NON-PAYMENT OF BILLS BY OVERSEAS BUYER-MARINE INSURANCE IMPO

Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 4306-4307 of 2003
New India Assurance Co. Ltd. ........Appellant(s)
Vs.
M/s Hira Lal Ramesh Chand & Ors. ....Respondents in CA No.4306/2003
M/s Ratan Chand Deep Chand & Ors … Respondents in CA No.4307/2003
J U D G M E N T
R. V. Raveendran J.
These appeals under section 23 of the Consumer Protection Act,
1986, are filed against the common order dated 31.1.2003 passed by the
National Consumer Disputes Redressal Commission, New Delhi
('Commission' for short) allowing in part OP No. 45 of 1997 and OP No. 49
of 1997. OP No.45 of 1997 was filed by M/s Hira Lal Ramesh Chand and its
partner Rajender Kumar Jain (respondents 1 and 2 in CA No.4306/2003).
OP No.49 of 1997 was filed by M/s Ratan Chand Deep Chand and its two
partners (respondents 1 to 3 in CA No.4307/2003).
2. As the ranks of parties differ in the two appeals and as some parties
were given up before the Commission, for convenience, we will also refer to
the parties as follows : New India Assurance Co. Ltd., as ‘Appellant’ or
‘Insurer’; M/s Hira Lal Ramesh Chand and its partners (Respondents 1 & 2
in the first matter) and M/s Ratan Chand Deep Chand and its partners
(Respondents 1 to 3 in the second matter) as the ‘complainants’; M/s
Niranjan Shipping Agency Pvt. Ltd., (third Respondent in the first matter
and fourth Respondent in the second matter) as ‘Niranjan Shipping’; Punjab
National Bank (fourth Respondent in the first matter and fifth Respondent
in the second matter), and Bank of Baroda (sixth Respondent in the second
matter) by their names; Atlanta Rugs Inc. as the ‘Buyer’; and Overseas
2
Container Lines Inc. (the Non-Vessel Owning Common Carrier acting as
shipping Agent) as ‘NVOCC’ or ‘Overseas Container’.
3. The case of the complainants, in brief, is as follows : Complainants
are manufacturers of Rugs and Durries, carrying on business at Mirzapur,
UP. In pursuance of orders placed by Atlanta Rugs Inc., Atlanta (for short
the ‘buyer’), M/s. Hira Lal Ramesh Chand dispatched 17 consignments of
rugs and durries of the value of US $ 4,06,096 between 15.3.1995 and
29.6.1995; and M/s. Ratan Chand Deep Chand dispatched 38 consignments
of the value of US $ 8,87,973 between 23.8.1994 and 4.7.1995. The
consignments were entrusted to M/s Overseas Container Line Inc., a nonvessel
owning shipping Agent represented by its Agent Niranjant Shipping
Agency (P) Ltd., for transhipment from Mumbai to Atlanda (USA). The Bill
of Lading issued by Overseas Container in regard to each of the
consignment showed the consignee as “Unto order” and party to be notified
as “Atlanta Rugs Inc.”. All the consignments were insured by the
consignors, with the New India Assurance Co. Ltd. The original documents
relating to the consignments were forwarded by Niranjan Shipping to the
Bankers of complainant - Punjab National Bank. The complainants obtained
credit facilities from Punjab National Bank by discounting the Bills and
endorsed the Bill of Lading in favour of the said Bank. The said Bank, in
3
turn, forwarded the original documents of title to its agent Sun Trust Bank
(earlier known as Trust Company Bank) Atlanta, for collection, by
endorsing the documents in their favour. The buyer (Atlanta Rugs Inc.) did
not make payment and obtain release of the documents of title. They
therefore made efforts to contact the buyer and the shipping Agent–
Overseas Container. They were also not able to locate them. Nor were they
able to find out the whereabouts of the consignments. Therefore they
telephonically lodged an oral claim with the insurer on 2.2.1996 seeking
payment of the value of the consignments. The insurer directed them to get
in touch with their Surveyor-cum-Claim Settlement Agent at Atlanda -- M/s.
Toplis and Hoarding Inc. They accordingly requested the said Surveyor to
inquire and investigate the matter and issue necessary certificates. The
surveyor submitted their reports to the Insurer, but failed to furnish copies
thereof to the complainants. Their claim was not settled by the Insurer for
more than a year in spite of reminders. Such failure amounted to deficiency
in service and consequently the insurer became liable to pay the value of the
consignments and the other amounts claimed, as compensation.
4. The complainants sought a direction to the New India Assurance Co.
Ltd. (appellant) to pay the following amounts as compensation :
4
Particulars Claim in OA 45/1997 Claim in OA
49/1997
Amount (in US $) Amount (in US $)
a) Insurance amount (unrealized value of
shipments) : 406096 887973
b) Increase in cost of goods (10%) : 40609 88797
c) Compensation for mental agony : 100000 100000
d) Business loss for one year : 58091 100000
e) Expenses for pursuing the claim : 10000 10000
------------------- -----------
T O T A L : 614796 1186770
f) Interest at 24% p.a. with quarterly rests 108253 233072
on the unrealized value of shipments from
the date of claim to date of complaint
g) Pendente lite and future interest at 24% p.a. from the date of complaint to date of
payment.
5. The Appellant – Insurer, the opposite party – Respondent in the two
complaints, resisted the said claims. It contended that the claim was not
maintainable as none of the consignments were lost or damaged in transit.
According to them, the investigation report of the surveyor disclosed that
one Kumar Chaudhary was the common President of M/s. Overseas
Container Lines Inc. (the shipping Agent) and M/s. Atlanta Rugs Inc. (the
buyer) and that the said Kumar Chaudhary had admitted to the surveyors
that the consignments had all been received by the buyer. If the buyer,
having taken delivery of all the consignments, failed to pay the value of the
consignments, such non-payment of price by the buyer or non-realisation of
5
the price by the seller, will not be a maritime peril giving rise to a claim
against the Insurer under a Marine Insurance Policy. When the insured
consignments had been delivered to the buyer, it cannot be said that there is
a loss of the consignments. The claims were repudiated on 4.3.1997. The
reasons for repudiation were furnished to the complainants by the Insurer as
also by the surveyors. There was thus no deficiency in service. It was also
pointed out that when the goods are entrusted to a sea going vessel, a master
bill of lading is issued by the vessel/shipping line showing the particulars of
consignments and the names of the consignees and the said Master Bill of
Lading was not part of the documents of title. The failure on the part of the
complainants to take any action against the buyer and the manner in which
the transactions were conducted, gave room for doubt that there has been a
collusion between the complainants and the buyer to foist false claims
against the insurer. The Insurer also prayed that the detailed reasons for
repudiation given in its letter dated 4.3.1997 be read as part of its written
statement. The relevant portions of the letter of repudiation are extracted
below :
“The buyer had taken delivery of all the consignments but has not paid
your Company for the same. Non-payment of the price by the buyer is not
an insured peril under the captioned policies and hence your claim falls
beyond the scope and ambit of the policies issued by our company. xxxx
6
Instead of taking up the matter with your buyer for the payment of the
price of the said consignments, you thought it fit to take no action
whatsoever against your buyer. xxxxxx
D) You have failed and neglected to act with reasonable dispatch as
required by Clause 18 of the Institute cargo clauses (A) to which the
above polices were made subject to. Clause 18 reads as under :
‘It is a condition of this Insurance that the Assured shall act
with reasonable dispatch in all circumstances within their
control’.
The consignments were shipped from Bombay to Atlanta between the
months of August 1994 to July 1995. However, your company has
informed our company and our aforesaid Surveyors of the alleged loss
allegedly suffered by you only in the first week of February, 1996. As you
have failed to act with reasonable dispatch as required by the said policies,
our company is not liable to pay any amount under the captioned policies.
E) As you are aware, it is a conditions of the policy that a certificate
of loss/damage should be obtained from our Surveyors who are the
company’s agents at the Port of discharge. It is an admitted position that
no such certificates has been obtained by your company. In view of breach
of the aforesaid condition our company is not liable to pay any amount to
your company under the captioned policies.
G) We have to state that under the aforesaid policies, we had agreed to
insure that consignment subject to Institute Cargo Clause (A). Clause I of
the said Institute Cargo Clause (A) clearly stipulates as under :
‘This insurance covers all risks of loss or damage to the
subject matter…..’
As is pointed out by the surveyors, that the consignment under the
captioned policies have been received by the buyers. In view thereof, there
is no loss and/or damage to the subject matter i.e. the said consignments
entitling your company to seek an indemnity from our company.
H) Records in our possession show that you kept on sending
consignments to your buyer without caring to ascertain if the buyer was
financially solvent and would make payment in respect of the
consignments shipped to you. In view thereof, we have to state that the
alleged loss is also attributable to the aforesaid willful misconduct on the
part of your company under provisions of Institute Cargo Clause (A) –
clause 4.1 and section 55 of the Marine Insurance Act, 193.
7
I) You will appreciate that our company has agreed to indemnify you
for the loss and/or damage suffered to the consignments during its journey
from your company’s warehouse to the buyers warehouse due to the
insured perils. Financial insolvency and/or refusal of the buyer to pay for
the price of the said consignments is not one of the perils insured under the
captioned policies and hence your company cannot seek any indemnity
under the captioned policies.
6. Initially, there were four common respondents in both the complaints.
The Divisional Office, Regional Office and Head Office of New India
Assurance company Ltd. were respondents 1 to 3. Overseas Container Lines
Inc., was the fourth Respondent. By order dated 10.11.2000, the
Commission directed the complainants to implead M/s Atlanta Rugs Inc.
(Buyer), M/s Niranjan Shipping Agency Pvt. Ltd. (Forwarding Agent of the
Complainants, as also the agent of Overseas Container Lines Inc.), Punjab
National Bank and Bank of Baroda (Bankers of complainant), Sun Trust
Bank, earlier known as Trust Company Bank (the foreign correspondent
Bank of Punjab National Bank) as they were proper and necessary parties.
Accordidngly, M/s Atlanta Rugs Inc., Niranjan Shipping Agency (P) Ltd.,
Punjab National Bank and Sun Trust Bank, were impleaded as respondents
5 to 8 in OP no.45 of 1997. However, subsequently respondents 4, 5, and 8
were given up by the complainants as service could not be effected and their
names were deleted from the array of parties and consequently, when the
matter was heard, the respondents in OP No.45/1997 were the insurer, M/s
8
Niranjan Shipping Agency (P) Ltd., and the Pubjab National Bank.
Similarly, the said four persons as also Bank of Baroda were impleaded as
respondents 5 to 9 in OP No.49 of 1997. But later, the three respondents
who could not be served were given up and deleted and at the time of
hearing the respondents were the insurer, M/s Niranjan Shipping Agency
(P) Ltd., Punjab National Bank and Bank of Baroda.
7. The parties did not lead any oral evidence nor mark any document as
exhibits, but produced some documents. The complainants and the insurer
filed affidavits supporting the complaint and the written statement. On the
basis of the pleadings, affidavits, copies of documents produced and
arguments, the Commission decided the complaints by its common order
dated 31.1.2003. The Commission held that the complainants held valid
marine insurance cargo policies which gave insurance cover against all risks
of loss. The bills of lading showed the consignee as “Unto order” and they
were endorsed in favour of Sun Trust Bank. The original documents were
not retired by the buyer and were returned by Sun Trust Bank to Punjab
National Bank. As delivery could be taken only after obtaining original bills
of lading which were with the Sun Trust Bank and as the original
documents had been returned, and as there was no evidence on record about
the fate of the shipments, the shipments should be covered under the term
9
“loss” and insurer will have to indemnify the complainants for such loss.
Even if Atlanta Rugs Inc. had managed to receive the consignments by
fraudulent means without legitimate endorsement or transfer of the original
documents of title which were in the custody of the Sun Trust Bank, that
amounted to loss of goods. As the consignee was shown as “Unto order” in
the bills of lading, the complainants had lien and control over the
consignments and consequently, property in the goods did not pass to the
buyer and in such circumstances, delivery to Atlanta Rugs Inc. would still
amount to loss of goods. As the goods were lost, the insurer was liable to
indemnify the complainants for such loss and failure to do so was a
deficiency in service. It therefore allowed both the complaints in part.
8. In OP No.45/1997, the Commission directed the insurer to indemnify
the complainant – M/s. Hira Lal Ramesh Chand by paying US $ 367311
(equivalent to Rs.1,32,78,293 at an exchange rate of Rs.36.15 per US
Dollar) with interest at 12% p.a. from the date of complaint till the date of
payment, and pay the said amount to Punjab National Bank so that the said
Bank could adjust the said amount against the amount due from the
complainants. In OP No.49/1997 the Commission directed the insurer to
indemnify the complainant – M/s. Ratan Chand Deep Chand to an extent of
10
Rs.30,00,000/- with interest at 12% p.a. from the date of complaint to the
date of payment, and pay the said amount equally to the complainants’
Bankers, Punjab National Bank and Bank of Baroda, Mirzapur.
9. Feeling aggrieved the insurer has filed these two appeals. On the
contentions raised, the following questions arise for our consideration in
these appeals :
(i) What is the scope of the policies of insurance issued by the
Insurer to the insured?
(ii) Whether the complainants had proved that there has been loss
of consignments falling within the risks covered by the Marine
insurance policies ?
(iii) Whether the Commission was justified in holding the insurer
liable ?
Re : Question (i)
10. M/s. Hira Lal Ratan Chand had taken two marine policies (cargo)
which are in the nature of open covers, from the Insurer. They are open
cover Policy Nos.2142 11000 8745 dated 29.4.1994 (which was in force
from 29.4.1994 to 28.4.1995) and No.2142 11000 9032 dated 19.5.1995
11
(which was in force from 19.5.1995 to 18.5.1996) each with an assured limit
of Rs.50 lakhs. The assured limit of Open Cover No.2142 11000 8745 was
extended by another Rs.50 lacs with effect from 22.2.1995 and by another
Rs.7 lacs with effect from 27.4.1995 the total assured amount being Rs.1.07
crore. The Open Cover constituted the contract under which the insurer
agreed to issue separate Marine Insurance Certificates as and when the
insured made declarations of each shipment. The terms of the open cover
are extracted below (from Policy No.2142 11000 8745) :
Subject matter Insured :
On consignment said to contain of Indian handmade knotted woolen
carpets/Durries packed in alkathene paper and double new hessiar cloths,
dispatched vide Road/Rail/Approved Vessel from warehouse Mirzapur to
anywhere in world, from time to time. Insured will declare each and every
consignment within 15 days or one month (as per insured) & dispatch with its
value packing marks etc. Total sum insured under this policy is Rs.50 lakhs.
Risk covered : All risks 0.1525%; war and SRCC Rs.0.0275%. On receipt of
declarations, certificate of insurance will be issued for each consignment. This
policy will remain in force for one year i.e. 29.4.1994 to 28.4.1995 unless
previously exhausted by way of declaration. If no declaration is received from the
insured the minimum premium will be retained by the company.
Special conditions & warranties
Covered against : All risks (ICC), War & SRCC from consignor’s warehouse to
consignee’s warehouse : Inland transit clause (A) Institute cargo clause (A),
Institute War Clause (Cargo), Institute strike clause (Cargo) Lorry warranty as
attached hereto.
The attached clauses and endorsements form part of this policy.
12
Survey and claims settlement :
In the event of loss or damage which may result in a claim under this insurance
immediate notice be given to carrier at destination.
Certificate of loss/damage be obtained from our surveyor, who are the company’s
agents at port of discharge in order that they may examine the goods and issue a
survey report. Where the company has no agent, the notice must be given to
Lloyd’s agents.
Payable as per declaration.
Similar were the terms of Open Cover No.2142 11000 9032 as also the
Open Cover Policies issued to M/s. Ratan Chand Deep Chand.
11. As and when the complainants entrusted the consignments to OCL,
they made declarations and the Insurer issued Marine Insurance Certificates
in respect of each consignment. Each of these Marine Insurance Certificates
specified the particulars of the consignment, and the value thereof and
confirmed that the consignment was “covered against : All risks (ICC), war
& SRCC from consignor’s warehouse to consignee’s warehouse.” The
certificates required that in the event of loss or damage which may involve a
claim under the certificate, notice of loss or damage should be given to its
surveyors M/s. Toplis & Harding Inc., Atlanta (USA).
13
12. Clause (1) of the Institute Cargo clause (A) forming part of the
Insurance Policy stipulated that the insurance covered all risks of loss of or
damage to the subject matter insured (except as provided in clauses 4, 5,
and 7 therein). Clause (1) of the Inland Transit clause (A) stipulated that the
insurance covered all risks or loss or damage to the subject matter insured
(except as provided in clauses 2, 3 and 4 therein). Clause (1) of the Institute
War Clause (Cargo) stipulated that the insurance covered loss or damage to
subject matter insured caused by war, civil war etc. (except as provided in
clauses 3 and 4 therein). Clause (1) of the Institute Strikes clause (cargo)
stipulated that the insurance covered loss or damage to the subject matter
insured caused by strikes, lock outs etc. (except as provided in clauses 3 and
4 therein). The duration of insurance cover is specified in clause (8) of the
Institute Cargo Clause (A), and clause (5) of the Inland Transit Clause (A).
They are extracted below :
Clause (8) of Institute Cargo Clause (A)
Duration.
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
8.1.1 on delivery to the Consignee’s or other final warehouse or place of storage at the
destination named herein,
8.1.2 on delivery to any other warehouse of place of storage, whether prior to or at the
destination named herein, which the Assured elect to use either
14
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.
Clause (5) of Inland Transit (Rail or Road) Clause (A)
Duration
“5. This insurance attaches from the time the goods leave the
warehouse and/or the store at the place named in the policy for the
commencement of transit and continues during the ordinary course
of transit including customary transhipment, if any,
(i) until delivery to the final warehouse at the destination named in the
policy or
(ii) in respect of transits by Rail only or Rail and Road until expiry of 7
days after arrival of the railway wagon at the final destination
railway station or
(iii) in respect of transits by Road only until expiry of 7 days after
arrival of the vehicle at the destination town named in the policy
whichever shall first occur.”
Similar duration clauses are found Institute War Clause (Cargo) and
Institute Strike Clause (Cargo).
13. The Marine Insurance Act, 1963 governs the law relating to marine
insurance. Section 3 defines marine insurance as under :
15
“3. Marine insurance defined.—A contract of marine insurance is an
agreement whereby the insurer undertakes to indemnify the assured, in the
manner and to the extent thereby agreed, against marine losses, that is to
say, the losses incidental to marine adventure.”
13.1) The term ‘marine adventure’ is defined in section 2(d). The term
‘maritime peril’ referred to in the definition of ‘marine adventure’ is defined
in section 2(e). The said two definitions are extracted below :
(d) “marine adventure” includes any adventure where –
(i) any insurable property is exposed to maritime perils;
(ii) the earnings or acquisition of any freight, passage money,
commission, profit or other pecuniary benefit, or the security for any
advances, loans, or disbursements is endangered by the exposure or
insurable property to maritime perils;
(iii) any liability to a third party may be incurred by the owner of, or
other persons interested in or responsible for, insurable property by reason
of maritime perils;
(e) “maritime perils” means the perils consequent on, or incidental to,
the navigation of the sea, that is to say, perils of the seas, fire, war perils,
pirates, rovers, thieves, captures, seizures, restraints and detainments of
princes and people, jettisons, barratry and any other perils which are either
of the like kind or may be designated by the policy;”
13.2) Section 4 makes it clear that a contract of marine insurance may, by
its express terms, or by usage of trade, be extended so as to protect the
assured against losses on inland waters or on any land risk which may be
incidental to any sea voyage. The provisions of Marine Insurance Act are
therefore subject to the terms of the policy of insurance.
16
13.3) Section 57 provides that where the subject matter insured is
destroyed, or so damaged as to cease to be a thing of the kind insured, or
where the assured is irretrievably deprived thereof, there is an actual total
loss.
14. Marine Insurance is a contract whereby the insurer undertakes to
indemnify the assured in the manner and to the extent thereby agreed,
against marine losses, that is to say losses incident to marine adventure. The
instrument in which the contract of marine insurance is generally embodied
is called a policy. The thing or property insured is called the subject matter
of insurance and the assured’s interest in that subject matter is called his
insurable interest. That which is insured against is the loss arising from
maritime perils and casualties, and these are called the perils insured against
or the losses covered by the policy. When the insurer’s liability commences
under the contract, the policy is said to attach; or in other words, the risk is
said to attach or to begin to run from that time. A marine insurance cover
applies to the shipment and if the shipment reaches the destination, in a safe
and sound condition, no claim can arise against the insurer. A contract of
marine insurance may, however, by its express terms or by trade usage, be
17
extended so as to protect the assured against losses on inland waters or
against any land risk which may be incidental to a sea voyage. (Vide
sections 3 & 4 of Marine Insurance Act, 1963 and Hulsbury’s Law of
England, 4th Edition, Vol.25 paras 216 and 218).
15. The insurers offer different types of insurance cover. There are three
standard types of Institute Cargo Clauses (and Inland Transit Clauses)
denoted as A, B, and C, providing insurance cover of varying extents.
Institute Cargo Clause (C) provides the basic minimum cover as
enumerated. Institute Cargo Clause (B) offers a cover against wider range of
enumerated risks. The Insurer will also cover certain ‘extraneous risks’ like
theft, pilferage and/or non-delivery in addition to the risks covered by
Institute Cargo Clause (B) on payment of extra premium. While Institute
Cargo Clause (C) and (B) specify and enumerate the risks covered, Institute
Cargo Clause (A) which offers the widest cover, does not specify or
enumerate the risks covered. Institute Cargo Clause (A) provides insurance
cover against all risks of loss and damage to the subject matter insured
except those excluded by clauses (4) to (7) thereof which are extracted
below :
“4. In no case shall this insurance cover
18
4.1 loss damage or expenses attributable to wilful misconduct of the
Assured
4.2 ordinary leakage, ordinary loss in weight or volume, or ordinary
wear and tear of the subject matter insured
4.3 loss damage or expense caused by insufficiency or unsuitability of
packing or preparation of the subject-matter insured (for the purpose of
this Clause 4.3 “packing” shall be deemed to include stowage in a
container or lift-van but only when such stowage is carried out prior to
attachment of this insurance or by the Assured or their servant)
4.4 loss damage of expense caused by inherent vice or nature of the
subject matter insured
4.5 loss damage or expense proximately caused by delay, even though
the delay be caused by a insured against (except expenses payable under
Clause 2 above)
4.6 loss damage of expense arising from insolvency or financial default
of the owners, managers, charterers of operators of the vessel
4.7 loss, damage or expense arising from use of any weapon of war
employing atomic or nuclear fission and/or fusion or other like reaction of
radioactive force or matter
5. 5.1 In no case shall this insurance cover loss, damage or expense
arising from unseaworthiness of vessel or craft.
Unfitness of vessel craft conveyance container or liftvan for the safe
carriage of the subject-matter insured.
Where the Assured or their servants are privy to such unseaworthiness or
unfitness, at the time the subject-matter insured is loaded therein,
5.2 The Underwriters waive any breach of the implied warranties of
seaworthiness of the ship and fitness of the ship to carry the subject-matter
insured to destination, unless the Assured or their servants are privy to
such unseaworthiness or fitness.
6. In no case shall this insuration cover loss, damage or expense
caused by
6.1 war, civil war, revolution, rebellion, insurrection, or civil strife
arising therefrom, or any hostile act by or against a belligerent power
19
6.2 capture, seizure arrest, restraint or detainment (piracy excepted),
and the consequences thereof or any attempt thereat
6.3 derelict mines, torpedoes, bombs or other derelict weapons of war
7. In no case shall this insurance cover loss, damage or expense
7.1 caused by strikers, locked-out workmen, or person taking part in
labour disturbances, riots or civil commotions
7.2 resulting from strikes, lock-outs, labour disturbances, riots or civil
commotions
7.3 caused by any terrorist or any person acting from a political
motive.”
The exclusions under clauses (6) and (7) get deleted when Institute War
Clause (Cargo) and Institute Strikes Clause (cargo) are included. Exclusion
under sub-clause (1) of clause (5) virtually gets deleted by sub-clause (2) of
clause (5). As a result, an insurance policy with ICC(A), ITC(A) and SRCC,
providing cover against “all risks” of loss or damage to the insured
consignment from consignor’s warehouse to consignee’s warehouse,
provides a very wide coverage. All risks except those mentioned in clause
(4) of Institute Cargo Clause (A) are covered. Theft, pilferage or nondelivery
of the consignment are therefore risks covered by an insurance
policy with ICC(A) and ITC(A). If the insured goods are not delivered
by the shipping company or shipping Agent, who issued the Bill of Lading
to the assured, due to theft, pilferage, loss or non-availability, occurring
within the duration of insurance cover, the insurer will be liable under the
policy of insurance.
20
16. Having regard to clause (8) of Institute Cargo clause (A) relating to
duration, the insurance cover attaches from the time the goods leave the
warehouse of the assured and terminates either on delivery at the
consignee’s final warehouse or store at the destination named in the policy
(or on delivery to any other warehouse or place of storage, which the
assured elects to use) or on the expiry of 60 days after completion of
discharge of the goods from the vessel at the final port of discharge. The
insurance cover commences when the consignment leaves the warehouse or
place of storage at the place named in the policy for commencement of
transit and the cover continues during transit and continues until the
consignment reaches the final destination specified in the policy as the
consignee’s warehouse. Where the consignment is temporarily stored on
arrival at an interim destination (as for example on the dock, or in the
shipping lines’ warehouse or in the custom warehouse, pending onward
journey to the consignee’s warehouse mentioned as final destination in the
policy), the cover would remain only for a period of 60 days from the
discharge of the consignments from the ship irrespective of whether
consignment is put on onward journey to the consignee’s warehouse/storage
place, or not.
21
17. In view of the insurance cover extending ‘warehouse to warehouse’
the consignments are covered by insurance not only during the sea journey,
but beyond as stated in the policy. Therefore the contention of the insurer
that the insurance cover is available only in regard to maritime perils that is
perils relating to or incidental to the navigation of the sea may not be
correct. Having regard to section 4 of the Marine Insurance Act and the
terms of the policy undertaking insurance cover against wider risks, the
policy of insurance would cover the loss not only while goods or navigating
the sea but also any loss or damage during transit from the time it leaves the
consignor’s warehouse till it reaches the consignee’s warehouse. The cover
against risks will however cease on the expiry of 60 days after discharge of
the consignment from the vessel at the final port of discharge, if the goods
do not reach the consignee’s warehouse or place of storage for any reason
within the said 60 days.
18. The learned counsel for the Appellant relied on two decisions, the
first being a decision of this Court in Bihar Supply Syndicate v. Asiatic
Navigation [1993 (2) SCC 639] and the second being a decision of the
Kerala High Court in Concord of India Insurance Co. vs. Ravi Thokassaria
[ILR 1974 Kerala 649]. In Bihar Supply Syndicate, this Court was
22
concerned with a marine voyage policy with Institute Cargo clause (FPA)
covering “warehouse to warehouse”. This Court held that the expression
‘warehouse to warehouse’ in the policy merely denotes the time during
which the policy would remain in force and cannot be interpreted as
covering each and every risk. This Court held that under a typical marine
voyage policy with Institute Cargo Clauses (FPA), in the absence of loss
due to perils of the sea, the insurance company was not liable, and the onus
was on the plaintiff to prove as a fact that the cargo was lost due to the
perils of the sea. In Concord of India Insurance Co., the Kerala High Court
considering marine risk policy, held that non-delivery may be a good
ground against the shipping company, but not against the insurance
company as non-delivery was not a maritime peril.
19. There is a difference between marine insurance policies which extend
cover only against marine losses or maritime perils (as enumerated) and
marine ‘extra’ insurance policies which extend cover against all risks from
consignor’s warehouse to consignee’s warehouse which include not only the
sea journey but also the land journey at either end. The decision in Concord
of India Insurance Co. (supra) of the Kerala High Court and the decision of
this Court in Bihar Supply Syndicate (supra) relate to marine insurance
23
policies and not to mixed sea/land risks policies or to marine ‘extra’
insurance policies. They are not of assistance while considering the scope of
a policy covering all risks including ICC(A), ITC(A), IWC(Cargo), ISC
(Cargo). In fact in Peacock Plywood (P) Ltd. v. Oriental Insurance Co. Ltd.
[2006 (12) SCC 673], this Court held that where the policy contained a
wider term of risk coverage, the decision in Bihar Supply Syndicate (supra)
will not apply. In Peacock Plywood, the extended warranty clause in the
insurance policy specifically extended the coverage to include the risks of
theft, pilferage and non-delivery. In view of it, this Court held that a claim
by way of constructive total loss on account of a ship being stranded on sea
on account of its unseaworthiness was maintainable, although the goods
themselves were not damaged. In that case when the ship carrying the goods
got stranded at a port due to its unseaworthiness, the assured took steps to
recover the value of the cargo with a view to minimize its total loss due to
non delivery, but found that the cost of recovering and getting the cargo
back to the destination port would be more than the value of the goods.
Therefore the assured effected sale of the insured goods at the port where
ship was stranded. Insurer was found liable to pay the insured value of the
goods (less the amount actually recovered by such sale).
Re : Questions (ii) and (iii) :
24
20. The complainants were manufacturers and exporters of carpets and
durries, having their principal place of business and manufacturing unit at
Mirzapur. They allege that M/s Atlanta Rugs Inc. based at Atlanta (USA)
placed orders on them for supply of rugs/durries. The orders are not placed
on record. The complainants allege that they sent several shipments of
Rugs/durries to Atlanta (USA) for the buyer. The two complaints relate to
17 consignments sent by M/s. Hira Lal Ramesh Chand and 38 consignments
sent by M/s. Ratan Chand Deep Chand, for which they did not receive
payment. The common procedure adopted for supply is set out below.
20.1) The complainants handed over the consignment with an invoice made
out in the name of Atlanta Rugs Inc., to their Forwarding Agent at Mumbai,
namely, M/s Niranjan Shipping Agency Pvt. Ltd. The said Niranjan
Shipping was also the shipping agent of Overseas Container Lines Inc.,
which was a Non Vessel Owning Common Carrier registered in USA.
Niranjan Shipping as Forwarding Agent of the complainant entrusted the
goods to Overseas Container Line Inc. (also represented by Niranjan
Shipping as Shipping Agent) for transhipment from Mumbai to Atlanta.
Overseas Container Line Inc., represented by Niranjan Shipping issued a
25
Bill of lading in regard to each consignment. The Bill of lading showed the
complainant as the consignor and mentioned “unto order” in the consignee
column. Atlanta Rugs Inc. was shown as the buyer who should be notified
by the collecting Bank. Overseas Container Line Inc. (represented by
Niranjan Shipping) in turn entrusted the consignment to a shipping line
which actually carried the consignment and the Shipping Line would issue a
Master Bill of Manifest also known as Master Bill of Lading, showing the
details of all consignments loaded in the container for being carried from
the load port to the foreign destination port.
20.2) In regard to each consignment, M/s Niranjan Shipping as Custom
House Agent issued a ‘Shipping Bill for Export of Goods under Claim for
Duty Drawback’ showing the complainant as the Exporter and Atlanta
Rugs Inc. as the Consignee, giving the particulars of the consignment and
its value as also the name of carrier (vessel). The said Shipping Bill
contained an endorsement certified by the Customs Officer giving the
particulars of the vessel and date of sailing.
20.3) The original documents of title comprising (i) the Bill of Lading
issued by Overseas Container, represented by Niranjan Shipping as Agent,
26
(ii) the invoice issued by complainants, (iii) the packing list and (iv) the
shipping bill issued by Niranjan Shipping for claiming duty drawback, were
sent by Niranjan Shipping to the Complainant’s Bankers – Punjab National
Bank. The copy of the Master Bill of Lading issued by the shipping
line/ship was not included by Niranjan Shipping as part of the documents of
title.
20.4) The complainant had a foreign Out Bill Purchase Account with
Punjab National Bank. The Bank used to purchase/ discount the bills, and
the Bill of Lading (Negotiable copy) was endorsed by the complainant in
favour of Punjab National Bank or its order. The Punjab National Bank in
turn endorsed the Negotiable copy of Bill of Lading in favour of its foreign
correspondent Bank namely Trust Company Bank, Atlanta (subsequently
known as Sun Trust Bank) and forwarded the documents of title to the said
Trust Company Bank for collection. The foreign correspondent Bank would
intimate the buyer about the receipt of the documents. On the buyer making
payment of the Invoice amount, the foreign Bank would endorse the
documents in favour of the buyer to enable the buyer to take delivery of the
consignment. If the buyer did not make payment and retire documents
27
within 90 days, the foreign correspondent Bank would return the documents
to the Punjab National Bank.
20.5) The complainant would make a declaration under the marine
insurance open cover issued by the appellant Insurance Company, in respect
of each consignment as and when entrusted for shipment, for which the
appellant would issue a Marine Insurance Certificate.
21. OP No.45/1997 filed by M/s. Hira Lal Ramesh Chand related to 17
consignments of the total value of US$ 406,096. According to complainant,
12 consignments were covered by Marine Insurance Certificates issued
under marine open policy cover No.2142 11000 8745 and 5 consignments
were covered by certificates issued under Marine open Policy Cover
No.2142 11000 9032. The seventeen invoices were made between 9.3.1995
and 13.6.1995 and corresponding Bills of Lading were dated between
15.3.1995 to 29.6.1995.
22. OP No.49/1997 filed by M/s. Ratan Chand Deep Chand related to 38
consignments of the total value of US$ 8,87,973. According to
complainants, 33 consignments were covered by Marine Insurance
28
Certificates issued under Marine Open Cover Policy No.2142 11000 8749
(validity period 4.5.1994 to 3.5.1995), two consignments were covered by
certificates issued under Marine Open Policy Cover No.2142 11000 9038
(validity period 23.5.1995 to 22.5.1996) and three consignments were
covered by specific policies No.2142 11000 8868, 2142 11000 8869 and
2142 11000 8870. The invoices in regard to these 38 consignments were
made between 28.7.1994 to 25.6.1995 and corresponding Bills of Lading
were dated between 23.8.1994 to 4.7.1995. According to the complainants,
the original insured value of the two marine open cover policies was Rs.20
lakhs and Rs.10 lakhs, but on account of extra endorsements in respect of
the open covers the extent of cover in respect of the two open covers stood
increased to Rs.3,70,00,000 and Rs.90,00,000, and the three specific
policies were for Rs.4,06,300, Rs.2,91,000 and Rs.2,81,700 in all
Rs.4,69,79,000/-. It is contended that the value of 38 consignments which
was US$ 887973 (equivalent to Indian Rs.3,21,00,224/-) was well within
the insurance cover amount and the commission erred in taking the total
extent of cover as only Rs.30 lakhs. The complainants (respondents 1 to 3 in
CA 4307/2003) have therefore filed cross-objections seeking increase in the
amount awarded for Rs.30 lakhs to Rs.3,21,00,224/-. Be that as it may.
29
23. When the consignments were entrusted to Overseas Container, the
complainants were not aware of its address, as the Bill of Lading did not
indicate any address. On their request, Niranjan Shipping provided the
address of Overseas Container on 8.8.1995. The complainants claim to have
written the following letter on 8.8.1995 to the Overseas Container Lines Inc.
(NVOCC) :
“We have to transfer our goods to other buyers in USA. We have to
convey the position of our cargoes to them and ask our bankers to transfer
the documents in their name. For this reason we need the current position
of our all the cargoes.
Please let us know the position of our cargoes carried by you which had
been booked with you for onward sea journey through forwarding agent
M/s Niranjan Shipping Agency Pvt. Ltd., Bombay.
Please treat the matter most urgent.”
There was no reply in spite of a reminder dated 9.11.1995.
24. The complainants claim to have instructed their Bankers (Punjab
National Bank) on 15.8.1995 to store the consignments sent to Atlanta in a
Bonded Warehouse duly insured. But apparently neither Punjab National
Bank nor its Foreign Correspondent Bank took any steps in the matter nor
complied with the instructions.
30
25. On 25.1.1996, the foreign collecting Bank informed the Punjab
National Bank and complainants by telex message as follows :
“We have contacted the drawee on several occasions and on each occasion
they promised to make payment but as of date they have not make good on
their promises. We have exhausted all efforts to obtain payment and do not
wish to continue our fruitless efforts in pursuing these transaction. Please
instruct us to turn the documents over to your agent for them to pursue as
we do not offer the services you are requesting us to do and our policy is to
return document after we exhausted efforts to collect payment and also not
to hold documents over 90 days.
If we do not receive your instructions to forward documents to your agent
are returned them yourself by latest February 10, 1996.
All documents will be returned to you and we will close our files on these
transactions. It not our practice to investigate how the goods was
released nor to obtain any warehouse merchandise. We can assure you
that we did not issue any form of guarantee to the drawee nor release any
of documents to them. Please remit our charges of US $ 3930, presenting
our collection charges of US $ 85 each, US $ 5 each postage, cable
charges US $ 50 and courier US $ 195.”
(emphasis supplied)
26. Thereafter, the complainants telephonically informed the insurer on
2.2.1996 about the non-realization of the Bills and claimed the value of the
consignments. The insurer instructed the complainants to get in touch with
their Surveyor and Claim settlement Agent -- M/s Toplis & Harding Inc.,
Atlanta, to investigate into the matter and give their report/certificate.
Accordingly, the complainant sent a letter on 6.2.1996 to the said Surveyor
31
requesting for an inquiry and investigation in regard to the consignments.
In that letter the complainant stated :
“In the above reference, we have to bring your kind attention that we failed
to trace out the consignment as per details enclosed. We made the
correspondence through our Bankers in India, that foreign Bank (Trust
Company Bank now known as Sun Trust Bank) to whom the documents
were endorsed and sent for collection of payments. Now foreign Bank has
confirmed that the original documents are with them. We presumed that
the following consignments are either lost or shipping company has
done some fraud with our consignments with them.”
(Emphasis supplied)
The complainant also sent reminder dated 19.2.1996 to the Surveyor. The
Surveyor sent a Fax reply dated 4.3.1996 to the complainant stating that the
various shipments had been delivered to and/or picked up by its customer –
Atlanta Rugs Inc., with probable collusion from Overseas Container Line
Inc., as Mr. Kumar Chaudhry was the President of both companies. In its
letter dated 20.3.1996 to the Surveyor, the complainant acknowledged the
information that the goods had been delivered by Overseas Container Line
Inc., to someone other than Sun Trust Bank (who was holding the
documents) and stated that such act on the part of Overseas Container Line
Inc. in releasing the goods has resulted in loss to them. The complainants
therefore sought the following information from the surveyor :
32
(a) The basis for the surveyor’s finding that the Trust Company Bank
was not the consignee.
(b) Name and description of the person who actually took the delivery
of the consignments.
(c) The particulars of documents on the basis of which releases were
made by the custom services.
(d) Name and description of the authority giving delivery/release.
The surveyor sent a telex dated 1.4.1996 to the complainant reiterating that
its inquiry revealed that the President of Overseas Container Lines Inc. and
President of M/s Atlanta Rugs Inc. was one and the same person namely
Kumar Chaudhary and answered the four queries as follows:
(a) In the steamship line bill of lading (Master Bill of lading)
Overseas Container Lines Inc. was probably named/shown as the
Consignee.
(b) M/s Atlanta Rugs Inc. was apparently the person who actually
took the delivery with the help of Overseas Container Lines Inc.
which was named as the Consignee on the steamship line bill of
lading.
(c) As the complainant had not furnished the details of the
customhouse broker who cleared the goods through US Customs,
the answer could be provided by Kumar Chaudhary.
33
(d) The release was probably by steamship line/custom warehouse.
The surveyor also suggested that the complainant should contact S.K.
Verma of M/s Niranjan Shipping as he was the signatory of the bills of
lading issued by Overseas Container Lines Inc. and as his role in the matter
was not clear. The surveyor also informed the complainant as the Marine
Insurance cover applied to shipments and as the shipments had reached the
destination and were delivered without loss or damage, as per the insurance
contract, the claim was not maintainable.
27. The complainants also contacted the Federal Meritime Commission,
Washington, seeking their help to ascertain whether their consignments
were lying at port or had been released and if lying at the port under whose
custody they were lying or if they were released, when and to whom they
had been released and under what conditions. The Federal Meritime
Commission sent a reply dated 1.3.1996 to the complainant stating that it
had been unable to locate either Overseas Container Lines Inc. or Atlanta
Rugs Inc and advising the complainant to seek legal advice. The
Commission also informed the complainant that Overseas Container Lines
Inc. as a Non-vessel operating common carrier (NVOCC) had maintained a
bond for US $ 50000 and if any judgment is rendered, against it, the
34
complainant could present a copy to Inter-Cargo Insurance Co., Illinois who
were the insurer of Overseas Container Lines Inc. for payment.
28. Thereafter the complainant wrote a letter dated 6.5.1996 to Overseas
Container Line Inc., stating as follows :
“It is really strange that all our communications that is letters dated
8.8.1995 and 9.11.1995 have been un-replied. We are not able to contact
you on phone and fax. We have to come that all the goods have been
released to you. How and why you have done causing this huge lose to us.
We will file a claim against you in proper forum at your entire risks.”
(emphasis supplied)
29. The insurer informed the complainant that they were awaiting the
report from the Surveyor M/s. Toplis & Harding Inc. and as soon as they
receive the report, they will attend to the claims. The surveyor sent two
reports dated 27.6.1996 in respect of the consignments of the two
complaints. The relevant portions of the said report which are identical are
extracted below :
“…. We noted that the original bills of lading on hand at Sun Trust Bank
were issued by Overseas Container Line Inc. which were the NVOCC
involved in arranging of the various shipments at origin. The authorized
signatory of the Overseas Container Line Inc. ocean bill of lading was a
Mr. S. K. Verma of Niranjan Shipping Agency Pvt. Ltd. We advised all
concerned parties to contact Mr. Verma for further information but we did
not receive confirmation if this was carried out.”
35
Master Bills of lading should have been issued by the steamship line but
none were in Sun Trust Bank’s possession. We noted that the Overseas
Container Line Inc. bills of lading were consigned to the order of Trust
Company Bank with the notified party as Atlanta Rugs Inc. At no time,
have we been shown the master bills of lading issued by the steamship
line.
Mr. Chang at Sun Trust Bank stated that he met Mr. Kumar Chaudhary,
President of Atlanta Rugs Inc., on a number of occasions and he stated that
to his knowledge Mr. Chaudhary was going through financial difficulties
in both his personal and business life.
On February 23, 1996, we attended at the premises of Atlanta Rugs, Inc.,
and initially met with a person by the name of Rajesh Shorie, who said he
was a new employee and could not assist our investigations. However,
during our visit, Mr. Chaudhary arrived and was willing to speak with us
but not to issue a signed statement.
Mr. Chaudhary understood the reason for the shipper’s concern and stated
unequivocally that he had received all the shipments and that very few
pieces remained although he would not allow us to inspect his storage
facility. He also did not give specifics as to how the cargo was cleared into
his possession. He referred us to an attorney in Atlanta, Georgia, a
Marshall Siegel. However, later Mr. Siegel informed us that he had only
recently been contacted by Mr. Chaudhary and had not been retained by
him as counsel.
During this time, we were contacted by another shipper, insured through a
different underwriter, who also informed us that their shipments had not
been paid for. We had been given a customs house clearing agents name in
Atlanta – C.H. Powell and Company and we contacted their import
manager, Mr. Wick. Mr. Wick informed us that he had acted as Atlanta
Rugs, Inc. agent in 1994 and still had $40000 of fees outstanding. We
requested particulars details of the steamship lines involved and he
volunteered that Neptune Orient Line was one of the carriers. Mr. Wick
stated that on the NOL bill of lading the consignee and notify party were
listed as Overseas Container Lines.
This confirmed our earlier suspicion that probably Overseas Container
Lines were using the steamship line master bill of lading to obtain and
clear the shipments.
We later became aware that Mr. Kumar Chaudhary is the registered
President of Overseas Container Lines, Inc. We contacted Bureau of
Enforcement at the Federal Maritime Commission (FMC) and we
discussed that Overseas Container Lines address is registered at the same
location as Atlanta Rugs, Inc. They also have a $50000 bond with
36
intercargo at Schaumberg, Illinoise since 1993. They could not act as a
Custom House Broker to clear the goods through US Customs as they
would need to post a much larger bond with FMC. Ratan Chand Deep
Chand did not furnish us with details of their customs house broker,
although we did request this information on a number of occasions.
In May 1996 we received a request from Punjab National Bank stating that
they had purchased the ‘Bills’ pertaining to the shipments and that the
claim amount should be remitted directly to themselves (see enclosed
correspondence).
At this time, we believe that Atlanta Rugs, Inc, has been dissolved and that
Mr. Chaudhary is operating a different company. Based upon all the
available information, at this present time, it would appear that all
shipments were picked up by Atlanta Rugs, Inc. who used fraudulent
methods to obtain the shipments without payment through the bank. We
believe that the involvement of the steamship lines will be necessary to
prevent further acts and to obtain more information on the stolen
shipments. We are issuing our report to document all the facts as known at
his present time and it is our intention to issue an addendum should our
further involvement be necessary. Please note that we do not comprehend,
and have received no explanation as to why the shipments were
continually being sent even when the shipper was not receiving any
proceeds.”
30. The copies of the reports were not furnished to complainants. As the
Insurer did not settle their claim, the complainants filed complaints (OP
Nos.45 and 49/1997) before the Commission on 25.2.1997 alleging that the
conduct of the Insurer in not settling the claim amounted to a deficiency in
service and consequently, claiming compensation from the Insurer in regard
to the value of the consignments and other losses (as detailed in para 3
above). The Insurer sent letters of repudiation dated 4.3.1997 to
complainants giving reasons for repudiation, relevant portions of which
have been extracted above.
37
31. We have considered the detailed submissions made by learned
counsel. We have also considered the material that was placed before the
Commission. We find on a careful consideration that the Commission has
not addressed itself to the relevant issues. It is no doubt true that the
complainants had booked the consignments showing the consignee as ‘unto
order’ thereby indicating that the goods covered by the Bills of lading
should be delivered only to the holder/endorsee of the Bills of Lading.
There is also no doubt that the original documents were not cleared/retired
by the buyer ‘Atlanta Rugs Inc.’ and that the original documents were
ultimately returned by the foreign correspondent Bank to Punjab National
Bank and they are lying with Punjab National Bank. There is also no doubt
that the consignments were insured against all risks of loss and damage.
32. The basic and fundamental averment and proof required in a case of
this nature is that the consignments had been lost or damaged in transit or
that when the holder of the documents applied for delivery, the goods were
not delivered on account of the same being irretrievably lost that is having
been pilfered, stolen, lost or misdelivered. But there is no such averment or
38
evidence that the consignments were lost or damaged. Nor is there any
averment that the holder of the documents of title applied for delivery of the
consignments, and was denied or refused delivery on account of nonavailability
of the consignments either due to pilferage, loss or misdelivery.
When there is no allegation or proof of Sun Trust Bank having applied for
delivery and refusal of delivery, it is inconceivable how the complainants
can maintain a claim against the insurer.
33. Failure of the buyer to make payment and take delivery is not a ‘loss’
of consignment which is covered by the Insurance Policy. The complainant
should make out a case of actual ‘loss’ of the consignment covered by the
contract of insurance or non-delivery of the consignment, that is refusal to
meet a demand for delivery. The question is whether the complainants have
proved such loss or non-delivery. The case of the complainant as put forth
in the complaint and reiterated in the affidavit is that they have dispatched
the consignment to Atlanta, that the consignments were insured against all
risks; that the buyer did not retire the documents by making payment; that
they do not know what happens to the consignments and that therefore the
Insurer ought to have paid them the value of the consignment and failure to
do so amounted to deficiency in service as contemplated under the
39
Consumer Protection Act, 1986. We are afraid that these are not allegations
or proof of loss or non-delivery sufficient to foist any liability on the
insurer.
34. Another question that arises for consideration is who was responsible
for transshipment and delivery. Admittedly Overseas Containers was only a
non-vessel owning common carrier (NVOCC) and not the actual shipping
line. Necessarily therefore Overseas Container had to entrust the
consignment to an actual shipping line for transportation and the Master Bill
of Lading given by the shipping line would show the Overseas Containers
as the consignee entitled to receive the delivery. The very fact that the
Master Bill of Lading is not given to the consignors/complainants and the
fact that the complainants did not demand for the same shows that they did
not intend to apply for delivery directly from the shipping line that carried
the consignments but only intended that delivery should be from Overseas
Containers which had issued the Bill of lading. As the contract for carriage
was between complainants and Overseas Containers and as the Bills of
Lading issued by the Overseas Container showed that the consignments
were deliverable to the order of the complainants, necessarily Overseas
Containers were expected to take delivery of the consignment at Atlanta
40
from the shipping line which actually transported the consignments and then
deliver it to the holder of the documents of title who seeks delivery. If that
is so, the Overseas Containers were entitled to take delivery from the
shipping line which transported the consignment and there was nothing
collusive, clandestine or irregular about delivery of consignments being
taken by Overseas Containers from the shipping line, as it had entrusted the
consignment to the shipping line for transportation.
35. There is no averment or proof that the consignments did not reach the
destination namely the Port at Atlanta or that the goods were not taken
delivery by the Overseas Containers. There is no averment as to whether the
holders of the documents namely the Sun Trust Bank applied for delivery or
attempted to take delivery of the consignment and store them in a bonded
warehouse and whether they were refused delivery within the insurance
cover period.
36. The insurance cover was in regard to all risks from consignor’s
warehouse to consignee’s warehouse. There is no dispute as to what is the
consignor’s warehouse as the complainant is clearly shown as the
consignor. The difficulty arises about the consignee’s warehouse. If the
consignee is treated as Atlanta Rugs Inc., on delivery to Atlanta Rugs Inc.,
41
the insurer is discharged of any liability for risks. If the consignee is shown
as ‘unto order’ whose warehouse is to be treated as consignee’s warehouse?
It does not obviously refer to complainants’ warehouse as admittedly the
complainants were not having any warehouse in Atlanta (USA), nor were
they the holders of the documents. The ‘consignee’ at the relevant time
could only be the Sun Trust Bank in whose favour the documents had been
endorsed. But it is not the case of the complainant that Sun Trust Bank as
the holder of the documents of title sought delivery of the consignments
from the custom’s warehouse or steam ship line or from Overseas
Containers. Where there is no effort on the part of the ‘consignee’ to take
delivery from the shipping line/customs warehouse, the duration of
insurance cover cannot be infinite or indefinite. In such circumstances the
risk cover would terminate on the expiry of 60 days after completion of
discharge overside of the insured shipment from the Overseas vessel at the
final port of discharge at Atlanta having regard to clause 8 of Institute
Cargo clause. It is not the case of the complainant that within that time (of
60 days), delivery was sought by the holder of the documents and that such
delivery was refused. It is also not the case of the complainants that the
consignments were unauthorizedly delivered to Atlanta Rugs or that such
delivery was within 60 days of the landing of the consignments at Atlanta.
42
In the absence of any averment or evidence as to when the consignments
were discharged from the ship at Atlanta and an averment that within 60
days of the landing of the consignments at Atlanta the holder sought
delivery and delivery was refused, the question of the Insurer being made
liable for non delivery does not arise. After 60 days of the landing of a
consignment even if the consignment is destroyed, lost or misdelivered, it is
no concern of the Insurer.
37. It should be noted that a claimant insured in a marine insurance claim
has to plead and prove the following (i) his position - whether he is the
assured or an assignee; (ii) his insurable interest; (iii) the type or kind of the
insurance policy and its relevant terms; (iv) the duration of the cover; (v) the
nature of risk/loss; and (vi) the risk/loss is covered by the policy. In the
absence of necessary averments and evidence to establish a marine
insurance claim, a claim against the insurer is liable to be rejected. It is
unfortunate that the Commission disposed of the matter without examining
the terms of the policy and obligations undertaken by the insurer. In fact,
having regard to the nature of issues involved, this was more appropriately a
matter for civil court. Be that as it may.
43
38. Another significant aspect is that the consignments were being
continuously sent from August, 1994 to July, 1995 by M/s. Ratan Chand
Deep Chand and from March to June, 1995 by M/s. Hira Lal Ramesh Chand
without making any effort to ascertain the fate of the earlier consignments.
Even when they learnt none of the documents relating to the consignments
had been retired by the buyer, they merely gave the oral intimation to the
insurer that too on 2.2.1996 about the non-retirement of the documents. No
claim was lodged with the insurer in writing. The allegation that orally a
claim for ‘loss of goods’ was made on 2.2.1996 cannot be true as according
to complainants themselves till that date they had no knowledge that the
consignments had been either lost or wrongfully delivered. In fact the
complainant have not produced even a single document making a claim on
the insurer on the ground that the goods had been lost or not delivered.
39. The complaints, affidavits and the documents are also significantly
silent about the following aspects :
(i) The particulars of the ships by which the consignments were
transported and the dates on which the ships sailed, and whether any loss or
damage was caused to any of the consignments while in transit. [Though the
44
Xerox copies of the ‘Shipping Bills for export of goods under claim for duty
drawback’ give the name of ship and date of sailing, they are not
authenticated or supported by the evidence of the persons who prepared
those shipping Bills or the Customs officers who certified them].
(ii) If the consignments were not damaged or lost in transit, when did the
ships discharge the consignments in Atlanta Port; on such discharge
whether the consignments were with the shipping line or were shifted to a
customs warehouse; or whether they were immediately delivered to
Overseas Containers and if so when.
(iii) In their rejoinder, the complainants stated that by letter dated
15.8.1995 they asked their Bankers to take delivery of the consignments and
store them in a bonded warehouse duly insured. This assumes that the
consignments had arrived safely and soundly at Atlanta Port. The Sun Trust
Bank was holding the original documents at that time. There is no averment
as to whether they complied with the said instructions and took delivery of
the consignment and place them in a warehouse in its control. If they did not
do so, the reasons ought to have been given.
45
(iv) Nothing is said as to whether the Bank holding the documents of title
apply for delivery by producing them. The complainants did not obviously
apply. If no one ever applied or sought delivery and if there was no refusal,
there is no question of loss or the question of liability on the part of the
Insurer.
(v) There is no averment as to whether the complainants or the holders of
documents of title ever complained or reported loss of the consignment, or
about any wrong delivery or misdelivery to any one, in writing.
(vi) The consignments were entrusted to Niranjan Shipping, who was
acting as the forwarding agent of complainants as also the agent of a nonvessel
owning shipping agent (NVOCC) namely Overseas container. The
Bills of Lading were issued by a NVOCC. In those circumstances the reason
as to why the complainants did not demand for the supply of the copies of
the Master Bills of Lading issued by the shipping line/vessel which actually
transported the consignments, is not disclosed. The failure of complainants
to pursue the matter with Niranjan Shipping to whom they had delivered the
consignments, is also strange.
(vii) None of the Bills of lading issued by the Overseas Container Lines
Inc., contains their address. The complainants did not care to seek their
46
address, even though it would not have been possible to take delivery
without knowing the address. The complainants did not also care to enquire
with Niranjan Shipping, about the absence of address in the Bills of Lading.
It was only long after all the consignments were dispatched, when the
documents were not retired by the buyer, the complainants woke up and
requested Niranjan Shipping to furnish the address of the Overseas
Container and Niranjan Shipping provided the address by communication
dated 8.8.1995. This strange behaviour is not explained. This indicates
either willful negligence or willful misconduct by way of collusion.
(viii) In regard to all the consignments, Niranjan Shipping had issued
‘shipping bills for export of goods under claim for duty drawback’ showing
the complainant as the exporter and the Atlanta Rugs Inc. as the consignee.
If the Bills of lading showed the consignee as “unto order” (that is the
endorsee of the documents of title) and if the property in the goods had not
passed by the buyer (Atlanta Rugs Inc.), then the reason why the
complainant did not protest against the issue of such shipping bill showing
Atlanta Rugs Inc. as the consignee, is not stated.
47
40. The complainants have failed to plead and make out a case of loss, in
respect of each and every consignment, either during transit or within 60
days of the consignments being discharged from the ship at Atlanta Port.
They merely proceed the assumption that the Insurer is liable when the
documents are not retired by the buyer, which, to say the least, is untenable.
As there is no averment or proof that the consignor or the foreign
correspondent Bank holding the documents of title or any person authorized
by the said Bank applied for delivery within 60 days of the goods being
discharged, and as there is no averment or proof that the consignments were
lost or wrongly delivered within the said period of 60 days, the liability and
responsibility of the insurer under the policy of insurance came to an end
with reference to each of those consignments. Consequently the claim of the
complainants against the insurer is liable to be rejected.
41. The Commission has referred to the delay of nine months on the part
of the Insurer in repudiating the claim, after receiving the surveyor’s Report,
and the failure to furnish a copy of the reports to the complainants as
deficiency in service. But what is overlooked is that the complainants did
not lodge any claim in writing. At all events, they did not produce any
document showing the lodging of claim. It was on a mere oral intimation on
48
2.2.1996, the investigation by surveyor was set in motion. Further the
contents of the report had already been notified to the complainants by the
surveyor in the telexes dated 4.3.1996 and 1.4.1996. Therefore, the finding
of deficiency in service was not warranted.
42. In this view of the matter, it is unnecessary to consider the counter
claim of the respondents 1 to 3 in CA No.4307 of 2003. Nor is it necessary
to consider whether such counter claim is maintainable in an appeal under
section 23 of the Consumer Protection Act, 1996.
43. In view of the foregoing, the appeals are allowed and the order of the
National Consumer Redressal Commission is set aside and OP No.45/1997
and 49/1997 before the Commission stand dismissed. Parties to bear their
respective costs.
………………………….J.
(B. N. Agrawal)
………………………….J.
(P. P. Naolekar)
New Delhi; ………………………….J.
June 13, 2008. (R. V. Raveendran)
49