State Consumer Disputes Redressal Commission
Sunrise Enterprises vs Ecgc Ltd. on 9 April, 2021
Daily Order STATE CONSUMER DISPUTES REDRESSAL COMMISSION, U.T., CHANDIGARH Complaint Case No. : 466 of 2018 Date of Institution : 17.12.2018 Date of Decision : 09.04.2021 Sunrise Enterprises, through its Partner/authorized signatory GPA/SPA Sh.Sarvpriya Attri s/o Sh.R.D.Attri r/o SCO 176, Stadium Road, New Grain Market, Sunam, District Sangrur (Punjab). ......Complainant. Versus ECGC Ltd. (formerly Export Credit Guarantee Corporation of India Ltd.) (A Government of India Enterprises) through its Manager/GM/Authorised Signatory PHD Chamber House First Floor, Sector 31-A, Chandigarh - 160031. ECGC Ltd., through its MD CMD Regd. Office : Express Towers 10th Floor, Nariman Point, Mumbai. MNS Credit Management Group (P) Ltd., through its MD/CMD/Authorised Signatory/Manager/GM 906 DLF Tower-A District Centre Jasola, New Delhi - 110025, India. E-Grow Plus PTE Ltd. (201524576K) through its Directors/authorized signatory. Mr.Tanveer Ahmed Chaudhary, Director ID No.57268370F Email ID : [email protected]. Ms.Tabasum Farzana, Director ID No.AK7016231. Mr.Mushtaq Ahmad Butt, Director ID No.52729056F. Mr. Ahmar Rafiq, Authorised Signatory/Manager. All r/o 1 Rochor Canal Road #04-07 SIM LIM Tower Singapore 188504 Singapore Republic of Singapore. Mr.Tanveer Ahmad Chaudhary, Director ID No.S7268370F E Grow PLUS PTE Ltd.,11 Farrer Park Road, #15-03 Farrer Park View Singapore (210011), Email ID : [email protected]. Ms.Tabasum Farzana, Director ID No.AK7016231 1 Rochor Canal Road # 04-07 SIM LIM Square Singapore (1885504). Mr.Mushtaq Ahmad Butt, Director ID No.S2728056F 603 Hougang Avenue 4 # 05-217, Singapore (530603). Mr.Ahmar Rafiq, Authorised Signatory/Manager 1 Rochor Canal Road, # 04-07 SIM LIM Square Singapore (188504). Yes Bank through its Manager/Authorised Signatory Dhuri Branch, Group Floor, H.No.539, Sangrur Road, PO Dhuri Pin - 148024, Punjab. .... Opposite Parties. BEFORE: JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT. MRS. PADMA PANDEY, MEMBER
ARGUED BY :
Sh. R.M.Dutta, Advocate for the complainant.
Opposite Parties No.1 & 2 exparte vide order dated 22.03.2021.
Sh. Prashant Puri, Advocate, proxy for Sh. Alankar Narula, Advocate for Opposite Party No.3.
Sh. Deepak Jain, Advocate for Opposite Party No.5.
Opposite Party No.4 already exparte vide order dated 11.12.2019.
PER PADMA PANDEY, MEMBER The facts in brief are that the complainant is a partnership concern through its five partners, out of which, two had retired and now three partners through their SPA Sh.Sarvpriya Attri to earn their livelihood, exported rice to Singapore. The relevant Partnership Deed is annexed as Annexure C-1. It was stated that the complainant so as to cover the overseas risk cover of export consignment for the same, insured the same due to commercial and/or political risks through Opposite Party No.1 by paying a sum of Rs.69,500/- vide receipt dated 24.09.2015 with policy No.SBEP's (0320000655) with previous exposure of 50 lakhs with 80% coverage and date of expiry 23.09.2016 (Annexure C-5). Before the issuance of policy, Opposite Party No.1 asked the complainant to provide the complete details of buyer to verify the credit history and other details of the buyer and after verification of which, the said Opposite Party issued buyer exposure policy No.0320000653 to cover the export risk of E Grow Plus Pvt. Ltd. with condition credit of 60 days but buyer asked the complainant to extend the credit limit to 150 days in invoice 12/2015 w.r.t. P-1. It was further stated that Opposite Party No.4 being the buyer of consignment of 25MT and 50 MT rice, vide invoices No.12/2015 and 13/2016 were dispatched to the Opposite Parties in January, 2016 and April, 2016, which were received by the said Opposite Party in February, 2016 and May, 2016. The Opposite Party(ies) had requested the complainant to extend the time limit from 60 days to 150 days for first consignment of 12/2015, which was extended accordingly, but they failed to honour the commitment in respect of invoice No.12/2015 & 13/2015 dated 25.01.2016 and 07.04.2016 with payment terms of DA 150 and DA 60 days respectively. It was further stated that out of the total USD 78591 INR Rs.52,18,344/- a part payment of Singapore $ 5000 INR Rs.2,46,670/- were made by Opposite Party No.4 and balance amount of US $ 74887 equivalent to Indian rupees as on date are still unpaid till date (Annexure C-9). Thereafter, the complainant approached Opposite Party No.1 and was directed to approach Opposite Party No.3 being recovery agency, which was appointed on 13.09.2016 vide letter dated 22.09.2016 and Agreement dated 13.09.2016 (Annexures C-10 to C-15). Opposite Party No.1 issued a letter to Opposite Party No.4 (Annexure C-16) and Opposite Party No.3 also issued a legal notice on behalf of complainant to Opposite Party No.4 but without any success (Annexures C-17 & 17-A). It was further stated that Opposite Party No.1 discontinued the services of Opposite Party No.3, as it failed to collect the debt on behalf of the complainant. It was further stated that Opposite Party No.1 repudiated the claim of the complainant on 06.06.2017, which was duly replied by the complainant on 19.07.2017. Vide letter dated 09.02.2018 the claim representation of the complainant was rejected (Annexure C-25). It was further stated that the Opposite Parties miserably failed to honour the commitment to the complainant, due to which, still a sum of US $ 74,887 payable in equivalent Indian currency as on date is still pending overdue since 2016 and Opposite Party No.4 was also contacted a number of times but they did not respond. Ultimately, the complainant also sent legal notice to the Opposite Parties (Annexures C-26 to C-33), which was duly replied by Opposite Party No.1 and Opposite Party No.3 (Annexures C-46 to C-48). It was further stated that the aforesaid acts, on the part of the Opposite Parties, amounted to deficiency, in rendering service, and indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under the Consumer Protection Act, was filed.
2. In their written statement, Opposite Parties No.1 & 2 have stated that it is a fully owned Government Company, which was established in the year 1957 by the Government of India to strengthen the export promotion drive by providing export credit insurance and trade related services to the Indian exporters and the banks. It was the admitted fact that the complainant had obtained Single Buyer Exposure Policy bearing No.0320000655 (in short "SBE Policy") from the replying Opposite Parties for covering its export credit risk against insured buyer i.e. Opposite Party No.4, subject to strict compliance of terms and conditions of the policy, unless especially excused in writing by the replying Opposite Parties. The said policy was valid from 24.09.2015 to 23.09.2016 with a loss limit of Rs.50 lakhs and percentage cover of 80% of the loss amount. It was further stated that the complainant failed to observe the terms and conditions of the policy and claim was rejected. It was further stated that the complainant concealed the material facts in the proposal form from the replying Opposite Parties regarding the fact that the payment of shipment was overdue towards the insured buyer at the time of issuance of policy and this fact is evident from the factum that proposal form of Single Buyer Exposure Policy shows that shipping invoice dated 11.06.2015 was projected realized in August, 2015 with overdue NIL towards insured buyer, whereas, as per the bank certified claim form, the payment realisation date was 30.12.2015. Therefore, the complaint as per Clause 1(a) and 2(a) policy was duty bound to disclose the material information to the replying Opposite Parties, failing which policy stands treated as void-abinitio. The terms and conditions of the policy is vitiated by the complainant by deliberately non disclosing of material facts having bearing on SBE policy. It was further stated that the complainant made the following shipments to Opposite Party No.4, the payment of which has been wilfully defaulted by the buyer and the complainant delayed by reporting to replying Opposite Parties regarding the default of insured buyer for two months and 1 day, which is clear violation of Clause 3(b) of Part II of the insurance policy. The following are the details of shipment with due date of delivery :-
S.No. Date of Shipment Terms of Payment Due Date
1. 13.02.2016 DA 60 13.04.2016
2. 22.04.2016 DA 60 21.06.2016 The report of default was to be submitted on or before 15.06.2016 but the same was submitted by the complainant with delay on 19.08.2016. It was further stated that the insured buyer was sent the shipment without prior approval of the replying Opposite Parties when payment in respect of earlier shipments were remaining overdue in clear violation of Clause 2(a)(i) of Part II of the policy bond. It was further stated that the due date of payment was extended by the complainant from DA 60 to DA 150 on its own without taking prior approval of replying Opposite Parties, which is clear violation of Clause 4 of Part II of the policy bond. Therefore, the claim of the complainant was rightly rejected by the replying Opposite Parties as they failed to observe the terms and conditions of the policy and the claim was rightly rejected. It was further stated that neither there was any deficiency, in rendering service, on the part of the replying Opposite Parties, nor they indulged into unfair trade practice.
3. Opposite Party No.3 in its written statement, stated that the complainant had approached the replying Opposite Party for availing professional services in connection with recovery of the complainant's outstanding payment of USD 74887 from one of their buyer. Accordingly, Debt Collection Agreement was executed on 13.09.2016. The replying Opposite Party initiated efforts to trace the buyer for recovery of the aforesaid USD. The replying Opposite Party had also engaged its overseas associate in Singapore and discussed the matter with said buyer many times regarding non payment of the said USD due to the complainant. However, the said buyer claimed to have made all the payments to the complainant and stated that nothing was due from them but the said buyer did not provide any documentary proof in support of his claim. The complainant was duly informed in this regard and advised to initiate legal action against the said buyer for recovery of the due payment but the complainant was not inclined to initiate the said legal action. Thereafter, the complainant vide email dated 13.10.2017 informed the replying Opposite Party and requested for termination of the Agreement, which was confirmed vide email dated 20.10.2017 and a closure report was duly submitted to the complainant as well as ECGC Limited vide email dated 18.11.2017. It was further stated that there was no specific averment made against the replying Opposite Party and thus prayed for deletion of the name from the array of the parties.
4. Opposite Party No.4 did not appear despite service. Hence, Opposite Party No.4 is proceeded against exparte vide order dated 11.12.2019.
4. Opposite Party No.5 (M/s Yes Bank Ltd.) - newly impleaded party - in its written statement has submitted that no such policy was issued by the replying Opposite Party and there is no grievance qua Opposite Party No.5, as such, prayed for dismissal of the complaint qua Opposite Party No.5.
5. The Parties led evidence, in support of their case.
6. We have heard the learned Counsel for the contesting parties and have gone through the evidence and record of the case, carefully.
7. After going through the record of the case, this Commission finds that the complaint needs to be dismissed for the following reasons.
8. Opposite Party No.1 i.e. ECGC Ltd. repudiated the claim of the complainant i.e. Sunrise Enterprises vide its letter dated 09.02.2018 (Annexure C-25), the relevant portion of the said letter reads thus:-
"x x x x As per the proposal form of your SBE 0320000655, the shipment- invoice dated 11.06.15 (B/L date : 24.06.15) was shown realized in Aug 15 with overdue as NIL whereas as per the bank certified claim form the payment realization date was 30/12/15. According to clause 1(a), 1(d) and 2(a) of part II & 4(a) of part III, shipments are excluded from cover as correct information was not disclosed to us at the time of submission of proposal for the policy. Hence, policy stands void and ineffective ab-initio.
Necessary approval of RBI/Authorized dealer for direct dispatch of documents.
Declaration of overdue payment was submitted with a delay of 2 months and 1 day which is a non compliance of clause 3(b) of part II of the policy.
Shipments made to a buyer without prior approval of the Corporation when payments in respect of earlier shipment(S) to that buyer were remaining unpaid after the original due date which is a non compliance of clause 2(a) of part II of the policy.
Shipment was sent on DA-150 days terms of payment however as per performa invoice terms of payment was DA-60 days.
In view of above, your claim representation has been rejected"
On a bare perusal of the documents available with this Commission, we find that ECGC - Opposite Party No.1 is a fully owned Government Company, which was established in the year 1957 of the Govt. of India to strengthen the export promotion drive by providing export credit insurance and trade related services to the Indian exporters and the banks. It also provides a range of credit risk insurance covers to exporters against loss in export of goods and services and also offers credit insurance covers to banks and financial institutions to enable exporters to obtain better credit facilities from them.
9. In the present case, the complainant had obtained Single Buyer Exposure Policy No.0320000655 (for short "SBE Policy") from Opposite Party No.1 for covering its export credit risk against insured buyers i.e. Opposite Party No.4 i.e. E-Grow Plus PTE Limited, subject to strict compliance of the terms and conditions of the SBE Policy, unless especially excused in writing by the Opposite Parties.
10. The SBE Policy in the present case was valid from 24.09.2015 to 23.09.2016 with a loss limit of Rs.50 lacs and percentage cover of 80% of the loss amount. The said conditions apply only when the complainant adheres fully the terms and conditions of the policy.
11. We observe that the complainant had lodged a claim for a sum of (US $ 74887) alongwith interest @ 18% from the date of default, since the complainant did not get the payment from Oppsoite Party No.4. It is observed from the record that the complainant had paid a sum of Rs.67,500/- as a premium for the coverage of the consignment for the above mentioned insurance policy. The complainant had also made a mention that Opposite Party No.1 had also appointed international recovery agency i.e. MNS Credit Management Group (P) Ltd., which has been impleaded as Opposite Party No.3 for recovery of the payment from Opposite Party No.4. The complainant has further made allegation that before the issuance of the policy, Opposite Party No.1 had asked the complainant about the complete details of the buyers i.e. Opposite Party No.4 to verify the credit history and other details of the buyer and after verification to which Opposite Party No.1 issued Single Buyer Exposure Policy No.0320000655 to the complainant for the period from 24.09.2015 to 23.09.2016 for covering its export credit risk against Opposite Party No.4 i.e. E-Grow Plus PTE Ltd. subject to the strict compliance of the terms and conditions of the SBE Policy. The policy was issued to the complainant for the loss limit of Rs.50 lakhs. The loss limit is maximum limit beyond which no claim shall be payable by the ECGC i.e. Opposite Party No.1 under the policy. Further, it is an undertaking measure adopted by the corporation to ensure that policy coverage is not usually extended to buyer who have provisionally defaulted to Indian exporters. It is observed that fixing of loss limit is not for the purpose of verification of the credibility of the buyer, whereas, the same is the sole prerogative of the exporter i.e. the complainant. In the present case, the complainant has changed the terms of payment (TOP) from DA 60 to DA 150, thereby extended the credit period without obtaining prior written approval from Opposite Parties No.1 & 2 before granting such extension, which is clear violation of Clause 4 of Part II of the policy bond. The terms of payment was informed by the complainant only on 19.08.2016 i.e. much after the due date of payment, which was 13.04.2016.
12. Further, we observe that claim was rightly repudiated by ECGC on the following valid grounds. There was a concealment of the fact by informing Opposite Party No.1 that shipment was made to the buyer i.e. Opposite Party No.4 in the month of June, 2015 and was realized in the month of August, 2015 but the Opposite Party has relied on the bank certified statement that shipment was overdue at the time of application of the policy and it was realized only on 30.12.2015. This concealment of fact had a material bearing on the underwriting of Opposite Party No.1.
13. The complainant had failed to report overdues of the buyer i.e. Opposite Party No.4 within the prescribed time period in clear violation of Clause 3(b) of the policy.
14. The shipment of the insured buyer was sent without approval of the Opposite Party when payments in respect of earlier shipments were remaining overdue in clear violation of Clause 2(a)(i) of Part II of the policy bond.
15. The contention of Opposite Parties No.1 & 2 i.e. ECGC Limited is that report of default was to be submitted on or before 15.06.2016 but the same was submitted by the complainant with delay on 19.08.2016. We further observe that shipment to Opposite Party No.4 was sent without the prior approval of the Company i.e. Opposite Party No.1, even when the payments in respect of the earlier shipments were remaining overdue in clear violation of Clause 2(a)(i) of Part II of the policy bond. Further, due dates of payments were also extended by the complainant from DA 60 to DA 150 on its own without taking prior approval of the Company i.e. Opposite Party No.1, which is clear violation of Clause 4 of Part II of the policy bond.
16. This Commission therefore is of the view that Opposite Parties No.1 & 2 rightly rejected the claim of the complainant for the reasons which had been given above and, as such, this complaint stands dismissed, with no order as to costs.
17. Certified Copies of this order be sent to the parties, free of charge.
18. The file be consigned to Record Room, after completion.
Pronounced.
09.04.2021 Sd/-
[JUSTICE RAJ SHEKHAR ATTRI] PRESIDENT Sd/-
(PADMA PANDEY) MEMBER