State Consumer Disputes Redressal Commission
M/S Verma Industries vs Ecgci Ltd. on 9 June, 2016
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, SECTOR 37-A, DAKSHIN MARG, CHANDIGARH.
Consumer Complaint No.58 of 2012
Date of Institution: 16.07.2012
Date of Decision: 09.06.2016
M/s Verma Industries, C-5, Sports & Surgical Goods Complex,
Kapurthala Road, Jalandhar, through Sh. Ashok Kumar Verma its
propprietor.
.....Complainant.
Versus
1. Export Credit Guarantee Corporation of India Limited, Registered
Office, Express Towers, 10th Floor, Nariman Point, Mumbai
through its Chairman.
2. Export Credit Guarantee Corporation of India Limited Gobind
Niwas, Second Floor, 36, G.T. Road, Jalandhar through its
Branch Manager.
....Opposite Parties
Consumer complaint under Section
17(1)(a) of Consumer Protection Act,1986
Quorum:-
Shri J. S. Klar, Presiding Judicial Member
Shri J.S. Gill, Member Present:-
For the complainant : Sh. A.K. Bakshi, Advocate
For opposite parties : Sh. B.B. Bagga, Advocate
................................................ J. S. KLAR, PRESIDING JUDICIAL MEMBER:-
The complainant M/s Verma Industries has filed this complaint, through its proprietor Ashok Kumar Verma under Section 17(1) (a) of Consumer Protection Act, 1986 (in short "the Act") against the Consumer Complaint No.58 of 2014 2 opposite parties (hereinafter referred as 'OPs') on the averments that complainant company is engaged in the business of manufacturing of various items made of various types of metals with its manufacture base at C-5, Sports & Surgical Goods Complex, Kapurthala Road, Jalandhar. The complainant has been making export items manufactured by it against order received from abroad. The complainant exported to M/s Mazid Al Mazooqi Building Material, at UAE by virtue of three invoices no.317 dated 22.11.2008 for USD 12000-00 (Annexure C-1), invoice no.320 dated 09.01.2009 for USD 24650-00 and invoice no.90 dated 20.01.2009 for USD 18250-00, after clearance by the Custom Authorities at the port of dispatch. Performa invoice is Annexure C-2, Packaging list is Annexure C-3, Shipping bill is annexure C-4, Bill of lading is annexure C-5, Shipped on Board is annexure C-6, SDF Form is annexure C-7, consignment delivery certificate is annexure C-8 on the record. Export of wings plates, vide invoice no.82 dated 22.11.2008 worth USD 12,000 (Annexure C-9, packaging list Annexure C-10) was also made to the same buyer, payment made written invoice which has been duly made by above buyer to the complainant. UTI Bank Limited Certificate dated 10.04.009, Axis Bank Limited Certificate & Form no.1 (SBI Certificate) showing payment made wrt invoice no.82 are C-11. Invoice no.320 dated 09.01.2009 for USD 24650-00 is Annexure C-12, performa invoice is annexure C-13, packaging list is annexure C-14, custom clearance/shipping bill is annexure C-15, bill of lading is annexure Consumer Complaint No.58 of 2014 3 C-16, consignment delivery certificate is annexure C-17 and SDF form is annexure C-18. Invoice no.90 dated 20.01.2009 for USD 1825 is annexure C-19, performa invoice is annexure C-20, packaging list is annexure C-21, custom clearance/shipping bill is annexure C-22, bill of lading is annexure C-23, shipped on board is annexure C-24, SDF form is annexure C-25, consignment delivery certificate is Annexure C-26 as attached with the file. The buyers did not come forward to make the payments for the goods purchased and received by it, as shown by consignment delivery certificate. The complainant sent demand letter, besides telephonic calls for recovery of the payment and also visited Dubai for 10 days in January and February, 2009 in connection with recovery. The meeting took place, wherein complainant was promised for payment in next morning, but to no effect. The buyer fled after locking the office and the complainant had to return to India empty-handed. The Government of India in order to safeguard the interest of the exporters against non-payment of the price of the goods exported, had created a Corporation by the name of Export Credit Guarantee Corporation of India Limited with its registered office situated at Express Towers, 10th Floor, Nariman Point, Mumbai & Local Branch Office in Gobind Niwas, Second Floor, 36, G.T. Road, Jalandhar.
The above said Corporation offers a cover by issuing a policy that in case, the customers/buyers abroad did not pay to the exporter for the goods exported, the price of goods so exported is then paid by the Corporation to the exporter & it gets subrogation into the shoes Consumer Complaint No.58 of 2014 4 of the exporter for recovering the money from the customers/buyers. The complainant took out an insurance cover from the OPs, bearing policy no.SCR0530000139 dated 23.03.2007 having maximum liability of Rs.50,00,000/- alongwith its schedule & forwarding letter. The complainant informed the OPs after dispatch of goods from Bombay to U.A.E. and also furnished the copies of the bills through which the good were sold alongwith requisite documents of shipping. The complainant was called upon by the OPs to deposit the premium payable in respect of the price of the goods exported through the above said three bills. Declaration form no.203 dated 15.01.2009 wrt invoice no.317 showing the premium paid Rs.3873/- received by ECGC on 15.01.2009. Similarly, declaration form no.203 dated 20.02.2009 wrt invoice no.320 dated 90 showing premium paid of Rs.9805/- and Rs.7309/- respectively received by ECGC on 28.02.2009. Receipt dated 03.03.2009 was issued by ECGC on 28.02.2009 (Annexure C-31). Receipt dated 03.03.2009 issued by the ECGC in this regard is annexure C-32. The policy no.0530000139 was issued in favour of complainant after accepting the premiums. Vide letter dated 13.03.2009 (Annexure C-34), ECGC advised complainant to initiate steps for collection of exported amount through MAH-International (a Debt Collection agency) as well as Consulate General of India at Dubai for recovery of its dues. The complainant took up the matter with Consulate General of India at Dubai in this regard. The complainant could not succeed in its efforts to recover the amount. It lodged the claim with OPs, but they Consumer Complaint No.58 of 2014 5 repudiated the same, vide letter dated 05.05.2010 for the reasons as stated below:-
(a) Credit limit not available for shipment under claim,
(b) Shipment made directly to the buyer, necessary approval from RBI/AD not provided,
(c) Declaration for the shipment under default submitted with delay & after occurrence of default
(d) Report of default submitted late
(e) There is no order of correspondence provided evidencing buyer ordered the consignment
(f) No confirmation from buyer side available acknowledging the debt
(g) Agreement for recovery was not signed with debt collecting agency M/s MAH International GMBH, Switzerland
(h) There is mismatch in shipment declared & bill of lading date
(i) On board bill of lading not provided
(j) Two years statement for the period 21.03.2007 to 28.02.2008 not submitted The complainant has, thus, filed the complaint against OPs directing them to pay an amount of USD54900 or money equivalent to it in India at the current rate of exchange alongwith interest @18% per annum till its realization, besides payment of Rs.50,000/- as costs of litigation.
2. Upon notice, OPs filed written reply and contested the complaint on the preliminary objections that Export Credit Guarantee Consumer Complaint No.58 of 2014 6 Corporation of India Limited i.e. OPs is a company incorporated under the Companies Act, 1956 owned by the Government of India and has been functioning under the Administrative Control of the Department of Commerce, Ministry of Commerce & Industry. The objects of the Corporation (hereinafter called as ECGC) is to support and strengthen the export promotion initiatives of the Government of India by providing a range of credit risk insurance covers to the exporters against the risk of loss on account of non receipt of payment involved in export of goods and by offering export credit insurance covers to the banks and financial institutions in India as a cushion against risks of non repayment of their loans availed by exporters/borrowers for exports as are faced by them in export finance, but the said covers are always subject to the terms and conditions of the covers availed by the insured i.e. exporter or the bank. The insurance covers issued by ECGC to the exporters include shipment (comprehensive risks) policy. Vide proposal form dated 20.03.2007, the complainant applied for a shipment policy. The policy bearing no.SCR0530000139 dated 23.03.2007 valid from 21.03.2007 to 31.03.2009 was forwarded to the complainant, vide cover letter dated 23.03.2007. The said policy covered the risks as mentioned therein subject to strict compliance of the terms and conditions of the same, which was a condition precedent to any liability of the OPs, as per clause 28 of the terms and conditions of the policy. Clause 29 thereof deals with failure to comply with conditions. Clause 8 thereof mandates that complainant is to submit Consumer Complaint No.58 of 2014 7 the monthly declaration of shipments and of overdue payments to the Corporation on or before the scheduled/mentioned date, otherwise the Corporation shall not have any liability as per clause 19(a) & (b) of the terms and conditions of the policy. As per clause 19(a) of terms and conditions of the policy, if insured has failed or neglected to duly declare in time in strict compliance with the requirements under condition 8(a) of the policy, any one or more of the shipments that were required to be declared under the said condition and/or to pay the full premium that was due thereon. The complainant submitted the delayed declaration in violation of clause 8 (a) (b) of the terms and conditions of the policy and corporation does not have any liability, as per clause 19 (a) and (b) of the terms and conditions of the policy. The first shipment dated 22.11.2008 was due for payment on 06.01.2009 and was declared only on 15.01.2009, when the payment was already overdue. Despite the first shipment being overdue, the complainant further made shipments to the captioned buyer on 09.01.2009 and on 20.01.2009 in gross violation of instructions given in para 3 (III) (e) of the covering letter dated 23.03.2007. As per clause 10 of terms and conditions of the policy and as mandated by Section 64 VB of the insurance Act, 1938, the complainant was required to ensure payment of premium on or before the dates of shipments. As per clause 20 of the terms and conditions of the policy, the liability of the Corporation for commercial risks on a buyer is limited to the extent of the Credit Limit and clause 21 describes the amount of credit limit. Consumer Complaint No.58 of 2014 8 The said shipments were made by the complainant directly to the buyer without necessary approval from the RBI/authorized dealer and in violation of FEMA guidelines. No recovery efforts as stipulated under clause 7 of the terms and conditions of the policy were envisaged by the complainant despite specific instructions including in letter dated 13.04.2009. Other requisite documents viz. on board bill of lading, duly certified export turn over statement etc. were not provided by the complainant. The complaint is liable to be dismissed on the grounds of suppressio veri and suggestio falsi. On merits, it is pleaded by the OPs that complainant has failed to provide any copy of the order from the buyer, if any, correspondence which exchanged with the buyer for getting the said payment etc. to the OP, despite specific requests including in letters dated 05.05.2010, 09.08.2010 and 14.02.2011. The risks mentioned in the insurance cover/policy are subject to strict compliance of terms and conditions of the same. The premium was not paid in accordance with clause 10 of the policy. The receipt dated 03.03.2009 clearly mentioned that the said receipt creates no liability on the Corporation of any kind whatsoever. The complainant failed to abide by the instructions of the OPs sent vide letter dated 13.04.2009 and took almost one year before sending the requests to MAH International, Indian Consulate General and lost substantial time, which proved to be fatal for recovery of dues from the captioned buyer. It is further averred that claim of the complainant was rightly repudiated due to serious breach of terms and conditions of the policy and for reasons cited in Consumer Complaint No.58 of 2014 9 letters dated 05.05.2010, 09.08.2010 and 14.02.2011. The OPs further averred that complainant took one year from 13.04.2009 to 12.04.2010 before writing to MAH International, Indian Consulate General and that too was done just as a ritual thereby jeopardizing the recovery from the buyer. The OPs controverted the averments of complainant with regard to its entitlement to any claim and, thus, prayed for the dismissal of the complaint.
3. The complainant tendered in evidence affidavits Ex.C/A an Ex.C/B alongwith documents Ex.C-1 to Ex.C-54 and closed the evidence. As against it, OPs tendered in evidence affidavit Ex.OP-1/A alongwith documents Ex.OP-1 to Ex.OP-4 and closed the evidence.
4. We have heard the learned counsel for the parties and have also examined the record of the case. Ex.C-1 is invoice dated 22.11.2008 for USD 12000-00 and the buyer is recorded as Mazid Al Mazrooqui Building Material Dubai and the description of goods is wing nut. Ex.C-2 is proforma invoice dated 30.10.2008 for USD 24000-00 and the buyer is Mazid Al Mazrooqui Building Material Dubai and the description of goods wing plate and wing nut. Ex.C-3 is packing list dated 22.11.2008 to the order of Mazid Al Mazrooqui Building Material Dubai and the description of goods is wing nut. Ex.C-4 is shipping bill for export of goods under claim for duty drawback to the extent of Rs.5,84,500/- for parts of structures wing out and all other details as per invoice no.VIJ/317/08-09 dated 22.11.2008. Ex.C-5 is bill of lading for the gross weight 24480 KG Consumer Complaint No.58 of 2014 10 and the articles exported are mentioned in it. Ex.C-6 is the copy of email dated 10.02.2010. Ex.C-7 is Form SDF dated 22.11.2008. It is declaration sent by the complainant Ashok Kumar to the effect that the Foreign exchanges representing the full export value of the goods on or before @6 months in the manner prescribed in Rule 9 of the Foreign Exchanges Regulation Rule, 1974. Consignment delivery certificate is Ex.C-8 on the record. The shipper is Verma Industries and it was issued on 13.12.2008 and CTNR returned by the CNEE on 18.12.2008. Invoice dated 22.11.2008 is Ex.C-9 for USD 12000-00 for 30,000 wing plates. Packing list is Ex.C-10 dated 22.11.2008 and net weight is recorded in it as 13,950. Ex.C-11 is the certificate of Foreign Inward Remittance dated 10.04.009 issued by UTI Bank Limited to the effect that foreign currency USD 11966 was remitted and this payment was received by it for the complainant. Similarly, we have also examined the document Ex.C-12 invoice dated 09.01.2009 for USD 24,650 for wing nut. Ex.C-13 is the copy of proformas invoice thereof. Ex.C-14 is packing list dated 09.01.2009 of total net weight 22100. Ex.C-15 is shipping bill for export dated 09.01.2009. Ex.C-16 is bill of lading. Ex.C-17 is the certificate issued by Seabridge Maritime Agencies Private Limited. Ex.C-18 is the Form SDF dated 09.01.2009. Ex.C-19 is invoice for USD 18250 for 50000 wing plates dated 20.01.2009. Similarly, we have examined the documents Ex.C-20 to C-27 on the record. The above referred documents have proved this fact that complainant shipped the goods to Dubai for delivery at destination of wing plates Consumer Complaint No.58 of 2014 11 and nuts and so on, as detailed therein. Ex.C-28 is the copy of passport of the complainant showing his visit to Dubai. Reference no.SCR0530000139 dated 23.03.2007 is Ex.C-29 on the record. Ex.C-31 is the copy of Form no.203 of Export Credit Guarantee Corporation of India Limited regarding receiving the premium of Rs.17,114/- from complainant company regarding shipment of 09.01.2009 and 20.01.2009 to Mazid Al Mazrooqui Building Material Dubai. Ex.C-32 is copy of receipt thereof. We have also considered the other documents placed on record by the complainant to prove that it is entitled to the claim from the OPs in this regard.
5. The OPs tendered in evidence affidavit of A. Augustus, Branch Manager of OP Ex.OP-1/A on the record. Ex.OP-1 is the copy of Proposal Form Shipments (Comprehensive risks) Policy/small exporter's policy. Ex.OP-2 is the terms and conditions of the policy. Ex.OP-3 is the copy of shipments (Comprehensive Risks) policy (SC). Ex.OP-4/1 is the repudiation letter dated 05.05.2010. Ex.OP-4/2 is copy of letter dated 09.08.2010 from OP to complainant regarding regretting the representation of the complainant. Ex.OP- 4/3 is the copy of letter dated 14.02.2011 from OP to complainant regarding not considering the second representation of complainant.
6. From hearing the respective submissions of counsel for the parties and perusal of record, we are of this view that on account of serious breaches of the terms and conditions of Shipments (Comprehensive Risks) policy/ small Exporter's policy by the complainant, it is not entitled to the claim which is not admissible Consumer Complaint No.58 of 2014 12 under the terms and conditions of the policy. The parties are strictly bound by the terms and conditions of the Contract of Insurance issued by the OPs to complainant. Ex.C-29, the Shipments (Comprehensive Risks) Policy/Small Exporter's Policy together with Schedules I, II and III, which has been placed on record by the complainant, vide policy bearing no.SCR0530000139. We have to examine whether the claim of the complainant is admissible under the terms and conditions of this policy, which is governing document between the parties in this case. We find that the Clause 8 of the terms and conditions of the policy lays down as under:
"The insured shall deliver to the Corporation on or before the 15th day of each calendar month-
(a) a declaration of shipments in the prescribed form giving information on all the shipments made by him during the previous months. If no shipment has been made during a month a 'NIL' declaration shall nevertheless be submitted;
(b) a declaration of overdue payments in the prescribed form giving information on all such shipments as were insured under this policy and in respect of which the payment due from the buyer remained wholly or partly unpaid after having become overdue for not less than thirty days as at the close of the preceding month and shall continue to deliver such declarations of overdue payments so long as any such payment remaining outstanding."Consumer Complaint No.58 of 2014 13
It is imperative to be complied with by the complainant. Clause no.19 of the Contract of Insurance, the Exclusion to Corporation's Liability lays down that (a) that if the insured has failed or neglected to duly declare in time in strict compliance with the requirements under condition 8(a) of the policy any one or more of the shipments that were required to be declared under the said condition and/or to pay the full premium that was due thereon; or (b) in respect of which the insured has failed to submit the relevant declaration of overdue payments as required in strict compliance with the requirements under condition 8(b) of the policy; (c) in cases where the payment terms are cash against documents, documentary sign draft or documents against payment, the insured or anyone acting for or on behalf of the insured has released or has caused the release of the documents and/or of the goods to the buyer on any other terms of payment, than on payment for onward transmission to the insured of the full amount that was due thereon; or (d) if the insured has failed or neglected to duly lodge a claim with the Corporation in the prescribed form within two years from the respective due date of payment.
7. Clause 20 of the terms and conditions of the policy, vide Ex.C-29 further lays down that liability of the Corporation under the policy for losses occasioned owing to any of the commercial risks described in clause (i), (ii) or (iii) of the Risks Insured in respect of shipments made to anyone buyer shall be limited to the amount hereinafter defined as the amount of credit limit. Clause 21 of the Consumer Complaint No.58 of 2014 14 terms and conditions of the policy deals with amount of Credit Limit and Clause 22 thereof deals with maximum liability of Corporation/OP.
8. We find that the complainant made following shipment to M/s Mazid Mazrooqui Building at Dubai as under:
Dates of Terms of Due date Declared on Report of
shipment payment (Form-203) Default
submitted
on(For-205)
22.11.2008 TT-45 days 06.01.2009 15.01.2009 09.04.2009
(delayed by (delayed by
31 days 25 days)
09.01.2009 TT-45 days 23.02.2009 02.03.2009 09.04.2009
(delayed by
15 days)
20.01.2009 TT-45 days 06.03.2009 02.03.2009 09.04.2009
(delayed by
15 days)
It is evident that complainant produced the delayed declaration in violation of clause 8 (a) and (b) of the Contract of Insurance and Corporation does not have any liability, as per Clause 19 (a) and (b) of the terms and conditions of the policy. The complainant made the shipment to the buyer despite the fact that the earlier shipment was overdue and thereby violated the terms and conditions of the policy, as contemplated above.
9. There is violation of clause 20 of the Contract of Insurance dealing with the credit limit. The complainant had neither applied for nor the OP had approved any credit limit on the captioned buyer i.e. M/s Mazid Al Mazrooqui Building Material, UAE. There is, thus, violation of clause 20 of the Contract of Insurance and claim of Consumer Complaint No.58 of 2014 15 the complainant is inadmissible because complainant had not applied for credit limit nor it was approved by the OPs and claim is inadmissible for violation of clause 20 of the Contract of Insurance.
10. The complainant made shipments directly to buyer without necessary approval from the RBI/authorized dealer and in violation of FEMA guidelines. Clause 28 of the Contract of Insurance Ex.C-29 mandated the due performance and observance of each term and condition contained therein or in the proposal and declaration shall be condition precedent to any liability of the Corporation hereunder and to the enforcement thereof by the insured. Clause 29 of the Contract of Insurance further lays down that no failure by the insured to comply with the terms and conditions, shall be deemed to have been waived, excused or accepted by the Corporation. Clause 8 thereof deals with month declaration of shipments and of overdue payments, which has not been complied with by the complainant in this case. The complainant has not provided correspondence entered with the buyer to OPs duly certified export turn over statement etc. in this regard as well, the OPs, thus, repudiated the contract of insurance, vide Ex.OP-4/1.
11. As a result of our above discussion, we have come to the conclusion that OPs have rightly repudiated the insurance claim of the complainant on account of violation of clauses of the Contract of Insurance, as discussed above. We find no force in the complaint and the same is hereby ordered to be dismissed without any order as to costs.
Consumer Complaint No.58 of 2014 16
12. Arguments in this complaint were heard on 30.05.2016 and the order was reserved. Now the order be communicated to the parties.
13. The complaint could not be decided within the statutory period due to heavy pendency of court cases.
(J. S. KLAR) PRESIDING JUDICIAL MEMBER (J. S. GILL) MEMBER June 09, 2016.
(MM)