National Consumer Disputes Redressal
National Agricultural Co-Operative ... vs New India Assurance Co. Ltd. on 18 December, 2018
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 161 OF 2012 1. NATIONAL AGRICULTURAL CO-OPERATIVE MARKETING FEDERATION OF INDIA LTD. Sidhartha Enclave, Ashram Chowk, Ring Road, New Delhi -110 014 ...........Complainant(s) Versus 1. NEW INDIA ASSURANCE CO. LTD. 87, Mahatma Gandhi Road Fort Mumbai - 400 001. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN,PRESIDING MEMBER
For the Complainant : Mr. A.K. Thakur, Advocate
Mr. Pinaki Addy, Advocate
Mr. Rishi Raj, Advocate For the Opp.Party : Mr. Vishnu Mehra, Advocate
Mr. Garva Dhyani, Advocate
Dated : 18 Dec 2018 ORDER
MR. JUSTICE V.K.JAIN, PRESIDING MEMBER
The complainant National Agriculture Marketing Federation of India, which is a Government of India enterprise, purchased 50,000 M.T. (+10%) of yellow peas Canadian origin from a company based in Brisbane in Australia. The aforesaid goods were to be carried from Brisbane to India on board a vessel M.V. Tonghai. The complainant obtained an insurance policy to the tune of Rs.1,29,86,86,950/- to cover the risks to the said consignment from the port of leading at Vancouver in Canada to Indian port in Mumbai/Kolkata, paying a premium of Rs.14,07,718/- to the opposite party. The aforesaid cargo was shipped on 05.03.2009 vide two separate Bills of Lading. 20,000/- M.T. of Cargo was unloaded at Vishakhapatnam on or about 23.04.2009 and the rest of the cargo reached Diamond Harbor Anchorage, where the discharge commenced on 24.04.2009 and continued till 28.05.2009. At the port of loading the cargo had been stowed in the vessel in loose condition but for the purpose of discharge, the complainant transferred the said loose material into bags, which were then loaded on the barges that were to carry the bags containing the material to the port.
2. During the discharge of the bags kept on barges, super-cyclone namely "Aila" struck the area, resulting in damage to the part of the consignment.
3. The complainant appointed a surveyor namely M/s. Apex Surveyors Pvt. Ltd. for the purpose of carrying out a survey and also for assessing the loss. The aforesaid surveyors had been engaged by the complainant under intimation to the opposite party and vide its letter dated 10.09.2009, the opposite party, recognizing that complainant was Government of India organization, informed that as a loss control measure and quick completion of the survey and loss assignment job, M/s. Apex Surveyors Pvt. Ltd., which were 'A' category surveyors should continue to complete the job at the earliest. M/s. Apex Survyors Pvt. Ltd. submitted their report dated 15.12.2009. The said report, to the extent it is relevant, reads as under:-
Cause of Loss : "Due to Super Cyclone 'Aila' which struck the West Bengal Coastal Area on 25.05.209 causing ingress of water inside the barges during transmit from the Anchorage point till delivery to various Dock Transit Sheds which further aggravated due to seepage of water into the Dock Transit Sheds.'
As per our advise the segregation of damaged Cargo from Mixed one were conducted and in total 3315.705 M.T. of Cargo were ultimately found and sold as damaged including 148.550 M.T. of fully damaged Cargo of the vessel BHORAN which were directly sold from the Vessel. The Breakup of 3315.705 M.T. of damaged Cargo sold are as following:-
Weight (M.T.)
1) CWC Bonhooghly 66.865
2) CWC Panchpara 487.800
3) CWC Panihati 1291.095
4) NAFED Godown, Salkia, Howrah 1011.695
5) Direct Sale from BHORAN 148.550
6) Various Dock Shed 309.700__
3315.705_
4. It would thus be seen that M/s. Apex Surveyors Pvt. Ltd. only quantified the damaged stock but did not assess the damage suffered by the complainant on account of damage to the said stock.
5. Thereafter, the complainant engaged Dr. Amen Controllers Pvt. Ltd. for supervision of the consignment. The insurer then engaged J.C. Gupta & Co. Pvt. Ltd. to assess the loss suffered by the complainant. M/s. J.C. Gupta assessed the loss to the complainant @ Rs.2,01,66,033/-, subject to the terms and conditions of the policy. The claim, however, was rejected by the insurer vide its letter dated 08.06.2011 which, to the extent it is relevant, reads as under:-
"With reference to the above claim, we have perused all the facts, documents and reports relating to the same and regret to inform you that the competent authority has expressed inability to entertain the same for the following reasons:
We note that the loss to the cargo has taken place during bagging operations in the vessel itself at the midstream anchorage.You have also paid demurrage for long period of holding the ship presumably for this purpose.Consequently, the delivery is deemed to have been effected from the vessel itself.
As per the provisions of the Duration Clause of ICC(A),
"The insure terminates either
On delivery to the consignees' warehouse at destination named in the policy or
On delivery to any other warehouse whether prior to or at destination which the insured may effect for storage other than in ordinary course of transit or for allocation or distribution or
On expiry of 60 days after discharge over side of the insured goods from the overseas vessel at the final port of discharge;
Whichever shall first occur."
In the instant, you have elected to take delivery at the vessel itself, thereby our coverage ceased thereon.
As per charter party agreement, the discharge of the cargo was to be completed @ 3000 MT per day indicating that the discharge of total consignment commencing from 24.04.2009 should have been completed by 03.05.2009.
Contrary to the above, discharge was completed only on 28.05.2009. This indicates the fact, had the discharge been done as per the charter party agreement, the loss on account of cyclone on 25.05.2009 could not have taken place."
6. Being aggrieved from the rejection of the claim, the complainant is before this Commission by way of this complaint.
7. The complaint has been resisted by the insurer primarily on the grounds on which the claim was repudiated.
8. In view of the decision of the Hon'ble Supreme Court in Galada Power and Telecommunication Limited Vs. United India Insurance Company Limited & Anr. (2016) 14 SCC 161, the complaint can be resisted by the OP only on the grounds on which the claim had been repudiated and no additional ground can be allowed to be taken.
9. As per the insurance policy issued by the OP, the said policy covered the consignment during the course of its journey from Vancouver to Indian ports including Kolkata and then to final destination in India. Admittedly, the Institute Cargo Clause applied to the aforesaid insurance policy. Clause 8.1 of the Institute Cargo Clause (A) reads as under:
8.1 This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either
8.1.1on delivery to the Consignees' or other final warehouse or place of storage at the destination named herein.
8.1.2 on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which the Assured elect to use either 8.1.2.1 for storage other than in the ordinary course of transit or 8.1.2.2 for allocation or distribution or 8.1.3. on the expiry of 60 days after completion of discharge overside of the goods hereby insured from the oversea vessel at the final port of discharge, whichever shall first occur.
10. It would be seen from a conjoint perusal of the insurance policy and clause 8.1 of the Institute Cargo Clause (A) that the insurance cover was available to the complainant till the goods were delivered, at their final destination, to the consignee or to the final warehouse or place of storage. The final destination, in this case, was Kolkata Port. It is an admitted position that the goods had not reached Kolkata port by the time they were damaged, the damage having taken in the barges that were carrying the bags of the material to the port. The contention of the learned counsel for the OP is that the vessel itself was treated as a place of storage by the complainant when it started shifting the loose material into the bags, and since the damage took place after the material had been transferred to the bags, the loss is not covered by the insurance policy. In his submission, the complainant had taken delivery of the material at the vessel itself in the aforesaid manner treating the vessel as a store. I however, find myself unable to accept the said contention. The transfer of the loose material into baggage was necessary for the purpose of carrying the same upto the warehouse of the complainant at the Kolkata port as loose material could not have been taken from the anchorage point to the warehouse of the complainant at Kolkata port. It has to be kept in mind that the transfer of the loose material into bags took place in the same vessel in which the goods travelled from Vancouver in Canada upto the anchorage at Diamond Harbour. The complainant, in my view, cannot be said to have treated the vessel as its store or warehouse merely by transferring the loose material into bags inside the vessel. The goods in my view, continued to remain in transit till the barges reached the port and thereafter, the bags containing the material were shifted to the warehouse of the complainant. Admittedly, having occurred even before the barges could reach the port, it would be difficult to dispute that the goods were in transit at the time the said damage took place and cannot be said to have reached their final destination which would have been the final warehouse or place of storage at Kolkata port. Therefore, I find no merit in the aforesaid ground taken by the insurer for rejecting the claim.
11. The next contention of the OP is that the complainant delayed the discharge of the material, since the discharge was to take place at the rate of 3000 M.T. per weather working day, as per clause 16 of the Charter Party Agreement, between the complainant and the vessel owner. The clause relied upon by the learned counsel for the OP reads as under:
"Clause 16 - Time for Discharging Time for discharging shall commence (unless discharging is commenced earlier, in which case actual time used to count) twenty-four hours after Notice of readiness has been given during ordinary office hours, whether in berth or not at the first or sole port of discharge and on arrival at the second port, if any, or so near as she may be permitted to approach, Cargo is to be discharged free of expense to the Vessel at the average rate of 3,000 MT tonnes per weather working day of twenty-four consecutive hours provided that the vessel can deliver at the rate. Time from 1700 hours Saturday to 0800 hours Monday and 1700 hours on a day preceding a holiday to 0800 hours on day followed a holiday not to count even if used."
12. Clause 4.5 of the Institute Cargo Clause on which the learned counsel for the OP relies in conjunction with clause 16 of the Charter Party Agreement, reads as under:
"4.5 loss damage or expense proximately caused by delay, even though the delay be caused by a risk insured against (except expenses payable under Clause 2 above) 4.6 loss damage or expense arising from insolvency or financial default of the owners, managers charterers or operators of the vessel."
13. In my view, the time stipulated in the Charter Party Agreement for discharge of the cargo, in the present case would commence only after the loose material was transferred into bags, as discharge of the loose material without transferring the same into bags was not possible. In view of the aforesaid, there was no delay on the part of the complainant in discharging the material since this is not the case of the OP that after the loose material had been transferred into bags, the discharge was not at the rate of 3000 M.T. per weather working day. Therefore, there was no breach of clause 4.5 of the Institute Cargo Clause (A) read with clause 16 of the Charter Party Agreement between the complainant and the owner of the vessel. Mr. Mehra has drawn my attention to clause 5.4 of the report of the J.C. Gupta & Company Pvt. Ltd., according to whom the discharge had commenced on 14.04.2009, and should have been completed by 03.05.2009 at the rate of 3000 M.T. per weather working day whereas it was completed only on 28.05.2009. He has also stated that the cause of delay was bagging operations over board at Diamond Harbour Anchorage. Since the bagging in my opinion was necessary before discharge of the Cargo and no other cause for the alleged delay has been attributed to the complainant, the complainant cannot be said to have breached clause 4.5 of the Institute Cargo Clause even if the discharge was complete only on 28.05.2009.
14. The next question which arises for consideration is as to what amount the complainant is entitled as compensation from the insurer for the loss suffered by it on account of damage to the insured goods. It is evident from the reports of M/s Apex Surveyor Pvt. Ltd. as well as the report of J.C. Gupta & Company, that the goods weighing 3,315.70 M.T. were damaged on account of cyclone which hit this area. This includes 859.903 M.T. of the material which was damaged post unloading at Jetty Wharf. In my opinion, the damage to the goods, even at the Port/Jetty was covered under the insurance policy since the goods had not reached their final destination i.e. warehouse of the complainant at Kolkata port whereas the insurance cover was available till the final destination of the goods.
15. The report of the surveyor would show that the Sound Cargo was sold by the complainant at the average rate of 14,038.33 Per M.T., though the complainant had purchased the said material at the same rate of US $ 462.99 Per M.T. In my view, since the complainant is entitled to re-imbursement only of the actual loss suffered by it, it can get only the price prevailing on the date of damage to the goods. The Sound Cargo having been sold at the rate of Rs.14,038.33 per M.T., it is evident that the rates in the market had come down substantially after the material was purchased by the complainant at a much higher price. Had the market price of the Cargo been the price at which it was purchased by the complainant or a higher price, the Sound Cargo would have fetched that price instead of Rs.14,038.33 per M.T., when it was sold by the complainant from the port itself. The complainant, if it so wanted, could have replenished the stock by purchasing the same quantity of the material at the rate of Rs.14,038.33 per M.T. To look at it in another way, had there been no damage to the goods, even then the entire consignment would have been sold at the rate of Rs.14,038.33 per M.T., though it would certainly have resulted in loss to the complainant. Therefore, the complainant is entitled to re-imburse at the rate of Rs.14,038.33 per M.T. of the damaged material. Calculated at the aforesaid rate, the gross loss to the complainant in respect of the entire quantity of 3,315.705 M.T. of the material comes to Rs.4,65,46,960.97p.
16. As per the excess clause contained in the insurance policy, the excess amount was to be 0.50% on total consignment value. The entire consignment which was brought from Vancouver to India weighed 45,976 M.T. The value of the said consignment, in my opinion, has to be calculated at the rate at which Sound Cargo was sold by the complainant. It must be noted here that the expression used in the policy is 'consignment value' and not the 'consignment price'. The consignment value, in my opinion, would be the market value of the consignment on the date the damage took place. The insurer cannot be allowed to say that for the purpose of determining the policy excess, they would value the consignment at the purchase price whereas for the purpose of re-imbursement to the complainant for the loss, they would value the same goods at the price at which the Sound Cargo was sold. Calculated at the rate of Rs.14,038.33 per M.T., .5% of the value of the total consignment which travelled from Vancouver to India comes to Rs.32,27,131.30p. The insurer is entitled to deduction of the aforesaid amount from the gross loss of Rs.4,65,46,960.97p.
17. The surveyor has deducted 25% of the gross loss after deduction of the policy excess on account of the recovery rights having allegedly being prejudiced. The contention of the learned counsel for the insurer is that since no action was initiated by the complainant either against the vessel owner or against the owner of the barges, the insurer has been prejudiced since it is not now possible for the insurer to institute a claim against that even if a subrogation letter is executed by the complainant in favour of the insurer. I however, find absolutely no merit in this plea taken by the learned counsel for the insurer. The complainant could not have been expected to initiate legal proceedings against the vessel owner or the owners of the barges without there being any negligence on their part. There is no evidence of the goods having been damaged due to any negligence on the part of the vessel owner or the owner of the barges. The damage to the goods took place on account of a cyclone which was a natural calamity, for which neither the vessel owner of the owners of the barges can be blamed. Therefore, the deduction of 25% on account of alleged prejudice to the rights of the insurer is wholly unjustified and unsustainable.
18. Admittedly, the salvage has been sold for a total consideration of Rs.1,34,13,001.35p. The insurer is entitled to deduction of the aforesaid amount from the gross loss suffered by the complainant.
19. Thus, the net amount payable to the complainant comes to Rs.2,99,06,828.32p.
20. For the reasons stated hereinabove, the complaint is disposed of with the following directions:
(i) The OP shall pay a sum of Rs.2,99,06,828.32p to the complainant as compensation for the loss suffered by it.
(ii) The OP shall also pay interest @ 9% per annum w.e.f. six months from the date of submission of the claim till the date of payment.
(iii) The payment in terms of this order shall be made within three months from today.
(iv) In the facts and circumstances of the case, there shall be no order as to costs.
......................J V.K. JAIN PRESIDING MEMBER