State Consumer Disputes Redressal Commission
Lifelong India Ltd. vs Tata Aig Gen. Insurance Co. on 17 August, 2021
IN THE DELHI STATE CONSUMER DISPUTES REDRESSAL COMMISSION
JUDGMENT RESERVED ON: 04.08.2021
JUDGMENT PRONOUNCED ON: 17.08.2021
COMPLAINT NO. 478/2013
IN THE MATTER OF
M/S. LIFELONG INDIA LIMITED .....COMPLAINANT
VERSUS
TATA AIG GENERAL INSURANCE CO. LTD & ANR.
....OPPOSITE PARTIES
CORAM:
HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
HON'BLE SH. ANIL SRIVASTAVA, (MEMBER)
Present: Mr. L.R. Goyal, Counsel for the Complainant.
None for the Opposite Party.
PER: HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL,
PRESIDENT
JUDGMENT
[Via Video Conferencing]
1. The present Consumer Complaint has been filed before this Commission under Section 17 of the Consumer Protection Act, 1986, by M/S Lifelong India Ltd. (hereinafter referred to as "Complainant") against TATA AIG General Insurance Co. Ltd.(Through its Branch Manager, New Friends Colony) & TATA CC 478/2013 Page 1 of 12 AIG General Insurance Co. Ltd. (Through its National Manager, Mumbai) (hereinafter referred to as "Opposite Parties") seeking the following reliefs:-
"A. A sum of Rs. 69,82,437/- being the insured value of the consignment which has been rendered to be total loss as a result of the insured perils.
B. Interest @ 12 % per annum on the said amount of Rs. 69,82,437/- from 1.3.2011 up to the date of this complaint and thereafter upto the date of realization.
C. A sum of Rs, 500000/- towards harassment caused to the complainant in entering into avoidable correspondence and consequent expenses.
D. A sum of Rs. 100000/- towards costs of this litigation E. Any other or further relief as this Hon'ble Commission finds fit and proper in the circumstances of the case."
2. Brief facts necessary for the adjudication of the present complaint are that the Complainant obtained a Marine Cargo Open Policy bearing policy No. 0830006785 from Opposite Party No.1, valid from 24.02.2012 to 23.02.2013, for a sum insured of Rs. 79,99,573/- in respect of domestic transits and Rs. 88,23,529/- in respect of exports covering the transit and storage risks on Automobile Plastic Moulded Automobile Parts and other items namely Machineries, Granules, tools and mould, job work movement and raw materials etc. by Rail/Road, Sea, Air, Post, Courier.
3. On 24.02.2011, the Complainant received an order from M/s Inteva Slovkia Spol. (hereinafter referred to as "Inteva") for supply of Automobile Components, pursuant to which, vide invoice bearing No. EXP/2011-12/0136, dated 29.06.2011, a fully loaded container CC 478/2013 Page 2 of 12 containing 22 Pallets of automobile components was shipped by the Complainant to the warehouse at Slovakia for onward dispatch to the buyers.
4. The consignment was carried from the Complainant's unit, Haridwar to Inland Container Depot, Delhi by road. The goods were stuffed in a 20" Container bearing No. MSKU3389817 which was sealed with Seal No.571932 under the supervision of the Custom Authorities. M/S Jasman Consultants Pvt Ltd. was appointed by the Customs Officials for supervision and inspection of the stuffing of goods, and a report dated 12.07.2011 was issued by it.
5. Subsequently, a Bill of Lading bearing No. CTLT0942000496 dated 27.07.2011 was issued by M/s Cargo Partner Logistics India Pvt. Ltd., who was an agent for the carrier M/s Consoltainer Line Transport GmbH. It had been acknowledged by the Carrier that the goods received were in good order as well as the conditions for carriage and delivery.
6. On 26.08.2011, when the container reached Bratislava, water marks were found on the same. Upon examination, the Cartons which contained the automobile components were found to be wet and deformed. Upon this recovery an alert dated 26.08.2011 was sent to the Complainant by the consignee and the consignee also issued a damage protocol on the same date that the packages were received in a wet and torn condition.
7. Thereafter, further inspection of the consignment was done by the buyer M/s Inteva and their agent M/s Phoenix Quality Services on 12.09.2011. After examination of the consignment, vide report dated 31.10.2011, the buyer informed the Complainant that the consignment was not acceptable.
CC 478/2013 Page 3 of 128. On 18.10.2011, the Complainant's technical team did further examination to determine the extent of the damage caused as well as the cause of the same. It was found by the technical team that there was major damage caused due to contact with water. Once this was communicated to the Complainant, the same was further communicated to the Opposite Party No.1 along with a request to depute their surveyor for assessment of loss vide email dated 19.10.2011.
9. After receiving the relevant documents, the Opposite Party No.1 deployed M/s Inservis Slovakia for the survey of the said consignment. The Surveyors inspected the consignment on 31.10.2011 and 04.11.2011. The Surveyor report dated 23.12.2011, stated that there was massive water and moisture contamination leading to the entire shipment of transported goods becoming mouldy. The cause of loss as described in the aforementioned report was water contamination and its subsequent extended action in the container. The report further concluded that the water contamination probably occurred before packaging and loading the goods in the container and not during the transportation in the container.
10. Vide letter dated 27.01.2012, the Opposite party No. 1 repudiated the claim on the following grounds:-
a) The consignment was unloaded from the container on 26.08.2011, while the loss was intimated in 19.10.2011 i.e. after a delay of 52 days ;
b) The surveyor couldn't examine the container due to delayed intimation, however, upon inquiry it was found that there was no damage to the container before and after this shipment ;
c) The water contaminated pallets in its original packing were found to be completely shrinked wrapped pallet with water contamination visible underneath the CC 478/2013 Page 4 of 12 foil in the form of condensing moisture ;
d) The contact with water and moisture resulted in damages leading to corrosion of mechanical parts and affecting their mobility ;
e) Salinity test of water samples through potable optic refractometer indicated 1% salinity. According to available data, the salinity of sea water is between 3- 5% ;
f) The surveyor has concluded that the water contamination probably did not occur during the transportation of the container. Possibility of contamination with water could have happened before packaging and loading the goods in the container ;
g) This policy excluded losses due to rust, oxidation, discoloration unless caused by ICC/ITC- B perils ;
h) Surveyors have also remarked that no measures were taken to minimize the loss after alleged contamination was noticed upon unloading; therefore due diligence was not exercised.
11. Vide letter dated 07.02.2012, the Complainant gave clarifications to the grounds of repudiation given by the Opposite Party No.1 in their repudiation letter. The contents of the clarifications are as follows:-
a) Consignment reached the warehouse at the storage where 90 days storage cover was available. This was not the final destination and the goods were still in transit.
b) The consignment arrived to the warehouse en-route on 26.08.2011 in wet condition due to which it wasn't unloaded till the completion of certain formalities on 02.09.2011. Upon opening of the same only a few pallets were found to be damaged. The same could not be intimated to the Opposite Party as the situation for an insurance claim did not arise due to the policy of loss of excess of 0.25% of the consignment value
c) Furthermore, the inspection by the consignee could be only completed on 12.10.2011. After confirmation of damage, the team of senior executives of the Complainant visited the warehouse on 13.10.2011 for inspection. Only after receipt of final mail from consignor team about suspected damage on 18.10.2011, the same could be intimated to the Opposite Party.CC 478/2013 Page 5 of 12
d) Water contamination was observed underneath the foil and pallets because somewhere during sea voyage only the seawater entered in an unforeseen and sudden manner.
e) Salinity test results of even 1% do not conclusively rule out the probability of entry of seawater.
f) The probability of water entry before packing is ruled out because the container inspection was conducted before stuffing and after stuffing. "
12. Despite the aforesaid clarification given by the Complainant, the Opposite Party No.1 failed to reconsider the claim of the Complainant. Aggrieved by the same, the Complainant made a representation to the IRDA on 06.07.2012. The Complainant received no reply from the IRDA.
13. Thus, left with no other option, alleging deficiency of service on the part of the Opposite Parties, the Complainant has approached this commission.
14. The Opposite Parties have contested the present case and raised some preliminary objections as to the maintainability of the present complaint and contended (a) that the complainant is not a "Consumer" as per the Consumer Protection Act, 1986 ; (b) that the Complainant has failed to establish any kind of deficiency in providing services by the Opposite Parties. Pressing the aforesaid preliminary objections, the Opposite Parties prayed that the present Consumer Complaint should be dismissed.
15. The Complainant filed its Rejoinder rebutting the written statement filed by the Opposite Parties. Both the parties filed their Evidence by way of Affidavit in order to prove their averments on record. After the completion of the pleadings, the case was listed for final arguments.
CC 478/2013 Page 6 of 1216. We have heard the counsel for the parties and perused through the material on record
17. Before delving into the merits of the case, we deem it appropriate to adjudicate preliminary issue as to the maintainability of the Consumer Complaint.
COMPLAINANT- CONSUMER OR NOT?
18. The first leg of argument of the Opposite Parties is that the Complainant is not a consumer within the meaning of the Consumer Protection Act, 1986 and cannot invoke the provisions of the Act. The counsel for Opposite Parties has alleged that the Complainant had taken the Fire Insurance policy for "business purposes".
19. This aspect as to whether Insurance Policy taken for a business would entitle an insured to be considered as a "Consumer" has been dealt with by the Hon'ble National Consumer Disputes Redressal Commission in Harsolia Motors Vs. National Insurance Co. Ltd. Reported at 2004 SCC OnLine NCDRC 11. The relevant portion has been reproduced as under:-
"At the outset, it is to be stated that an insured who takes the insurance policy cannot trade or carry on any commercial activity with regard to the insurance policy taken by him. Under Sec. 3 of the Insurance Act, 1938, no person is permitted to carry on business of insurance unless he obtains a certificate of registration from the Insurance Recovery and Development Authority.
Further, hiring of services of the Insurance Company by taking insurance policy by Complainants who are carrying on commercial activities cannot be held to be a commercial purpose. The policy is taken for reimbursement or for indemnity for the loss which may be suffered due to various perils. There is no question of trading or carrying on commerce in insurance policies by the insured. May be that insurance coverage is taken CC 478/2013 Page 7 of 12 for commercial activity carried out by the insured.
In Halabury's Laws of England, vol. 25, 4th Edition, the origin and common principles of insurance is discussed and in paragraph 3 it has been mentioned that it is based on principle of indemnity. Thereafter, relevant discussion is to the effect that most of contract of insurance belong to general category of contracts of indemnity. In the sense that insurers' liability is limited to the actual loss which is, in fact, proved. The contract is one of indemnity and, therefore, insured can recover the actual amount of loss and no more.
In this view of the matter, taking of the insurance policy is for protection of the interest of the assured in the articles or goods and not for making any profit or trading for carrying on commercial purpose.
In this view of the matter, a person who takes insurance policy to cover the envisaged risk does not take the policy for commercial purpose. Policy is only for indemnification and actual loss. It is not intended to generate profit."
20. From the aforesaid dicta of the Hon'ble National Commission, it flows that the contract for Insurance is a contract for indemnity and is not Commercial Purpose under the Consumer Protection Act, 1986.
21. Returning to the facts of the present case, the Complainant had purchased Marine Cargo Open Policy from the Opposite Party No.1 for protection of the interest of the Complainant and not for making any profit or trading for a commercial purpose.
22. Consequently, the contention of the Opposite Parties that the Complainant is not a consumer since the insurance has been taken for business purposes holds no ground.
CC 478/2013 Page 8 of 12DEFICIENCY OF SERVICE
23. The Opposite Party No.1 has relied upon two major grounds for repudiation of the Insurance Claim. The first being that the Complainant delayed in intimating about the damage caused to the consignment and due to the delay, the surveyor could not assess the loss properly.
24. Referring to the facts of the present case, the consignment arrived to the warehouse en-route on 26.08.2011 in wet condition due to which it wasn't unloaded till the completion of certain formalities on 02.09.2011.The Complainant was informed about the damage caused to the consignment on 26.08.2011 by the Carriers. Thereafter, the Buyer was invited for inspection on 12.09.2011. Subsequently, on 18.10.2011 the technical staff of the Complainant inspected the consignment and came to a conclusion that the major damage was caused due to contact with water. Only then the Complainant intimated about the same the Opposite Party No. 1 on 19.10.2011.
25. The Complainant has submitted that an insurance claim did not arise as the consignment value and necessary examination and quantification was a must by the Complainant before intimating the loss in writing to Opposite party No.1. The Policy also contains an excess clause of 0.25% of the consignment value and there would be no claim unless the damage exceeds the amount of the excess. Hence the complainant was right in intimating the Opposite party No.1 after assessing the loss. Accordingly, the first ground for repudiation is not valid.
26. Moreover, the second major ground being taken by the Opposite Party No.1 for repudiation of the claim is that the consignment was damaged before the goods were out on route. To support this CC 478/2013 Page 9 of 12 contention the Opposite Party No.1 has relied upon the salinity test of the water samples which indicated only 1 % salinity. However, according to the available data, the salinity of the sea water is between 3-5%.
27. The Complainant has relied upon the inspection done by the M/S Jasman Consultants Pvt. Ltd which is attached as Annexure C-4 of the Complaint. The Report provides that the the Consignment was inspected. In view of the aforesaid, the Carrier issued a Bill of Lading wherein it was mentioned that the consignment was received in a good condition. The relevant portion is produced as follows:-
"Received the above described merchandise from the merchant, in apparent good order and conditions unless otherwise indicated to be transported as provided therein."
28. The perusal of the aforesaid reflects that the consignment was inspected and it was in a good condition as envisaged in the Bill of Lading. Thereafter, the consignment was on route to the destination and the damage was only discovered when the consignment reached the destination. It is crystal clear that the consignment was damaged during the course of transit.
29. The Opposite Party No. 1 has further contended that the water samples collected from the consignment had a salinity of 1 % which is below than the average salinity level of sea water. However, the Opposite party No.1 has merely made a bald statement while placing reliance on the salinity tests and has not placed on record any cogent evidence to prove this contention. Hence, this contention is also answered in negative.
30. At this juncture, we deem it appropriate to refer to Clause (A) -1.1.82 which states that the Insurance Policy covers rain-water/ sea-water CC 478/2013 Page 10 of 12 damage also. Since the Insurance Policy covers such peril caused due to sea water damage, the present claim is maintainable and the grounds taken by the Opposite Party No. 1 for repudiation of the claim are invalid. Thus the Opposite Party No.1 is deficient in providing its services to the Complainant.
CONCLUSION
31. Keeping in view the facts of the present case, we allow the following reliefs as prayed for by the Complainant:
I. We direct the Opposite Party No.1 to pay an amount of Rs. 69,82,437/- along with interest as per the following arrangement:
A. An interest @ 6% p.a. calculated from 27.01.2012 (the date of repudiation of the Insurance Claim) till 17.08.2021 (being the date of the present judgment);
B. The rate of interest payable as per the aforesaid clause (A) is subject to the condition that the Opposite Party pays the entire amount on or before 31.10.2021; C. In case the Opposite Party fails to refund the amount as per the aforesaid clause (A) on or before 31.10.2021, the entire amount is to be refunded with an interest @ 9% p.a. calculated from 27.01.2012 (the date of repudiation of the Insurance Claim) till the actual realization of the amount.
II. In addition to the aforesaid and taking into consideration the facts of the present case, the Opposite Party is also directed to pay to the Complainants CC 478/2013 Page 11 of 12 A. A sum of Rs. 3,00,000/- as cost for mental agony and harassment;
B. And the litigation cost to the extent of Rs. 50,000/-.
32. Applications pending, if any, stands disposed of in terms of the aforesaid judgment.
33. A copy of this judgment be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986. The judgment be uploaded forthwith on the website of the commission for the perusal of the parties.
34. File be consigned to record room along with a copy of this Judgment.
(DR. JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (ANIL SRIVASTAVA) MEMBER Pronounced On:
17.08.2021 CC 478/2013 Page 12 of 12