjury/financial loss that occurred as a result of a rejected claim by OP between October 2017 till August, 2018 subsequent act of commission/omission on the part of the OP has never been shown by the Complainants to suggest any continuity in cause of action. That being so, when the consequences resulting from a single source by themselves would not constitute a fresh or further cause of action soas to term it a 'continuity in cause of action', the events enumeratedby the complainant viz., making several representations one after theother are all nothing but consequences flowing from the said single instance; thus, we see no substance in the claim for continuity incause of action. At the risk of repetition, it is underlined that consequences arising from the same injury that gave rise to the cause of action can never be cited as grounds for continuity in causeof action for reviving a time-barred dispute. In the present case, when the alleged act of rejection of claim and representation not giverise to a liability de die in diem, the endeavor of the complainant to hopelessly convert the cause of action into 'continuity in cause of action' for reviving a dead complaint that was hit by limitation,cannot be legally permitted. In the decision reported in Richard Raja Singh(Dr.) Vs. Ford Motor Co. Ltd., IV (2014) CPJ 509 (NC), the National Commission categorically held that neither service of notice nor OPs' response to such notice gave rise to any freshcause of action. Therefore, once the Complainant had come to knowthat claim was rejected in 2017-18 as also the representations forreview of repudiation representation rejected in August, 2018 itshould have approached the Consumer Forum within the limitationperiod. Since they miserably failed in doing so nor filed the complaint along with DISMISSED PAGE 5 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
condonation of application delay, We are of the considered view that, for the alleged deficiency of service that took place October 2017 till August, 2018, the complainants/appellants belatedly filed the complaint beyond the limitation period of two years Le., only on September, 2022, as such, the complaint is barred by limitation. Since the appellants failed to convince us on the limitation point, there is noneed to go into the merits of the case. Accordingly, we reject the complaint in limine.
8. Therefore, the complaint is dismissed on grounds of being barredunder limitation under Section 24A and 69 of CPA as is the settled lawexhaustively dealt with. Even otherwise, the relief claimed is more than Rs.1 crore in all cases whereas the pecuniary jurisdiction of District Commission has been reduced to Rs.50 Lacs Section 34 (1) (as amended vide notification dated 30-12-2021 by Ministry ofConsumer Affairs, Food and Public Distribution). Therefore, thecomplaint also merits dismissal on the grounds of relief soughtexceeding the pecuniary jurisdiction of this Commission as accordedunder Section 34(1) of CPA, 2019 as amended up to date. Therefore,the complaint is dismissed in limine on grounds of limitation underSection 69 and pecuniary Jurisdiction under Section 34(1) of CPA, 2019. No order as to cost.
9. It is made clear that we have not gone into the merits of the dispute between the parties and therefore this order will not come in the way of complainant to avail of legal remedy by approaching appropriate Court having jurisdiction to adjudicate such complaints which he isfree to exercise as per law (but Consumer Protection Fora is not for him).
3. Aggrieved by the aforesaid order of the District Commission, the Appellant/Complainant has preferred the present appeal, contending that the District Commission failed to appreciate that the period of limitation began on 27.01.2022 i.e. after the final rejection of the claim of the Appellant. It is stated that the Appellant could not have filed the complaint before exhausting all DISMISSED PAGE 6 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
the remedies available to the Appellant. It is stated that as each representation was referred to a higher officer than the one who rejected the claim, every rejection gave rise to fresh cause of action. It is stated that the District Commission has wrongly held that limitation commence from the rejection of the second representation made by the Appellant i.e. 05.03.2019.
4. It is further stated in the appeal that District Commission erroneously observed that the Appellant had exhausted its opportunity to raise two representations in August 2018. It is stated that District Commission erroneously came to conclusion that sending legal notice, making representations, exchange of communication, does not extend the period of limitation, however, the case of the Appellant does not fall under any of the said category; failed to appreciate that the time period between the lodgment of claim on 14.11.2017 till final rejection on 27.01.2022 the claim was pending before the Respondent for about two years. The Appellant has also challenged the impugned order stating that the District Commission erred in holding that as the claim amount and compensation amount was more than the pecuniary jurisdiction of the District Commission, the complaint was not maintainable.
5. The respondent has filed reply to the appeal. We have perused the appeal, the record of the District Forum and impugned order.
6. In our opinion, the question which needs to be determined in this appeal is whether the complaint filed by the Appellant before District Commission was within the period of two years from the date on which the cause of action has arisen and that the complaint was rightly dismissed on the point of pecuniary jurisdiction.
DISMISSED PAGE 7 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
7. Perusal of record shows that the Appellant had filed statement of claim with the Respondent on 14.11.2017 for a sum of Rs.2,60,20,122/- being 90% of the loss of Rs.2,89,11,247/- which was the total loss suffered pertaining to the shipments. The Respondent rejected the claim of the Appellant vide repudiation letter dated 23.04.2018 for the following reasons:
i. It is observed that four claims for Rs.88955250/- have been filed against the same combination of buyer notify party consignee. No due diligence and serious efforts were taken to minimize the loss, which is violation of clause 7(a) and 7(d) of the policy bond.
ii. Shipment dated 17.05.2016 under claim was consigned to M/s.
CJC Logistics, South Africa and notify party was M/s. Amity General Trading LLC UAE, Dubai. Further shipment dated 24.09.2016 was sent to the same consignee M/s. CJC Logistics Ltd., South Africa when earlier was overdue. Despite this required due diligence was not applied to prevent/minimize the loss and further shipments were made. This is non-compliance of clause 7(a) of the policy bond issued.
iii. Shipment under claim dated 17.05.2016 was consigned to M/s.
CJC Logistics, South Africa and notify party was Amity General Trading LLC UAE, Dubai. Thus actual buyer is not clear from the documents submitted.
iv. Legal action has not been initiated against the buyer till date.
8. Thereafter, the Appellant made first representation dated 07.05.2018 to Respondent against the rejection but the representation was rejected by Respondent vide letter dated 04.08.2018 citing the same reasons. The Appellant on 05.11.2018 DISMISSED PAGE 8 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
made a second representation with Respondent, which was again rejected vide letter dated 05.03.2019 reiterating the stand taken by the Respondent in its previous rejection letter dated 04.08.2018.
9. It is stated that the Appellant kept pursuing the matter with the Respondent through meetings and telephonic conversation and after lapse of one and a half years, the Respondent asked for documents Bank Realization Certificate(BRC) and export statements of previous years of the Appellant showing previous transaction with the buyer. The Appellant accordingly vide e-mail dated 29.12.2020 provided the said documents. However, the Respondent vide a final rejection letter dated 27.01.2022 rejected the claim of Appellant. It is stated that the rejection of claim by Respondent is against the policies of the Respondents and is in violation of Master Manual on Processing and Settlement of claims under short Term Policies (manual as well as IRDA Guidelines dated 20.09.20211 in its circular).
10. In reply to the appeal, the Respondent has stated that the complaint filed before the District Commission is barred by limitation and in terms of Clause 4.19.2 of the Manual, the Appellant was entitled to make a maximum of two representations to Respondent against decision on claim within 03 months of date of letter communicating the decision of rejection and the Appellant had duly exhausted the remedy available with it. It is further stated that the last cause of action to file the complaint before the District Commission arose on 05.03.2019, when the second representation DISMISSED PAGE 9 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
dated 05.11.2018 was rejected by the Respondent. However, the Appellant had failed to explain its silence between March, 2019 to December 2020 between the parties; he could not give any cogent explanation for silence between the parties for more than one and half years.
11. On careful perusal of record, we find that the insurance policy taken by the Appellant, claim filed, rejection, representations in terms of Clause 4.19.2 of the Manual are not in dispute.
12. In our view, the District Commission has rightly dismissed the complaint being barred by limitation, for the reasons that in terms of Clause 4.19.2 of the Manual, the Appellant was entitled to make a maximum of two representations to Respondent against decision on claim within 03 months of date of letter communicating the decision of rejection, which remedy has already been availed by the Appellant. Perusal of record shows that first representation dated 07.05.2018 was rejected by Respondent vide letter dated 04.08.2018 and the second representation made on 05.11.2018 was rejected vide letter dated 05.03.2019 reiterating the stand taken by the Respondent in its previous rejection letter dated 04.08.2018. Thus, the cause of action for filing the complaint lastly arose on 05.03.2019. Thereafter, the Appellant instead of filing the complaintindulged in correspondence with the Respondent that too after lapse of one and half years, simply to extend the limitation.
DISMISSED PAGE 10 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
13. As regards, the dismissal of complaint on the point of pecuniary jurisdiction, we are in agreement with the Appellant that under the newly enacted Consumer Protection Act, 2019, the District Commission shall have jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed Rupees Fifty Lakh. The Parliament, while enacting the Act of 2019 was conscious of this fact and to ensure that Consumer should approach the appropriate Consumer Disputes Redressal Commission whether it is District, State or National only the value of the consideration paid should be taken into consideration while determining the pecuniary jurisdiction and not value of the goods or services and compensation, and that is why a specific provision has been made in Sections 34 (1), 47 (1) (a) (i) and 58 (1) (a) (i) providing for the pecuniary jurisdiction of the District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal Commission and the National Commission respectively.
14. From a reading of the aforesaid provisions it is amply clear that for determining the pecuniary jurisdiction of the District Commission, State Commission or National Commission the value of the goods or services paid as consideration alone has to be taken and not the value of the goods or services purchased/ taken. Therefore, we are of the view that the provision of the Act of 2019 are very clear and does not call for any two interpretations. Thus, in our view, the District Commission had the jurisdiction to entertain the complaint.
DISMISSED PAGE 11 OF 12 FA NO.273/2022 CROSS TRADE LINKS V. ECGC LTD.
15. However, as the complaint was barred by limitation having been filed after two years, the cause of action arose i.e. 05.03.2019, the appeal has no merit and stands dismissed accordingly.
16. Application(s) pending, if any, stand disposed of in terms of the aforesaid judgment.
17. A copy of this judgment be provided/communicated to all the parties free of cost as mandated by the Consumer Protection Act, 2019. The judgment be uploaded forthwith on the website of the Commission for the perusal of the parties.
18. File be consigned to record room along with a copy of this Judgment.
(JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (PINKI) MEMBER (JUDICIAL) (J.P. AGRAWAL) MEMBER Pronounced On: 17.08.2023 DISMISSED PAGE 12 OF 12