State Consumer Disputes Redressal Commission
M/S. International Corporation vs Export Credit Guarantee Corporation Of ... on 3 July, 2012
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: 3.7.2012 Complaint Case No. C-09/165 M/s International Corporation - Complainant Through Its Partners, S-96, Badli Industrial Area, New Delhi 110042. Versus Export Credit Guarantee - Opposite Party Corporation of India Limited, Through its Managing Director, NBBC Place, South Tower, 4th Floor, Pragati Vihar, Bhishima Pitamaha Marg, New Delhi 110003. CORAM : JUSTICE BARKAT ALI ZAIDI - President Mr. V.K. GUPTA -Member (Judicial) 1. Whether reporters of local newspapers be allowed to see the judgment? 2. To be referred to the Reporter or not? V.K. GUPTA, MEMBER(ORAL) ORDER
1. This is a complaint under Section 12/17 of the Consumer Protection Act, 1986.
2. Brief facts are that the complainant is a partnership firm registered under the Indian Partnership Act, 1932 and is engaged in business of manufacture and export of stainless steel and other metal goods. The OP is an enterprise of the Government of India and is engaged in the business of insurance with respect to the export business. It provides the services to the exporters which are as under:
(a) Offers insurance protection to exporters against payment risks;
(b) Provides guidance in export-related activities
(c) Makes available information on different countries with its own credit ratings;
(d) Makes it easy to obtain export finance from banks/financial institutions
(e) Assists exporters in recovering bad bents; and
(f) Provides information on credit worthiness of overseas buyers.
3. The STELCO is an Indian Pvt. Ltd. Company, which is also indulged in the same line of business as that of the complainant. The said STELCO Company requested the complainant to supply/deliver a container of stainless steel and other metal goods to the above mentioned buyer. In consequence thereof, the complainant agreed to supply/deliver 1 (one) container of stainless steel and other metal goods on the agreed terms and conditions with the promise from the buyer that the buyer would not make any delay in making payment to the complainant. The buyer and the complainant agreed for the supply of goods as per Proforma Invoice # INC/PI/QTD/001 dated 23.7.2007.
The complainant prepared the goods and raised a commercial invoice alongwith packing list bearing no. RI/69 DTD dated 25.7.2007 on the buyer. As per terms and conditions, the payment term was 60 days from the date of bill of lading.
The goods cover under the aforesaid commercial invoice were shipped vide bill of lading dated 10.8.07. On 30.8.2009, the complainants bank intimated that the Buyers bank has informed that the aforementioned bill of lading has been accepted to mature on 09.10.2007. The complainant approached the OP for obtaining an insurance policy against payment risks involved in the transaction and inconsequence thereof the complainant submitted a proposal form for obtaining the insurance policy. On 26.7.07, OP sought a clarification form the complainant which was supplied to him. The complainant vide its letter dated 06.08.07 forwarded a cheque of Rs. 8,577/- to the OP towards the minimum premium payable for obtaining the insurance policy. On submission of the proposal, the OP on 21.8.07 issued a specific shipment policy bearing policy No. SNC 0510000252 in favour of the complainant and the amount covered in this policy was $26,883.64 in foreign currency and which value as per Indian currency i.e. Rs. 10,88,787/- and the maximum liability of the OP according to the policy terms and condition was Rs. 8,71,030.00 in Indian currency. The percentage of the amount of the loss payable was 80% and the waiting period was 4 moths. The main features of the said policy are mentioned in Para No. 7.9.1 to 7.9.3.5.
In pursuance to the said policy, the complainant stated following up the Buyer for payment of the shipment and sent for the payment details on 27.9.07 only and again reminded buyer for payment on 9.10.07 but the buyer still refused to make the payment and asked for some more time to do the same. The buyer had manipulated things according to his own way and had taken all the shipment documents from the complainant bank without making any payment to the complainant. On 06.11.2007, the complainant sent a final reminder to the buyer informing him that the complainant will take every step to recover their payment. On 12.12.07, the complainant replied the legal notice. It was specifically clarified by the complainant earlier that the complainant had never entered into an agreement with the buyer to supply any more containers except for the 1(One) container, which was confirmed by the buyer also. The OP on 1.11.07, addressed a letter to the complainant acknowledging the complaints declaration of the overdue payments for the month of august 2007 on the buyer. Further OP had instructed the complainant to initiate steps for collection of the overdue payments through one of the Debt Collection Agencies registered with the OP. On the instructions of the OP, the complainant entered into an agreement dated 18.12.2007 with M/s MAH International GmbH. The complainant made a request to the OP for issuance of the claim form against SSP-ST Policy No. SSP 0510000252 dtd 21.8.2007 as herein above mentioned in Para7.8. The Claim form was issued to the complainant by the OP and the claim form was sent to the OP seeking reimbursement of Rs.8,70,810.26. Pursuant to the submission of the claim form, the OP addressed an e-mail dated 28.3.2008 to the buyer seeking an explanation with respect to the default in making payments to the complainant and the buyer replied through e-mail on 14.4.2008 making certain allegation which are mentioned in Para 7.19. The complainant replied on 1.5.2008 to the allegations contained in the buyer reply to the Op and further elaborated the reasons for the reimbursement of the loss from the OP. The complainant specifically mentioned that it is not the party of any contract between STELCO and the Buyer and the understanding between the complainant and the buyer was limited to supply of one container only at an agreed rates and payment of the same on due date and the same was shipped on time by the complainant. On 12.5.2008, the OP sent a letter rejecting the claim on the ground mentioned in Para No. 7.22.
Thereafter the complainant sent many letters to the OP for making payment of the Insurance Policy. The OP is liable to pay a sum of Rs. 8,71,030/- to the complainant to make good the loss sustained by the complainant. The claim of the complainant towards the OP is Rs. 8,71,030 + 29,050 i.e. Rs. 10,80,080/- (actual claim amount along with interest). The complainant also claims Rs. 10 Lac as compensation and damages for the deficiency in service provided by the OP and for mental agony and harassment.
4. The Respondent/OP filed the written statement and denied the claims. It is contended that the complainant and the STELCO Overseas Pvt. Ltd. are the sister concerns but it is completely concealed. The complainant clearly stated that the consignment was sent by our clients through its sister company M/s STELCO Overseas (P) Ltd., which has been denied by the complainant later on.
M/s STELCO Overseas Pvt. Ltd. company, which is a sister concerns of the complainant was not in a position to send the goods because there were complaints about the quality of the goods and delay in sending the same in respect of the two consignments sent by them and further it was found by the OP that STELCO was an unsatisfactory client and might not have granted cover for its third consignment. Obviously STLECO is a defaulter and their premium dues of the OP outstanding since 2004 is about Rs. 57,975/-. The complainant sought and obtained credit insurance cover from the OP concealing the above facts that the complainant and the STELCO Pvt. Ltd. are the sister concerns. In the proposal for the Insurance, the specific question was Names of group concerns, associates and sister concerns, which was answered by the complainant is NA, which is deliberate concealment by the complainant. The third consignment value is Rs. 10,77,702 was sent by the complainant to the buyer on 10.8.07 and the term of the payment was Documents against acceptance. In response to the legal notice, the buyer explained poor quality of the goods, delay in sending the goods and get the order placed with buyer by the complainant. The complainant itself vide letter dated 12.12.2007 by the advocate as confirmed with its sister concern, STELCO Overseas (P) Ltd. and it was also confirmed by the Overseas buyer. Since the buyer has justified reasons to refuse the payment after the claim has to be rejected in clause 3(a)(d) of the exclusion to the risk insured under the policy.
It may further be stated that the insurance is subject to the strict compliance to the terms and conditions of the contract. The complainant is not a consumer within the definition under section 2(1)(d) of the Consumer Protection Act 1986 in as much as the policy was taken for commercial purposes to facilitate the export business. The consignment sent by the complainant was third of the 5 consignment for which orders had been placed by STELCO. The shipment was sent on 10.7.07 and as solon as the consignment reached the buyer, he raised objection about the quality of the goods as well as the manner of the performance by the complainant. The Debt Collection Agency has informed the complainant that only way to recover from the buyer is by legal action. The claim of the complainant was rightly rejected by the OP for the reason the complainant failed to adhere to the terms and conditions of the policy. The complainant not only concealed the material facts about its sister concern but also supplied the sub-standard goods to the buyer. Therefore, the complainant is not entitled to the claim any relief.
5. Both parties have filed evidence in their support.
6. We have heard the Ld. Counsel for the parties and perused the matter.
7. The case of the complainant is that STELCO had requested to the complainant to supply/deliver a container of stainless steel and other metal goods to the buyer namely M/s QT Dog LLC in view of the fact that STELCO is also involved in the same line of business of the complainant and the said STELCO had the good business in the past.
In pursuance of this, the complainant had agreed to supply one container of stainless steel and other metal goods on the agreed terms and conditions with the promise from the buyer that the said buyer would not make any delay in making the payment. The goods were supplied as per Proforma Invoice and packing list bearing No.R-1/69 DTD dated 25.07.2007. These facts are not in dispute. The complainant approached the opposite party for obtaining the insurance policy against the aforesaid payment risk involved in the transaction. The opposite party on 21.08.2007 issued a specific shipment policy bearing No. SNC 0510000252 in favour of the complainant for the amount covered Rs. 10,88,787/- and the complainant had to pay the premium.
In the written statement it is admitted that the opposite party issued a policy in the name of complainant in respect of the aforesaid transaction which are mentioned herein above. The buyer has not paid the amount, therefore, the complainant claims amount from the opposite party under the policy.
8. The only contention raised by the opposite party is that there is suppression of the material facts, therefore the complainant is not entitled to claim any amount of the policy. The contention of the opposite party is that STELCO Overseas (P). Ltd. Is a Sister Co. which fact has been concealed and suppressed by the complainant while submitting the Proposal Form. It may be added here that STELCO Overseas (P). Ltd. Is a defaulter and has not paid the outstanding amount of Rs. 57,975/- since 2004 to the opposite party with regard to the premium dues. The opposite party has filed the photo copy of the proposal which is Annexure-OP-1, Sl. No.9 of this Form is with regard to the enquiry by the name of groups concerns, associates and sister concerns for which the answer is given by the complainant as NA, meaning thereby that this question mentioned at Sl. No.9 is not applicable in case of the complainant.
This Proposal Form goes to show that the complainant has no sister concern or group or associate in any manner with any business concern. The opposite party has filed a copy of the legal notice issued by the buyer i.e. M/s. QT DOG LLC, USA which is Annexure-OP-8. In para No.3 of this notice it is specifically and unambiguously stated that the consignment was sent by our clients(complainants) through its sister company(M/s STELCO Overseas(P) Ltd..
This notice is sent by the counsel for the complainant which is an admission on behalf of the complainant i.e. STELCO Overseas (P) Ltd. Which is a sister concern, but later on this has been denied by stating that both (complainant) STELCO Overseas (P) Ltd. have no legal connection whatsoever with each other. It is a well settled principle of law that the facts admitted need not be proved and they cannot be denied by the person or the concern which admitted the same earlier. Since STELCO Overseas (P) Ltd. which admittedly is a sister concern of the complainant was not in a position to send the goods because there were complaints about the quality of goods and delay in sending the goods in respect of the two consignments sent by them and further, the opposite party had found STELCO Overseas(P) Ltd. an unsatisfactory client. The counsel for the opposite party invited our attention towards the paper Annexure-18 which was filed by the complainant and it relates to the policy which is admitted by both the parties.
In para No.3 of this document goes to show that regarding the SCR Policy taken by STELCO in 2002, a letter informing of the due premium was received in May 2004. STELCO did try to settle this issue then and the company executive of ECGC had found occasion but there was no settlement reached. This goes to show an admission on the part of the complainant that STELCO is a defaulter and has not paid the outstanding premium of Rs. 57,975/- and since the STELCO could not supply the goods as it was a defaulting company, therefore it is sister concern i.e. the complainant supplied the goods and deliberately and intentionally suppressed the material fact in para No.9 of the Proposal Form of the complainant as no sister concern. At every stage of supplying the goods to the buyer, the complainant has taken one or the other pretext in respect of STELCO Overseas (P) Ltd. by vaguely stating due to banking objections and other impediments STELCO was not in a position to supply you the goods-with no particulars as to what were the banking objections and what were the other impediments.
9. The repudiation of the claim by the complainant was rejected by the opposite party on 12.05.2008 which is Annexure-17. There are some other papers on the material on record that the complainant asked for review of the decision by the opposite party to reject the claim, the competent officers of the opposite re-examined the facts and circumstances and did not found anything new.
10. The goods has been rejected by the buyer as it was not up to the mark and not in accordance with the terms and conditions of the quality as ordered, therefore this case comes under Clause(d) of the exclusions of the policy. Clause3(d) of the terms and conditions of the policy is reproduced below:-
Clause(3)(d) Exclusions to the Risks Insured the failure or refusal on the part of the buyer to accept the goods and/or to pay for them due to his claim that he is justified in withholding payment of the contract price or the gross invoice value of the said goods or any part thereof by reason of any payment, credit, set-off or counterclaim and/or due to his claim that, for any other reason he is excused from performing his obligations under the contract, unless, except where the Corporation agrees in writing to the contrary, the insured has, for the amount of his loss, obtained by legal proceedings in a competent court of law in the country of the buyer a final judgment enforceable against him.
11. In view of the above, the complainant has candidly confirmed that STELCO Overseas(P) Ltd. is a sister concern and this very material fact was suppressed in the Proposal Form of the Policy, therefore the complainant is not entitled to claim the amount of the policy and the claim was rightly repudiated by the opposite party.
12. Under these circumstances, the complaint is dismissed.
13. 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.
(JUSTICE BARKAT ALI ZAIDI) PRESIDENT (V.K. GUPTA) MEMBER(JUDICIAL) rn