State Consumer Disputes Redressal Commission
Karthik Alloys Ltd. vs Bajaj Allianz General Insurance ... on 30 June, 2017
1
BEFORE THE GOA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION,
PANAJI - GOA
C. C. No. 08/2016
Karthik Alloys Ltd., having its registered
office at Plot no. L 6, L 7, Cuncolim
Industrial Estate, Cuncolim, Salcete - Goa.
.... Complainant.
v/s.
[1] Bajaj Allianz General Insurance
Company Ltd., a company registered
under the provisions of the Companies
Act 1956, having its registered office
at GE Plaza, Airport Road, Yerwada,
Pune - 411006 and is carrying on the
business of providing insurance
services in the State of Goa from its
regional office at 3C - N3D Sesa Ghor,
20 Patto Plaza, EDC Complex,
Panjim, Goa,
[2] The Regional Manager/In-Charge of
the policy servicing office of Bajaj
Allianz General Insurance Co. Ltd.,
at 3C - N3D Sesa Ghor, 20 Patto Plaza,
EDC Complex, Panjim, Goa. ....Opposite Parties.
Adv. Mr. Joydeep Sen alongwith Adv. Ms. S. Bandodkar, for the
Complainant.
Adv. Mr. V. Kurtikar, for the Opposite Parties.
Coram: Shri. Justice U. V. Bakre, President
Smt. Vidhya R. Gurav, Member
Dated: 30/06/2017
ORDER
[Per Justice Shri. U. V. Bakre, President] Vide this Complaint, filed under Section 12 of the Consumer Protection Act, 1986 (the 'Act', for short), the Complainant has 2 prayed for various reliefs against the Opposite Parties (OPs, for short) as under:-
(A) A declaration declaring that the repudiation of the insurance claim of the complainant under the marine insurance open cover No. OG-14-1717-100600000002, vide the letter dated 06.04.2015 of the Opposite Party No. 1 is bad in law and inoperative.
(B) An order setting aside the impugned repudiation letter dated 06.04.2015 of the Opposite Party No. 1 repudiating the insurance claim of the complainant under the marine insurance open cover No. OG-14-1717-100600000002.
(C) An order directing the Opposite Party No. 1 to pay an amount of Rs. 54,52,810/- on account of marine insurance claim to the Complainant under the Marine Insurance Certificate Nos. OG-14-1703-1011-00000072 and OG-14-1703-
1011-00000073 under the marine insurance open cover No. OG-14-1717-100600000002, towards indemnification for the loss of 62.480 MT Silico Manganese during transit.
(D) An order directing the Opposite Party No. 1 to pay an amount of Rs. 2,38,940/- (USD 3676) to the Complainant on account of reimbursement of the survey and inspection charges and container detention charges as paid by the Complainant.
(E) An order directing the Opposite Party No. 1 to pay interest @ 14% p.a. on the insurance claim amount of Rs. 54,52,810/- for the period from the date of intimation of loss till the date of actual payment of the claim amount to be made by the Opposite Party No. 1.
(F) An order directing the Opposite Party No. 1 to pay interest @ 14% p.a. on the insurance claim amount of Rs.
32,38,940/- for the period from the date of such payment by the Complainant till the date of actual payment of the said amount to be made by the Opposite Party No. 1.
(G) An order directing the Opposite Party No. 1 to pay to the Complainant an amount of Rs. 5,00,000/- towards compensation for harassment and mental agony caused to the directors and office-bearers of the complainant by wrongful repudiation of its insurance claim.
(H) An order directing the Opposite Party No. 1 to pay to the Complainant all costs and expenses incurred by the Complainant towards protecting and preserving the right of recovery for subrogation of the same in favour of the Opposite Party No. 1.
(I) An order directing the Opposite Party No. 1 to pay to the Complainant all costs and expenses of litigation as actually incurred by the Complainant in the instant litigation.
(J) Pass any further order or orders and/or direction or directions as this Hon'ble State Commission deems fit and proper.
2. Case of the Complainant, in short, is as follows:-
The Complainant is a Company carrying on its business of manufacturing of Silico Manganese Alloys and trading of the same including export trading. The OP No. 1 is an Insurance Company and the Complainant had obtained its services for indemnifying the Complainant against any loss suffered by its goods during transit and had obtained an Open Marine Insurance Cover No. OG-14-1717-100600000002 from the OP No. 1 which was effective from 14/09/2013 to 13/09/2014. The said Insurance cover was in respect of marine transits by 4 Air, Sea, Rail, Road from India to anywhere in the world with Per Location Limit of Rs. 2,25,00,000/- upon payment of premium by the Complainant as per agreed rate. The said policy was an 'All Risk Policy' under Institute Cargo Clause A. The Complainant had obtained an order from IR Trading S.R.L. of Genoa, Italy (overseas buyer) for supply of total 500 MT (5% +/-) of Silico Manganese through number of consignments. The price of the said quantity of product was finalized between the Complainant and overseas buyer to the tune of USD 1,227/- per MT of Silico Manganese. In the month of March 2003, the Complainant took steps to export a consignment of 140 MT Silico Manganese manufactured as per the specifications of the said overseas buyer and after the said quantity was ready at the Angadpur factory of the Complainant, the Complainant availed of the services of one M/s Topstar Suppliers Pvt. Ltd. and its sister-concern namely M/s Eastern Carriers, for shipment and export of the aforesaid consignment of 140 MT Silicon Manganese to Italy. The said two companies in turn engaged one M/s Gorsia Terminal Services, inter alia, for transportation of the total consignment of 140 MT Silico Manganese to Haldia Dock Complex of Kolkata Port for shipment. For the said transportation, M/s Gorsia Terminal Services on 08/03/2014 sent five empty containers loaded on five trucks/lorries along with five numbers of Shipping Liner's Seals and five consignment notes dated 08/03/2014. The said trucks arrived at the Angadpur factory of the Complainant on early morning of 09/03/2014. The details of the containers with the respective trucks carrying the same and the respective shipping liner's seals accompanying the containers are as follows:-5
(a) Container No. MSCU3115782 was sent by truck No. WB39-9656 alongwith Shipping Liner Seal No. K426772.
(b) Container No. MEDU399406 was sent by truck No. WB65B-2139 along with Shipping Liner Seal No. K426774.
(c) Container No. GATU0402396 was sent by truck No. WB23B-5942 along with Shipping Liner Seal No. K426778.
(d) Container No. MSCU1453306 was sent by truck No. WB03C-9226 along with Shipping Liner Seal No. K426771.
(e) Container No. MSCU1904225 was sent by truck No. NI02K-5988 along with Shipping Liner Seal No. K426779.
3. The Complainant has further alleged as under:-
The loading of the cargo of 140 MT Silico Manganese into the aforesaid 5 containers mounted on the aforesaid respective trucks commenced at the factory of the Complainant on 09/03/2014 and the loading operations continued till 10/03/2014 and this entire loading operation was supervised by the deputed surveyor of M/s Bureau Veritas (India) Pvt. Ltd., the Indian counterpart of an international organization. On 10/03/2014, the loading operation in respect of the subject cargo was completed in the presence of the officials of the Central Excise Department and the executive of M/s Bureau Veritas(India) Pvt. Ltd. A quantity of 28 MT of Silico Manganese was loaded into each of the said five containers. After completion of loading and weighment inter alia in the presence of Central Excise officials and the representatives of M/s Bureau Veritas (India) Pvt. Ltd., necessary specimens from each container for sampling 6 and chemical analysis were collected and thereafter, the Central Excise Department officials sealed the said five loaded containers by putting wire-seal on each of them. The transporter applied the Shipping Liner's Seal No. K426772 on container No. MSCU3115782, Seal No.K426774 on Container No. MEDU3992406, Seal No. K426778 on Container No. GATU0402396, Seal No. K426771 on Container No. MSCU1453306 and Seal No. K426779 on Container No. MSCU1904225. On all the said containers the Seals of Bureau Veritas (India) Pvt. Ltd. were also applied. Each of the said five loaded containers were sealed with three seals, namely the wire-seals applied by the Central Excise Department, the Shipping Liner's Seals brought and applied by the transporter and the seals of Bureau Veritas (India) Pvt. Ltd. which surveyed the loading operations. The Central Excise Department, Durgapur, issued certificate to that effect mentioning therein the container numbers, MSC Seal numbers and the respective truck numbers. M/s Bureau Veritas (India) Pvt. Ltd. also carried out weighment and issued certificates certifying that the containers were weighed and sealed in their presence within the factory compound of the Complainant. On 10/03/2014 itself, all the four trucks carrying the sealed container Nos. MEDU3992406, GATU0402396, MSCU1453306 and MSCU1904225 departed from the Angadpur factory premises of the Complainant for onward transit to Haldia Dock Complex of the Kolkata Port. The Complainant issued commercial Invoice No. 370 in respect of the 4/5th part of the whole cargo being 128 MT contained in the said four containers. The 5th truck carrying the container No. MSCU3115782 could start from the factory of the Complainant only on 11/03/2014 as the same could not commence journey due to mechanical problem of the truck. The Complainant issued commercial invoice No. 371 in respect of the 7 consignment of 28 MT of silico manganese dispatched in this 5th container. The Complainant had also issued corresponding packing lists in respect of the said consignment. The Complainant made necessary voyage declarations to the policy servicing branch of the OP No. 1 by furnishing commercial invoices and the OP No. 1 issued two marine insurance certificates as per the said commercial invoices in respect of the 112 MT Silico Manganese in four containers and 28 MT Silico Manganese contained in one container. The said five containers arrived at Haldia Dock Complex and were presented for Customs clearance on 15/03/2014. On 21/03/2014, the said consignment of 140 MT Silico Manganese contained in the said five containers were shipped on board the vessel SS Hansa Centurion; and clean Bills of Lading were issued to that effect by Mediterranean Shipping Company S.A. in respect of the said consignment of total 140 MT Silico Manganese. In May 2014, the overseas buyers informed the Complainant about receipt of the consignment mixed up with sizable volume of slag and iron powder. On 07/05/2014 and 08/05/2014, the overseas buyer sent emails to the Complainant recording such fact of receipt of part of the consignment in 3 containers mixed up with a huge volume of slag and iron powder. On 08/05/2014, the Complainant sent an email to the concerned officer of the OP No. 1 informing about the said fact. On 20/05/2014, one Mr. Edoardo Canali claiming to be representing Gastaldi International SRL, the overseas surveyor engaged by the overseas claim settling agent of the OP No. 1 namely M/s W K Webster & Co. Ltd., sent an email to the concerned officer of the Complainant making some enquiries. By an email dated 31/05/2014, the concerned officer of the Complainant gave reply to the queries raised by the said Mr. Edoardo Canali. Again by an email dated 24/06/2015, the Complainant 8 responded to the further queries raised by the said Mr. Edoardo Canali.
4. The Complainant has further pleaded as under:-
In the meantime, the Complainant had to refund an amount of USD 39,002.00 to the overseas buyer by adjustment of accounts due to the short-receipt of cargo as well as on account of survey, inspection and analysis fees being USD 3,676, as claimed by the said overseas buyer vide Debit Note No. 140632 dated 20/05/2014. The said refund and payment was made through the State Bank of Mysore, Margao Branch on vide request letter dated 24/05/2014. Thereafter, on 06/04/2015. i.e. after an inordinate delay of almost 11 months from the date of discovery of loss, the Opposite Party No. 1, through its policy servicing office at Panaji, repudiated the claim of the Complainant under the marine open insurance policy cover in question. The claim was repudiated on the alleged ground of negligence on the part of the Complainant solely on the basis of conjecture and surmise. However, from the said letter of repudiation dated 06/04/2015 of the OP No. 1, it is apparent that the OP No. 1 has admitted the occurrence of pilferage of material from the aforesaid containers by an organized crime racket. This admission of the OP No. 1 is an admission of the operation of a peril namely 'Pilferage' which is covered under the Institute Cargo Clause-A, under which the subject marine insurance policy was issued by the OP No. 1 in respect of the cargo exported under the aforesaid commercial invoices No. 370, 338 and 371 all dated 07/03/2014. However, while repudiating the claim on the basis of the purported survey report, for the reasons best known to the OP No. 1, the survey report was not provided to the Complainant, though the surveyor's fees was paid ultimately by the Complainant. This non-supply of the survey 9 report by the OP No. 1 to the Complainant precluded the Complainant from effectively dealing with and challenging the contents of the survey report and the observations made in the letter dated 06/04/2015 of the OP No. 1. The non-supply of the survey report shows malafide intention of the OP No. 1.
Thereafter the Complainant wrote a letter through advocate to the OP No. 1 requesting for supply of the copy of the survey report and then the OP No. 1, vide letter dated 11/08/2015, intimated that a copy of the survey report of M/s W K Webster & Co. Ltd. had been sent to the Complainant vide letter dated 03/08/2015. Upon receipt of the said survey report of the OP No. 3, it was found that out of 140, 140 KG (140.40 MT) of goods as stipulated in the commercial invoices No. 370, 371 and 338 dated 07/03/2014, only 77,520 KG (77.520 MT) conformed to the quality, quantity and nature of the consignment mentioned in the aforesaid commercial invoices and remaining 62,620 KG (62.620 MT) was found to be slag, though the specified goods to the tune of entire 140 MT + was loaded onto the said five containers. The Complainant found several discrepancies in the said report amounting to conjecture, speculation and indication of mental pre-disposition for repudiation of the claim.
5. The Complainant further alleged as under:-
From the surveyor's report it appeared that the surveyor had found alleged seals of the consignor namely 'Karthik Seal' on two of the five containers, over and above the Shipping Liner's Seals and Bureau Veritas (India) Pvt. Ltd.'s seals on the containers, though the Complainant did not at all apply any seal of its own, which fact is apparent from the loading survey report of M/s Bureau Veritas (India) Pvt. Ltd. In response to the to the query of the surveyor in this regard, the concerned official of the Complainant had categorically stated that the Complainant had not applied any seals 10 of Karthik Alloys Ltd. on the containers. The presence of such seals bearing the name 'Karthik' on two containers at the time of survey at Italy makes it apparent that the organized racket of criminals which committed pilferage from the sealed containers and about whose modus operandi the OP No. 1 is well aware, had pre-planned the pilferage operation. One of the inconsistencies in the said destination port survey report is that the number of one of the five containers was recorded in the said survey report as MEDU 399240/7 bearing the Shipping Liner's Seal No. K426774, though it is apparent from the records that there was no container shipped by the Complainant bearing No. MEDU399240/7. Inconsistency is that though the surveyor has observed that the seals were inspected in order to find signs of tampering but they were intact, however, in another part of the self-same survey report, the overseas surveyor has recorded that the seals on three numbers of containers were 'unreadable'. Thus it is clear that only perfunctory and casual survey was conducted by the said surveyor appointed by M/s W. K. Webster & Co. Ltd. resulting in erroneous observations in the said survey report. The OP has therefore wrongfully repudiated the claim. The OP No. 1 has wrongfully observed in the claim repudiation letter that the consignment was in the hands of transporter before the seals were affixed though there is no material on record to support such allegation of the OP No. 1. The OP has wrongfully made another untrue observation in the claim repudiation letter to the effect that as per invoice and waybill, one of the containersNo. MEDU3992406 was replaced by another container No. MEDU3992407 which was not recorded by the Complainant.
There was no question of any replacement of the container. The observation in the repudiation letter dated 06/04/2015 to the effect that Challan No. 16/C Bill no. 1467103 does not carry any container number is absolutely inconsequential and immaterial and does not constitute any negligence on the part of the Complainant-insured inasmuch as the said dock challan is a document initiated by the 11 Kolkata Port Trust upon entry of the consignment into the dock complex for shipment. Further in the said repudiation letter dated 06/04/2015 the OP No. 1 has alleged that no video footage of loading, sealing and inspection process could be produced by the Complainant. The subject insurance policy does not stipulate any condition or warranty requiring the Complainant to video-graph the loading, sealing and inspection process and such not video-graphing does not constitute any negligence. Further in the said repudiation letter dated 06/04/2015 the OP No. 1 has alleged that it had asked for a sample of the consignment and the same was not produced by the Complainant. In fact, in none of the correspondence between the Complainant, the OP No. 1 and the surveyor appointed by OP No. 1, there was any whisper of seeking any sample of the consignment. Further the allegation made by the OP No. 1 in paragraph No. (F) of the repudiation letter is baseless since there was no condition in the policy that the consignor should appose its seal on the container. The observation contained in Paragraph No. (G) of the repudiation letter to the effect that the 'normal procedure and safety norm was not followed through' is also irrelevant and vague.
6. According to the Complainant, he has not committed any omission or negligence in dispatching the subject insured consignment. The loss of the subject cargo covered under the subject marine insurance policy by way of pilferage is a peril covered under the Institute Cargo Clause A. The repudiation of the just and valid insurance claim of the Complainant amounts to deficiency on the part of the OP No. 1 to provide service as per the terms and conditions of the insurance policy. Apart from the huge loss of Rs. 5452810/- on account of pilferage of the insured cargo, the Complainant had to incur expenditure to the tune of USD 3676/- (Rs. 238940/- as per the exchange rate of Rs. 65/- per USD) by way of re-imbursement on account of inspection charges, fees and container-detention-demurage in respect of the said cargo.
12Therefore the OP No. 1 is liable to pay to the Complainant the total insurance claim amount of Rs. 54,52,810/- on account of the declared value of the 62.480 MT cargo of Silico Manganese lost in transit due to pilferage. The OP No. 1 also liable to pay an amount of Rs. 238940/- (USD 3676) towards survey and inspection charges and container detention charges. The wrongful denial of the insurance claim had also caused tremendous mental agony and harassment to the directors and office-bearers of the complainant and the therefore the OP No. 1 is liable to damages and compensation to the tune of Rs. 500000/. The Complainant is further entitled to interest of 14% p.a. on the insurance claim amount of Rs. 5452810/- for the period from the date of intimation of loss till the date of actual payment of the claim amount and on the amount of Rs. 238940/- for the period from the date of such payment by the complainant till the date of actual payment of the said amount to be made by the OP No. 1. Hence the Complaint.
7. The Complainant produced various documents and a CD in support of the Complaint.
8. By way of written version, the OPs denied various allegations made by the Complainant in the Complaint. The OPs, in short, alleged as follows:- The OPs have not committed any deficiency in service by repudiating the claim proposal of the Complainant. The statement made by the Complainant in paragraph 13 of the Complaint specifies that custody of consignment was with the transporters from 15/03/2014 till boarding on vessel till 21/03/2014. The activities of the transporter were to be monitored by the Complainant and therefore there was negligence on the part of the Complainant. After receiving the email from the overseas buyer regarding the mixture of slag and iron powder in the consignment, the Complainant had to file First Investigation Report (FIR) within the territory of India, but no such complaint has been filed and this 13 reflects biased mind of the Complainant. The mail by consignee cannot be considered as prima facie legal evidence of loss or direct pilferage of consignment until and unless it is corroborated by the report of investigative machinery. The version of Complainant about missing of iron powder and slag with the consignments of Ferro Silico Manganese is hypothetical as there is nothing to show as to what material and quantity was mixed. The OPs have never admitted the occurrence of pilferage with the consignment material. They had only placed the probability about the organized crime syndicate carrying out operations of stealing the material inside the container and by putting same quantity in weight of slag as that of original which cannot be identified until the container is opened. The OPs never used the word 'pilferage' in the repudiation letter. The surveyor namely Gastaldi International SRL, Genoa at Italy on behalf of M/s W. K. Webster and Co. Ltd., during investigation, found the seals of the consignor/complainant namely 'Karthik Alloys' on two containers MEDU 399240/7 and GATU 040239/6 and when the staff of the Complainant was asked by the surveyor through mail about the said seals, their answer was that the 'Seals of Karthik Alloys'might have been used by port representatives at destination sight for the safety purpose. Their surveyor found the observation that as per the invoice and way bill one of the container No. MEDU 3992406 was replaced by the container No. MEDU3992407 and this fact has been suppressed by the Complainant. As per the challan no. 16/C Bill no. 1467103 dated 07/03/2014 Export Roll No. 62426/14 the consignment was received on 12/03/2014 at Haldiya Port (of 112 MTS) and allowed for shipment on 15/03/2014 showing the gross weight and net weight the same i.e. 112.000 MTS and this challan does not carry any container number or seal number. The OPs have rightly rejected the claim citing the genuine grounds based upon the reports of the independent IRDA Licensed Surveyor, Mr. Debasis Gupta and surveyor, W. K. Webster and Company.
149. The OPs further alleged in their written version as under:-
The consignment carrying 112 MT and 28 MT total of 140 MT was handed over to the transporter M/s Gorsia Terminal Services vide their way bill nos. 0375 to 0379 whereas the Inspector of Central Excise sealed the containers between 09/03/2014 and 10/03/2014 in the presence of M/s. Bureau Veritas surveyors inside the compound of the complainant. The consignment was in the hands of the M/s. Gorsia Terminal Services, a transporter who was supposed to load about 28 MT of the bulk loose Ferro Silico Manganese into each of the five containers. When the containers arrived at the factory of the Complainant, the consignment was handed over to the transporter for loading and was within the physical custody of the transporter until the entire loading activity was completed before the seals of authority were being affixed. The four trucks carrying 112 MT of Ferro Silico Manganese left on 10/03/2013 and one container carrying 28 MT Ferro Silico Manganese left on 11/03/2014 towards Haldia Dock which is approximately 270 km from Complainant's factory at about 4 to 5 hours riding time. However the four containers left on 10/03/2014 arrived at Haldia Dock on 12/03/2014 and the one container left on 11/03/2014 arrived on 13/03/2014 which means that 2 days time was taken and therefore the Complainant had to enquire with the transporter regarding the extra time for reaching Haldia Dock and had to file complaint for non- delivering consignment within the required time. However no action was taken by the Complainant against the transporter. It was observed by the surveyor of the OPs in the Gastaldi International SRL that inspection at destination on 13/05/2014 of the unloading of two containers was carried out in the presence of Mr. Borni, a surveyor acting on behalf of consignee along with the surveyor of opponents etc., namely Mr. Ongis IR Trading managing director and surveyor acting on behalf of MSC carrier. The container was opened for unloading and the non-conform part was removed by 15 mechanical shovel to avoid contamination with sound material. Jointly, the surveyor of the OPs and consignee surveyor-Mr. Borni took two samples of goods, one of sound material and one of waste material for counter analysis. At the end of survey ascertainment, it was agreed with Mr. Ongis IR Trading Managing Director that they would have sorted out conform material as it was mixed with waste material in order to preventthat after fusion there would be noted irregularities in the quality of final product.The IR TradingManaging Director provided the involved parties with the weight reports specifying that first delivered container MSCU 149330/6 as they were unknown about such problem of mixture of sound and non-conform material and while unloading letting the product fall and mixing the sound material with slag. The analysis of specimen of sound material made by IR trading on the same day concluded that the content of manganese, silicon and iron is slightly less than that indicated on the sales technical sheets. Subsequently, analysis of non-conform material made by IR trading on the same day concluded that Manganese and iron were absolutely of low parameter and material turned out not to be suitable to be used in any production process. When the contents of all the containers were sorted out as sound material and non-conform slag, the total weight of sound material was 77,520 kg and that of slag was found to be 62,620 kg, but the total gross weight was the same i.e. 140 MT. Thus, the quantity of goods was reported to be the same as shipped from Haldia Dock Complex Kolkata and received at Italy Port but the quality had turned low. Therefore, gross negligence was caused by the Complainant while loading the consignment at the factory. No goods were lost in transit by pilferage or by theft. Hence, the liabilities of the OPs do not arise and the OPs have rightly repudiated the claim.
10. The OPs also relied upon various documents.
1611. The Complainant filed the affidavit-in-evidence of two witnesses namely Ms. Pushpalata Gurunath Kalangutkar, the Sr. Manager (Administration and Finance) of the Complainant and of Shri. Abhijit Das, the Senior Manager at the factory. The OPs filed the affidavit-in-evidence of their authorized signatory namely Mr. Nilesh Gandhi and of Mr. Debasis Gupta, the Insurance Investigator. Subsequently, the OPs filed the affidavit of Mr. Cerruti Angelo Giuseppe, the president of the "Gastaldi International SRL". Questionnaires were filed by the Complainants for the OPs and for Mr. Debasis Gupta and answers to the said queries given by the said witnesses, by way of affidavit-in-reply, have been filed by the OPs.
12. Both the parties have filed written arguments on record. Oral arguments were also heard from Mr. Joydeep Sen, Lr. Counsel on behalf of the Complainant. We have gone through the entire material on record.
13. The emails dated 07/05/2014 and 08/05/2014 sent by IR Trading S.R.L. to the Complainant revealed that the two containers No. MEDU3992406, seal No. K-426774 and MSCU1453306, seal No. 426771 contained slag and iron powder mixed with Low Carbon Ferro Silicon manganese instead of Low Carbon Ferro Silicon manganese. The survey report of M/s W K Webster & Co. Ltd. showed that out of 140, 140 KG (140.40 MT) of goods as stipulated in the commercial invoices No. 370, 371 and 338 dated 07/03/2014, only 77,520 KG (77.520 MT) conformed to the quality, quantity and nature of the consignment mentioned in the aforesaid commercial invoices and remaining 62,620 KG (62.620 MT) was found to be slag. Gastaldi International SRL, in its survey report, has alleged that the consignee received the same quantity which consignor had sent i.e. 140 MT and there was no proof of tampering or any alleged theft as claimed by the consignee and that based on ascertainments carried out, there was no evidence showing that the claimed loss actually occurred as a fortuity while in transit. The IR Trading SRL, the 17 consignee had thus claimed that there was theft of consignment. It is nobody's case that the Complainant had mixed the slag and iron powder in the consignment.
14. Admittedly, the OP No. 2 had issued Marine Insurance Open Cover (Import/Export Transit) policy No. OG-14.1717-1006- 00000002 for the period from 14/09/2013 to 13/09/2014, in favour of the Complainant and the incident for which the Complainant made a claim to the OP No. 2 occurred during the validity of the said policy. Indisputably, the goods sold by the Complainant to IR Trading S.R.L. of Genoa, Italy were covered under the policy. The insurance covered all risks of loss of or damage to the said goods except as provided in the exclusion clauses No. 4, 5, 6 and 7 of the Institute Cargo Clauses (A)(hereinafter referred to as "ICC-A"). However, the claim has been repudiated by the OP No. 2 allegedly due to the gross negligence on the part of the Complainant. In order to repudiate the claim, the same had to come under one or more of the clauses No. 4, 5, 6 and 7 of ICC-A. However, negligence either gross or otherwise has not been mentioned in any of the above clauses of ICC-A. Based on survey reports of W K Webster & Co Ltd. and Debasis Gupta and claim documents, eight reasons have been mentioned in the repudiation letter dated 6th April, 2015 for claiming gross negligence on the part of the Complainant. Mr. Debasis Gupta, the Insurance Investigator, has filed an affidavit on behalf of the OPs and has stated in paragraph 4 of the same that in his investigation report he recommended gross negligence on the part of the insured M/S Karthik Alloys in respect of the consignment handed over to the transporter. A question was put by the Complainant to Mr. Debasis Gupta to explain as to what was the alleged gross negligence. Mr. Debasis Gupta, in his affidavit-in-reply, explained that gross negligence was lack of diligence or care and voluntary act or omission in reckless disregard of a legal breach of the legal obligation. It is not the case of the OPs that the loss, damage or 18 expense was attributable to willful misconduct of the Complainant. The OPs have not at all stated as to under which exclusion clause the case of the Complainant was covered. Shri Debasis Gupta appears to be a private investigator appointed by the OPs. It is not known as to what qualification and experience he has in the field. Be that as it may, without prejudice to the above, let us deal with each of the said reasons for claiming gross negligence of the Complainant.
15. The first reason is that:
"(a) The consignment was handed over to the transporter M/s.
Gorsia Terminal Services vide their way bills nos. 0375 to 0379 whereas the Inspector of Central Excise have sealed the containers between 09/03/2014 and 10/03/2014 in presence of "M/S. BUREAU VERITAS" surveyors inside your compound. It is noted that the consignment was in the hands of the transporters before the seals were affixed."
The OPs have made such an allegation on the basis of the report of Mr. Debasis Gupta, who has stated therein that the insured claimant (Complainant) had given to him copies of the export related documents in respect of the said consignment and that the above fact was found by him from the survey report of Gastaldi International SRL, Genova, Italy. But a perusal of the said survey report of Gastaldi International SRL does not suggest any such thing. No doubt, the Goods Receipts No. 0375, 0376, 0377, 0378 and 0379 issued by the transporter M/s Gorsia Terminal Services mention the date as 08/03/2014. Merely because the date on these receipts is 08/03/2014, it cannot automatically mean that the consignment was in the hands of the transporter on 08/03/2014. The transporter M/S Gorsia Terminal Services is from Karl Marx Sarani, Kolkota, West Bengal whereas the factory of the Complainant is at Angadpur, Durgapur at West Bengal. The Complainant has stated in the Complaint that it had availed the services of M/s Topstar 19 Suppliers Pvt. Ltd. and its sister concern M/s Eastern Carriers for shipment and export of the said consignment and the said companies in turn engaged M/s Gorsia Terminal Services for transportation of the consignment. The Complainant has further stated that on 08/03/2014, M/s Gorsia Terminal Services sent the five empty containers loaded on five trucks along with five Shipping Liner's seals and five consignment notes dated 08/03/2014 and that the said trucks arrived at the Angadpur factory of the Complainant on the early morning of 09/03/2014. Ms. Pushpalata Gurunath Kalangutkar, the Senior Manager (Administration & Finance) of the Complainant and Mr. Abhijit Das, the Senior Manager at the factory of the Complainant have both stated the above fact in their affidavit. Both have stated on oath that the entire cargo of 140 MT Silico Manganese was loaded in the said five containers and this loading operation was supervised by the deputed surveyor of M/S Bureau Veritas (India) Pvt. Ltd. and that the loading operation and weighment was completed on 10/03/2014 in the presence of the officials of the Central Excise Department and the executive of M/s Bureau Veritas and thereafter the Central Excise Department officials sealed the said five loaded containers by putting wire-seals; the transporter applied the Shipping Liner's seals and the representative of Bureau Veritas applied their seals. The report for factory sealed packages/containers issued by the Central Excise and the quality, quantity and weight certificate issued by Bureau Veritas, which are produced by the Complainant on record confirm the loading of the cargo as per the invoice specifications and sealing of the same with shipping liner's bottle seals as well as Bureau Veritas seals within the factory premises of the Complainant. The Investigator appointed by the OP No. 1, Mr. Debasis Gupta, in his affidavit-in-reply to the questionnaire of the Complainant, has confirmed the genuineness of the "factory loading and sealing reports" of the Central Excise. Mr. Debasis Gupta has produced letter dated 18/03/2015 addressed to the Superintendent of Central 20 Excise, letter dated 25/03/2015 addressed to M/S Bureau Veritas, letter dated 18/03/2015 addressed to the General Manager, Haldia Dock Complex, and letter dated 14/02/2015 addressed to M/S Gorsia Terminal Services, asking for relevant information regarding the consignment. However he has neither produced the replies of the concerned to those letters nor has he stated as to what replies were given. Questions No. 37 and 38 asked to Mr. Debasis Gupta and his answers to the same are as follows:-
"Question No. 37:- Can you furnish any document before the Hon'ble State Commission from which you can show that the loaded containers were in hands of the transporter before sealing? If your answer is affirmative, then please furnish the same along with your answer to this instant question.
Answer:- As per international survey report page No. 7- 8, I learned that the insured declared before the said surveyor of their queries:
'Who applied the MSC seals, when and where?
Ans: The transporter apposed the MSC seals after stuffing and verification of the containers at our works (Karthik Alloys Ltd.) The plastic seal of Karthik which we found in some containers, is it your seal? And why had it not been applied on all the 5 containers?
Ans: Plastice seals - we have not made any seals. Apparently, at destination side for safety purpose, Port Representatives might have used it.
Who ordered Gorsia to pick up the containers: it was done by Karthik or by MSC?21
Ans: M/S Gorsia Terminal Services was appointed by our clearing agent M/S Eastern Carriers with the concern of MSC.
But the insured was not able to provide me any confirmation of the port authority that the port authority have applied plastic seals of Karthik Alloys in the containers.' These circumstances show that the containers were in hands of transporter before sealing."
Question No. 38: Has Gastaldi International SRL furnished any document to show that the loaded containers were in the hands of transporter before sealing? If your answer is affirmative, then please furnish such document along with your answer to this instant question.
Answer: Negative."
In our considered view, the above facts do not at all establish that the consignment was in the hands of the transporter before sealing. As contended by the Lr. Counsel for the Complainant, the above allegation appears to be contrary to the record. In fact, in the same repudiation letter dated 06/04/2015, it is stated that the Inspector of Central Excise has sealed the containers between 09/03/2014 and 10/03/2014 in the presence of M/s. Bureau Veritas surveyors inside the compound of the Complainant. Thus it is not proved by the OPs that the consignment was handed over to the transporter before seals were affixed.
16. The second reason for claiming gross negligence on the part of the Complainant is as under:-
"(B) As per invoice and way bill, one of the container No. MEDU 3992406 was replaced by another container No. MEDU3992407. The same was not recorded by you."22
In this regard, the Goods receipt No. 0376 showed the container Number to be MEDU-3992406. The Shipping Bill for export issued by the Indian Customs also mentioned one of the Containers as having No. MEDU3992406. Further documents namely the factory loading and sealing report of the Central Excise, the certificate of Bureau Veritas and the bills of lading issued by the shipping line all clearly mentioned the existence of container No. MEDU3992406. The above would indisputably show that it was the container No. MEDU3992406 that was loaded on the vehicle and was dispatched from the factory and was even loaded on the ship. Therefore, at least there was no replacement of the container when the same left the factory of the Complainant. The Complainant cannot have any control on the containers after the vehicles with containers leave the factory of the Complainant. If the said container was replaced during transit when it was under the custody of the transporter/carrier, such replacement, if any, cannot be attributed to the Complainant. There is nothing on record produced by the OPs to prove that the Complainant had any knowledge of such replacement during ocean transit. The Complainant cannot be expected to record such a fact. The law does not compel a person to do that which he cannot possibly perform. As submitted by the Lr. Counsel for the Complainant, the legal maxim "Lex Non Cogit Ad Impossibilia" is applicable to such case. In fact, even the email dated 08/05/2014 sent by IR Trading SRL to the Complainant mentions that one of the containers having slag and iron powder mixed with Low Carbon Ferro Silicon Manganese had the No. MEDU3992406 with seal No. K-426774. It is not known as to how Gastaldi International SRL found one of the containers as bearing No. MEDU 399240/7 instead of MEDU3992406, though with the same MSC seal No. K426774 which was actually affixed on the container No MEDU3992406. Be that as it may, even if there was replacement, which was without knowledge and consent of the Complainant, this would be an insurance peril under ICC-A of the Insurance Policy.
2317. The third reason for claiming gross negligence on the part of the Complainant as stated in the repudiation letter is that:
"(C ) On the challan No. 16/C, Bill No. 1467103 dated 07/03/2014, Export Roll No. 62426/14, the consignment was received on 12/03/2014 at Haldia Port (of 112 MTS) and allowed for shipment on 15/03/2014 showing the gross weight and Net weight the same i.e. 112.000 MTS. This challan does not carry any container number or seal number."
In this regard it is difficult to understand as to how the Complainant can be blamed for non-recording of container and the seal numbers in the Port challan issued by the Port Trust, since at the time of entry at the Port, the goods were under the control of carrier and not the Complainant. The Complainant cannot have any control over the Port Trust. Here also, the same maxim "Lex Non Cogit Ad Impossibilia" applies. Since the consignment was allowed for shipment without mention of container and seal number, it means that there is no legal requirement of mentioning the same on the challan. Be that as it may, this negligence, if any cannot be attributed to the Complainant.
18. The fourth reason mentioned in the repudiation letter for saying that there was gross negligence on the part of the Complainant is that:
"(D) No video footage of loading, sealing and inspection process could be produced by your goodself."
Admittedly, no video graphing of loading, sealing and inspection process was done at the factory of the Complainant. A perusal of the Open Marine Insurance Policy reveals that there is nothing therein showing that the inspection process, loading operation and sealing has to be video graphed. The OPs have not pointed out any legal provision in this regard. Section 24 of the Indian Marine Insurance Act 1963, as rightly pointed out by the Lr.
24Counsel for the Complainant, inter alia, provides that a contract of marine insurance shall not be admitted in evidence unless it is embodied in a marine policy in accordance with the Marine Insurance Act. The reason at serial No. (F) in the repudiation letter dated 06/04/2015 mentions about pictures taken at the time of loading. As contended by the Lr. Counsel for the Complainant, even video graphs can be tampered with. In any case, the Central Excise Department which is the statutory authority, as well as M/s. Bureau Veritas, an independent agency, have both certified the loading and sealing operations in their presence within the factory premises which is cannot be disputed. Hence non-video graphing the loading, inspection and sealing operation cannot be made a basis for repudiation of the claim.
19. Next reason given by the OPs for repudiating the claim on the ground of gross negligence of the Complainant is that:
"(E) We asked for a sample of consignment however the same could not be produced by you."
There is nothing on record to establish that the OP No. 1 at any time had asked for a sample of the consignment from the Complainant. In paragraph 32 of the Complaint, the Complainant has specifically stated that in none of the correspondences between the Complainant, the OP No. 1 and the surveyor appointed by the OP No. 1, there is any whisper of seeking sample of the consignment. The OPs have dealt with paragraph 32 of the Complaint in the paragraph 26 of the written version wherein there is a simple general denial of paragraphs 25, 26, 27, 28, 29, 30, 31, 32, 33 and 34 of the Complaint. In the case of "S. P. Gupta and others Vs. President of India and others" (AIR 1982 SC 149), relied upon by the Lr. Counsel for the Complainant, it has been held that a vague denial meant no denial at all. If at all the Complainant was required to provide the sample of the consignment to the OPs, without being 25 asked for, then the OPs had to show such provision of law or any such condition in the policy. Otherwise, it was for the OPs to show that they had actually asked for the sample and the Complainant had failed to provide the same. Such a thing cannot amount to negligence on the part of the Complainant.
20. Another reason stated by the OPs to claim gross negligence on the part of the Complainant is that:
"F) In normal course there should have been three seals on the containers i.e. (1) Seal of consignor (2) Seal of Central Excise (3) Seal of surveyor BUREAU VERITAS. The MSC seals should have been applied in the presence of BV controllers and of the Central Excise Inspector before leaving your factory however from the pictures taken at the time of loading only the BV seals can be recognized and not the MSC seals."
In this regard, the OPs have not shown anything for this Commission to believe that there had to be three seals on the containers, in the normal course, as stated in the repudiation letter. The Open Marine Insurance Policy nowhere mentions that the claim shall not be paid unless three seals are applied. The OPs have also not disclosed any customary practice showing that in normal course three seals are to be applied. This cannot be considered as such a lapse on the part of the Complainant, for OPs to repudiate the claim.
21. The next reason for negligence of the Complainant as stated by the OPs is that:
"(G) The normal procedure and safety norms while sending the consignment was not followed through. No FIR was lodged against the transporters who carried the containers from Durgapur to Haldia taking inordinate time to deliver the consignment to the dock."
In this regard, the OPs have stated in the written version that four trucks with containers left the factory of the Complainant on 26 10/03/2014 and arrived at Haldia Dock on 12/03/2014 whereas one truck with container left on 11/03/2014 and arrived at Haldia Dock on 13/03/2014 which means that total time required to reach each container was two days though the distance was approximately 27Km only i.e. about 4 to 5 hours riding time. No doubt, there was inordinate delay for the containers to reach the Dock which has not been explained. But that does not mean that FIR should have been lodged by the Complainant on account of such delay. The Complainant did not know that there would be some mischief. Unless there is some non-bailable offence, the question of filing FIR does not arise. Here also, the Open marine Insurance Policy does not stipulate any normal procedure and any safety norms to be followed while sending the goods to the Port and the OPs have not shown any legal provision requiring any procedure and safety norms to be followed. In fact, the Central Excise and Bureau Veritas have both certified that the invoiced consignment was loaded and sealed in their presence at the factory premises. Mere delay in arrival at Port does not amount to any criminal offence and when there was no intimation to the Complainant that some goods were removed from the containers, the question of the Complainant lodging FIR against the transporter does not arise. Be that as it may, the containers were loaded on the vessel with unqualified bill of lading and therefore no indication of any theft/skilful removal of goods from the containers was available to the Complainant. Merely because even after receiving intimation from the consignee regarding mixture/contamination of slag and iron powder in the consignment, the Complainant did not register FIR against the transporter, that does not entitle the OPs to repudiate the claim. The OPs, if desired, could themselves file FIR with the police. The Complainant, after receiving the intimation from IR Trading SRL, about the contamination, vide email dated 08/05/2014, immediately on the same day i.e. on 08/05/2014 made the insurance claim and informed the OP No. 1 that the containers were stuffed in presence of Central 27 Excise authorities at Durgapur factory and third party inspection agency M/s Bureau Veritas Quality International were also present at the time of stuffing and sealing the cargo and that some error happened in transit. Hence there was absolutely no delay in making the claim. But the OPs after inordinate delay of 11 months, on 06/04/2015, sent the repudiation letter to the Complainant. Lr. Counsel for the Complainant has produced before this Commission a copy of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations 2002. Regulation No. 9 provides for the claim procedure in respect of the general insurance policy. As per Regulation No. 9(5), on receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured and if the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from receipt of the survey report or the additional survey report, as the case may be. No additional survey report was requisitioned by the OPs. The investigation report of Debasis Gupta is dated 25/03/2015. But, Mr, Debasis Gupta, as clearly stated by him in his affidavit-in-reply to the interrogatories, is not a surveyor and was an investigator only and he has not given any survey report. The survey report of Gastaldi International SRL, on behalf of Messrs. W. K. Webster & Co. Ltd. is dated 25/07/2014. But the repudiation letter is dated 06/04/2015, which is after more than 6½ months after the survey report.
22. The last reason for alleged gross negligence of the Complainant as stated by the OPs for repudiating the claim is that:
"(H) The goods had been well stowed therefore affirming that the people carrying out these operations know how to handle the said material and the missing weight of the stolen goods was put right 28 again using the slag in the same quantity in order not to change the containers weight thus showing an organized crime."
Though in the written notes of arguments filed by the OPs, now the OPs have alleged that they had never admitted the occurrence of pilferage with the consignment by crime racket, and that they had only placed the probability about the organized crime syndicate carrying out operations of stealing the material and missing weight of stolen goods by placing the same weight of slag as that of the original, however, the reason at (H) above does not say that this is a probability. From the above, it can be said that even the OPs have understood that some part of consignment was stolen after the entire consignment was well stowed and the missing weight of the stolen portion was put right by using slag in the same quantity in order not to change the container's weight. The OPs are aware that such organized crimes take place. In this regard, the Complainant has placed reliance on the book named "Maritime fraud" by Paul Todd wherein there is quote from the book of Ken Luke, chief Superintendent of the Port of London Police, who inter alia, said as follows:-
"The security seal system has fallen into virtual disuse or irrelevance. When I left the police service some thirteen years ago, there was not a container seal on the market that I could not open and close again and no-one would have been aware that I have tampered with it. To be fair, things have improved a little but seals are far from perfect."
23. The Complainant has produced a compact disk wherein two video clippings from www.youtube.com have been downloaded. The said video clippings really show as to how theft of material from a sealed container can be committed without leaving any sign of tampering. As per the survey report, there was replacement of one of the containers and it is proved that the Complainant had not done this. Further, though the Complainant had not put its seals on 29 any of the containers, as per the survey report, there were seals of "Karthik Alloys" on two of the containers. The OP No. 1 has not clearly specified in the repudiation letter as to what had amounted to "negligence" on the part of the Complainant. There cannot be any dispute that the goods had been well stowed showing that the people carrying out the operations knew how to handle the said material. In fact, the containers were loaded with invoiced cargo and sealed within the factory premises as per the reports of the Central Excise and Bureau Veritas. It is therefore not understood as to how the allegation of negligence would stand.
24. Thus, none of the reasons stated in the repudiation letter can be said to amount to gross negligence on the part of the Complainant. The survey report is not reliable. The repudiation is wrongful and illegal. The repudiation letter dated 06/04/2015 is therefore liable to be set aside. The OPs have relied upon the order dated 29/03/2016 passed by the Hon'ble National Commission in the case of "Raunaq Ice & Cold Storage Vs. New India Assurance Co. Ltd. and Ors.", reported in [III(2016) CPJ 513 (NC)], wherein the observation of the Hon'ble Apex Court in the case of "Sri Venkateswara Syndicate V. Oriental Insurance Company Limited and Anr", [ MANU/SC/1500/2009 : II (2010) SLT 664 : 111 (2010) CPJ 1 (SC) : (2009) 8 SCC 5072 has been quoted. The observation is as under:
"31. The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by insured, a loss adjuster, popularly known as loss surveyor, is deputed who assesses the loss and issues report known as survey report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for 30 settlement of claim by the insurer in respect of the loss suffered by the insured."
We are of the view that there are sufficient grounds not to agree with the survey report.
25. The insurance cover is of Per Location Limit of Rs. 2,25,00,000/-. The insurance claim made by the Complainant is of Rs. 54,52,810/- on account of the declared value of 62.480 MT cargo of Silico Manganese lost in transit. The Complainant had to refund an amount of USD 39,002,00/- to the overseas buyer namely IR Trading SRL, by way of adjustment of accounts. The Complainant has already paid an amount of USD 3676/- (Rs. 2,38,940/- as per exchange rate of Rs. 65/- per USD) by way of reimbursement on account of inspection charges, fees and container detention demurrage in respect of the subject cargo, as claimed by the overseas buyer vide Debit Note No. 140632 dated 20/05/2014. The Complainant has produced documents, in this regard. The Complainant is entitled to receive the said amounts from the OPs along with reasonable interest which according to us is 9% per annum. The Complainant is also entitled for appropriate compensation towards harassment and mental agony and costs of litigation.
26. In the result, the Complaint is partly allowed.
(i) The repudiation of the insurance claim of the Complainant under the marine insurance open cover No. OG-14-1717- 100600000002, vide letter dated 06/04/2015 is declared to be bad in law and inoperative and the same is set aside.
(ii) The OP No. 1 shall pay to the Complainant an amount of Rs. 54,52,810/- on account of marine insurance claim under the marine insurance certificate Nos. OG-14-1703-1011-00000072 and OG-14-1703-1011-00000073 under the marine insurance open cover No. OG-14-1717-100600000002, towards indemnification for the loss 31 of 62.480 MT Silico Manganese during transit, along with interest at the rate of 9% per annum from the date of the claim till the date of actual payment by OP No. 1.
(iii) The OP No. 1 shall pay to the Complainant an amount of Rs. 2,38,940/- (USD 3676) on account of reimbursement of the survey and inspection charges and container detention charges as paid by the Complainant, along with interest at the rate of 9% per annum as from the date of such respective payment by the Complainant till the date of actual payment by OP No. 1.
(iv) The OP No. 1 shall pay to the Complainant an amount of Rs. 1,00,000/- towards compensation for harassment and mental agony caused to the directors and office bearers of the Complainant by wrongful repudiation of the insurance claim.
(v) The OP shall pay to the Complainant an amount of Rs. 50,000/- toward costs and expenses incurred by the Complainant for the litigation.
[Smt. Vidhya R. Gurav] [Justice Shri. U. V. Bakre]
Member President
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