National Consumer Disputes Redressal
Lords Polymer (I) Pvt. Ltd. vs Oriental Insurance Co. Ltd. & Ors. on 28 May, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 229 OF 2010 1. LORDS POLYMER (I) PVT. LTD. Office At Chatterjee International Centre: 33A, J.L. Nehru Road, 4th Floor, Suite No.A4 Kolkata-700001 ...........Complainant(s) Versus 1. ORIENTAL INSURANCE CO. LTD. & ORS. Having Office At Eastern Regional Office At 4, Lyons Range Kolkata-700001 2. TOP RESOURCES HONG KONG LTD. 29/F. Town C, Triumph City, 170 Beiyuan Road, Chaoyang District, Beijing, P.R. China - 100 101 3. BONVOYAGE SHIPPING & LOGISTICS Having Office At: 2, Gastin Place, 4th Floor Kolkata -700001 ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE MR. DR. B.C. GUPTA, MEMBER
For the Complainant : Mr. A.K. Pandey, Advocate
Mr. M.R. Sarbadhakari, Advocate For the Opp.Party : Mr. Kishore Rawat, Advocate, OP-1
OP-2 Deleted
OP-3 NEMO
Dated : 28 May 2015 ORDER
The complainant Lords Polymers (I) Pvt. Ltd., is a company incorporated in India under the Companies Act, 1956 having its office at Kolkata and is engaged, interalia, in the business of exports and deals in different items including iron ore fines. The OP-2, Top Resources Hong Kong Limited, is a company registered in China, which had placed orders for supply of iron ore fines in bulk with the complainants. The OP-3, M/s. Bonvoyage Shipping & Logistics are steamer agent/carrier for and on behalf of Master of M.V. "Columbian Express", Captain Sanak Chattopadhyay. The OP-1 is an insurance company carrying on business in marine and general insurance. As stated in the complaint, as per order placed by the buyer OP-2 under their contract dated 08.04.2008 for supply of iron ore fines in bulk, the complainant executed shipment of iron ore fines for a total quantity 15,673 MT in bulk by sea and loaded the goods on ocean vessel M.V. Columbian Express against commercial invoice No. LORDS-18/10/08-09 dated 29.04.2008.
2. The ocean vessel M.V. "Columbian Express" acknowledged the receipt of goods vide bill of lading No. 1 issued on 16.05.2008 (date of shipment 26.04.2008). The complainant insured the goods with OP-1 Insurance Company under Marine Cargo Single Voyage (sea) Policy being policy No.311400/21/2009/77 for a total sum insured of ₹11,07,49,951.00. It has been stated in the complaint that the steamer agents failed to deliver the cargo to the consignee/OP-2 at the destination port at China. The complainant, therefore, suffered heavy loss and accordingly preferred their claim letter dated 18.08.2008 with the Insurance Company. The consumer complaint in question has been filed seeking direction to OP-1 Insurance Company for payment of ₹11,07,49,951.00 alongwith interest @18% p.a. from the date of claim till payment. The complainant has also demanded a further compensation of ₹1 crore for harassment and mental agony and ₹10 lakhs as cost of litigation.
3. The complaint has been resisted by the OP-1 Insurance Company by filing a detailed written statement in which they took the plea that the claim was not covered under the terms and conditions of the policy. Before filing the written statement to the complaint, the Insurance company issued a detailed letter of repudiation dated 03.08.2012. It has been stated by the Insurance company that the complainant approached them on 29.04.2008 at 11:45 AM for insurance coverage after they became aware of the loss by suppressing material facts and also misleading them by their proposal dated 28.04.2008 (received by them on 29.04.2008 at 11:45 AM) by giving the impression that the shipment would be undertaken on a future date whereas the shipment had already taken place on 26.04.2008. The company issued the cover note dated 30.04.2008 with coverage from 30.04.2008 only and hence the risk in question fell beyond the purview of the policy. Further, the ship in question was to carry 19000 WMT of iron ore fines from the three ports of Haldia, Sagar and Vizag in India. However, the ship loaded the material from the ports of Haldia and Sagar only with total quantity 15673 WMT and left the port of Sagar on 27.04.2008 without informing the port authorities for unknown destination. The insured, therefore, was aware of the loss at the time, they submitted proposal for obtaining the said policy. Moreover, in the terms of the cover note dated 30.04.2008, the declaration of shipment of exports was to be made within 72 hours of the sailing of the vehicle. However, intimation in this regard was given on 26.05.2008 which was a breach of the conditions mentioned in the cover note. Further, the name of the consignee as mentioned in the shipping bill issued by the custom authorities was M/s. Hilton Resources Investment Pvt. Limited whereas the complainant stated that OP-2 was the consignee.
4. The Insurance Company have also taken the stand that the complainant raised 4 different invoices on different dates with different values. One of the invoices mentions the total quantity as 19000 MT whereas in another invoice, the quantity was reduced to 15673 MT. In the letter received from the consignee OP-2 by which they stated that they had not received the material, still a different invoice number had been mentioned. The complainant had, therefore, violated the sanctity of section 19 of Marine Insurance Act, 1963, according to which a contract of insurance is based on the principle of utmost good faith. Further, the proposed load of 19000 MT was remitted and confirmed by the insured in their application dated 07.05.2008 in case No. AP/238/2008 before the High Court of Kolkata. The Insurance Company further mentioned that the consignment in question had in fact reached the Chinese port as evident from an order dated 16.05.2008 by the High Court of Kolkata. It was, therefore, not a case of loss in transit in the high sea.
5. At the time of hearing before us, the learned counsel for the Insurance company, stated at the outset that the shipment, in question had been affected before the proposal to issue the insurance policy was accepted by them. The insurance cover was to start with effect from 30.04.2008 whereas the complainant came to know that the goods had been lost on 27.04.2008 itself because the ship in question, left Sagar port for undisclosed destination and did not go to Vizag to collect the remaining consignment. Had the loss not taken place before the issuing of the cover note, the said policy could still have taken effect. The learned counsel also stated that civil proceedings in the High Court had also been pending between the parties involved and it was clear from an order made by the Hon'ble High Court that the consignment in question had reached China. The learned counsel mentioned that the letter of repudiation issued by them on 03.08.2012 was a detailed one and the entire stand of the Insurance Company had been explained therein. The factum of non-delivery of the consignment in question remained to be established by the complainant. The learned counsel for the complainant, however, stated that the premium had been received by the Insurance Company on 26.04.2008 itself and hence, the policy in question was to be considered to be valid with effect from 26.04.2008. Since the goods had not reached the consignee and there was a letter to this effect on record from OP-2, Top Resources Hong Kong Limited, the Insurance Company was bound to honour the claim in accordance with the terms and conditions of the Policy.
6. We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us.
7. The opposite party no. 1, Insurance Company has raised a basic issue that the complainant had concealed material information from them about the quantity and timing of movement of the consignment, while obtaining the policy in question. They referred to the request of the complainant for issuing the Marine Cargo Insurance Policy, contained in their letter dated 28.04.2008, which was received by the Insurance Company on 29.04.2008 at 11.45 am. It is stated in the said letter as follows:
"We do hereby inform you that we are looking to perform our export of our cargo from Haldia, Sagar and Vizag Port, India to any main port in China."
8. In the said letter, it is also mentioned that the total quantity of consignment would be 19000 WMT (approx.). In pursuance of the request from the complainant, the Insurance Company issued cover note dated 30.04.2008, in which it was stated as follows:-
"It is warranted that the validity period of this cover note is 90 days w.e.f. 30.04.2008 unless extended by prior notice."
9. It was also stated in the cover note that the movement of the consignment shall be from Haldia, Sagar and Vizag ports in India to any main port in China. It was also mentioned that the declaration of shipment should be furnished within 72 hours of sailing of the vessel in the case of exports.
10. The stand of the Insurance Company in nutshell, is that the insurance cover was to take effect from 30.04.2008; that the total quantity of consignment was to be 19000 WMT, to be picked-up from three ports of Haldia, Sagar and Vizag; and that the declaration of shipment was to be furnished within 72 hours of sailing of the vessel in the case of exports. However, the insured misled them on all three accounts because the ship had already started sailing from 26.04.2008, even when the request for obtaining the policy had not been made; the total quantity carried was 15673 WMT from 2 ports of Haldia and Sagar only; and the declaration of shipment was made to the insurance company on 26.05.2008. The insured had, therefore, suppressed material information from them and also violated the conditions of the policy.
11. In their repudiation letter, the Insurance Company has referred to condition no. 11.2 of ICC (A), which reads as under:-
"Subject to Clause 11.1 above, the Assured shall be entitled to recover for insured loss occurring during the period covered by this insurance, notwithstanding that the loss occurred before the contact of insurance was concluded, unless the assured were aware of the loss and the insurers were not."
Additionally Section 35 (3) of Marine Insurance Act 1963 reads:
Warranty "is a condition which must be exactly complied with, whether it be material to the risk or not. If it be not so complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty."
You breached the express warranty by making shipment (26/04/2008) prior to the date mentioned in the Cover Note (30/04/2008)."
12. The facts on record make it clear that the Insurance Company was not aware of the movement of the ship on 26.04.2008, because they were given the impression on 29.04.2008, that the complainant was ' looking to perform' export of cargo from India, whereas the ship had already started sailing. It is also clear that the ship moved from Sagar port on 27.04.2008 and never went to Vizag port and these facts were in the knowledge of the insured. The contention of the Insurance Company that the insured has violated the conditions of the policy as well as the warranty, stands established therefore, from the facts on record.
13. Further, Section 23 of the Marine Insurance Act, 1963 says as follows:-
"23. When contract is deemed to be concluded.-A contract of marine insurance is deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the policy be then issued or not; and for the purpose of showing when the proposal was accepted, reference may be made to the slip, covering note or other customary memorandum of the contract, although it be unstamped."
14. Since the cover note was issued by the Insurance Company on 30.04.2008, it is clear that the contract was not concluded when the consignment had been loaded in the ship and the said ship left the port of Sagar after the second loading.
15. The total proposed quantity of consignment has been mentioned to be 19000 WMT, to be loaded from the ports of Haldia, Sagar and Vizag, as per the information given to the Insurance Company. The invoice dated 28.04.2008 No. No. LORDS-18/10/08-09 also mentions that 19000 MT of material was to be loaded in the said ship from the three ports mentioned above. The proposed loading of this much quantity was also admitted and confirmed by the insured in their application dated 07.05.2008 in case No. AP/238/2008 before the High Court of Kolkata. However, the factual position is that quantity of 15673 MT was loaded from the ports of Haldia and Sagar only. The vessel left Sagar port in the morning of 27.04.2008 and failed to report at Vizag on 28.04.2008 as scheduled. Fresh invoice was then made stating the quantity to be 15673 WMT only. The version of the Insurance Company, therefore, that they were not provided proper information about the quantity to be loaded stands vindicated from these facts.
16. Further, it has been stated in the cover note that the declaration of shipment of exports was to be made within 72 hours of the sailing of the vessel, but the said intimation was given to the Insurance Company on 26.05.2008, which is clearly a breach of the condition mentioned in the cover note.
17. The Insurance Company have stated that there were as many as four invoices in respect of the consignment of iron ore in question. Invoice no. LORDS-18/IO/08-09 dated 29.04.2008 says that the loading port is Haldia and Sagar in India and the destination is Zhangjiagang or Jingyin port China. The quantity mentioned in the said invoice is 15673 WMT. There is another invoice no. LORDS-18/IO/07-08 dated 28.04.2008 which says that the loading ports are Haldia, Sagar and Vizag in India and the destination is any main port in China. The quantity of material mentioned in this invoice is 19000 WMT. Further, in the letter reported to have been received from the consignee, Top Resources Hong Kong Ltd addressed to the complainant, it has been stated that they had not received any export consignment under Bill of Lading no. 1 and invoice no. FSLIPL/C.EXPRESS/MUM-000101 dated 27.04.2008. The Insurance Company have taken the plea in their repudiation letter that the invoice no. quoted by the consignee was neither submitted to them nor any clarification was given in response to the letter dated 20.03.2009 from the Insurance Company. It amounts to violation of Section 19 of the Marine Insurance Act, 1963, which says that a contract of insurance is uberrima fide, i.e. contract of utmost good faith.
18. A case no. C.S. No. 75 of 2009 is stated to have been filed by the complainant in the High Court of Calcutta in the exercise of their Original Civil jurisdiction, pleading that the defendants had failed to deliver the cargo at the port of destination in China. In the said case, the defendant no. 2 is the carrier Company, which is opposite party no. 3 in the consumer complaint, while defendant no. 3 is M/s. FLINDTHOLT Shipping Line (India) Pvt. Ltd., which is stated to be the shipping Company. The fate of the Civil proceedings in the High court has not been explained by the complainant. They have also not given any explanation as to why the shipping company has not been arrayed as a party in the present proceedings.
19. On record, is a copy of the order dated 16.05.2008 passed by the High Court at Calcutta in the case, AP 238 of 2008, Lords Polymer(I) Pvt. Ltd. vs. Flindtholt Shipping Line (India) Pvt. Ltd., in which, it has been stated as follows:-
"Having considered the submission of the parties and the fact that the goods have reached the Chinese port, the agent of the respondent is directed to issue Bill of Lading to the petitioner for release of the said goods".
20. It is made out from the above order that the consignment in question had reached the port in China. It is clear, therefore, that the consignment had not been lost during shipping from the ports in India to the port in China, rather it had landed at the Chinese port. What happened to the consignment after reaching China, has not been made clear at all by the complainant. Whether the consignee came forward to take the delivery of the consignment or whether there had been any correspondence to this effect between the complainant and the consignee, has not been disclosed in the material placed before us. It is, therefore, not possible for us to conclude that there has been any deficiency of service on the part of the Insurance Company in repudiating the insurance claim in question.
21. On record, is a letter dated 25.10.2010 issued by the Carrier agent (opposite party no. 3) addressed to the complainant saying that the ship failed to deliver the consignment at destination port at China for which Bill of Lading no. 1 was issued on 26.04.2008 and this letter may be treated as non-delivery certificate. The version given in this letter does not seem to be true, because it has been stated elsewhere that the consignment had reached the port in China. Moreover, the issuance of the said letter after 2 ½ years of the shipment in question, leads to the conclusion that wrong facts are being stated with the intention of getting claim from the Insurance Company.
22. Further, under Section 230 of the Indian Contract Act, 1872, a contract cannot be enforced by or against the agent, unless it falls within the exceptions stipulated therein. The exceptions are (i) whether the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad, (ii) whether the agent does not disclose the name of his principal and (iii) whether the principal, though disclosed, cannot be sued. In the case before us, none of the aforesaid three exceptions is attracted and therefore, it would be difficult for the complainant to recover compensation from respondent no. 3 on the premise that it is an agent of the shipping Company. The complainant should have arrayed the shipping Company also as a party in the case but the same has not been done, meaning thereby that there is misjoinder of the parties in the present proceedings.
23. Looking at the entire facts and circumstances of the case, and as per the discussion above, it is held that the complainant is not liable to be compensated, as they violated the terms and conditions of the insurance policy in question and also tried to mislead the Insurance Company. We, therefore, find no merit in this consumer complaint and the same is ordered to be dismissed. There shall be no order as to costs.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER