Indian Kanoon - Search engine for Indian Law

13. It is argued by the ECGC that the complainant filed the declaration and paid the premium on the value of the shipments made in the month of September, 1994 only on 26th October, 1994 after a delay of 11 days. Similarly, for the shipment made in October, 1994, the declaration was filed and premium cheque enclosed on 25th November, 1994 (after a delay of 6 days). It is argued that according to the terms of the policy any delay in filing of the returns can only be waived by ECGC in writing and that ECGC had given no such waiver. It is further argued that in addition to both the declarations having been filed late, declaration for October was made after the fraud was known to the complainant. ECGC also pointed out Clause 8(b) above, according to which moneys remaining unpaid by the buyers for more than 30 days are required to be made known to ECGC and that the complainant has failed in this mandatory requirement.

14. On this issue the complainant on his part argued that by its own action, ECGC have waived delay in filing of the declarations of shipments. In the past also they had accepted delayed filing of the declarations. As regards the declaration made on 21st November, 1994, ECGC refused to accept the premium for shipment made to M/s. AAC and not for the shipments made as regards other parties. This itself shows that they have been following double standards and this is a frivolous objection.

15. As regards to the second reason of para 10 above, regarding rejection, ECGC's argument is that the credit limits of M/s. AAC was sanctioned by it on the basis of documents and information furnished by the complainant and all that information turned out to be untrue and based on false or fabricated documents. In this connection, they relied on various Fax messages allegedly sent by the Standard Bank of South Africa to the complainant and complainant's Bank Manager which in turn were produced by the complainant and its bank before the ECGC for getting the credit limit. Subsequent investigation revealed all these documents to be bogus. ECGC further points out that the complainant's application dated 5.9.1994 for sanction of credit limit wherein he has described M/s. AAC as "sound and big buyers". They further argued that the complainant's partner N. Prakash himself was the one who secured the purchase order by visiting South Africa. He appointed one Mr. M. Pillai of Kitchen Delite Corporation of South Africa as the complainant's sole selling agent by an agency agreement dated 5th August, 1994. The said Pillai is alleged to have introduced N. Prakash to one Shaffee, representing M/s. AAC. Nothing is known about the antecedents or credibility of these persons-Mr. Pillai or Mr. Shaffee. The buyer is one G.J. Bentley. However his name does not come anywhere on the record except for the purchase order letter issued on 1.8.1994 - this is most unusual. The purchase orders were, in fact communicated to the other partners of the complainant's firm by Prakash from South Africa itself. It is argued that one is not very clear about the role of N. Prakash. In any case it is very clear that he did not exercise due diligence in checking the credibility of purported buyer.

16. Further ECGC have argued that the complainant has brought lot of pressure on ECGC through the federation of Tirupur Exporters Association and Federation of Indian Exports Organisations to sanction the credit limit in a hurry. The complainant went on alleging delay on the part of ECGC in enhancing the credit limits and persistently pressured ECGC to sanction the limits in a short time. ECGC, in particular, pointed out to a letter written as late as on 7.10.1994 to the complainant by complainant's agent M/s. African Continent, South Africa, mentioning that the consignments are getting delayed because of problems in convincing ECGC that the buyers are credit-worthy and due to the procedure laid down by the ECGC, the complainant is likely to loose another likely order from M/s. AAC worth another US $ 4.5. Extending this argument further, it is pleaded that the credit limits were got sanctioned by supplying wrong information and hence the original sanction of credit limits itself became void or voidable by ECGC. ECGC has done exactly the same and cancelled the credit limits on 23.11.1994 as soon as they came to know about the fraudulent documents based on which the credit limit was sanctioned. Therefore the question of reimbursement of losses under Clauses (i) to (iii) of the Insurance Policy does not arise. ECGC's main case is that a fraud per se - whether it is committed by the complainant or with the knowledge and connivance of the complainant's buying agents in South Africa, or even if the complainant was innocent and the fraud was committed on him, is not covered by the '"risks insured" under the policy.

23. The fraud was reported to ECGC by the complainant in writing only on 30.11.1994. The complainant however argues that the facts were brought to the notice of the ECGC by his Lawyer orally on 24.11.1994. Whatever be the truth, even prior to these dates, namely on 23.11.1994 itself, ECGC informed the complainant that his liability is not attracted as regards the two shipments made on 16.10.1994 and 26.10.1994 for a total value of Rs. 4,10,50,556 because of delay on the part of the complainant in reporting the shipments on time. ECGC also returned the complainant's cheque towards the payment of premium for the above shipments. Similarly, ECGC cancelled the credit limit ab initio on 23.11.1994 itself.