National Consumer Disputes Redressal
Renaissance Rtw (Asia) (P) Ltd. vs Cholamandalam Ms General Insurance ... on 30 January, 2024
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVIEW APPLICATION NO. 75 OF 2023 IN CC/101/2016 1. RENAISSANCE RTW (ASIA) (P) LTD. ...........Appellants(s) Versus 1. CHOLAMANDALAM MS GENERAL INSURANCE COMPANY LTD. ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,PRESIDING MEMBER HON'BLE BHARATKUMAR PANDYA,MEMBER FOR THE APPELLANT :
Dated : 30 January 2024 ORDER
1. Heard Mr. Sukumar Pattjoshi, Sr. Advocate, assisted by Mr. Govind Jee, Advocate, for the complainant/review applicant and Mr. S.M. Tripathi, Advocate, for the opposite party.
2. After hearing the parties, above complaint was dismissed on merit, vide judgment dated 27.07.2022. The complainant has filed review application on 22.02.2023, along with IA/2315/2023, for condoning delay, in filing the review application. In IA/2315/2023, the complainant has stated that the impugned judgment was challenged in Civil Appeal No.6970 of 2022, before Supreme Court. When the appeal came up for hearing, the complainant sought for liberty to file review application, which was granted by the order dated 14.10.2022. Then review application was filed. There is no explanation of delay for the period of 14.10.2022 to 22.02.2023 but in order to examine the merit of the review application, we are condoning delay in filing review application. IA/2315/2023 is allowed.
3. Renaissance RTW (Asia) (P) Ltd. filed above complaint for directing the opposite party to pay (i) US$ 166620.19/- along with interest @18% per annum from the date of the claim till the date of actual payment, as insurance claim; (ii) Rs.one crore, as the compensation for business loss; (iii) litigation cost; and (iv) any other relief, which is deemed fit and proper in the circumstances of the case.
4. The facts as stated in the complaint and emerged from the documents attached with it are, as follows:-
(a) The complainant was a private company, registered under Indian Companies Act, 1956 and engaged in business of manufacture and export of the garments. The complainant entered into a contract with M/s. Fitzroy Sales Inc. USA, acting on behalf of M/s. Army and Air Force Exchange Services, USA, for export of the garments, including T. Shirts, Polo for women, men and children. As per terms of the contracts, the US Company had to place purchase orders periodically and the complainant had to deliver the goods as and when required. The contract envisaged that the complainant would be responsible for international freight, domestic freight in USA and import duty.
(b) The complainant took Marine Cargo Open Policy-All i.e. Policy No. MO-0007359-000-02 from Cholamandalam MS General Insurance Company Ltd. (the opposite party) for the period of 07.04.2012 to 06.04.2013, with additional 30 days coverage, for a sum of Rs.150/- crores. Limit per sending was Rs.8/- crores. The policy inculcates "Institute Cargo Clauses (A), being applicable. The terms of the insurance policy was that the coverage would extend till the vendor takes physical possession of goods at the point of delivery, being warehouse in New Jersey.
(c) In pursuance of the purchase orders from M/s. Fitzroy Sales Inc. USA, the complainant exported 24512 garments vide Invoice No. RTW/077/12-13 dated 01.06.2012, 7948 garments vide Invoice No.RTW/163/12-13 dated 01.08.2012 and 16867 garments vide Invoice No.RTW/189/12-13 dated 20.09.2012 from Chennai to New York (USA), where it were safely unloaded from vessel and stored in a bonded warehouse of M/s. Empire Warehousing and Distribution Inc., 5 Empire Boulevard in Carlstadt, New Jersey, with whom the complainant had a contract for storage.
(d) On 29/30.10.2012, a severe storm, named as "Hurricane Sandy" hit the shores of North America, in particular New Jersey and wrecked considerable damage. The garments worth US$ 166620.19 were severely damaged due to wetting in water at the warehouse. The complainant informed the Insurer about the loss and submitted insurance claim. The Insurer referred the claim to W.K. Webster (Overseas) Ltd. an International Claim Settler, who appointed International Surveyors & Adjusters (USA), for survey and assessment of loss. The surveyor inspected the warehouse on 02.01.2013 and 25.03.2013 and submitted his preliminary report dated 15.04.2013, confirming damage of approximately 20000 garments, due to water.
(e) As the complainant did not receive any information, regarding settlement of the claim, it approached its insurance agent, who made query from the Insurer. The Insurer forwarded an email dated 27.03.2013 to insurance agent, stating that the complainant would be liable to bear the loss, citing "Free on Board" terms. In addition, this was damage whilst being storage hence liability of the Insurer would not engage. They were awaiting comprehensive survey report.
(f) After email dated 27.03.2013, the complainant did not receive any message for unreasonably long period, from the Insurer, then they gave a legal notice dated 09.01.2014 to the Insurer. In spite of service of legal notice, the Insurer did not give any reply, then another legal notice dated 05.07.2014 was sent to the Insurer. Apart from it, a representation dated 07.07.2014 was sent for settlement of the claim. In spite of service of all these letters, no reply was given by the Insurer. The complainant then sent an application dated 02.09.2014, for speedy disposal of his representation. Then the Insurer, vide letter dated 15.09.2014, informed that as per Invoice, the terms of delivery was "Free on Board" basis. Hence the interest or ownership of consignment would be transferred to the buyers, once the consignment is placed on Board of the Ocean Going Vessel. Additional Intermediate storage extension was given under the Marine Open Policy, is in respect of any loss/damage that occurs during the storage period at Tuticorin Seaport, India and not in U.S.A. The claim was not admissible as per terms of the policy. Then this complaint was filed on 28.01.2016, claiming deficiency in service.
5. The opposite party filed its written reply on 16.08.2016, in which, the material facts have not been denied. It has been stated that the complainant had supplied the consignments of garment to overseas buyer on "Free On Board" basis. All the consignment were safely delivered at Seaport New York, U.S.A., from where it were transported and stored in a bonded warehouse of M/s. Empire Warehousing and Distribution Inc., 5 Empire Boulevard in Carlstadt, New Jersey, where it were damaged due to storm "Hurricane Sandy". The ownership of the consignments of garment passed to the buyer long back to the date of damage. The complainant ceased to have insurable interest on the date of damage. Section 8(2) of Marine Insurance Act, 1963 provides that where the assured has no interest at the time of the loss, he cannot acquire interest by any act or election after he is aware of the loss. The Insurer was not liable to reimburse the loss. Additional 30 days coverage applies only when the goods are waiting for shipment at the port of loading in exporter's country. Institute Cargo Clauses apply to the insurance subject to the terms of sale, which in this case are "Free on Board" basis, which is clear from the copies of purchase order Nos.0060713589, 0060713591, 0060713592, 0061034980, 0061034982, 0061034984 and 0061479347. The complainant exported all the consignments on "Free on Board" basis. M/s. W.K. Webster (Overseas) Ltd., the claim settling agent of the Insurer, in its communications dated 20.03.2013, 04.04.2013, 07.05.2013 and 07.05.2013, opined that the Insurer was not liable for the loss occurred to the complainant. The surveyor M/s. International Surveyors & Adjuster (USA) in his report dated 03.07.2013, informed that the complainant did not give reply of the inventory given by him. Neither the complainant nor M/s. Empire Warehousing and Distribution Inc. cooperated with the surveyor. There was no deficiency in service, in repudiating the claim vide email dated 27.03.2013.
6. The complainant filed Rejoinder Reply on 03.11.2016, in which, the facts stated in the complaint were reiterated. The complainant filed Affidavit of Evidence of C. Anandhakumar and various documentary evidence. The opposite party filed Affidavit of Evidence of Anirudh Devraj, Manager Legal and various documents. Both the parties filed their short synopsis. In the judgment dated 22.07.2022, it was found that the insurance was terminated on delivery of the consignment to the warehouse M/s. Empire Warehousing and Distribution Inc. as such the complainant was not entitled for the claim and the complaint was dismissed. The complainant has now filed this review application.
7. In review application, the complainant stated and argued that the opposite party, in its letter dated 26.07.2013, mentioned that basis of valuation was "All Exports-CIF + 10%" basis but the Invoices of the consignments were on "FOB" basis, as such insurance coverage was discharged on the port of lading and the claim was repudiated on this ground. The opposite party in its reply dated 15.09.2014 to the legal notice and written version in this complaint, again re-iterated that the consignments were on "FOB" basis as such insurance coverage was discharged on the port of lading. This Commission, in the judgment dated 22.07.2022, did not find the ground taken by of the opposite party for repudiating the claim was a valid ground. Findings of this Commission that the insurance was terminated on delivery of the consignment to M/s. Empire Warehousing and Distribution Inc., U.S.A. suffers from error apparent on face of record, inasmuch as, the basis of valuation as mentioned in clause-4.3 of the policy was "All exports-CIF + 10%", which means cost, insurance and freight charges were borne by the complainant and higher premium was paid for the insurance policy. Before delivery to the actual buyer, the consignments were stored at M/s. Empire Warehousing and Distribution Inc., U.S.A., where it were damaged. Under clause-4.5 of the policy "tail and transit" are covered, which implies last leg of transaction, before the consignments were actually delivered to the buyer. Invoices contain the term "TT/90 days" means 90 days was outer limit for the seller to discharge its obligation. By virtue of clauses-4.3 and 4.5 of the policy, insurance coverage continued as the transit was at its last leg of completion at the time of loss. Title of the consignments remained with the complainant on the date of loss. Duration clause-8.1.1. as given in General Terms has to be read with clauses-4.3 and 8.5 of the policy. The judgment suffers from is an error apparent on the face of record and liable to be reviewed. The counsel for the complainant relied upon the judgment of this Commission in FA/435/2011 Oriental Insurance Company Limited Vs. M/s. Ajanta International (decided on 05.09.2016) and CC/497/2014 Vatech Wabag Limited Vs. Cholamandalam MS General Insurance Company Limited (decided on 12.03.2018) for the proposition that title of the seller continued till delivery of the consignment to the buyer and the judgments of Supreme Court in Galada Power and Telecommunication Limited Vs. United India Insurance Company Limited, (2016) 14 SCC 161 and JSK Industries Private Limited Vs. Oriental Insurance Company Limited, 2022 SCC OnLine SC 1451, for the proposition that the Insurer cannot be permitted to raise a ground, different from the ground taken in repudiation letter.
8. We have considered the arguments of the counsel for the parties and examined the record. The complaint was filed for obtaining the insurance claim, which is a contractual liability. In order to allow the complaint, it is necessary for this Commission to record a finding that the claim is admissible within four corners the insurance policy. A three Judges Bench of Supreme Court in New India Assurance Company Limited Vs. Hiralal Rameshchand, (2008) 10 SCC 626, held that it is fundamental duty of the complainant to make averment and prove that the insurance claim is payable under the insurance policy. In the cases of Galada Power and Telecommunication Limited and JSK Industries Private Limited, (supra) the doctrine of estoppel has been invoked against the Insurer but estoppel does operate against the Court, which is required to decide the case on basis of contract between the parties and in accordance of law. Even in ex-parte proceeding, in order to decree the suit, the court has to record a finding that necessary ingredients to grant the relief are proved from the evidence of the plaintiff. This Commission can dismiss the complaint on the ground of limitation which may not be a ground for repudiation of the claim. Supreme Court in Sonell Clocks and Gift Limited vs. New India Assurance Company Limited (2018) 9 SCC 784 held that waiver will not apply on the ground taken in repudiation letter.
9. In the Schedule attached to the "Marine Cargo Open Policy-All", basis of valuation "C & F" is mentioned but under clause-4-1 of the policy, "C & F" is applicable to all import. Similarly "FOB" is also applicable to all import. So far as export is concerned, "CIF + 10%" is mentioned in clause-4.3, as such "FOB" and "C & F" are not applicable for the export. Clause-4.5 reads as "All tail and transit i.e. from any port of India to factory site will be deemed covered only if satisfactory pre-dispatch survey at the tail end port before the dispatch of consignments. The cost of pre-dispatch survey will be borne by the Insured." This clause is applicable on transit from any port in India to factory site and is not applicable for the export. CIF (Cost, Insurance & Freight) is an international shipping term, which describes seller's responsibility for the cost of shipping, freight charges and insuring the cargo being shipped via ocean or waterways. The buyer assumes responsibility for the cargo as soon as it is delivered to the buyer's port. "TT" denotes trade term for payment. It does not mean that till the payment is made or for a period mentioned in it, the seller will remain owner of the goods. The goods were sold as soon as it is delivered at the port of discharge as per Invoice. Payment is required to be made within the period mentioned in trade term.
10. "DA" means "document against acceptance". In "DA" export, the exporter hands over the shipping documents of consignment along with bill of exchange to its banker, after shipping the consignments, who used to send it to the banker of the buyer. On receiving these documents, the banker of the buyer informs the buyer for its acceptance. When the buyer accepts the document and signs the bill of exchange, payment is made by the banker of the buyer to the banker of the seller. In this type of transaction, title of the exported goods remains with the exporter till the acceptance by the buyer.
11. Insurable interest/title of the goods at the time of the insurance and the loss is a condition precedent for a marine insurance and insurance claim under Marine Insurance Act, 1963. But the insurance liability has to be determined according to the terms of the insurance, which is a binding contract between the parties. The complainant obtained Marine Cargo Open Policy-All i.e. Policy No. MO-0007359-000-02, with additional 30 days coverage. Insurance Conditions and Warrantees included Institute Cargo Clauses (A)-All risk 1.1.82 and Inland transit (Rail/road)-All risk. General Terms of Institute Cargo Clauses (A) Clause-8- Duration- provides that the 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;
8.1.1.- On delivery to the consignee 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.
12. Under clause-8.1.1 the transit terminates on delivery to the consignee or at final warehouse or the place of storage. As per Invoices, the transit starts from port at Chennai to port at New York (USA). Admittedly, the consignments were safely delivered and stored in a bonded warehouse of M/s. Empire Warehousing and Distribution Inc., 5 Empire Boulevard in Carlstadt, New Jersey, where it was damaged due to "Hurricane Sandy" storm on 29/30.10.2012. At that time duration of insurance has already came to an end.
13. The judgment of this Commission in M/s. Ajanta International' s case (supra) related to the transaction "DA-180 days" and has not application in the present case. In the case of Vatech Wabag Limited (supra) the term was from "anywhere in the world" to "anywhere in India." Therefore, this case is also not applicable in the present case. Supreme Court in New India Assurance Company Ltd. vs. Hiralal Rameshchand (supra) held that the term warehouse to warehouse as mentioned in the Marine Insurance Policy as such the liability of the Insurance terminates as soon as the goods are delivered to the warehouse as per invoices. Similar view has been taken by this Court in Key Floopy vs. New India Assurance Co. Ltd. 2006 SCC OnLine NCDRC 31. Therefore, this Commission has not committed any error in holding that the insurance was terminated as soon as the goods were delivered to the warehouse as mentioned in the invoice and the judgment does not suffer from any error either in fact or in law and does not want review.
14. The counsel for the complainant submitted that although the reason as given in the repudiation letter has not been approved in the judgment dated 22.07.2022 but it has been held that the repudiation letter does not suffer from any illegality. The Insurer, in email dated 27.03.2013, has stated that the complainant would be liable to bear the loss, citing "Free on Board" terms. In addition, this was damage whilst being storage hence liability of the Insurer would not engage. Although part of reason has not been upheld but part of the reason and ultimate direction of repudiating the claim has been upheld as such, it has been held that repudiation letter does not suffer from any illegality. This is a hyper technical ground.
O R D E R In view of the aforesaid discussion, the review application i.e. RA/75/2023 is rejected. Typographical error in Clause 8.1.1.- "On delivery of the consignment" is corrected and it will be read as "On delivery to the consignee".
..................................................J RAM SURAT RAM MAURYA PRESIDING MEMBER ............................................. BHARATKUMAR PANDYA MEMBER