National Consumer Disputes Redressal
M/S. Hindalco Industries Ltd. vs New India Assurance Co. Ltd. on 9 October, 2018
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 69 OF 2004 1. M/S. HINDALCO INDUSTRIES LTD. (Unit Birla Copper),
P.O. Dahej, Bharuch Gujarat - 392 130 ...........Complainant(s) Versus 1. NEW INDIA ASSURANCE CO. LTD. Bharuch D.O. II,
J.K. Amin Chambers, Station Road, Bharuch, Gujarat. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN,PRESIDING MEMBER
For the Complainant : Mr. Bharat Sangal, Advocate
Ms. Amindita, Advocate For the Opp.Party : Mr. P.K. Seth, Advocate
Dated : 09 Oct 2018 ORDER
JUSTICE V.K.JAIN (ORAL)
M/s Birla Copper, a unit of the complainant company is engaged in manufacture of copper rod / wires from copper concentrate. A by-product of the said manufacturing process is Gold and Silver Slime or the Anode Slime. At the relevant time, Birla Copper was selling Anode Slime produced at their Dahej plant through M/s Noranda Inc. Toronto for refining the same. In order to insure its consignment, Birla Copper had taken a Marine Policy (Cargo) from the OP for period from 12.5.1999 to 11.5.2000, to the extent of Rs.100 crores. The terms and conditions of the policy, however, restricted the liability of the insurer per transit to Rs.1 crore.
2. On 25.8.1999, a consignment weighing 9.2654526 DMT of Anode Slime was loaded in a container, in 22 drums, for shipment to Noranda. The container was sealed with 5 wire lead seals and a bottle seal of the shipping line bearing No.114136. The container was then loaded on a trailor No.MH-04-C-4682. The trailor arrived at the Buffer Container Yard of Central Warehousing Corporation on 26.8.1999. Thereafter the container was loaded on another trailor for shifting the same from CWC Buffer Yard to Jawaharlal Nehru Port on 1.9.1999 at 0037 hours. Though considering the distance of about 5 km between CWC Buffer Yard and JNPT, the trailor carrying container should not have taken more than half an hour to reach JNPT it arrived at the gate of JNPT after about 27 hours. The container was initially loaded on a wrong vessel but was taken off that vessel and then loaded on the correct vessel. It arrived at Montreal Port on 21.10.99 and reached the factory of the consignee on 29.10.1999. When the trailor was opened, it was discovered that it contained only 10 instead of 22 drums. The matter was reported to the consignor by fax on the same day and was also notified to the insurer of the consignee, who appointed a surveyor M/s McLarens Toplis for survey and investigation into disappearance of 12 drums. The matter was also reported by the complainant to the concerned police station at Nhava Sheva, Navi Mumbai. A claim was lodged with the OP for reimbursement of loss sustained by the complainant on account of the theft of 12 drums containing Anode Slime. The OP appointed M/s J Basheer and Associates Surveyors Pvt. Ltd. to examine the claim. Vide their report dated 11.9.2001, the surveyor recommended that an undertaking from the insured may be obtained before settling the claim that should any recovery be made by the police in future, an amount equivalent to the value of the recovered material would be refunded by the insured to the insurer, against any claim amount they receive. However, instead of going by the recommendation made by the surveyor appointed by it, the OP repudiated the claim vide letter dated 22.5.2003 which, to the extent it is relevant, reads as under:-
The claim file was sent to our Head Office for their perusal. Now we have received the directives of our Higher Management as under:-
1. Bill of Lading & Mate's Receipt are clean which is the proof that full cargo was loaded on the ship.
2. The weight of the container at the time of stuffing and as shown in B/L and Mate's Receipt are the same. This shows that there is no pilferage during the inland transit or in the port premises.
3. According to Basheer's report in-gate-lncharge of Central Warehousing Corporation Buffer Container Yard, JNPT have confirmed that subject container was received with all seals intact under Buffer Yard Code No. 41833 on 2618/1999. This has also been countersigned by Custom' Prevention Officer Incharge.
4. Shipping bill indicates that the container was inspected for its seal at Dronagiri Container Freight Station and found intact as on 10/1999 i.e. on the date of removal of the contain" from buffer yard to inside port premises at JNPT, this also rules out any alleged pilferage during inland transit.
5. We have issued policy upto FOB point only. There is no documentary proof to establish that the loss has taken place during the transit covered under our policy. The possibility of loss taking place during the overseas transit or inland transit in Canada cannot be ruled out.
In view of the above, we regret that your claim can't be entertained & it is repudiated on the basis of terms and conditions of the policy."
3. Being aggrieved from the rejection of the claim, the complainant is before this Commission seeking payment of Rs.28476548/- along with interest and compensation.
4. The complaint has been resisted by the insurer primarily on the grounds on which the claim had been repudiated.
5. It is not in dispute that 22 drums containing Anode Slime were lodged by the complainant - Birla Copper in a container on 25.8.99. It is also not in dispute that when the container reached the premises of the consignee, it was found to contain only 10 drums meaning thereby that 12 drums containing Anode Slime were stolen somewhere between the factory premises of Birla Copper and the premises of the consignee in Toronto. Since the insurance had been taken by the complainant on FOB basis, the insurance policy covered the loss to the complainant only till the goods reached the ship on which they were to be taken to Montreal Port. As noted earlier, the consignee had engaged M/s McLarens Toplis. The aforesaid surveyor/investigator engaged a forensic laboratory, namely Felconmet Engineering and Laboratories Inc. through Rochon Engineering Incorporated, to compare the seal found on the container with an original seal and to carry out the specified individual testing procedures, required to compare the seal geometry, plastic casings and the material and chemical make-up. On physical inspection of the seals and the metallurgical analysis, it was concluded that these two seals varied considerably not only in physical appearance but in metal hardness, geometric dimensions in the construction of the red colured plastic material and the associated methods of stamping serial number on to the plastic. The chemical make-up of the materials also differed between the seals. The metrological examination carried by Felconmet Engineering and Laboratories Inc. determined further that the new seal differed from the used seal with respect to the stamping of the serial numbers. It was observed under microscopic analysis that the digits creating the used serial number differed considerably in font style, quality of lettering, spacing and positioning with respect to the new seal serial number.
6. The report of Felconmet Engineering and Laboratories Inc. to the extent it is relevant, reads as under:-
" The evidence obtained through visual, metallographic, chemical and dimensional examinations confirmed that the used sealed locking device was manufactured using different materials, design, processes and coatings than the (new) device.
These examinations also demonstrated that there were vast differences between the serial numbers stamped on the red thermoplastic material that covered the used and the new locking devices. These differences were related to the font, quality, spacing and the position of the numerals, as well as, to the chemical imprint of the "gold" coloured paint.
It was also demonstrated that the mold used to create the red thermoplastic cover of the used seal was fabricated from a previously used mold that was modified to erase its specific embedded serial number."
7. In its report dated 15.2.2000, M/s McLarens Toplis concluded interalia as under:-
"Based upon a thorough study of the aforementioned points, which have been elaborated upon in subsequent paragraphs of this report, one can conclude that the theft of the 12 drums from container ITLU829476-6 occurred in India after the container left the lndo Gtalf facility and prior to it being loaded aboard the ocean vessel in Mumbai.
Out reasons for arriving' at this conclusion are based on the following factors:
2. The container was sealed with 5 wire thread seals and one bolt seal. It should be noted that whereas wire seals can be tampered with, and it would take a trained eye to detect this. A bolt seal, once cut, cannot be easily reattached.
3. The seals, when examined by intermodal carriers and customs officials during the ordinary course of transit, are generally given a superficial look over and are seldom thoroughly scrutinized. With the large volume of traffic flowing in and out of terminals and ports, careful inspection of every container seal is seldom, if ever, carried out.
4. As will be seen in the concluding paragraphs of this report, the bolt seal taken off the container in Montreal (No.114136) has been proven to be a fake seal. When carefully examined under a microscope, the seal bears little or no resemblance to an authentic sample seal manufactured by Warner Security Sealing Systems of Mumbai. The seal, however, was good enough to pass inspection at the various stages of transit including inspection by Noranda and Indo Gulf representatives at final destination.
Based upon our investigation, it would appear that the fake seal was applied to the container after the drums were removed, most likely during transit between the shipper's premises in Dahej Gujrat and the loading port in Mumbai.
The fake seal was obviously good enough to pass customs and port inspection at Mumbai, Antwerp and Montreal. Under a microscope, the flaws in seal are obvious.
Reports provided to us by independent surveyors at the port of Montreal and Antwerp indicate that security at these ports is adequate, and furthermore, interchange receipts issued at these ports suggest that the container seal (the bolt seal no.114136) was intact. Reports issued by independent surveyors who inspected port facilities at both Montreal and Antwerp are attached. These reports are self explanatory and indicate that the container was not tampered with during layover at both Montreal and Antwerp. The bolt seal on the container was intact at both these locations.
Questions have also been raised as to whether a fake seal could net have been reproduced at either Antwerp or Montreal. As explained by the forensic scientist in his report, the fabrication of a fake seal is not a simple procedure, and does require time. The removal of the drums and the manufacture and application of the fake bolt seal had to be carried out in a place with little or no security, and the only points in transit with no security whatsoever was the passage between the Indo Gulf plant in Dahei Gujrat andbuffer yard in Mumbai, and between the buffer yard and JNPT Port. According to investigations conducted by our correspondents, Metcalfe 64 Hodgkinson and confirmed to us in their letter dated December 3.1999, there were approximately36 hours without security between the IndoGulf plant at Dahei and entry into the buffet yard. The container was in the custody or the trucker at this time. There was a further 15 hours between the buffer yard and the JNPT port (see flow chart)
If this theft was planned in advance as we suspect, then the actual execution of the theft could have been accomplished In a matter of minutes if the replacement seal had already been fabricated and was ready for use, and this could only have been done with someone having prior knowledge of due seal number as no seal number is mentioned on the bill of lading.
The forensic report and photographs are self explanatory and the conclusions reached by the forensic scientist are that the bolt seal, 114136, removed from the container at the Noranda plant in Montreal. is a fake seal and poorly fabricated as illustrated in the photographs.
The major differences in the two seals are as follows:
A difference in the steel part of due seals, including the steel hardness and geometric dimensions.
The construction of the red thermoplastic shield and the method of stamping the numbers.
A previously stamped number had been erased from the fake seal and the number 114136 printed on it was probably done by hand, causing non uniform spacing and uneven depth in the indentation of the numbers.
Font type was different The numbers 1 and 3 were found on both fittings (the sample seal and the fake seal). A direct comparison shows that there is a marked difference in the numbers, as can be seen in photographs 19-24 inclusive. The quality of paint used on the numerals in the sample and fake seals are also different. In the fake seal, the paint appears to have been brushed on, or otherwise deposited in the stamped grooves. The paint also appears to have spilled over in comparison to the clear stamping on the authentic seal.
The metallic part of the seal was significantly different in size and construction.
Previously embedded numbers in the fake seal had been ground out before the new numbers were applied. However, some of the old numbers are still clearly visible (see photographs 14, 15 & 18).
Had this seal been put on the container at the port of Montreal, the degree of corrosion would have been significantly less.
This is another reason why we have concluded that the fake seal was applied to the container in India.
It would appear that the only possible way for the perpetrators to have gained entry into the container was to cut the original shipper's seal, remove the drums and attach the fake seal, which to the untrained eye, looks reasonably authentic. The many defects in the seal can only be recognized under a microscope.
It should be further noted that it has now been established that the container was not weighed at any point during transit.
Although there are other anomalies with respect to this shipment, i.e. the container being re-directed to the wrong shipping line in Mumbai and there being no mention of the seal number on the bill of lading, the crux of the matter is the seal (number 114136) which has been proven beyond doubt to be a fake. Based on this evidence, it would appear that the container was broken into during transit prior to it being loaded aboard the ocean vessel at the port of Mumbai. We believe that the time factor at the ports of Antwerp and Montreal and the security at these ports would have rendered it extremely difficult for anyone to (a) manufacture a fake seal, (b) remove the drums and re-seal the container doors with the fake seal. Furthermore, as explained in the forensics reports, an old seal was necessary in order to fabricate the mould for the fake seal, particularly due thermoplastic cover, and we do not believe that an old seal with the appropriate thermoplastic covet have been readily available, either in Antwerp or Montreal. The forensic report should be carefully studied in order to fully understand how the thermoplastic cover for the fake seal was fabricated. It will be seen that a reasonable replica of the thermoplastic cover was actually more important than the steel bolt itself, as it was the thermoplastic cover that was embossed with the various markings including the seal number."
8. M/s J Basheer and Associates Surveyors Pvt. Ltd. which had been engaged by the OP to examine the claim, interalia observed as under:-
"The container was found neither weighed at the JNPT before entering the Gate nor inside JNPT, prior to loading onboard the vessel. Further, on our investigation at Antwerp Port as well as Montreal, we found that there was no physial weighment carried out at these Ports too. But the entries regarding weight in documents were based only from the Bill of Lading.
The subject container thus went without weighment till it reached at Destination of Discharge (Noranda factory) after weighment at Insured's factory. It only came to light when the container was opened for counting and weighment of individual Drums, since it was precious metal, in presence of all parties representatives.
On tracking of the Container movement, it was observed that the loaded Trailor Regd. No.MH-04-F-l853 of M/s. Ganesh Container Movers, driven by Shri Vijay Jagdale, from CWC Buffer Yard to JNPT Container Gate which is about 5 to 6 Kms distance, should normally take about 10-20 minutes of time, had taken about 27 Hours as per the Gate Passes.
During the period from 01/09/99 to 02/09/99 (1 day). the trailor with loaded container, remained outside security area, completely under the control of the Driver, and during the period the container seals could have been be easily tampered with, with the connivance of organised gang, operating in such container thefts.
Police Crime Branch, Navi Mumbai, Investigation Report stated that it was the fact that subject crime had taken place in Navi Mumbai area and suspected the loss / theft to have taken place during movement of the loaded trailor from CWC Buffer Yard to JNPT Gate.
It is pertinent to mention that there is no weighment facility either outside or inside the JNPT, by which the actual weight of container could have been ascertained for comparison with Shipping documents."
9. Considering the report of the forensic laboratory, the report of the surveyor engaged by the consignee and also the report of M/s J Basheer and Associates, it can be safely held that the bottle seal which had been put on the container in the premises of the complainant was replaced by a fake bottle seal sometime between the container leaving the premises of the complainant and reaching JNPT.
10. The loss during the aforesaid period being covered under the insurance policy would be payable to the extent it is payable in terms of the said policy.
11. The learned counsel for the OP has drawn my attention to a Probe report submitted by an investigator, namely, Tops Detectives and Security Services Ltd. appointed by the complainant itself. The conclusions and findings of the said investigator read as under:-
"CONCLUSION AND FINDING That alter chronological examination of the facts and chain of events that had occurred between 20'" August' l999 -11th September' 1999 and in the light of the circumstantial as well documentary evidences procured by us we conclude that :-
"The, 12 sealed drums of Anode Slime placed upon 6 pallets (l6th export lot) found missing from the alleged container ITLU 8294766 at the port of its destination is indicated to be stolen.
The theft of the said Export Consignment has been meticulously planned and elaborately executed by the perpetrators who had absolute intelligence of its nature and precious value and were well aware of the date of its departure from M/s. lndo Gulf Corporation plant, Dahej, Gujarat on 25th August' I999.
The above theft has been committed within Union Territory of India sometime between 26th August' 1999-27th August'1999 and en route before the alleged container ITLU 8294766 was delivered at CWC Buffer Container Yard, Navi Mumbai.
The examination has revealed that the alleged theft has been committed by employment of a tampered (red hue) bottle seal No.114136 (whether original or fake) conditioned to be opened up and re-sealed after sealing.
The circumstantial evidence indicate that the alleged theft has been committed in district Thane, Maharashtra"
In the opinion of the above-refereed investigator, the facts and events noticed by them indicted involvement of the transporter M/s Prakash Goods Carrier in conspiracy with others and the conspirators had utilised the driver Yegna Narayan Pandey as their tool for accomplishment of offence.
12. The learned counsel for the OP has drawn my attention to the following observations made by the above-referred investigator:-
"The driver allegedly drove the said tractor-trailor from M/s. Indo Gulf Corporation plant, Dahej to National Highway No. 8 Via Bharuch.
The entire stretch of road route between M/s. Indo-Gulf Corporation plant, Dahej and Bahruch highway is busy round the clock with vehicle traffic (light & heavy).
The entire stretch of national highway No. 8 from Gujarat to Maharashtra is also busy with vehicular traffic round the clock. Further there is police and other agencies patrolling on the main highway road round the clock. There is also intensive Police and Customs & Excise patrolling on the main road between Vashi and CWC buffer container yard, Navi Mumbai, which is also 24 hrs. busy road.
Hence the perpetrators of the offence could not have dared to tamper with the customs scaled container at any of the above point from M/s. Indo-Gulf Corporation, Dahej to CWC Buffer container yard, Navi Mumbai, and between CWC Buffer Container yard, Navi Mumbai and JNPT port, Sheva as it would have taken them 30-45 minutes time to accomplish the theft operation by opening up the seals - removal of 12 heavy drums by employing a fork lift/or pushing them over by employing considerable manpower of 8 to 10 labours - dumping the drums somewhere or shifting them on some other vehicle and thereafter closing the alleged container's gate - and re-fixing all the seals making them appear like originally affixed.
Further employment of a fork lift or considerable manpower of 8 to 10 labours for the above task shall never be an easy task at the said route which could go unnoticed especially on a public highway or a busy road. Further a seal opened container and material being off-loaded or shifted from the same shall instantly attract inquiry of the police, or any other passing preventive agency.
JNPT port itself were such that practically it was not possible to remove a considerable quantity of 12 heavy drums from custom sealed container there, whatsoever be, by removal of customs seals and employment of forklift or considerable manpower at these sensitive zones.
The entire above zone is highly sensitive where there is constant Customs & Excise and Police checks and surveillance round the clock, where theft of such a dimension is not imaginable, whatsoever be. The entire stretch of Western Express Highway No. 8 from Gujarat to Maharashtra also undergo police patrolling round the clock.
During the course of our probe we learnt that, the security arrangements at the buffer container yard (which is a 24 hrs. busy place with loading and offloading rush of container) is intensive and very much up to the mark and there are number of guards and supervisors on duty working there round the clock.
Hence the removal of considerable quantity of 12 heavy drums from sealed container inside the CWC Buffer container yard premises, after opening up the container seals, is highly improbable although some petty thefts or pilferings may occur.
In addition to the above facts, there is intensive Customs & Excise and Police checks and surveillance in this zone and practically on this sensitive route between CWC Buffer container yard and JNPT port, Sheva where diversion of tractor-trailors carrying containers from CWC buffer container yard to JNPT port, Sheva is not easily possible as any unreasonable delay in arrival time shall also attract instant inquiry.
Hence the above research gave us a clue to learn that the theft of 12 loaded drums of Anode slime (16th export lot consignment) dispatched from M/s. Indo-Gulf plant, Dahej on 25th Aug. 1999 and loaded on vessel P&O Nedlollyd Unity on 11th Sept. 1999 at JNPT port, Sheva if had taken place within union territory of India it must have taken place somewhere on a isolated spot before entering the above zone where the alleged container tractor-trailor must have been diverted and halted for committing the offence."
14. The above-referred report, on its careful perusal, does not in any manner show the theft to have taken place after the container had been loaded on the right ship nor does it rule out a reasonable possibility of the theft having taken place between the container leaving the premises of the complainant and reaching the premises of JNPT. In fact, the conclusion reached by them was that the theft could have taken place at some isolated spot where the container tractor/trailor must have been diverted and halted for committing the offence. Even if it is so and the container was diverted to an isolated spot before committing theft by replacing the genuine bottle seal with a fake bottle seal, the loss would still be covered under the insurance policy taken by the complainant.
15. Considering that the surveyor appointed by the opposite party itself found that the container was not weighed either at JNPT before entering the gate nor inside JNPT, no weighing facility either outside or inside JNPT was available, the trailor took about 27 hours to reach JNPT gate at a distance of about 5-6 kms though the normal time taken to cover such a distance would be about 10-20 minutes, Navi Mumbai Police also reported that the incident had taken place in Navi Mumbai area, the bottle seal found on the container at the time it was opened in the premises of the consignee, was found to be a fake seal and the time taken by the trailor to reach JNPT gate, there was a strong possibility of the container having taken to an isolated spot for committing the theft, employing the manpower and machine, if any, required for the purpose, I have no hesitation in holding that the theft had taken place in India, before the consignment was loaded on the ship.
16. The next question which arises for consideration is as to what amount the complainant is entitled from the OP for the loss sustained by it on account of theft of the material. As noted earlier, in terms of the insurance policy taken by the complainant, the liability of the insurer was limited to Rs.1 crore per lorry/rail. The claim of the complainant for the higher amount is, however, based upon a letter dated 17.4.2000 purporting to have been written by Divisional Manager of the OP to the complainant confirming that they had covered for a sum of Rs.82250600/- under declaration dated 25.8.99 vide LR No.35 dated 25.8.99 of Shukla Brothers, Truck No.MH-04C4682, Container No.729476(6). However, this is not the case of the complainant that it had paid any additional premium to the insurer for retrospectively covering the loss of goods against LR No.35 dated 25.8.99 to the extent of Rs.82250600/-. Therefore, the said letter having been written much after the loss had already happened, cannot, in my view, alter the term of the policy which covered the loss per lorry/rail to Rs.1 crore. In fact, I find it rather strange that an officer of a public sector insurance company chose to issue such a letter after the loss had already taken place and that too without the insurer receiving any additional payment from the complainant. The liability of the insurer under the insurance policy is to be examined as per the terms and conditions of the policy applicable at the time of the loss. At the time when theft happened, the liability of the OP was limited to Rs.1 crore per lorry/rail. The letter dated 17.4.2000 issued without consideration, cannot in my opinion enhance the liability of the insurer in respect of the loss which had already happened before the said letter was issued. More importantly, it is also not known as to whether the officer who issued the aforesaid letter dated 17.4.2000 was even aware, at the time he issued the aforesaid letter, that the goods sent in Container No.729476(6) vide LR No.35 dated 25.8.99 had already been stolen. If the enhancement to the extent of Rs.82250600/- was obtained suppressing the aforesaid theft from the insurer, such a contract would be void at the instance of the insurer and would not bind it.
17. For the reasons stated hereinabove, the OP is directed to pay a sum of Rs.1 crore to the complainant along with interest on that amount @ 9% per annum w.e.f. 6 months from the date of institution of the complaint till the date of payment. The complaint stands disposed of.
......................J V.K. JAIN PRESIDING MEMBER