National Consumer Disputes Redressal
National Insurance Co. Ltd. vs R.P. Export Pvt. Ltd. on 18 November, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 808 OF 2012 (Against the Order dated 02/01/2012 in Appeal No. 307/2010 of the State Commission West Bengal) 1. NATIONAL INSURANCE CO. LTD. 3,Middleton Street Calcutta - 700 071 West Bengal ...........Petitioner(s) Versus 1. R.P. EXPORT PVT. LTD. 26, Sarat Bose Road, Suit No-14,1st floor, Kolkata - 700 020 West Bengal ...........Respondent(s)
BEFORE: HON'BLE MRS. M. SHREESHA,PRESIDING MEMBER
For the Petitioner : Mr. Kishore Rawat, Advocate,
Mr. L.K. Tyagi, Advocate. For the Respondent : Mr. Vaibhav Prakash, Advocate.
Dated : 18 Nov 2019 ORDER
MRS. M. SHREESHA, PRESIDING MEMBER
Challenge in this Revision Petition under Section 21(b) of the Consumer Protection Act, 1986 (for short "the Act") is to the Order dated 02.01.2012 in in First Appeal No. 307 of 2010 passed by the West Bengal State Consumer Disputes Redressal Commission (for short "the State Commission"). By the impugned order, the State Commission has concurred with the findings of the District Forum and dismissed the Appeal preferred by the National Insurance Company Ltd. (hereinafter referred to as "the Insurance Company"). The facts in brief are that the Complainant Company is a supplier/consigner dealing with export business of cotton bags and allied goods. While so, the Second Opposite Party placed an order for 480 cartons of processed cotton handbags with string by their invoice No. 924/2002 dated 28.06.2002 by sea under Bill of Lading No. X001559 HBG dated 13.07.2002 through Haldia Port to the destination at Austria for Invoice Value of US$ 14,520.00 through their local clearing agent at Kolkata. It is averred that prior to dispatch of 480 cartons of cotton handbags the contents were thoroughly inspected by the Surveyor, Mr. Manash Dev Mallick of Kolkata who in his Survey Report dated 15.07.2002 confirmed that the goods were dispatched in a sound condition. Further, the Customs Appraiser also opened four cartons prior to the boarding of the goods and also took a sample and sealed the same with CH Seal No. 106 and confirmed that the goods were in good condition.
2. It is averred that at the time of dispatch the Complainant obtained Marine Cargo Insurance Policy for a sum insured of ₹7,82,600/- covering the Risk ICC(A) including war and SRCC as per policy issued by the Insurance Company. It is stated that throughout the journey during six days including Hamburg and lots of areas in Austria there was flooding which caused damage to the consignment. The Consignee arranged for inspection of the said consignment immediately and assessed the loss and intimated the same to the Complainant who informed the Insurance Company. The Surveyor observed that the loss was due to fresh floods and rain water and not by sea water. Complainant claimed the total value of US$15,306.50 i.e. ₹7,04,099/-. Thereafter the Insurance Company vide letter dated 08.09.2005 repudiated the claim on the ground that the damage was caused due to sea water and also that the loss did not occur within the prescribed time. Vide letter dated 27.01.2006 it was informed to the Complainant that the claim would not be settled. A legal notice was got issued to the Complainant but there was no response. Hence the Complaint seeking the following reliefs:-
"a) Issue Notice upon the Opposite Party No. 1;
b) After hearing the Opposite Party No. 1 be directed to pay ₹7,04,099/- in terms of particulars mentioned in the schedule along with 12% interest thereon from the date of claim till payment;
c) Compensation to the tune of ₹50,000/- be awarded for harassment and mental agony;
d) Costs;
e) Further order or orders and/or relief or reliefs as your Honour may deem fit and proper."
3. The Insurance Company filed their Written Version stating that the damage was caused due to sea water and, therefore, they are not liable to pay the claim and also vide letter dated 08.09.2005 it was informed to the Complainant that the loss did not occur within the prescribed time period stipulated in the Insurance Company. It is averred that there is evidence of damage during the transit and that the Complainant did not take any insurance for shifting of the containers from Maheshtala to Haladia Port. The buyers were supposed to arrange for the insurance at their cost which is confirmed by 'Freight Payable at Destination' which is endorsed on the Bill of Lading. As per normal practice, based on the Complainant's declaration, the consignment is insured by the Insurance Company on utmost good faith. The purchase order shows that the Complainant Company was advised by the buyer to arrange for insurance in India and the Complainant vide letter dated 22.10.2003 confirmed realization of the premium amount from the buyer in an approved manner. The same buyer was arranging insurance at their end for all imports from other countries and the intention of both the Complainant and the Buyer is not clear as to how the Insurance for the particular consignment was taken in India.
4. On arrival at the destination the damaged goods were surveyed by the Surveyor appointed by Helvetia Swiss Insurance Company at the request of buyer. At the time of reporting of the loss, the policy of 'Helvetia' with the buyer had lapsed and, therefore, the Surveyor has left the survey of the consignment midway.
5. The damaged consignment was received by the buyer on 27.08.2002, Helvetia surveyed it on 28.08.2002 while the Surveyors/Loss settling agent designated on the body of the Policy was informed by the buyer on 16.09.2002 over phone after a lapse of around 3 weeks. Subsequently, a Surveyor was appointed who inspected on 25.09.2002.
6. The Insurance Company in their Written Version reproduced the conclusion by Surveyor Helvetia as hereunder:-
"The cotton bags were found wet and mouldy and the cartons were wet. The goods had bad smell. The samples of the packing materials were subjected to chemical test to conclude that there was no seawater damage. There was no damage to the container. The damage was either caused by loading the goods in wet condition into the container or the container was standing in water and it was coming in from the bottom side."
7. It is further averred that the pre-inspection was done by Sri Manash Deb Mallick, who was not authorized by the Insurance Company and further pre-dispatch inspection was done on 09.07.2002. It is stated that no inspection was possible where the Customs Authorities inspected and sealed the container. It is stated that the pre-inspection report relied upon by the Complainant is a concocted one. There was no insurance of goods from the Complainant's premises to Haldia Port and the container was loaded on the ship on 13.07.2002 after almost a week. It is further averred that in the event of any transit insurance delivery of any consignment at any stage, it should necessarily be accompanied by a joint survey with carriers or endorsement of the carrier on the back of the contract highlighting the condition of the cargo at the point of delivery. It is stated that none of the above documents speak about the condition of goods at the time of delivery. Non-issuance of damage certificate by the carriers also indicates that there was no damage to the goods and hence the repudiation by the Insurance Company is pleaded to be justified.
8. The District Forum based on the evidence adduced, allowed the Complaint in part directing the Insurance Company to pay a sum of ₹7,04,099/- together with compensation of ₹20,000/- and costs of ₹5,000/- within 45 days failing which the amount shall attract interest @ 10% p.a.
9. Aggrieved by the said order, on an Appeal preferred by the Insurance Company the State Commission has observed hereunder:-
"It is an admitted fact that the Complainant-insured paid the requisite premium and the OP-1 based on the Surveyor's report has repudiated the claim of the Complainant. It is also an admitted fact that the report of the surveyor shall carry weightage in respect of settlement of a claim and moreover legally the Surveyor's report cannot be (sic) brushed aside. But in the instant complaint/case it appears from the surveyor's report that they are not sure how the goods were damaged as it is stated 'it appears damage was caused either in lading the container with goods in wet condition or by the container standing in fresh water.' It is seen by us that there is no evidence that the goods were put for shipment in wet condition as from the pre-despatched survey report dated 09.07.2002 reflects that external condition of the package at the time of survey was in 'O.K', Annexure-F(P-20) shows that 'the carton did not come into contact with sea water'. The report of the Transpack shows under colum-3 'cause of damage' that 'we were informed about the incident approx. 3 weeks after delivery. We were not able to start own investigation about the cause of damage.' In respect of such remark and observation of the surveyor it can easily be said that the surveyor was not in a position to inspect damaged goods and as they could not perform their duties the Insurance Company cannot repudiate the claim of the Complainant based on such incomplete report. Moreover why the surveyor was informed after three weeks from the date of delivery the OP-1 has failed to give any satisfactory reply. Though the Appellant-OP-1 has mentioned that due to delay in providing information by the Complainant, but in that respect the OP-1 has failed to adduce any cogent evidence in support of its contention. In the report of the Transpack it has been mentioned under the heading of 'cause of damage' that 'the set of photo prints we received (attached to this report) are showing the consignment was wet and mouldy after delivery but not in an extent that it is clear that water came from outside the container'. Such remark proves that at the time of shipment the goods were not in wet condition. It has been also mentioned by the said surveyor that 'this type of packing is usual for this type of goods.' (Emphasis supplied).
10. Heard both the sides at length. Learned Counsel appearing for the Revision Petitioner vehemently contended that the consigner was made a party before the District forum and was thereafter deleted; that the Surveyor reported 'no sea damage'; that the Complainant Company did not have any insurable interest; that the Complainant did not disclose that it is not on Free-on-Board (FoB) basis; the Policy was issued on CIF basis (cost+insurance+freight) and that FoB liability of the consigner ends at Haldia, the moment it is loaded into the vessel. Learned Counsel for the Insurance Company further contended that it was the consigner who informed their Insurance Company and that the intimation was given to the concerned agent after 15 days whereas the Policy stipulates that the intimation should be given immediately. He relied on the Judgement of the Hon'ble Supreme Court in Contship Container Lines Ltd. Vs. D.K. Lall & Ors. II (2010) CPJ 12 (SC) which was preferred against an order of this Commission reported in III (2003) CPJ 113 (NC).
11. He drew our attention to paragraphs 21 and 22 of the said Judgement and the same are reproduced as hereunder:-
"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 contracts 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.
22. It is common ground that the seller had, in the case at hand, reserved no right or lien qua the goods in question. In the absence of any contractual stipulation between the parties the unpaid seller's lien over the goods recognised in terms of Sections 46 and 47 of the Sale of Goods Act, 1930 stood terminated upon delivery of the goods to the carrier. The goods were from that stage onwards held by the carrier at the risk of the buyer and the property in the goods stood vested in the buyer. The principle underlying transfer of title in goods in FOB contracts was stated by a Constitution Bench of this Court in B.K. Wadeyar V. Daulatram Rameshwarlal (AIR 1961 SC 311). The question as to the transfer of title in the goods arose in that case in the context of a fiscal provision but the principle relating to the transfer of title in goods in terms of FOB contract was unequivocally recognised. This Court held that in FOB contracts for sale of goods, the property is intended to pass and does pass on the shipment of the goods. The National Commission was, therefore, right in holding that the seller had no insurable interest in the goods thereby absolving the insurance company of the liability to reimburse the loss, if any, arising from the mis-delivery of such goods."
12. Learned Counsel appearing for the Complainant submitted that there was a pre-discharge survey report dated 15.07.2002 marked as Axn. 'E' in which it was clearly reported that at the time of inspection of the said loading it was observed that 480 cartons of goods were loaded in 'okay condition' for onward dispatch to Haldia Port. He placed reliance on the report given by Transpack GmbH and further contended that it was the Insurance Company who informed the Surveyor belatedly.
13. At the outset, it is to be seen whether the contention of the Learned Counsel appearing for the Insurance Company that the pre-dispatch survey report is a concocted one is to be accepted. A perusal of the report dated 15.07.2002 shows that Mr. Manash Deb Mallick is a licensed Surveyor and the Loss Assessor has given his remarks that he had visited the place of loading of the cargo into the container on 09.07.2002 along-with the Consignor's representative and has found that 480 cartons were loaded and they were in 'Okay condition' for onward dispatch. If indeed the pre-inspection report was concocted it is not understood as to why the Insurance Company did not take steps to furnish interrogatories on the Surveyor who had issued the pre-dispatch inspection report. The second contention of the Learned Counsel for the Insurance Company is that the Complainant did not disclose that the consignment was on FoB basis whereas the Policy was issued on CIF basis. A brief perusal of the Insurance Policy filed as 'Annexure B' shows that the Complainant Company had taken an Insurance Policy for ₹7,82,600/- on CIF valuations. However, the Learned Counsel appearing for the Insurance Company placed reliance on the shipping bills and shows that the delivery was on FoB basis. However, the fact remains that the Policy was taken on CIF basis and, therefore, this contention cannot be sustained.
14. It is also the case of the Insurance Company that the insurable interest is to be seen as on the date of loss as per Section 8 of the Marine Insurance Act, 1963. On 27.02.2003 a letter was addressed by the Consignee to the Insurance Company that they had debited the full invoice value of the claim to the Complainant Company and requested the Insurance Company to arrange for payment of the claim in favour of M/s R.P. Exports Pvt. Ltd. and their discharge be accepted as full and final. A perusal of the material on record not only evidences that the concerned Policy was issued on CIF basis but read together with the letter dated 27.02.2003, written to the Insurance Company confirming the settlement of the claim, the argument of the Learned Counsel that it was on FoB basis cannot be accepted. Therefore, the judgement of the Hon'ble Supreme Court in Contship Container Lines Ltd. Vs. D.K. Lall (Supra) does not apply to the facts of this case. It is relevant to mention that the issue of absence of insurable interest has already been dealt with by both the Fora below and as it is evidenced that the Policy was taken on CIF basis, the question of not having insurable interest does not arise.
15. The submission of the Learned Counsel that the cause of damage was not by sea water needs to be addressed. Admittedly, the goods were shipped on 15.07.2002; a pre-inspection report was also conducted on the same day; on 30.08.2002 at Austria the goods were damaged and the Consigner arranged for the inspection of the said consignment and the loss was assessed by an Inspection Report based on the laboratory test and the same was intimated to the Insurance Company. The Surveyor at Austria, on the point of damage, had reported that the loss occurred due to contact with flood/rain water and not by sea water.
16. At this juncture, the relevant portion of the survey report by Transpack GmbH is reported as hereunder:-
"As mentioned the packing of the consignment was made of cartons of double wall corrugated paper. This type of packing is usual for this type of goods. As mentioned in the report of the surveyor ordered by the Helvetia Insurance Company the contamination was of fresh water and the goods were mouldy at delivery. The set of photo prints we received (attached to this report) are showing the consignment was wet and mouldy after delivery but not in an extent that it is clear the water came from outside the container.
The container was not damaged and in good condition. There is no report about traces on the container it was standing in water under transportation.
For we were informed about the incident approx. 3 weeks after delivery we were not able to start own investigation about the cause of damage.
We want to remark there was in August 2002 bit flood catastrophe in Austria. The flood was mainly from Aug. 13th to August 18th. Nevertheless there is not any remark there were found traces on the container that it was standing in water. In our experience always there are traces on the container when it was standing in water.
The other surveyor concluded the damage was caused either by loading the container with goods in wet condition or by container was standing in fresh water." (Emphasis Supplied).
17. From the afore-noted it is clear that Transpack GmbH has confirmed that type of packing that was used was as per the standard norms; that the set of photo-prints received show the consignment wet and mouldy after delivery but not to an extent that it can be construed that the water came from outside the container; that there is no evidence to substantiate that the container was standing in water under transportation. This statement was made by the Surveyor in their report specifically mentioning that the said observation was based on their experience. It is relevant to mention that the said Surveyor had also taken the help of a laboratory test which has favoured that the damage did not occur due to sea water but on account of fresh water. The documentary material on record evidences that the Customs Department had inspected the goods on 08.07.2002 and opened 10 cartons for examination, checked the declaration and found them in order which co-relates with the Bill of Lading dated 13.07.2002. It is pertinent to mention that the pre-dispatch survey report dated 15.07.2002 given by a Licensed Surveyor further substantiates that 480 cartons of goods were inspected prior to loading and were found in good condition. Additionally, there are no cogent reasons given by the Insurance Company for the delay in intimating M/s Transpack GmbH, though the Policy conditions stipulates that the same has to be done at the earliest possible opportunity. There are no substantial grounds to interfere with the well-considered concurrent findings of both the Fora below holding that there is deficiency of service on the part of the Insurance Company in repudiating the claim. For all the afore-noted reasons this Revision Petition is dismissed with no order as to costs. Needless to add, the amount deposited, if any, before the District Forum in terms of order dated 07.03.2012 shall stand released to the Complainant, if not already released, and the same shall stand adjusted from the decretal amount.
...................... M. SHREESHA PRESIDING MEMBER