National Consumer Disputes Redressal
Haris Marine Products vs Export Credit Guarantee Corporation ... on 13 July, 2020
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 1546 OF 2016 1. HARIS MARINE PRODUCTS (REP. BY ITS PARTNER MOHAMMED ALTHAF)
TRINITY COMMERICIAL COMPLEX, 1ST FLOOR, N.G. ROAD, ATTAVAR, MANGALORE-575001 ...........Complainant(s) Versus 1. EXPORT CREDIT GUARANTEE CORPORATION (ECGC) LIMITED HEAD OFFICE: ESPRESS TOWERS, 10TH FLOOR, NARIMAN POINT, MUMBAI-400021. ...........Opp.Party(s)
BEFORE: HON'BLE MR. PREM NARAIN,PRESIDING MEMBER
For the Complainant : MR. SHAHBAAZ HUSAIN For the Opp.Party : Mr Rajnish K Jha, Advocate
Dated : 13 Jul 2020 ORDER
PER MR PREM NARAIN, PRESIDING MEMBER
This consumer complaint has been filed by the complainant Harris Marine Products against the Export Credit Guarantee Corporation Limited (for short ECGC) alleging deficiency in service on the part of the ECGC for dismissing the insurance claim of the complainant.
2. The brief facts of the case are that the complainant applied for buyer exposure policy with the opposite party on 13th December 2012 and availed the same wide policy bearing number 05400-00143. The insurance policy provides for indemnification in case of loss on account of non-payment of sale proceeds by the importer. The policy schedule provides for insurance coverage from 14th December 2012 to 13th December 2013. The complainant lodged its claim on 14th February 2013 with the opposite party for the default committed by the buyer in payment of Rs.245.48 lakhs towards export of fish meal and fish oil. The ECGC rejected the claim on the ground that the date of shipment is prior to the effective date of the policy. It is the case of the complainant that the date of shipment is 15th December 2012 and therefore challenging the rejection of its claim, the complainant has filed the present complaint.
3. The complaint has been resisted by the opposite party by filing the written statement and stating that the export should have been effected within the policy period and in the present case the material was exported prior to the commencement of the policy, hence, the claim is not payable. On this ground, it was requested to dismiss the complaint. Both the parties filed their evidence by way of affidavits which have been taken on record.
4. Heard the learned counsel for both the parties and perused the record. The learned counsel for the complainant stated that the main question to be decided in the present complaint is about the date of shipment. The learned counsel for the complainant placed the following arguments before this Commission:
"(i) The opposite party deemed the date of onboard loading as mentioned in the bill of lading (13.12.2012) as the date of shipment on its own, unilaterally without any such reference in the policy and without the consent of the complainant;
(ii) The opposite party got a survey conducted and the survey report states that the boarding of goods was complete on 14.12.2012 at 10.00 p m;
(iii) The complainant had shipped the goods on 15.12.2012 through Tiger Mango Voyage 62, Mate's receipt was issued on 15.12.2012 and bill of lading was issued on 19.12.2012.The vessel carrying the fish meal and fish oil of the complainant sailed on 15.12.12;
(iv) The policy is silent on date of shipment and has no implications on the definition of date of shipment. OP has unilaterally ruled on the date of shipment without any agreement from the complainant. It is a settled principle of law that Contract (Policy) is the only instruction governing the relationship between OP and complainant;
(v) Dispute between the parties can be resolved only in terms of the contract in a contractual relationship; (Polymat India (P) Ltd., and Ors vs National Insurance Co. Ltd., and Others - (2005) 9 SCC 174 decided on 01.12.2004)
(vi) OP independently and unilaterally decided the date of shipment, which is a concept of paramount importance as it revolves around the applicability of the policy. Having drafted the policy, if OP had included the definition of date of shipment as date of on-board date mentioned in bill of lading, then the complainant would have taken an informed decision of not availing the policy as its of no uses and avail; (Modern Insulators Ltd., vs Oriental Insurance Co. Ltd., - (2000) 2 SCC 734) decided on 22.02.2000)
(vii) It is also a settled principle of law that in the absence of any provision in contract; regard has to be had to the facts and circumstances and intention of the parties. Following is the analysis of facts and circumstances and intention of the parties surrounding the issue at hand;
Shipments were made through the vessels owned by the company, Damco (I) Private Limited and it has issued a certificate on date of shipment, which shows such date as 19.12.2012. Damco is an independent entity and its certificate shall settle the issue on date of shipment;
The complainant intended the policy to be applicable to shipment in question as no other shipments have been made to the same buyer;
The independent Review Committee has made an observation that the complainant intended the policy to be applied to shipments in question and due consideration should be given to such intention.
(viii) In its defense, the OP has stated that it has relied on definition of date of shipment as contained in the DGFT chapter 9 'Miscellaneous Matter" point no. 9.12.;
DGFT's definition cannot be imported to the contractual transaction between the complainant and OP. DGFT definition is out the purview of contract and the same is not binding;
(ix) When insurance is ambiguous, it shall be interpreted favouring the insured. In the instant case, by being silent on the date of shipment, the policy is highly ambiguous; The opposite party cannot import definition of 'date of shipment' from DGFT guidelines; The insurer had the opportunity to clearly spell out the terms of the policy but failed to do so. Where there exists an ambiguous term, it is to be construed in the sense in which the insured might reasonably have understood.
5. On the other hand, the learned counsel for the respondent insurance company has stated that it has been clearly mentioned in the policy bond issued to the exporter that "you have completed a proposal in writing and applied to us for indemnity in respect of your export trade with the buyer specified in the proposal and we have agreed to give you such indemnity subject to all the terms and conditions contained in the policy including the payment of premium and other charges specified in the schedule". It was stated that the insurance company agreed to indemnify the risk of exports of goods exported during the period of the policy which is from 14th December 2012 to 13th December 2013. These dates are admitted to both the parties. The learned counsel for the opposite party argued that the terms and conditions of the policy cannot be altered or interpreted in terms of the suggestions made by the learned counsel for the complainant, rather, they are to be construed strictly in terms they have been put in the policy. To support his contentions, the learned counsel relied on the following judgments of the Hon'ble Supreme Court:-
Export credit guarantee corporation of India limited versus international - (2014) I Supreme Court Cases 686 decided on 17.01.2013;
"10. It is a settled legal proposition that:
"26........ [while] construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the Court to add, delete or substitute any words. It is also well settled, that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed in order to determine the extent of the liability of the insurer."
Therefore, the endeavour of the Court should always be to interpret the words used in the contract in the manner that will best express the intention of the parties. (Vide: M/s. Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd., SSC p. 575, para 26).
11. The insured cannot claim anything more than what is covered by the insurance policy. "The terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely." The clauses of an insurance policy have to be read as they are...Consequently, the terms of the insurance policy, that fix the responsibility of the Insurance Company must also be read strictly. The contract must be read as a whole and every attempt should be made to harmonize the terms thereof, keeping in mind that the rule of contra proferentem does not apply in case of commercial contract, for the reason that a clause in a commercial contract is bilateral and has mutually been agreed upon. (Vide : Oriental Insurance Co. Ltd. v. Sony Cheriyan; Polymat India P. Ltd. v. National Insurance Co. Ltd.,; M/s. Sumitomo Heavy Industries Ltd. v. ONGC Ltd.; and Rashtriya Ispat Nigam Ltd. v. M/s. Dewan Chand Ram Saran).
12. In Vikram Greentech (I) Ltd. & Anr. v. New India Assurance Co. Ltd., it was held (SCC pp.603-604, paras 16 and 18:
16. "An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself....
18. The endeavour of the court must always be to interpret the words in which the contract is expressed by the parties. The court while construing the terms of policy is not expected to venture into extra liberalism that may result in re- writing the contract or substituting the terms which were not intended by the parties."
(See also Sikka Papers Limited v. National Insurance Company Ltd & Ors. SCC pp 781-82 para 13).
13. Thus, it is not permissible for the court to substitute the terms of the contract itself, under the garb of construing terms incorporated in the agreement of insurance. No exceptions can be made on the ground of equity. The liberal attitude adopted by the court, by way of which it interferes in the terms of an insurance agreement, is not permitted. The same must certainly not be extended to the extent of substituting words that were never intended to form a part of the agreement".
(ii) Life insurance corporation of India versus Mani Ram - 2005 (6) scale:
"18. In the instant case, condition 2 expressly provided the period during which the payment was to be made. It also in no uncertain terms stated that if premium was not paid before the expiry of grace period, the policy would lapse. In our view, the ratio in Dharam Vir Anand would support the insurance company rather than the complainant. If all the terms and conditions of the policy (contract between the parties) have to be kept in mind and given effect to, acceptance of argument on behalf of the complainant would make the last part of condition 2, redundant, otiose and inoperative; and a court of law cannot construe a document in the manner suggested by the counsel for the complainant. As the premium was due on April 28, 1996 and was not paid till May 28, 1996 the policy lapsed. The fora below hence, committed an error of law in allowing the complaint of the respondent herein and the orders are liable to be set aside".
6. The learned counsel for the opposite party insurance company stated that the complainant himself has indicated 13.12.2012 as the date of shipment in the claim form certified by its banker - Canara Bank. The onboard date mentioned in the Bill of lading is to be considered which ascertaining shipment date. This is in consonance with the definition by Directorate General of Foreign Trade (DGFT). The policy was effective from 14.12.2012 and the onboard date as per bill of lading is 13.12.2012. Thus, the shipment is effected before the policy became effective and thus liability of opposite party is not attracted. Directorate General of Foreign Trade (DGFT) is an attached office of the Ministry of Commerce and industry and is headed by Director General of Foreign Trade (DGFT). This organization has been essentially involved in the regulation and promotion of foreign trade through regulation. It is responsible for formulating and implementing the Foreign Trade Policy with the main objective of promoting India's exports. In view of this, the claim has rightly been rejected by the Independent Review Committee which is liable to be upheld. The complaint filed by the complainant is liable to be dismissed with exemplary costs.
7. I have carefully considered the arguments advanced by both the learned counsel for the parties and have examined the record. The policy indemnifies as follows:
Buyer Exposure Policy:
"We agree that in the event of you suffering a loss in respect of your exports to the insured buyer owing to non-realization of the sale proceeds by reasons of the occurrence of any of the insured perils herein below specified, we will indemnify you up to the insured percentage specified in the Schedule of your insured loss provided however that under no circumstances our liability under this policy to indemnify you shall exceed the amount of loss limit specified in the schedule".
8. From the above, it is clear that the indemnification is against the loss of exports to the insured buyer. There is no doubt that the buyer has been insured with effect from 14.12.2012 and therefore any export to this buyer from 14.12.2012 would be covered under the policy. The controversy in the present case is that the goods have been exported vide bill of lading dated 13.12.2012. It is the argument of the learned counsel for the complainant that only for this export consignment, the present policy was taken. It has also been argued by the learned counsel for the complainant that the surveyor has reported that boarding of goods was completed by 10:00 p.m. on 14.12.2012 and the ship actually sailed on 15.12.2012. Therefore, the date of shipment should be treated as 15.12.2012. The learned counsel for the opposite party has relied on the definition of date of shipment from the DGFT and according to this definition, the date of bill of lading would be considered as date of shipment. I agree with the learned counsel for the complainant that the date of shipment is not defined in the policy nor it is clear whether shipment date should be taken to be the date of export as the policy only refers to the loss suffered due to exports to the insured buyer. Therefore, I would concentrate to examine the date of export.
9. Exports are signified by their date of shipment. The DGFT has defined date of shipment as the date of bill of lading. The complainant itself has given the date of shipment as 13.12.2012 in the claim form submitted to the ECGC and the same is verified by the banker of the complainant which is the Canara Bank. The complainant has not filed the copy of the letter of credit (LC) where the permissible date of shipment may have been mentioned and on that basis only, the bank may have verified the claim form. Once the complainant has mentioned the date of shipment as 13.12.2012, the complainant cannot take another stand that the date of shipment is 15.12.2012 because the date of shipment is definitely not the date of sailing of the ship. Even after the loading of cargo is completed in the ship, the ship may not leave the shore because of many reasons but that would not mean that the date of shipment has changed. Moreover, the rules, regulations and guidelines issued by the DGFT who controls the export and import of all kinds of goods in India, are applicable to all exporters and all exports are subject to these rules, regulations and guidelines. Therefore, it cannot be said that the guidelines in respect of the date of shipment issued by the DGFT will not be applicable in the present case. Otherwise also, the complainant has not given any other definition from any other source which can be considered. In this regard, I also do not find any merit in the argument of the learned counsel for the complainant that the opposite party should have included the definition of date of shipment for clarity in the policy so that no confusion could have arisen in respect of the date of shipment. In this regard the learned counsel has referred to the decision of the Hon'ble Supreme Court in the case of Modern Insulators Ltd., vs Oriental Insurance Co. Ltd., (supra). The fact is that when at the Government level there is a controller of imports and exports and his office issues various rules, regulations and guidelines for undertaking exports or imports, then there is no need for repeating the same in the policy. A simple example will illustrate this point. In a matter of motor vehicle policy, the provisions of the Motor Vehicle Act 1988 and rules thereunder are also not to be violated and the policy holder is also supposed to know these provisions and rules so that they are not violated. In Modern Insulator (supra) the exclusions were not supplied to the insured, however, there is nothing of this sort in the present complaint case. It is true that the dispute between the parties who are bound by a contract should be resolved in terms of the provisions of the contract, but the applicability of the relevant laws cannot be ignored. In a matter of export, the rules, regulations and guidelines issued by DGFT cannot be ignored. In fact, the judgment of the Hon'ble Supreme Court in the case of Polymat India (P) Ltd., and Ors vs National Insurance Co. Ltd., and Others (supra) is applicable in the present case as well, however, if the policy contract is silent on a particular definition, the help of other relevant laws, rules, regulations and instructions can be resorted to.
10. I also agree with the assertion of the learned counsel for the complainant that if there is any ambiguity in respect of any word or any clause of the policy, then the same has to be interpreted in favor of the complainant and against the insurance company. However, in the present case, I do not find any word or clause where such ambiguity is reflected. Therefore, there is no question of interpreting any word or clause in favor of the complainant. All the terms of the policy are quite clear and there seems to be no ambiguity in any of the clauses.
11. The dates given by the learned counsel for the complainant do not seem coherent. It has been stated that the bill of lading is dated 19.12.2012 whereas the ship left on 15.12.2012 which is not possible because bill of lading is the receipt when the shipper hands over the consignment to the carrier.
12. On the basis of the above examination, I find that the date of shipment in the present case is 13.12.2012. The definition of date of shipment as the date of bill of lading is supported by the rules, regulations and guidelines issued by the DGFT Government of India and no counter to these guidelines has been produced by the complainant. In the circumstances, I find that the export consignment vide bill of lading dated 13.12.2012 cannot be considered as export during the currency of the policy in question. Therefore, the export in question is not covered under the policy.
13. Based on the above discussion, the complaint No. 1546 of 2016 is dismissed on contest.
...................... PREM NARAIN PRESIDING MEMBER