National Consumer Disputes Redressal
M/S. Ghanta Creative Exports Pvt. Ltd. vs M/S. Export Credit Guarantee ... on 1 February, 2022
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 83 OF 2009 1. M/S. GHANTA CREATIVE EXPORTS PVT. LTD. 6-20-14,
First Floor,
9/1 Arundelpet,
Guntur-2 Andhra Pradesh ...........Complainant(s) Versus 1. M/S. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA 2nd Floor,
HACA Bhawan,
Opp. Public Garden Hyderabad - 500 004 ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,PRESIDING MEMBER
For the Complainant : : Mr. Pragyan Sharma, Advocate
: Mr. Sandeep Chatterjee, Advocate For the Opp.Party : Mr. Bharat Sangal, Sr. Advocate
: Ms. Babita Kushwaha, Advocate
Dated : 01 Feb 2022 ORDER
1. Heard Mr. Pragyan Sharma, Advocate, for the complainant and Mr. Bharat Sangal, Sr. Advocate, assisted by Ms. Babita Kushwaha, Advocate, for the opposite party.
2. M/s. Ghanta Creative Exports Private Limited (the complainant) has filed aforementioned complaint for directing M/s. Export Credit Guarantee Corporation of India (the opposite party) to pay (i) insurance claim of Rs.2/- crores along with interest @18% per annum, from the date of the claim, set up for the first time, (ii) suitable compensation for mental agony and harassment, due to deficiency in service, committed by the opposite party and causing loss of business and (iii) any other relief which may be deemed fit and proper, in the facts and circumstances of the case.
3. The facts, as stated in the complaint and emerged from the documents attached with the complaint, are as follows:-
(a) The complainant was a company incorporated under Companies, Act, 1956 and engaged in trade and export of cotton and yarn. Export Credit Guarantee Corporation of India (for short the ECGC), is a public corporation, owned by Government of India and functions under the control of Ministry of Commerce. It is managed by a Board of Directors, representing the Trade and Industry departments of Government, Banks, Insurance Companies etc. Avowed goal of the ECGC is to protect the exporters from the losses, due to delay in shipment or the consignment being blocked for any political or commercial reason. For that purpose, the ECGC used to issue Insurance Policies to the exporters and Export Credit Insurance Cover to the banks to cover their risks in exporting goods to foreign buyers and for granting credit facility. Export Credit Insurance is designed to protect the exporters against payment risks, both political and commercial, subject to the terms and conditions of the contract of insurance.
(b) The complainant obtained Policy No.SCR-0100002437, i.e. Shipments (Comprehensive Risks) Policy/Small Exporter's Policy, for a sum of Rs.2/- crores, for the period of 20.06.2005 to 30.06.2007. The complainant entered into a Delivery against Acceptance Sale Agreement with M/s. Greenvill International Dhaka-1000, Bangladesh on 04.03.2006, for export of Indian cotton. Under the Terms of the Policy, where any shipment is made under Delivery against Acceptance Sale Agreement, the policy holder has to get the credit limit approved by the ECGC. The complainant applied for approval the credit limit and submitted all the requisite documents. On being satisfied, the ECGC approved the credit limit on 15.03.2006 for the Delivery against Acceptance Sale Agreement dated 04.03.3006. Thereafter, the complainant exported the goods of INR20771398.34, in two consignments dated 29.03.3006 and 01.04.2006, from Visakhapatnam to Chittagong port, Bangladesh, through M/s. German Express Shipping Agency (India) Pvt. Ltd.
(c) It is alleged that Uttara Bank Ltd. Bangladesh was the banker of M/s. Greenvill International Dhaka under the contract of Export. UTI Bank (now Axis Bank) was the banker of the complainant. When the consignment reached at Chittagong port, the Invoices were sent to Uttara Bank Ltd., but it has refused to accept the consignment and asked to return it. Uttara Bank Ltd. Bangladesh wrote a letter dated 25.04.2006, in this respect to UTI Bank.
(d) As soon as the complainant came to know about the aforesaid letter, the complainant inquired about other buyer in Bangladesh and found out one M/s. Rony International, who agreed to take the goods on low price and make payment. The complainant wrote a letter dated 03.05.2006 to the Branch Manager, the ECGC, Guntur, informing that Uttara Bank Ltd. had refused the consignments with endorsement that they were not intended to handle collection. The complainant sought for permission of the ECGC for resale of the consignments to M/s. Rony International, urgently, as at the port, the demurrage was being charged. The ECGC, vide letter dated 03.05.2006, advised (i) to take the matter with the bank of the complainant to persuade Uttara Bank to accept the consignments, (ii) to take adequate steps to safeguard the goods to minimise the loss and (iii) in case, the complainant wanted resale, to obtain prior approval of the ECGC in prescribed format. The complainant, vide letter dated 25.05.2006, apprised the ECGC that M/s. Rony International had offered to purchase on low price. In case, the consignments were sold to M/s. Rony International, then he would suffer a loss of Rs.25/- lacs, and request for grant of permission for resale of the consignments.
(e) The complainant sent a message to M/s. Rony International, Narayanganj, Bangladesh, on 23.05.2006, for sending a fax message, giving his consent that he was ready to accept the consignments. M/s. Rony International sent two fax messages dated 23.05.2006 and 24.05.2006 and requested to obtain Custom Clearance from the relevant authority, first. The complainant, vide message dated 26.05.2006, asked M/s. Rony International to apprise him as to what papers, were required, for obtaining custom clearance from the authorities. The complainant, vide letter dated 26.05.2006, requested M/s. German Express Shipping Agency (India) Pvt. Ltd. to amend the bill of lading of the consignments, in the name of M/s. Rony International and intimate their counterpart to the authorities in Bangladesh.
(f) The ECGC, vide letter dated 30.05.2006, granted permission for resale, provided that resale loss should not increase more than 18% of gross invoice. After obtaining permission from various departments, the complainant, vide letter dated 10.06.2006, sent all the papers M/s. Rony International, for getting clearance of custom department. However, M/s. Rony International, vide its letter dated 13.06.2006, expressed their inability to accept the documents/consignments, as they could not manage Import Permit, in their favour. The complainant then wrote a letter dated 15.06.2006, to the Manager, ECGC, to guide him in the changed circumstances. The Manager, vide letter dated 16.06.2006, advised to take step to minimise the loss. The complainant, vide letter dated 27.06.2006, requested the Manager, ECGC, to approach the government authorities in Bangladesh, for granting clearance certificate in favour of M/s. Rony International. However, M/s. Rony International again vide letter dated 03.08.2006, refused to accept the consignments.
(g) The complainant wrote a letter dated 27.06.2006 to his Shipping Agent to recall/reimport all the consignments. UTI Bank wrote a letter dated 25.07.2006, for reimporting the goods in order to minimise the loss, but of no effect, as in the meantime the goods were attached for auctioned by Bangladesh Custom Authorities. The complainant, then wrote a letter dated 10.08.2006 to the Manager, ECGC, for settlement of the claim by reimbursing the loss. The Manager, vide letter dated 10.08.2006, informed that the claim, if payable, would be considered after expiry of 4 months. The complainant submitted claim form on 26.09.2006. The Branch Manager, vide letter dated 08.11.2006, asked to apprise about the steps taken by the complainant after receiving auction notice. The complainant vide legal notice dated 22.11.2006, informed that Bangladesh government had not granted visa to the complainant as such he could not go there. He had apprised all the situation to the Manager, ECGC, time to time. However, Assistant General Manager, vide letter dated 12.06.2007, repudiated the claim on the ground that the loss was not covered under the policy. The complainant wrote a letter dated 15.06.2007 to Chairman, ECGC, for reconsideration of the claim, which was rejected by letter dated 12.07.2007. Executive Director, ECGC, vide letter dated 13.07.2007, informed that he had written letter to High Commissioner of India and Uttara Bank Ltd. Dhaka for recovery. This complaint was filed on 29.05.2009.
4. The insurer filed its written reply, on 23.11.2009, in which, the material facts relating to the insurance policy and export of cotton with approval have not been denied. It has been stated that extension of credit insurance cover to any policy holder of the Corporation is strictly under express provisions of the policy and the liability of the Corporation is no less nor more than what is stated in the policy and is also subject to strict compliance of the terms and conditions of the said policy by the policy holder. The complainant has taken Shipment Comprehensive Policy dated 20.06.2005, in which, the Risks Insured and Exclusions are specifically mentioned and provide details as to which risks are insured and which are not and are excluded from the purview of the policy. The Risks insured and Exclusions are quoted below:-
(1) Risks Insured
(a) Commercial Risks
(i) Insolvency of the buyer as hereinafter defined;
(ii) Failure of the buyer to pay to the Insured within four months after the due date of payment the gross invoice value of the goods delivered to and accepted by the buyer;
(iii) Failure or refusal on the part of the buyer to accept the goods which have already been exported from India, where any such failure or refusal is not excused by and does not arise from or in connection with any breach of contract or warranty on the part of the insured or from any other cause within his control provided that the insured shall, if so required by the Corporation, establish to the satisfaction of the Corporation through such means or documents as the Corporation may require including appropriate legal proceedings against the buyer if necessary, that the said failure or refusal on the part of the buyer was wrongful;
(2) Exclusions to the Risks Insured'
The Corporation shall not be liable to the Insured in respect of any loss the Insured may suffer, the proximate cause for which is a risk other than any of those specifically listed under the 'Risks Insured' herein above. Without limiting the generality of the aforesaid, losses arising out of any of the following causes are specifically excluded from the purview of cover under this policy, i.e., any loss that arises from-
(a) Default, Insolvency or an act of omission or commission of any marine or other Insurer of goods or of an opening bank in a letter of credit transaction;
(b) Default, insolvency or an act of omission or commission of the collecting bank, the carrier of goods or any other agent of the Insured;
(c) Failure or inability of the buyer to obtain any authority necessary under the regulations of the buyer's country in force at the date of shipment to import the goods and/or to pay for them as contracted and invoiced;
M/s. Greenvill International Dhaka neither became insolvent nor failed to pay after the goods were delivered to and accepted by it nor did it failed to accept the goods. It is therefore, clear that none of the commercial risks were involved in the present transaction. Exclusions clause-2(b) provides that any loss arises from default, insolvency or an act of omission or Commission of the collecting banks, the carrier of goods or any other agent of the Insured will not be covered under the policy. Exclusion clause-2 (c) provides that failure or inability of the buyer to obtain any authority necessary under the Regulation of its country and any loss arising therefrom are not covered under the policy and the Corporation shall have no liability towards the insured for such losses. Exclusion clauses-2(b) and 2(c) are attached in the present case, therefore, the claim was repudiated. It has been denied that the agreement dated 04.03.2006 provides that Uttara Bank Ltd. Bangladesh was the agent, appointed by the buyer for consummation of export transaction. In fact Uttara Bank Ltd. was not acting as an agent of the buyer as alleged. The complainant's bank presented the documents before Uttara Bank Ltd. for acceptance and in fact it was acting on the instructions of the Exporter's bank, to protect the interest of the complainant. It is bounden duty of the bank presenting the documents for acceptance, to ensure that the documents are released only as per the instructions of the exporter. In the present case, as the transaction was Delivery against Acceptance Sales Agreement, the collecting bank could have released the documents only if and after the buyer had accepted the documents to be paid within the specified and agreed period as indicated in the documents. The bank handling the documents for collection from the buyer cannot be said to be the buyer's agent. It acts on the instructions of the seller or the seller's bank and therefore is the agent of the insured seller. The definition of terms "Collecting Bank" as given in the financial dictionaries is as under:-
Businessdictionary.com: In documentary credit, the bank (usually the buyer's bank) that collects cash payment or a time draft from a buyer, in exchange for a bill of lading and/or other documents which enable the buyer to take delivery of the shipment. The collecting bank then forwards the payment to the remitting bank for eventual remittance to the seller.
Financial-dictionary.the freeditionary.com: A bank that assists in obtaining payment in accordance with draft payment terms.
From the aforesaid definition, it is clear that Uttara Bank Ltd. was not an agent of M/s. Greenvill International Dhaka.
5. The complainant filed his rejoinder reply on 23.07.2010, in which, the facts stated in the complaint were reiterated. The complainant filed various documentary evidence and Affidavit of Evidence of Kameshwar Rao. The Insurer filed Affidavit of Evidence of M. Senthilnathan, Deputy General Manager. The complainant filed an Affidavit on 07.03.2019, stating that the goods were auctioned on 28.12.2006 and total sale proceed was adjusted in custom duty and demurrage charges by the authorities of Bangladesh. Both the parties filed their short synopsis.
6. There is no dispute that the complainant had obtained Shipments (Comprehensive Risks) Policy/Small Exporter's Policy i.e. Policy No.SCR-0100002437, for a sum of Rs.2/- crores, for the period of 20.06.2005 to 30.06.2007 and the complainant entered into a Delivery against Acceptance Sale Agreement with M/s. Greenvill International Dhaka-1000, Bangladesh on 04.03.2006, for export of Indian cotton. The ECGC approved the credit limit of the complainant on 15.03.2006 for the Delivery against Acceptance Sale Agreement dated 04.03.3006. The complainant exported the goods in two consignments dated 29.03.3006 and 01.04.2006, of INR20771398.34, from Visakhapatnam to Chittagong, Bangladesh which was not accepted by M/s. Greenvill International Dhaka. The complainant tried to resale the consignments to M/s. Rony International but they could not obtain Import Licence, as such, could not purchase it. Ultimately the goods were seized and auctioned by the authority of Bangladesh and sale proceed was utilised towards custom duty and demurrage charges of the port.
7. The opposite party pleaded that Uttara Bank Ltd. Bangladesh was not mentioned as the agent of the complainant, in the agreement dated 04.03.2006 or in any other document, presented before the ECGC at the time of grant of Credit Limit Approval. In fact, the Exporter's bank, i.e. UTI Bank approached Uttara Bank Ltd., to handle the consignments, to protect the interest of the complainant but it refused. As such Uttara Bank cannot be treated as the banker/agent of the buyer. The complainant approached M/s. Ronyl International Dhaka for resale but they could not obtain Import Licence. Therefore Exclusion clauses-(b) and (c) are applicable in this case and the claim was rightly repudiated.
8. I have considered the arguments of the counsel for the parties and examined the record. The complainant relied upon Commercial Risks Clause-(a) (iii) of the policy and submitted that his claim was liable to be reimbursed. The opposite party, however, relied upon Exclusion clause-2 (b) and (c) and submitted that the claim was not payable, which are quoted below:
Risks Insured
(a) Commercial Risks
(iii) Failure or refusal on the part of the buyer to accept the goods which have already been exported from India, where any such failure or refusal is not excused by and does not arise from or in connection with any breach of contract or warranty on the part of the insured or from any other cause within his control provided that the insured shall, if so required by the Corporation, establish to the satisfaction of the Corporation through such means or documents as the Corporation may require including appropriate legal proceedings against the buyer if necessary, that the said failure or refusal on the part of the buyer was wrongful;
(2) Exclusions to the Risks Insured'
The Corporation shall not be liable to the Insured in respect of any loss the Insured may suffer, the proximate cause for which is a risk other than any of those specifically listed under the 'Risks Insured' herein above. Without limiting the generality of the aforesaid, losses arising out of any of the following causes are specifically excluded from the purview of cover under this policy, i.e., any loss that arises from-
(b) Default, insolvency or an act of omission or commission of the collecting bank, the carrier of goods or any other agent of the Insured;
(c) Failure or inability of the buyer to obtain any authority necessary under the regulations of the buyer's country in force at the date of shipment to import the goods and/or to pay for them as contracted and invoiced;
9. Supreme Court, in Sushilaben Indravadan Gandhi Vs. New India Assurance Company Limited, 2020 SCC OnLine SC 367, has held that exemption of liability clauses in insurance contracts are to be construed in the case of ambiguity contra proferentum. In Delhi Development Authority Vs. Virender Lal Bahri, 2019 SCC OnLine SC 279, held that when the main enactment is clear and unambiguous, a proviso can have no effect so as to exclude from main enactment by implication.
10. Clause-6 of Delivery against Acceptance Sale Agreement dated 04.03.2006 provides that with M/s. Greenvill International Dhaka should accept the documents and take the cargo by producing these documents in the port and make payment in three equal instalments. But M/s. Greenvill International Dhaka has failed to accept the consignments although the consignments were exported to Chittagong port Bangladesh as mentioned in clause-1. Therefore this commercial risk was covered under Clause-1(a) (iii) of the Risks Insured. Exclusion Clause provides that the Corporation shall not be liable to the Insured in respect of any loss, the Insured may suffer, the proximate cause for which is a risk other than any of those specifically listed under the "Risks Insured". While interpreting the Exclusion clause, it has to be examined as to whether the loss was due to the proximate cause, specifically listed under the "Risks Insured". Failure or refusal on the part of the buyer to accept the goods is covered under clause-(1)(a) (iii). The opposite party has not pointed out any reason as mentioned in this clause, for such failure or refusal of the buyer, in order to apply the Exclusion clause. As such the claim was falling under "Risks Insured" clause-(1)(a) (iii). Exclusion (b) and (c) are not applicable.
11. So far as failure M/s. Rony International to obtain Import Licence and to accept resale are concerned, it was an effort of the complainant to minimise the loss. Similarly, the complainant made effort to reimport the goods but could not succeed. These acts only prove the bonafide of the complainant to minimise the loss. It has nothing to do with respect of Risks Insured/Commercial Risks. In these circumstances, repudiation of insurance claim is not liable to be sustained.
ORDER
In view of the aforesaid discussions, the complaint is allowed. The opposite party is directed to pay Rs.2/- crores with interest @9% per annum from October, 2006 till the date of payment to the complainant, within two months from the date of delivery of this judgment.
......................J RAM SURAT RAM MAURYA PRESIDING MEMBER