State Consumer Disputes Redressal Commission
Farhat Enterpraises vs Expert Credit Garantee Corporation on 27 January, 2023
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UP C-1 Vikrant Khand 1 (Near Shaheed Path), Gomti Nagar Lucknow-226010 Complaint Case No. C/2012/02 ( Date of Filing : 27 Jan 2012 ) 1. Farhat Enterpraises a ...........Complainant(s) Versus 1. Expert Credit Garantee Corporation a ............Opp.Party(s) BEFORE: HON'ABLE MR. JUSTICE PRESIDENT PRESIDENT HON'BLE MR. JUSTICE ASHOK KUMAR PRESIDENT PRESENT: Dated : 27 Jan 2023 Final Order / Judgement RESERVED STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UTTAR PRADESH, LUCKNOW COMPLAINT NO. 02 OF 2012 M/s Farhat Enterprises Registered Office 7/90 B (Part) Tilak Nagar City & District Kanpur Nagar Through its Partner Sri Mohammad Kamran Rais ...Complainant Vs. M/s Export Credit Guarantee Corporation - of India Limited Having its Branch Office at 14/147 Skylark Complex, IIIrd Floor Chunni Ganj City & District Kanpur Nagar ...Opposite Party BEFORE: HON'BLE MR. JUSTICE ASHOK KUMAR, PRESIDENT HON'BLE MR. VIKAS SAXENA, MEMBER
For the Complainant : Sri R K Gupta, Advocate. For the Opposite Party : Sri Rajiv Jaiswal, Advocate. Dated : 17 -03-2023 JUDGMENT PER MR. JUSTICE ASHOK KUMAR, PRESIDENT
Heard Sri R K Gupta, learned Counsel for the complainant and Sri Rajiv Jaiswal, learned Counsel for the opposite party.
The instant complaint has been filed under Section 17(1)(a)(i) of the Consumer Protection Act, 1986 by M/s Farhat Enterprises against the opposite party M/s Export Credit Guarantee Corporation of India with the following reliefs/prayer:-
The opposite party be directed to pay the complainant a sum of Rs.10,13,354/- (Rupees Ten Lacs Thirteen Thousand Three Hundred Fifty Four only) alongwith an interest @ 21% p.a. with effect from January 2009 till the date of actual payment.
The opposite party be directed to pay Rs.67,974/- with appropriate interest which will be refunded to Collector of Customs by the complainant as an additional loss to the complainant.:2:
The opposite party be directed to pay Rs.5,00,000/- (Rupees Five lakhs only) as compensation for not getting the amount in time due to which the complainant suffered huge losses.
The opposite party be directed to pay Rs.2,00,000/- (Rupees Two lakhs only) as compensation for physical discomfort and mental agony.
Award a sum of Rs.60,000/- (Rupees Sixty Thousand only) as the costs of the case.
Pass any order or relief deemed just, proper and necessary to the circumstances of the case."
Facts of the case stated in brief are that the complainant is a manufacturer, exporter and supplier of all kinds of leather goods including equestrian items to foreign countries. The complainant has an expertise in manufacturing of high quality horse saddle and its accessories and is an established exporter and wholly an export oriented unit since more than two decades and is doing good business.
The complainant has been taking the shipments (Comprehensive Risks) SCR Policy from the opposite party since 1999 and has subsequently renewing the policy by paying Rs.10,000/- and submitting the names of foreign buyers and value of orders. The policy bearing No. SCR 0130000422 was valid from 01-04-2007 to 31-03-2009 for Rs.1,00,00,000/-. This policy is an Export Credit Risks Insurance Cover to protect the exporter and insure him from the risks of non receipt of payment for the exports made due to certain commercial and political risks specified under the clause 'Risk Insured' of the policy. Under this policy the opposite party covers and indemnifies the loss caused due to commercial risks for the losses sustained by the policy holder in respect of the shipments made to the specified buyer.
It has been alleged by the complainant in its complaint that it received various orders of saddles and its accessories from USA and it requested the opposite party to insure coverage/protection of shipment at least to the tune of RS.20,00,000/- vide Credit Limit Application dated 12-06-2007 on the said foreign buyer started making shipments, the sale proceeds of which were received. The opposite party vide its letter dated 04-07-2007 approved the Credit Limited for Rs.10,00,000/-.:3:
It has been stated by the complainant in its complaint that on the basis of confirmed order it made five shipments on different occasions for a value of Rs.21,53,727/-. As per the settled terms, these five shipments had emanated for 90 days D.A. (Documents against Acceptance). The premium on all the five shipments was paid by the complainant which were duly covered under the policy and as per policy of the risk coverage, the risk was covered to the extent of 90% of the sale proceeds. The Jammu & Kashmir Bank wrote a letter to the foreign buyer for remitting the amount but the foreign buyer committed default in payment of the dues. The complainant engaged M.A.H. International G.M.B.H., Switzerland to secure the recovery of the amount due. The recovery agent made sincere efforts to secure the recovery but the amount could not be recovered.
It has been further alleged in the complaint that the complainant moved an application dated 07-01-2009/12-01-2009 to the opposite party for extension of due date for shipment to the above buyer and another application dated 20-01-2009 regarding the typographical error in the name of the buyer in one shipment and sanctioned limit which was replied by the opposite party vide heir letter dated 21-01-2009 that they are unable to consider extension on the due date application. The opposite party issued an Exporter Advice Report dated 31-03-2009 which contained the shipment details for the transaction done to the foreign buyers between the period 02-03-2007 to 19-03-2009 by the complainant including the amount of premium which was paid to the opposite party. The complainant having lost all hopes of recovery from the above buyer, submitted a claim form dated 02-09-2009 for Rs.21,53,727/- (90% of which was Rs.19,38,354/-) to the opposite party as loss.
It has been stated in the complaint that the opposite party vide letter dated 27-10-2009 asked for additional premium for the abovesaid shipment amounting to Rs.3,376.54 on D.A. 180 basis which was paid by the complainant vide receipt dated 04-11-2009. The opposite party vide its letter dated 27-10-2009 proposed to pay Rs.9,25,000/- which was accepted by the complainant without prejudice to their rights. The opposite party vide letter dated 04-11-2009 informed the complainant that a cheque/demand draft no. 294470 dated 04-11-2009 is being sent to Jammu & Kashmir Bank, Kanpur. The complainant sent a protest letter dated :4: 17-11-2009 and another letter dated 24-11-2009 to the opposite party clarifying all the lapses on their part with a request to pay the balance amount of Rs.10,13,354/- (on the basis of 90%). The opposite party vide letter dated 09-03-2010 did not consider the protest letter and refused to make the balance payment of Rs.10,13,354/- in view of the credit limit of Rs.10,00,000/-. The complainant sent a letter to the opposite party specifying various reasons to pay the balance amount including duty drawback incentives. This letter was not replied by the opposite party. Thereafter the complainant sent a legal notice dated 01-07-2010 to the opposite party but the opposite party failed to make the payment of the balance amount which is a deficiency in service on the part of the opposite party.
In support of the complaint the complainant has filed the various documents Annexure-01 to Annexue-29 which are available on record.
The opposite party M/s Export Credit Guarantee Corporation of India Limited has filed the written statement and denied the allegations made by the complainant in its complaint.
It has been stated by the opposite party in its written statement that the credit limit applied by the complainant was for Rs.20,00,000/-, however based on the credit worthiness of the buyer, the opposite party had approved a credit limit of Rs.10,00,000/- only vide letter dated 04-07-2007, therefore, the effective credit limit on the said buyer to the policy holder was Rs.10,00,000/- only, hence the claim amount was calculated accordingly.
It has been stated by the opposite party in its written statement that the complainant had taken Shipment Comprehensive Risk policy which was valid from 01-04-2007 to 31-03-2009 and Clause 28 of the policy mandates strict compliance of the terms and conditions of the policy. Clause 29 deals with failure to comply with conditions and clause 30 clarified the uncovered risks.
It has been further stated by the opposite party in its written statement that as per clause 8(a) and 8(b) of the terms and conditions of the policy, the complainant was required to submit the declaration of shipment made in a month by 15th of the next month and the declaration :5: of overdue payments to the opposite party by 15th of the next month in which the payment was overdue for 30 days or more.
In the instant case, the shipments were reportedly made on28-07-2008, 11-08-2008, 08-09-2008, 03-10-2008 and 24-10-2008 and should have been declared to the OP on or before 15-08-2008, 15-09-2008, 15-10-2008 and 15-11-2008 respectively whereas the shipment dated 08-09-2008 was declared on 16-10-2008 and the OP is absolved of any liability as per clause 19(a) of the policy. The declaration of overdue payment ought to have been submitted to the OP on or before 15-12-2008 but it was received by the OP with considerable delay on 02-03-2009 and the OP was absolved of its liability as per clause 19(b) of the terms and conditions of the policy.
It has been further stated in the written statement that the complainant has wrongly declared the shipments on DA-90 days terms whereas the same were actually made on DA-180 days terms thereby misrepresenting the fact as well as paying less premium than the actual which was due. Thus the complainant misrepresented the material facts in violation of clause 1 and 2 of the terms and conditions of the policy and thereby making it void.
The opposite party has stated in the written statement that the opposite party vide letter dated 04-07-2007 had approved a credit limit of Rs.10,00,000/- on DA-90 days terms of payment on account of the buyer 440, Fence Company Inc., USA. It is noteworthy that the approval of credit limit by the opposite party on a particular buyer is done based on its credit worthiness. In fact the complainant had neither sought nor had been approved any credit limit on DA-180 days terms of payment on account of the said buyer and therefore there was no valid credit limit on the said buyer on DA-180 days terms of payment.
It is very much clear that the claim of the complainant was not payable at all due to serious breaches of the terms and conditions of the plicy issued to him. Despite that the OP considered the claim of the complainant as a special case to the extent of the credit limit approved i.e. Rs.10,00,000/- and after applying attendant reduction as per clause 29 of the policy for the lapses committed by the complainant and offered to pay Rs.9,25,000/- as full and final settlement vide letter dated :6: 27-10-2009. The complainant was at liberty not to accept this offer but the same was duly accepted by the complainant as is evident from the acceptance in the said letter dated 27-10-2009. Accordingly the claim of Rs.9,25,000/- was paid to the complainant vide letter dated 04-11-2009 in full and final settlement. The settlement of the claim in question was considered by the opposite party exercising its rights as per clause 29 of the policy issued to the complainant and so there is no deficiency of service attributable to the opposite party in the matter. The complainant cannot claim anything more than what is covered by the insurance policy. The present complaint being totally devoid of any substance is liable to be dismissed on this ground alone. The complaint of the complainant is bad in the eyes of law for the acts of suppression on the part of the complainant.
It has been further stated in the written statement that the complainant is not a consumer as per Section 2(1)(d) of the Consumer Protection Act 1986 and the complaint ought to be dismissed on this ground alone. The complaint is also bad in eyes of law on the ground of non-joinder of necessary parties. The captioned buyer has not been impleaded as necessary part in this complaint and on this ground alone the complaint ought to be dismissed with exemplary costs in favour of the opposite party.
It is stated by the opposite party in its written statement that the amount claimed in the complaint is less than Rs.20,00,000/- and therefore, the Hon'ble State Commission has no pecuniary jurisdiction to entertain the same. The complainant is not entitled to the reliefs claimed and the complaint is liable to be dismissed with cost and special costs in favour of the opposite party.
Both the parties have filed their evidence in the instant complaint.
Alongwith the evidence the complainant has filed the documents Annexure No.01 to Annexure No.03 in support of his evidence.
Alongwith the evidence the opposite parties have filed the documents Annexure No.01 to Annexure No.05 in support of their evidence.:7:
Learned Counsel for the complainant has filed written argument which is available on the record.
We have heard the learned Counsel for the parties.
Learned Counsel for the complainant has argued that the complainant is a manufacturer, exporter and supplier of all kinds of leather goods including equestrian items to foreign countries. The complainant has an expertise in manufacturing of high quality horse saddle and its accessories and is an established exporter and wholly an export oriented unit since more than a decade is doing good business.
Learned Counsel for the complainant has argued that the complainant has been taking the shipments (Comprehensive Risks) SCR Policy from the opposite party since 1999 and has subsequently renewing the policy by paying Rs.10,000/- and submitting the names of foreign buyers and value of orders. The policy bearing No. SCR 0130000422 was valid from 01-04-2007 to 31-03-2009 for Rs.1,00,00,000/-. This policy is an Export Credit Risks Insurance Cover to protect the exporter and insure him from the risks of non receipt of payment for the exports made due to certain commercial and political risks specified under the clause 'Risk Insured' of the policy. Under this policy the opposite party covers and indemnifies the loss caused due to commercial risks for the losses sustained by the policy holder in respect of the shipments made to the specified buyer.
It has been further argued by the learned Counsel for the complainant that the complainant received various orders of saddles and its accessories from USA and it requested the opposite party to insure coverage/protection of shipment at least to the tune of Rs.20,00,000/- vide Credit Limit Application dated 12-06-2007 on the said foreign buyer started making shipments, the sale proceeds of which were received. The opposite party vide its letter dated 04-07-2007 approved the Credit Limited for Rs.10,00,000/-.
It is contended by the learned Counsel for the complainant that on the basis of confirmed order it made five shipments on different occasions for a value of Rs.21,53,727/-. As per the settled terms, these five shipments had emanated for 90 days D.A. (Documents against Acceptance). The premium on all the five shipments was paid by the :8: complainant which were duly covered under the policy and as per policy of the risk coverage, the risk was covered to the extent of 90% of the sale proceeds. The Jammu & Kashmir Bank wrote a letter to the foreign buyer for remitting the amount but the foreign buyer committed default in payment of the dues. The complainant engaged M.A.H. International G.M.B.H., Switzerland to secure the recovery of the amount due. The recovery agent made sincere efforts to secure the recovery but the amount could not be recovered.
It has been further contended by the learned Counsel for the complainant that the complainant moved an application dated 07-01-2009/12-01-2009 to the opposite party for extension of due date for shipment to the above buyer and another application dated 20-01-2009 regarding the typographical error in the name of the buyer in one shipment and sanctioned limit which was replied by the opposite party vide their letter dated 21-01-2009 that they are unable to consider extension on the due date application. The opposite party issued an Exporter Advice Report dated 31-03-2009 which contained the shipment details for the transaction done to the foreign buyers between the period 02-03-2007 to 19-03-2009 by the complainant including the amount of premium which was paid to the opposite party. The complainant having lost all hopes of recovery from the above buyer, submitted a claim form dated 02-09-2009 for Rs.21,53,727/- (90% of which was Rs.19,38,354/-) to the opposite party as loss.
It is argued by the learned Counsel for the complainant that the opposite party vide letter dated 27-10-2009 asked for additional premium for the above said shipment amounting to Rs.3,376.54 on D.A. 180 basis which was paid by the complainant vide receipt dated 04-11-2009. The opposite party vide its letter dated 27-10-2009 proposed to pay Rs.9,25,000/- which was accepted by the complainant without prejudice to their rights. The opposite party vide letter dated 04-11-2009 informed the complainant that a cheque/demand draft no. 294470 dated 04-11-2009 is being sent to Jammu & Kashmir Bank, Kanpur. The complainant sent a protest letter dated 17-11-2009 and another letter dated 24-11-2009 to the opposite party clarifying all the lapses on their part with a request to pay the balance amount of Rs.10,13,354/- (on the basis of 90%). The opposite :9: party vide letter dated 09-03-2010 did not consider the protest letter and refused to make the balance payment of Rs.10,13,354/- in view of the credit limit of Rs.10,00,000/-.
It is contended by the learned Counsel for the complainant that if the credit limit was restricted to Rs.10,00,000/- then deduction of Rs.75,000/- was not justified to which they are liable to pay. The complainant sent a letter to the opposite party specifying various reasons to pay the balance amount including duty drawback incentives. This letter was not replied by the opposite party. Thereafter the complainant sent a legal notice dated 01-07-2010 to the opposite party but the opposite party failed to make the payment of the balance amount which is a deficiency in service on the part of the opposite party.
It is further argued by the learned Counsel for the complainant that the opposite party is denying their liability on the untenable ground of having the credit limit of Rs.10,00,000/- only on the defaulting party and since the shipments exceeded the value, therefore, the repudiation of payment was not proper. It is pertinent to mention here that Clause-21 of the policy demonstrates the flimsy approach of the opposite party as the complainant had approximately paid Rs.10,00,000/- as premium during the tenure of policy and as such the opposite party was liable to pay the balance amount of Rs.10,13,354/- as per terms of the policy. Learned Counsel for the complainant has referred the relevant portion of Clause 21(iii) of the policy which is quoted below:-
"21 (iii) - If during the two year period immediately proceeding the date of shipment, the insured had make at least one shipment to that particular buyer on payment terms identical to the shipments(s) in question and had duly realized all payments on the respective due dates then the highest amount that remained outstanding due from that buyer on any of those shipment(s) on similar payment terms subject to a limit of Rs.40,00,000/- per buyer with a sub-limit of Rs.15,00,000/- therein for open account transactions i.e. for shipments made on 'Open Delivery' or DA terms. "
In this regard it is stated by the complainant that in the year 2007, the complainant has sent two shipments total worth Rs.16,49,350/- to the above said foreign buyer. These two shipments were insured by opposite :10: party. The value of the above shipments was Rs.16,49,350/- which were realized within due date i.e. on 26-07-2007 and the opposite party had also charged the premium. Since initial shipment was more than Rs.16,49,350/- and the payments were received, the opposite party was bound to grant a credit limit of at least Rs.25,00,000/- on the said party. The complainant considered that the limit of more than Rs.10,00,000/- otherwise the opposite party may have not charged the premium over and above the limit. The shipments referred above sent by the complainant to the foreign party were valued at Rs.21,53,727/- for which the opposite party had already charged the premium. Once the premium on all the shipments was charged, it will be deemed that all the shipments were insured by the opposite party covering risk of default. The opposite party cannot unilaterally avoid the liability because they have accepted the entire payment as premium of these shipments and therefore it would be deemed that all the shipments are covered and the opposite party is liable to absorb the default.
It is contended finally by the learned Counsel for the complainant that the opposite party has failed to make the payment of the balance amount of Rs.10,13,354/- which is a deficiency in service on the part of the opposite party. The complainant has suffered much physical discomfort and mental agony and has also lost interest on the amount.
It is submitted by the learned Counsel for the complainant that the Directorate of Revenue Intelligence, Regional Unit, Lucknow sent a letter dated 08-12-2011 to the complainant and asked to sent the details of the export incentives. The complainant replied to the authority vide its letter dated 24-12-2011 that an amount of Rs.67,974/- has been received as drawback incentives on the above five shipments.
Learned Counsel for the opposite party has argued that the opposite party is a Company wholly owned by the Government of India. The object of the opposite party is to encourage exports from India made by genuine exporter who are otherwise open to risks even at the best of times. The Export Credit Insurance is designed to protect exporters against payment risks, both political and commercial, subject to strict compliances of terms and conditions of the contract of insurance/policy and to enable them to expand their overseas business without fear of loss of payment. The :11: opposite party has never been hesitant to honor genuine claims and is always willing to pay claims to its policy holders and bankers.
It is contended by the learned Counsel for the opposite party that the complainant had taken Shipment Comprehensive Risk Policy. The said policy was forwarded to the complainant under the covering letter dated 22-03-2007 which also mentioned some of the important terms and conditions of the policy.
It has been argued by the learned Counsel for the opposite party that the credit limit applied by the complainant was for Rs.20,00,000/-, however based on the credit worthiness of the buyer, the opposite party had approved a credit limit of Rs.10,00,000/- only vide letter dated 04-07-2007, therefore, the effective credit limit on the said buyer to the policy holder was Rs.10,00,000/- only, hence the claim amount was calculated accordingly.
It is contended by the opposite party that the amount claimed in the complaint is less than Rs.20,00,000/- and therefore, the Hon'ble State Commission has no pecuniary jurisdiction to entertain the same. The complainant is not entitled to the reliefs claimed and the complaint is liable to be dismissed with cost and special costs in favour of the opposite party.
It is contended by the learned Counsel for the opposite party that as per clause 30 of the policy bond, mere acknowledgement of the declaration or any payment or tender of the premium by the insured or its acceptance by the corporation opposite party shall not be deemed to undertake liability in respect of such account or bill. The premium was charged by the opposite party as per Clause 10 of the policy bond, based on gross invoice value of the shipments and the opposite party was neither negligent nor committed any misconduct or deficiency in service.
In support of the arguments learned Counsel for the opposite party has submitted the Shipments (Comprehensive Risks) Policy (SC) alongwith its terms and conditions.
We have heard the learned Counsel for the parties and perused the complaint filed by the complainants, written statement of the opposite :12: parties, evidence of the complainant and the written arguments filed by the complainant as well as the documents available on record.
Having heard the arguments of learned Counsel for both the parties and after considering the facts and circumstances of the case we are of the positive opinion that the submission of learned Counsel for the complainant appears to be justified and the complainants are entitled to get benefit of credit limit upto Rs.20,00,000/-.
In view of the aforesaid, we are of the positive opinion that the argument of the learned Counsel for the complainant has force and the complaint of the complainant is liable to be allowed and the opposite party is liable to pay the balance amount of Rs.10,13,354/- to the complainant.
ORDER The Complaint is partially allowed. The opposite party is directed to pay the balance amount of Rs.10,13,354/- to the complainant. The opposite party is further directed to pay interest at the rate of 09% per annum on the balance amount of Rs.10,13,354/- with effect from the date of claim lodged by the complainant with the opposite party till the actual payment of the balance amount is paid to the complainant. Apart from that we also direct the opposite party to pay sum of Rs.50,000/- (Rupees Fifty Thousand Only) towards the compensation as well as Rs.20,000/- (Rupees Twenty Thousand Only) towards the cost of the case. The aforesaid amount is directed to be paid by the opposite party to the complainant within a period of 60 days from the date of the delivery of the judgment.
The stenographer is requested to upload this order on the Website of this Commission at the earliest.
Let certified copy of this judgment be provided to the parties as per rules.
( JUSTICE ASHOK KUMAR ) ( VIKAS SAXENA ) PRESIDENT MEMBER Pnt. [HON'ABLE MR. JUSTICE PRESIDENT] PRESIDENT [HON'BLE MR. JUSTICE ASHOK KUMAR] PRESIDENT