State Consumer Disputes Redressal Commission
M/S H.M.Internation vs New India Assurance Co. Ltd. on 1 May, 2018
Daily Order IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of the Consumer Protection Act, 1986) Date of Decision: 01.05.2018 Complaint No. 291/1999 In the matter of: M/s H. M. International Through its partner Sh. Harmesh Arora F-23/2, Okhla Industrial Area, Phase II, New Delhi-110020 : Complainant Versus New India Assurance Co. Ltd. C-2, Mahavir Bhawan, Karampura Commercial Complex New Delhi-110015 Through Dy. Manager The New India Assurance Co. Ltd. Jeevan Bharati Bldg., Tower-II, 5th Floor, New Delhi-110001 : Respondent CORAM N P KAUSHIK : Member (Judicial) 1. Whether reporters of local newspaper be allowed to see the judgment? Yes 2. To be referred to the reporter or not? Yes N P KAUSHIK - MEMBER (JUDICIAL) JUDGEMENT
Present complaint was disposed by this Commission vide orders dated 31.08.2007. Hon'ble National Commission vide orders dated 13.03.2013 remanded the matter back to this Commission with the directions to decide it afresh taking into consideration the evidence present on record.
Facts in brief of the complaint filed on 16.09.1999 in this Commission are that the complainant M/s. H M International is a partnership firm registered under the Partnership Act. It is inter alia engaged in the business of manufacturing of leather garments and other merchant trading items. All such goods/ items are exported to various foreign countries for which the services of several institutions, companies including individuals are availed of. New India Assurance Company Ltd. (in short the OP) rendered its services by insuring the goods in transit by rail/ sea/ air against various risks.
Complainant vide its letter dated 12.09.1995 requested the OP to issue an open policy covering all risks, wars and SRCC for Rs.25 lakhs. OP issued an insurance cover note dated 18.09.1995. Original policy was presumably issued bearing the date 09.10.1995 in lieu of the aforementioned cover note. Policy however was not received by the complainant. In August, 1996 complainant despatched a consignment of 100% cotton powerloom bed sheets. The consignment was of Rs.46,65,678/- and an invoice No.134 dated 02.08.1996 with a packing list was prepared. Complainant contended that the invoice showed the carriage of the consignment 'by Sea'. Subsequently, shipping bill no. 7492 dated 5.8.1996 for the export of goods under claim was also prepared. The same was processed by the Customs authorities.
Complainant submitted that on 7.10.1996, it received an information from Sotra Transport that the vessel carrying the consignment ran aground and General Average had been declared. Complainant lodged its claim with the OP. Finding no response, a reminder dated 29.10.1998 was sent. The same was followed by a strongly worded fax message dated 15.11.1996. On 20.11.1996, OP sent its surveyors but no further action was taken by the OP. OP's surveyors had however submitted their report. Complainant wrote a letter dated 28.11.1996 seeking intervention of higher authorities of the OP. In a bid to save its reputation, complainant got the goods reloaded by paying General Average. Complainant paid USD 4204 towards demurrage. OP also issued extra endorsement on 07.01.1997. Vide its letter dated 13.07.1999, OP informed the complainant that his claim was under consideration. Frustrated with inaction on the part of the OP, the complainant filed the present complaint.
Before proceeding further it may be mentioned here that during the pendency of the present proceedings in this Commission, OP repudiated the claim on the following grounds:
"a. as per terms of the marine insurance policy, the carriage by sea not covered;
b. the shipment which was in fact on C & F basis did not fall within the ambit of the policy; and as such the complainant had no insurable interest in the goods."
In its written version, OP admitted having issued a marine cover note No. 0047080 dated 18.09.1995 followed by marine open policy no. 2131170200395 valid for the period from 18.09.1995 to 17.09.1996 for a sum of Rs.25 lakhs in respect of the consignment of leather garments and other like goods securely packed in polybags sent by air from New Delhi to USA, USSR, Canada and other European countries. OP submitted that the complainant had deliberately by interpolating the copy of the cover note added the word "sea" after the words "By Air". OP submitted that the complainant withheld the policy in question only to conceal the fraud perpetrated upon the OP. OP further submitted that the complainant made requests from time to time for endorsement against the policy in question. OP referred to a request letter dated 16.11.1995 sent by the complainant for issuance of the said endorsement. The endorsement stated: "our merchandise is sent by air". OP submitted that out of 25 consignments most were sent by air. Only three consignments being the last ones were sent by sea. Complainant finding that his claim was not covered under the policy deposited a sum of USD 16,530/- towards General Average/ salvage charges. Amount of USD 4204.40 towards demurrages was also paid.
Next submission of the OP is that the shipment in question was on C & F basis and did not fall within the ambit of the policy. For this reason the complainant had no insurable interest in the goods.
Parties placed on record their affidavits towards evidence. Written arguments were also filed by the parties. I have heard the arguments addressed at length by the Counsel for the complainant Sh. Anish Verma Advocate and Counsel for the OP Sh. S.M. Tripathi Advocate.
In respect of his contention that the claim was covered under Marine Insurance, the complainant has relied upon his letter of request for issuance of open policy Exhibit CW-I/2 showing that the merchandise of the complainant was to be sent by air or by sea.
The letter dated 12.09.1995 bears an endorsement dated 15.09.1995 (Ex.CW-I/2) by an officer of the OP named Sh. Y.P. Vig. Complainant stated Sh. Y P Vig was working as Assistant Divisional Manager of the OP. The endorsement reads as under:
"Agreed Sd/- 15.09.95 BM/ Dv.
This is my valued client I am doing their marine insurance for last 3 years and I have collected a premium of Rs.1.50 lakh. There is no claim reported till today. Please accord your sanction @0.20% x + Sic 21/00122. Sd/-"
OP issued a cover note dated 18.09.1995 bearing No. A/0047060. Premium chargeable is stated to have been received in advance. Against the column 'Per (Conveyance)', the writing 'By AIR/ SEA' appears. Visual examination of the aforesaid writing does not show if any tampering had been made in the said writing. Cover note is original one and written in hand. Writings 'by air' and 'sea' are in the same handwriting and same ink. To prove its case, complainant placed on record a letter dated 30.10.1996 written by the OP to its internal department called Marine Technical Department/ DRO-I. The letter is Exhibit Ex.CW-I/4. The relevant paragraph of the same is reproduced below:
"On going through the policy, we observe that mode of conveyance granted under the policy is by AIR only and accordingly rates of war & SRCC and stamp duty has been charged. Keeping the fact in view that it was the intention of the insured to cover sea perils at the time of effecting insurance and accordingly they sent declaration no. 3553 dated 125.08.1996 declaring the consignment from New Delhi to Moscow under Bill of lading no. DEL-100007 dated 12.08.1996 for Rs.46,95,678/- under the aforesaid policy. It appears that the insured remained under the impression that his sea shipments are covered under the policy."
Perusal of the abovesaid letter shows that the OP referred to the declaration dated 12.08.1996 declaring the consignment from New Delhi to Moscow under a Bill of Lading.
It is not in dispute that the OP in its cover note used the expression "Marine cover note". The word marine by no stretch of an imagination could be used for transporting the goods 'by air' alone. Marine Insurance Act-1963 gives definition of Marine Insurance Policy 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 incidential 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 t he 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."
Use of the expression "by air" refers to perils besides maritime perils i.e. by sea as perils by sea are inherent in every Marine Insurance Policy. OP has failed to place on record the insurance policy as such. It has also not placed on record its office record or any document showing that the intention of the OP was to ensure that the goods were sent by air alone. I am, therefore, of the considered opinion that the cover note in question intended to cover all Marine type perils.
While repudiating the claim, OP also took an objection stating that the policy was purchased against C & F basis and not on CIF basis. The difference in CIF and C & F basis has been referred to by the Hon'ble Supreme Court in the case of Contship Container Lines Ltd. vs. D. K. Lall and Ors., II (2010) CPJ 12 (SC). The relevant para of the judgement is para 21 and the same is reproduced below:
"21. Coming to the case at hand, the contract of sale was on FOB basis even when the contract of insurance proceeded on the basis that the transactions between the seller and the purchaser and meant to be covered by the policy would be on CIF basis. The distinction between CIF (Cost Insurance and Freight) and FOB (Free on Board) contracts is well recognized in the commercial world. While in the case of CIF contract the seller in the absence of any special contract is bound to do certain things like making an invoice of the goods sold, shipping the goods at the port of shipment, procuring a contract of insurance under which the goods will be delivered at the destination, etc., in the case of FOB contacts the goods are delivered free on board the ship. Once the seller has placed the goods safely on board at his cost and thereby handed over the possession of the goods to the ship in terms of the Bill of Lading or other documents, the responsibility of the seller ceases and the delivery of the goods to the buyer is complete. The goods are from that stage onwards at the risk of the buyer."
Complainant in support of his case has placed reliance upon the letters Ex. CW-I/12, I/14 & I/15. Perusal of the letter Ex.CW-I/12 which is an invoice dated 02.08.19963 clearly shows that the terms of delivery and payment are shown as 'CIF'. Similarly the letter Ex.CW-I/14 is the letter written by New Delhi office of the OP to its Head Office in Mumbai. Letter is dated 11.06.1999. The relevant portion of the same is reproduced below:
"We have now received a letter dated 07.06.1999 from the insured M/s. H. M. International enclosing therein copy of shut out notices and shipping bill stating that the shipment was in fact on CIF basis which is evident from the above documents."
Shipping bill dated 05.08.1996, Ex.CW-I/13 shows the nature of the contract as 'CIF'. Union Bank of India, Okhla Industrial Area, Ph.I, New Delhi vide its Certificate dated 09.11.1999 clarified that it had received full amount for the invoice dated 02.08.1996 which was on CIF basis. These documents lead to a safe inference that the insurance was done by the ensured on 'CIF' basis.
The open policy covered a risk of Rs.1.5 crores but in the present case sum assured was Rs.25 lakhs only. Cost of the consignment was Rs.46,65,678/-. Loss suffered by the complainant has to be restricted to the payment made by him in getting the cargo released. Documents placed on record by the complainant show that he had paid USD 20,734/-for this purpose. Exchange rate at the relevant time was Rs.43.50. Calculated thus, the complainant suffered a loss of Rs.9,01,929/-. Complainant had been writing letters and reminders to the OP for sanctioning the said claim but the OP did not respond. Complainant then filed the present complaint. It was during the pendency of the present complaint that the OP repudiated the claim.
In view of the reasons given above, complaint is allowed. OP is directed to pay to the complainant an amount of Rs.9,01,929/- alongwith interest @8% from the date of filing of this complaint i.e. w.e.f. 16.09.1999 till the date of its realization. Complaint is accordingly disposed of. File be consigned to record room.
(N P KAUSHIK) MEMBER (JUDICIAL)