National Consumer Disputes Redressal
M/S Parenteral Drugs (India) Limited, vs M/S United India Insurance Company ... on 6 March, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 142 OF 2014 1. M/s PARENTERAL DRUGS (INDIA) LIMITED, Through its Assistant Manager Legal, Shri Nanalal Joshi, Head Office: Shree Ganesh Chambers, Navlakha Crossing, A. B. Road, INDORE - 452001. ...........Complainant(s) Versus 1. M/s UNITED INDIA INSURANCE COMPANY LIMITED & ANR. 24, Whites Road, Roya Pettah, CHENNAI - 600014. 2. Divisional Manager, M/s UNITED INDIA INSURANCE COMPANY LIMITED, Divisional Office No. 2, Block No. 3, 5th Floor, 7, Race Course Road, INDORE - 452001. ...........Opp.Party(s) BEFORE: HON'BLE MR. SUBHASH CHANDRA,PRESIDING MEMBER For the Complainant : Mr P P Malhotra, Sr Advocate with Ms Sonia Malhotra and Mr Vijayesh Atre, Advocate For the Opp.Party : Mr Ravi Kumar, Proxy Counsel for Mr Abhishek Kumar, Advocate Dated : 06 Mar 2023 ORDER PER MR SUBHASH CHANDRA, MEMBER The present complaint has been filed by the complainant under section 21 of the Consumer Protection Act, 1986 (in short, 'the Act') alleging deficiency in service by the opposite parties in the settlement of an insurance claim.
2. The brief facts of the case, as stated by the complainant, are that it is engaged in the business of manufacturing and trading of drugs and pharmaceuticals products at its plant located near Indore. The complainant purchased a Form Fill and Seal (FFS) machine worth Rs.32.32 crores from M/s Anitas Exports Limited at Village Bhud, Baddi, Nalagarh, District Solan, Himachal Pradesh. A Marine Cargo Specific Voyage Policy was obtained with effect from 26.06.2010 against a premium of Rs.1,42,418/- for a total insured sum of Rs.32.32 crores for transportation by road. The operation of the policy was from the time the consignment left the warehouse (commencement of transit) and continued during the ordinary course of transit including customary transhipment, until delivery to the final warehouse of the destination named in the policy, until expiry of 7 days after the arrival of the vehicle at the destination town which ever was earlier. It is stated by the complainant that the truck carrying of the FFS reached the factory site on 02.07.2010 at 04.45 am and was taken inside the factory complex at 06.00 am. The unloading was done at 03.00 pm by a crane of M/s N B Crane Services (Crane no. GJ-10-D-0625). Around 03.30 pm, during unloading, the machine was damaged due to the movement of the truck. Opposite party no.1 was informed immediately at 03.40 pm. Around 05.10 pm a representative of opposite party no.1 along with surveyor undertook preliminary survey and recorded statements. Documents sought were handed over on 03.07.2010. A final surveyor was appointed by the opposite party on 09.07.2010 from Mumbai who visited the site on 10.07.2010. The complainant alleges that on account of the lethargic approach of the opposite party, the sophisticated machine could not be removed or taken for repairs, if any, and therefore, it issued a legal notice on 13.07.2010 which was replied to. The Surveyor of the opposite party, M/s Alok Shankar and Company, Mumbai, submitted a report dated 05.07.2011 admitting loss on account of carelessness and negligence on the party of the carrier/ crane operator and held the transporter/ crane operator responsible for the loss which was assessed at Rs.3,92,31,000/- after deducting Rs.1,30,77,000/- towards the difference in cost/ profit margin of about 25% of the gross assessed loss of Rs.5,23,08,000/- after deducting Rs.10,00,000/- towards salvage. The complainants made several efforts with opposite party no.1 to settle the claim. They also filed a Writ Petition no. 6252 of 2012 before the Hon'ble High Court of Madhya Pradesh at Indore (which was dismissed as withdrawn).
3. Complainant impugns the rejection letter dated 30.03.2012 issued by opposite party no.1 as being arbitrary and not being based on the surveyor's report. It is submitted that the surveyor has recommended a net loss of Rs.3,92,31,000/- after various deductions without any mention that the accident occurred before termination of the contractual transit period. It is stated that the ground of rejection is contrary to the findings of the final report which states that:
4. Loss/damage to the consignment is attributing to the carelessness/misconduct/negligence on the part of the carrier/ crane operator. Transports/ crane operator is responsible to make good the losses since damages were taken place when consignment was unloaded by them.
4. It is stated that the 'duration' clause under paragraph 5 of the insurance policy states clearly that the insurance covers the period from time the goods leaves the warehouse named in the policy for transit, until delivery at the final warehouse at the destination named in the policy, and in case of transit by road, until expiry of 7 days after arrival of the vehicle at the destination, whichever shall occur first. Therefore, the policy issued, according to the complainant, continued and remained valid until delivery to the final warehouse at the destination named in the policy. The complainant states that the machine was meant for installation inside the factory and therefore, it cannot be interpreted that the "ordinary course of transit" was over on arrival of the vehicle at the factory site. It is stated that no such condition or limitation was mentioned in the policy. The rejection letter, however, states the cover was available only during the ordinary course of transit and on arrival of the vehicle at the factory site, after a lapse of two hours, when the vehicle with consignment was taken inside the factory under the control of the complainant the ordinary course of transit came to an end. This interpretation is challenged as frivolous and is only to reject a genuine claim since, according to the complainant, transit of the machine was not over the moment it reached the final warehouse at the destination named in the policy. It is stated that the machine being large required a crane to be moved to the final warehouse and loading and unloading were not excluded from the policy under any special condition. According to the complainant, the ordinary meaning of the word 'transit' also includes loading and unloading material. Reliance is placed on the obiter-dicta in the judgment of the Hon'ble Supreme Court in the case of United India Insurance Co. Ltd., vs Great Eastern Shipping Co. Ltd., (2007) 7 SCC 101, that the insurer cannot be discharged in case of a transit policy just on the reaching of the insured material at the destination. It is stated that the grounds of rejection of the opposite party that the transit policy came to an end the moment the subject consignment and the carrying vehicle were in the custody of the complainant is beyond the contractual terms of the policy as neither the policy nor any of the special terms and conditions excluded the liability of the opposite party when the subject consignment and the carrying vehicles were handed over to the insured in the course of transit. It is stated that the plain and simple meaning of the words used in the policy cannot be interpreted so as to either exclude the risk relating to loading and unloading of the machine or to curtail the meaning of the term 'delivery' by 'constructive delivery' at the factory site. It is stated that the delay in settling the claim by the opposite party was inordinate and beyond the stipulated period of settling such claims as per the IRDA Guidelines. As per clause 5.1 of the policy relating to 'duration', the policy was valid until delivery to the final warehouse at the destination mentioned in the policy. Accordingly, the complainant contends that the words 'until delivery' and 'to the final warehouse' should be read without any addition or substitution to their natural and grammatical meaning. Therefore, interpretation of 'delivery' does not mean mere entry into the factory premises as stated in the rejection letter dated 30.03.2012 which was contrary to well settled principles of interpretation and has been done to reject the claim. Reliance is placed in the case of Life Insurance Corporation of India vs Raj Kumar Rajgarhia and Anr. (AIR 1999 SC 2346), wherein the Hon'ble Supreme Court has held that 'while interpreting the terms of the insurance policies if two view are possible, courts will accept the one which favours the policy holders'.
5. The complainant is before this Commission with the following prayer:
Issue necessary order (s) or any other appropriate order or direction against the opposite party no.1 and 2 to quash the impugned rejection letter dated 30.03.2012;
Issue necessary directions to the opposite parties to make the payment of the gross amount of loss assessed for Rs.5,23,08,000/- without any deduction therein;
Direct the opposite parties to pay special damage @ 15% on gross amount of Rs.5,23,08,000/- on account of the complainant's claim of loss of earnings and an assessment of loss of future earnings, loss due to damage to a chattel, loss on breach of contract for the sale of goods, and loss of profits, i.e., anticipated profit and loss of the goods which is the natural and probable consequence for the loss of the pecuniary damages suffered by the complainant;
Direct the opposite parties to pay interest @ 18% per annum on the delay in payment of the assessed loss of Rs.5,23,08,000/- beyond 4th August 2011, till the date of actual payment;
Direct the opposite parties to reimburse the cost of filing this complain to the complainant company; and Issue such other or further appropriate order, write or directions as this Hon'ble Court may think appropriate in the interest of justice.
6. The complaint was resisted by way of reply by opposite parties nos.1 and 2. It is submitted that insurance cover under the Marine Cargo Specific Voyage Policy was available as per clause 5 from the time goods left the warehouse and continued during the ordinary course of transit until delivery at the final warehouse. There was no specific cover for unloading of the consignment or its installation/ erection. The truck with consignment had arrived safely at the final warehouse on 02.07.2010 at 04.45 am, when the truck was parked inside the factory and left at the disposal of the complainant in its custody and control. It is construed that the consignment was thereafter no longer in transit and the damage occurred 9 hours later when the complainant had arranged for shifting the consignment within the factory from the vehicle. It is contended that the damage was caused during the process of unloading from the machine from the carrier's vehicle by the crane operator employed by the insured and unloading with the help of crane or its operation is not covered under the specific voyage policy. It is the case of the opposite parties that the transit had ended when the consignment was brought into the factory of the complainant and the vehicle with the consignment was left in the custody and control of the complainant. Accordingly, the consignment ceased to be in "ordinary course of transit'' as covered by the said insurance policy. The damage to the consignment was caused after the termination of transit when the carrier had effected delivery at the complainant's factory. It is also contended that the insurer got discharged and the policy came to an end after the complainant had received the delivery from the carrier since the policy was operative only during the ordinary course of transit until the delivery and not thereafter. According to the opposite party, the process of shifting and installation after transit are beyond the scope of the policy and the complainant has admitted that the loss was caused due to negligence by the crane operator. The Marine Cargo Specific Voyage Policy does not cover any loss caused by the crane operator and hence, it is the crane operator who is liable to pay the loss and not the opposite party (insurance company); therefore, the present complaint is erroneous and liable to be dismissed. The crane operator M/s N B Crane Services is also not made a party to the present complaint and the complaint is liable to be dismissed on the grounds of non-joinder of necessary parties and mis-joinder of the opposite party.
7. The opposite parties have stated that although no loss to consignment was caused during the ordinary course of transit as covered by the policy, they appointed M/s D K Jain and Co., Assessors, Valuers Pvt. Ltd., as the preliminary surveyor who submitted a report on 07.07.2010. Thereafter, M/s Alok Shankar and Co. were appointed as the final surveyor who, without prejudice to the rights of the opposite party, assessed the gross loss at Rs.5,23,08,000/- and worked out the liability of Rs.3,92,31,000/- after deducting the salvage value of Rs.10,00,000/- and Rs.1,30,77,000/- towards the difference in cost/ profit margin. As per the internal examination of the claim by the authorities of opposite party no.1, the amount payable as per the policy condition was estimated at Rs.3,68,19,703/-. However, the claim was repudiated on 30.03.2012 on the following grounds:
"As you know, our liability is subject to the terms and conditions of the policy. We specifically draw your attention to the sub-clause 5 of Inland Transit Rail Road Clause A (All Risks) which is in respect of duration of cover. Insurance attaches from the time the goods leave the warehouse and/ or the place named in the policy for the commencement of transit and continues during the ordinary course of transit including customary transhipment, if any, until delivery to the final warehouse at the destination named in the policy. Thus, you will appreciate that the cover shall be available only during ordinary course of transit. On arrival of the carrying vehicle at your factory site, after a lapse of two hours, when the vehicle with the consignment was taken inside your factory, under your control ordinary course of transit came to an end. Nine hours thereafter when you commenced unloading process by employing the services of M/s NB Crane services, you had taken constructive delivery and physical control over the cargo. Thus, the movement of the cargo subsequent to the entry into the factory, the damage to the care nine hours after entry into your factory on account of negligence on the part of the crane operator employed by you are all events subsequent to termination of transit. Thus, you will appreciate that the delivery as contemplated in Sub-clause 5 of Inland Transit Rail/Road Clause (All Risks) took place when the cargo was taken inside your factory premises as per your instructions resulting in termination of ordinary course of transit as well as the cover under the policy.
Therefore, the reported loss took place after termination of transit and insurance cover under the policy, hence the claim is beyond the scope of cover granted by us. For the said reasons, we regret our inability to entertain the claim".
8. Reliance is placed on the judgment of the Hon'ble Supreme Court in the case of Oriental Insurance vs Sony Cheriyan (1999) 6 SCC 451 that an insurance policy represents a contract between the insurers and insured, the terms of which have to be strictly construed to determine the extent of liability of the insurer and the insured cannot claim anything more than what is covered by the insurance policy. Objection was also taken to the complainants not being a 'consumer' under section 2 (b) of the Act on the basis of Laxmi Engineering Works vs P S G Industrial Institute - AIR 1995 SC 142 and Sree Anantha Grameena Bank vs The Industrial Finance Corporation of India - IV (2005) CPJ 10 (NC). It is stated that the present complaint cannot be decided summarily under the Act on the basis of the judgments of the Hon'ble Supreme Court in Synco Industries vs State Bank of Bikaner and Jaipur (2002) 2 SCC 1 and Oriental Insurance Company vs Munimahesh Patel (2008) 7 SCC 655.
9. It is submitted that there is no deficiency in service on the part of the opposite party since the fault, imperfection, short comings or inadequacy on the part of the insurer must be willful as per the judgment of the Hon'ble Supreme Court in the case of Ravneet Singh Bagga vs KLM Royal Dutch Airlines (2000) 1 SCC 66 which has not been established in the present case. On merits, it is stated that the assessment by the surveyor under section 64 UM of the Insurance Act, 1938 is not conclusive or binding and that the opposite party has the authority to assess all the claims including the report of the surveyor. The opposite party has denied liability on the grounds that the damage occurred while the consignment was being shifted by the complainant after delivery by the carrier, who placed the consignment in the custody of the complainant at its factory. It is therefore, contended that the claim of the complainant was rightly repudiated and that the present complaint be dismissed.
10. Parties have led their evidence and filed rejoinder and short synopsis of arguments. I have heard the learned counsel for the complainant. Learned counsel for the opposite party was placed ex parte as the learned counsel was not available on the date fixed for final arguments despite a final opportunity having been provided on the previous date categorically to be present and argue his case. However, his written submissions on record are taken as his final arguments.
11. Learned counsel for the complainant has relied upon the final survey report dated 05.07.2011 which concludes that 'loss/damage to the consignment is attributing to the carelessness/ misconduct/ negligence on the part of the carrier/ crane operator. Transporter/ crane operator is responsible to make good the losses since damages were taken place when the consignment was unloaded by them. He has also assessed the loss of Rs.3,92,31,000/- after deducting a sum of Rs.1,30,77,000/- towards difference in cost/ profit margin (about 25% of the gross loss). It has claimed that repairers had raised an invoice of Rs.5,66,51,000/- and the deduction by the surveyor on the grounds of manufacturer and the insurer being sister concerns was unjustified.
12. On behalf of the opposite party it was contended that the repudiation dated 30.03.2012 was justified on the grounds that the loss reported did not occur during the currency of the policy and before the termination of the transit. It is argued that the duration of the policy as per paragraph 5 of the document continues during the ordinary course of transit including the customary trans-shipment, if any, or delivery to the final ware house or until expiry of 7 days after the arrival of the vehicle at the destination town which ever shall occur first. It is argued that delivery means 'actual delivery' and in the present case involved delivery of the machine on the carrier (truck) to the factory of the complainant. It is disputed that after the truck reached the factory premises and delivery had to be given after unloading.
13. However, complainant argued that there could not be delivery without unloading and that even as per the report of the surveyor, the machine in question was on the carrier and the truck was in motion when the machine fell and got damaged. It is therefore, evident that there was no delivery since the accident occurred before the machinery could be unloaded for delivery. According to the complainant the damage took place before the actual delivery while the machine was in transit to the final ware house. As per the complainant the accident occurred when the consignment was being unloaded for delivery and was yet to be delivered. It is argued that the process of unloading was an act towards delivery/ transfer of possession. It is argued that as per section 33 of the Sale of Goods Act, 1930, "delivery'' has been defined as under:
33. Delivery : - Delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorised to hold them on his behalf.
14. It is also argued that the carrier was holding the equipment on behalf of the vendor till the equipment was actually delivered. Therefore, the equipment was not yet delivered, unloading was an act preceding delivery and therefore, the equipment should be deemed to be in transit. Reliance is placed on the judgment of the Hon'ble Supreme Court in Shri Ramakrishna Commercial Society Ltd., Anakapalli and Others vs State of Andhra - AIR 1961 AP 86 (FB) which held as under:
70. Here in this section delivery to the carrier and taking delivery from the carrier represent two different capacities of the carrier. As a result of first mentioned delivery which is for purposes of transmission, the carrier is an agent of the buyer but while actually delivering to the buyer he is the agent of the seller and not of purchaser. This distinction became necessary because the vendor has a right if unpaid and if the vendee has become insolvent, to retake the goods before they are actually delivered to the vendee or someone who is name as his agent, and on that ground it is only the actual delivery to the vendee or his agent that puts an end to the course of transit."
15. It is further argued that the word used in the policy document is 'delivery' which cannot be construed as 'constructive delivery' since 'delivery' means/ implies transfer of possession from one person to another. The insurance obtained was for 'delivery' at the ware house and not for 'constructive delivery'. According to the complainant 'constructive delivery' in such matters is when the consignee does not take delivery of the goods which are lying with the carrier. Hence, it is argued that 'constructive delivery' means 'presumptive delivery' and not 'actual delivery'. Therefore, the FFS machine was still on the truck until it was unloaded for 'delivery'. It could have been 'delivered' only after unloading. Since the accident took place as the consignment was on the truck while being unloaded, the machine had not been 'delivered' according to the complainant. It is further argued that the reason why condition no.5 mentioned 'delivery' or expiry of 7 days after arrival of the goods at the destination' is that the policy is voyage cum-time policy as defined under section 27 of the Marine Insurance Act, 1963.
16. The moot issue in this matter is whether the consignment covered under the Marine Caro Specific Voyage Policy had been delivered to the complainant under the terms of the policy. Admittedly, the vehicle carrying the consignment reached the factory gate of the complainant at 04.45 am on 02.07.2010 and was allowed inside the complex at 06.00 am. The consignment, however, was still on the truck, since it needed to be lifted by a crane to be unloaded. The opposite party has argued that there was "constructive delivery" of the consignment at 06.00 am on 02.07.2010. Per contra, the complainant has argued that since the consignment was still on the truck and it had not been unloaded to be delivered at the destination. Completion of the delivery had not been done. Therefore, it is his case that the processes of loading and unloading were specifically under the policy and the claim was valid.
17. While the policy was for transit, it is also notable that it was from the ware house of the consigner to the factory premises of the consignee. The fact that the loss occurred during unloading from the carne has been interpreted by the opposite party (insurance company) to be the responsibility of the complainant since it had engaged a crane from M/s N B Crane Services for the purpose. The opposite party has not produced any delivery note from the complainant to conclusively establish whether the delivery under the policy had been completed.
18. In view of the foregoing, delivery under the Marine Cargo Specific Voyage Policy at the destination cannot be stated to have been done. The contentions of the opposite party cannot be accepted since the consignment was on the truck in the premises of the complainant but had not been successfully unloaded to be delivered. The arrival of the consignment carrying truck into the premises cannot be condoned as 'delivery'. In view of the fact that delivery itself was not accomplished, and a claim was raised, the issue of applicability of the clause of 'or 7 days whichever is earlier' would not apply. Therefore, the delivery of the consignment cannot be interpreted to have been successfully completed, therefore, there is merit in the complaint that consignment was not "delivered" to the complainant and is liable to succeed.
19. The complaint is accordingly allowed. The opposite party is directed to pay a sum of Rs.3,92,31,000/- as assessed by the surveyor to the complainant along with interest at the rate of 6% per annum from the date of repudiation the claim within 8 weeks of this order failing which the rate of interest shall be 9% till realisation. No order as to cost.
...................... SUBHASH CHANDRA PRESIDING MEMBER