State Consumer Disputes Redressal Commission
H.M. International vs The New India Assurance Co. Ltd on 31 August, 2007
IN THE STATE COMMISSION : DELHI IN THE STATE COMMISSION : DELHI (Constituted under Section 9 clause (b)of the Consumer Protection Act, 1986 ) Date of Decision: 31.08.2007 Complaint Case No. C-291/1999 M/s H.M. International, Complainant F-23/2 Okhla Industrial Area, Through Phase II, Mr. Amrit Singh Chadha, New Delhi-110020. Sr. Advocate with Through its Partner Mr. Mohit Gupta & Sh. Harmesh Arora. Ms. Sonia Khurana. Versus The New India Assurance Co. Ltd., Opposite Party C-2, Mahavir Bhawan, Through Mr. P.K. Tripathi Karampura Commercial Complex, advocate. New Delhi-110015. CORAM : Justice J.D. Kapoor - President Ms. Rumnita Mittal - Member
1. Whether reporters of local newspapers be allowed to see the judgment?
2. To be referred to the Reporter or not?
JUSTICE J.D. KAPOOR, PRESIDENT (ORAL)
1. On account of loss suffered by the complainant entirely due to the negligence and reluctance on the part of the OP in discharging/performing its duty, the complainant has through this complaint sought compensation of Rs. 9,01,929/- (being the amount equal to US $ 16530 + 4204 at an exchange rate of Rs. 43.50 for amount spent by the complainant in getting its cargo released together with interest @ 18% p.a.
2. Case of the complainant, in brief, is that, complainant is a partnership concern duly registered under Indian Partnership Act and is inter-alia engaged in the manufacture of leather garments, articles and other related goods/items to various foreign countries and in order to accomplish their goal and business the complainant is availing the services of various bodies, organizations, institutions, companies besides individuals including that of the OP.
3. Complainant vide its letter dated 12th September 1995 requested the OP to issue an open policy covering all risks, wars and S.R.C.C. for Rs. 25,00,000/- and furnished the OP with complete details of packing etc. and made the payment to OP by cheque. In response to the request of the complainant the OP issued an insurance cover note NO. A/No.0047060 dated 18-09-1995. The OP presumably issued a policy No. 2131170200395 dated 09-10-1995 in lieu of the aforementioned cover note.
However, the policy has not been received by the complainant so far.
4. That w.e.f. 05-07-1996 at the request of the complainant the scope of the policy was extended to cover the merchant miscellaneous items also vide Marine Extra Endorsement copy-cum-bill dated 17th September 1996 issued at New Delhi by the OP which is annexed as Annexure NO. III. In the month of August 1996 the complainant despatched a consignment of 100% cotton power loom bed-sheet sets to M/s Unisonimpex, Moscow, Russia for Rs.46,65,678/- only and an Invoice No. 134 dated 02-08-1996 and packing list of even date was prepared accordingly showing the carriage of the consignment by Sea and subsequently the shipping bill No. 7492 dated 5th August 1996 for export of goods under claim was also prepared and which was processed by the Custom Authorities.
5. The aforementioned consignment was handed over to and taken in charge by Sotra Transport (India) Pvt. Ltd. for and on behalf of M/s Soyuz Transit and a Multi Modal Transport Document was prepared containing all the necessary details and showing the mode/means of transport by rail/sea/road for its transportation to Russia (to the buyer).(Annexure VI). At the time of handing over the export consignment to the transporter the complainant also asked the OP to issue certificate of insurance cover for the aforementioned consignment under its open policy NO. 2131170200395 vide Marine Declaration form NO. 03553 in the sum of Rs.46.65,678/- (as is evident from the ledger of the OP). Since the aforementioned open policy was going to expire on 17-09-1996, the complainant requested the OP either to refund or adjust the amount of premium paid by them and lying to their credit unutilized vide its letter dated 12-09-1999 followed by another letter dated 19-09-1999. The complainant had to his credit an amount of Rs.
17,134.90 as it was entitled (as per records of the OP) to export goods worth Rs.72,84,816/- for which the premium for insurance coverage had already been paid to the OP.
6. That the complainant received letter (Annexure IX) from its transporter i.e. M/s Sotra Transport (India) Pvt. Ltd. dated October 7, 1996 informing that the feeder vessel Petsoamo carrying the container of aforementioned cargo has run aground and General Average has been declared and salvage operations have been carried out. Through the same letter the transporter also requested the complainant to furnish certain documents for the release of the container. On receipt of the letter from M/s Sotra Transport India Pvt. Ltd. regarding the declaration of the General Average claim the complainant vide its letter dated 10-10-1996 lodged its claim under the aforementioned policy with the OP.
Since there was no response from the OP, the necessary documents were again sent to the OP by the complainant under the cover of its letter/reminder dated 29-10-1998 followed by the strongly worded FAX message dated 15-11-1996 requesting them to do the needful but to the utter chagrin of the complainant there was no response from the OP.
7. Suddenly on 20-11-1996 the surveyors visited the premises of the complainant and submitted their report. However, there was no action on the part of the OP even on this report as such another letter/reminder dated 28-11-1996 was addressed to Shri S.N. Chaturvedi, Asstt. General Manager, New Delhi alongwith C.C. to Shri R.M. Patel, Asstt. Manager, MC.T.O. Bombay seeking their intervention and help in getting the release of General Average document expedited.
8. For the first time a letter dated 18-02-1998 of the OP was received by the complainant regarding the General Average claim asking the complainant to apprise the OP of the latest status of the claim and asking for relevant documents. All the relevant documents had already been supplied to the OP and it was their delaying tactics only. Hence this complaint.
9. Till the filing of this complaint the OP had been informing the complainant that its claim was still under consideration.
However, during the proceedings the OP repudiated the claim on the following grounds:-
(a) As per terms of the Marine Insurance Policy the carriage by sea was not covered.
(b) The shipment which was in fact on C & F basis did not fall within the ambit of the policy as the complainant had no insurable interest in the goods.
10. On merits the OP came up with the following version:-
(i) That OP issued a marine cover note No. 0047060 dated 18-09-1995 followed by marine open policy bearing No. 2131170200395 in favour of the complainant valid for the period from 18-09-1995 to 17-09-1996 for a sum of Rs.25,00,000/- (CISF & 10%) in respect of consignment of certain leather garments, leather articles and other allied goods securely packed in poly bags sent by air from New Delhi to USA, USSR, Canada, Italy and other European countries. The complainant had deliberately made interpolations in copy of the cover note by adding the word sea after the words By Air.
(ii) That in order to conceal the said fraud perpetrated upon by the complainant on the OP to lodge an insurance claim on the OP to which the complainant would otherwise have not been entitled to under law or the contract i.e. policy of insurance, the complainant has withheld the policy itself from this Honble Commission.
(iii) That the complainant made requests from time to time for issuing endorsements against the policy in question, one of which endorsements bearing NO. 2131170230195 is marked Exhibit P-3 to the complainants affidavit. On the request letter dated 16-11-1995 given by the complainant for issuance of the said endorsement, the complainant has clearly and categorically stated that Our merchandise is sent by Air.
(iv) That the fraud played by the OP in filing a fabricated and interpolated document/cover note as Exhibit P-2 with the words written thereon By Air/Sea is fully exposed from a document none other than produced by the Complainant with the very same affidavit as evidence, sworn on oath, namely letter dated 05-07-1997 wherein there is clear and categorical admission on the part of the complainant that at least till that date i.e. 05-07-1997 the cover note in the possession of the complainant had only the words By Air as more clearly stated by the complainant in the letter that When we received the cover note, it only mentioned by air.
(v) That vide letter dated 29-11-1996 the claim lodged by them was not maintainable as per terms and conditions of the policy. The complainant therefore vide their letter dated 05-07-1997 sought reconsideration of the claim. The OP on examining the matter further, did not find any reasons as to why the complainant ought not to have been aware of the contents of the policy, particularly when out of 25 consignments, most of them were sent by air, and only three consignments, being the last ones, were sent by sea.
(vi) That the complainant on finding that the claim was not covered as per terms and conditions of the policy , apparently deposited a sum of USD 16,530 towards general average/salvage charges on an amount of USD 1,37,752.50 and an amount of USD 4204.40 towards demurrages and got the goods released. The General Average Claim was thereafter referred to the Arbitrators in London, but the complainant has not disclosed the outcome of the said proceedings either to the OP or in the present complaint/evidence by way of affidavit.
(vii) That as per terms and conditions of the policy, namely that (a) carriage by sea was not covered as per terms and conditions of the policy and (b) the shipment which was in fact on C&F basis did not fall within the ambit of the policy, as the complainant had no insurable interest in the goods. The policy only confined by Air, the OP has placed reliance upon the following documents:-
(a) Ex. R-1 is the Marine Cover Note. In this cover note against column Description of Interest & nature of packing the following information is provided:-
One consignment said to contain leather garment, leather articles and other leather goods securely packed on poly bags, then in card board boxes cycled with hessian cloth.
Per conveyance: By Air.
Voyage : New Delhi, USA USSR, Canada, Italy and other European countries.
(b) The printed terms of the policy on the same Cover Note reads as under:-
As requested you are hereby held covered subject to the terms and conditions of the Companys Marine Cargo Policy.
Rate of premium was mentioned as Marine @ 0.20% for all risks and 0.02% for War & SRCC.
(C). Ex. R-2 under the title Marine Insurance and Ex. R-3 letter dated November 1995 sent by the complainant to the OP-Company which is to the following effect:-
Please find enclosed our Cheque No. 094936. We are exporting garments and other various type of articles to USA, USSR and neighbouring countries. Our merchandise is sent by Air. We request you to kindly increase the sum assured to Rs.1 Crore under policy 2131170200395 covering all risks and war and SRCC.
12. In support of its claim the complainant has relied upon the following documents:-
(a) Ex. CW/1/1 is letter dated 12-09-1995 sent by the complainant informing that the merchandise was by Air/By sea.
(b) Ex. CW/1/2 is letter dated 12-09-1995 which shows endorsement by OP saying issuance of marine insurance.
(c) Ex. CW/1/3 is Marine Cover Note under the Marine Cargo Policy and premium has been charged on marine rate @ 0.20% for all risks.
(d) EX. CW/1/12 & 13 are invoices 02-08-1996 on which the complainant supplied shipping bills for export for issuance of cover note for marine declaration.
(e) Ex. CW/1/17 is the Marine Declaration Form No. 03553 dated 08-1996 which categorically Pers. S.S. as Rail/Sea/Road.
(f) Page 41 Photocopy of Leger of the OP for the Marine Open Policy Book wherein the premium has been accepted for declaration 3553 along with shipping bills.
(g) Ex. CW1/24 is a letter dated November 15, 1996 sent by the complainant to the OP.
(h) Ex. CW/1/5 dated is a letter dated 31-10-1996 sent by the OP.
(i) Ex. CW/1/6 is letter dated October 1996 wherein the OP agreed for Air/Sea.
(j) Ex. CW 1/8 dated 08-12-1997 wherein the OP agreed to cover the despatches by sea since inception under the policy.
(k) Ex.CW 1/10 is Marine Extra Endorsement dated 07-01-1997 vide which Marine Extra Premium had further been charged for the marine insurance.
(l) Ex. CW 1/9 is letter dated 18-02-1999 written by OPs Asstt. General Manager to Head Office saying that this was a marine policy.
(m) Claim is based on two payments (i) Ex. CW/1/29 dated 07-01-1997 for US $ 16,530 and (ii) Ex. CW 1/30 dated 20-01-1997 afor US $ 4204 as demurrages.
13. As is apparent the dispute between the parties is whether in the Marine Cover Note, the risk by air alone was covered or by sea also. The original cover note produced by the complainant shows that both the risks are covered i.e. by air or sea. The writing on the cover note is in the hand writing of one person. Though there is no demonstrative circumstance showing that word sea was incorporated later on as the word sea appears to have been written by the same person who had written other contents.
14. Let us assume that in the cover note word by air alone were mentioned. In common parlance the word Marine Insurance means perils consequent on or incidental to navigation of the sea i.e. the perils of the sea. If in the marine insurance policy also any other word is added say by air or road, the policy does not confine to those added perils. The perils consequence to the navigation of the sea are inherent, in the word Marine. Not only the cover note but policy also is titled as Marine Cover Note and Marine Insurance Policy.
15. The very definition of Marine Insurance Policy provided by the Marine Insurance Act 1963 is as under:
A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agree, against marine losses, that is to say, the losses incidental to marine adventure.
Marine adventure as defined by Section 2(d) is as under:
Marine adventure includes any adventure where: -
(i) any insurable property is exposed to maritime perils.
(ii) The earnings or acquisition of any freight, passage money, commission, profit or other pecuniary benefit, or the security for any advances, loans or disbursements is endangered by the exposure of insurable property to maritime perils.
(iii) Any liability to a third party may be incurred by the owner of or other person interested in or responsible for insurable property by reason of maritime perils.
Section 2(e) defines maritime perils as under:
maritime perils means the perils consequent on, or incidental to, the navigation of the sea that is to say, perils of the sea, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints and detainments of princes and peoples, jettisons, barratry and any other perils, which are either of the like kind or may be designated by the policy.
Section 2(g) defines Policy as under:
policy means a marine policy.
16. Thus in our view if the perils by air are mentioned in the Marine Cover Note, these are in addition to the mary time perils i.e. by sea, as perils by sea are inherent in every Marine Insurance Policy. We even go to the extent of observing that in the Marine Cover Note or Policy there is no need to mention risks covered by sea as it is understood that Marine Cover Note or Policy covers maritime perils. If the word peril by air or road are mentioned there, these are additional perils. Thus the only inference that can be drawn from the cover note, which was issued as Marine Insurance Cover Note, is that it covered all maritime perils.
17. Now comes the next question whether the policy in question was purchased against CIF basis or C&F basis. In this regard counsel for the OP has contended that the policy was issued for CIF basis and therefore, the complainant was not covered under the said policy and it is for this reason that the complainant has intentionally and deliberately withheld the original policy. On the contrary the counsel for the complainant has contended that none of the terms i.e. CIF or C&F are mentioned in the policy. This term is only mentioned on the invoice and in this case EX. CW1/12 specifically shows that it was on CIF basis and so much so even the shipping bill also stipulated that it was on CIF basis. Over and above this the letter Ex CW -1/14 sent by the respondent to the complainant clearly mentions that it was on CIF basis. More so the respondent had accepted the premium for shipment on CIF basis. This solitary circumstance ousts the respondent from denying the claim on the ground of shipment being on C&F basis.
18. The distinction between CIF and C&F is that in case of CIF the consigner has to pay the premium whereas on C&F basis the consignee has to pay the premium. Since the respondent had accepted the premium from the complainant who is the consignor, no manner of doubt is left that the sum insured was on CIF basis which is manifestly demonstrated from the documents referred and relied upon by the complainant. Even the Ex. CW 1/15 mentions that it was on CIF basis.
19. In our view even if it was on C&F basis the circumstance of the premium having been paid by the consignor itself converted this into CIF as the insurance company is concerned with the amount of premium and if it is paid by the consignor then it has to be treated on CIF basis and not on the C&F basis.
20. Aforesaid discussion leads us to the conclusion that the insurance claim of the complainant was wrongfully repudiated by the respondent in spite of the fact that the Marine Cover Note covers the risk of maritime perils i.e. navigation by sea and the sum insured was on CIF basis. Though it was open policy covering risk of Rs.1.5 crores but in the instant case, the sum assured was Rs.25,00,000/-. However the cost of the consignment was about Rs.46,65,678/- but the loss suffered by the complainant is restricted to the payment made by the complainant in getting the cargo released to the tune of 20734 USD at the exchange rate which at the relevant time was Rs.43.50. Thus at the relevant time the complainant had suffered loss of Rs.9,01,929/-
21. In the given facts and circumstances of the case we allow the complaint to the effect that the OP shall make payment of Rs.9,01,929/- towards actual loss suffered by the complainant and pay Rs.1,00,000/- as lump sum compensation towards mental agony and harassment suffered by the complainant which shall include the cost of litigation.
22. A copy of this order as per the statutory requirements, be forwarded to the parties free of charge and thereafter the file be consigned to Record Room.
Announced on this 31st day of August 2007.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member Tri