Oral Order : (Patil Vithal Rao, Member)
Challenge is made to the order dated 09.12.2013 passed by the District Consumer Forum -III, [for brevity, ‘the District Forum’] Hyderabad in C.C.No.1041/2011 dismissing the complaint. The Appellant herein is the Complainant and the Respondents are the Opposite Parties in the said case. For the sake of convenience the parties will be referred to herein after as arrayed before the District Forum.
2. The case of the Complainant, as set up, before the District Forum, in brief, is that it has obtained a Marine insurance policy bearing no.550215/21/10/4300000034 having the C.I.F. value of US $ 22186.45 equivalent to Indian Rs.10,20,567.70 ps., covering a consignment of 3636 cartons of biscuits for export from Hyderabad to South Sudan WAU by Road and Sea covering against All Risks by remitting an amount of Rs.715 towards premium on 19.07.2010. The consignment was lodged in the Vessel MSC – CHITRA – 12R on 07.08.2010 at JNPT PORT Mumbai and after traveling 3 nautical miles it collided with another Vessel 'KHALIJA' in the Indian Arabian Sea and sank resulting in total damage of the consignment. The Surveyors and Loss Assessors, M/s. Subhash Chander & Associates, Mumbai have assessed the damage as total loss. The further case of the complainant is that when it lodged a monetary claim for the loss with the Agent of Mediterranean Shipping Co., Mumbai, it was rejected with an advice to claim the same from the other Vessel KHALIJA-3. Thereafter the complainant submitted claim form with necessary documents on 02.02.2011 to the Opposite Party no.1 but it was rejected on the ground that the terms of invoice were different from the terms of the policy and that the Buyer alone could claim the proceeds of the contract, by the letter dated 31.05.2011. Therefore, the Buyer / Importer and the Complainant mutually agreed to amend the C.I.F. contract as per the Marine Insurance Policy and submitted the legitimate claim to the Opposite Party no.1 & 2 but they refused to accept the same and disowned their liability. Even the Grievance Department of the Opposite Party no.2 did not reconsider the decision of Opposite Party no.1 & 2. Thereafter, the Complainant approached the insurance Recovery and Development Authority [IRDA] by way of a complaint dated 05.08.2011 but was of no help. The further case of the Complainant is that, the Opposite Parties have failed to honour their contractual obligation in making payment of the claim amount as per the policy on C.I.F. basis. For these reasons the Complainant has prayed to allow the complaint directing the Opposite Parties to pay the insured sum of Rs.10,20,567.70 ps., with interest @ 18% p.a., from the date of the claim till realization and also compensation of Rs.2,50,000/- with costs of Rs.1,00,000/-.
3. The Opposite Parties resisted the claim by way of filing a written version before the District Forum on the grounds, inter-alia, that the Complainant had obtained one policy bearing no.550215/21/10/4300000031 for a sum of Rs.10,81,607/- on C.I.F [Cost, Insurance & freight ] basis and another policy bearing no.550215/21/10/4300000034 for a sum of Rs.10,20,568/- on C& F [Cost and Freight] basis and that the first policy amount was settled while repudiating the second policy amount on the ground that the liability of the insurer was ceased once the Goods / Consignments were placed safely on board the vessel. Thereafter the overseas Buyer approached the Opposite Parties and the matter was once again examined and found that there was no material change to interfere with the earlier decision. The said decision was also upheld by the Grievance Cell of Opposite Party no.1, Insurance Company and further by the IRDA. As per the Opposite Parties, in a contract of insurance, the rights and obligations of the parties are strictly covered by the Insurance Policy and no exception or relaxation can be made on the ground of equity. Infact, the Complainant has suppressed the fact that the transit was on C & F basis which is a material departure breaching the duty of utmost good faith casts upon the exporters towards Insurance Policy under the Marine Insurance Act. The Complainant and the overseas Buyer sought to amend the C&F contract into C.I.F. contract which is not permissible. For all these reasons, the Opposite Parties had prayed to dismiss the complaint with costs.
4. After due enquiry into the matter the District Forum passed the impugned order dismissing the complaint which is now impugned in the present appeal.
5. The contention of the Appellant / Complainant, in brief, is that as per the bill of lading dated 07.08.2010 the freight charges were prepaid and that the consignment was on C.I.F basis but not on F.O.B. basis. Therefore, the responsibility of the seller ceases only after delivering the goods to the Buyer at Port, Mombasa but the consignment was sunk in the Indian Seas before reaching the destination. Further, as per the Sale of goods Act, 1930 the Appellant is an unpaid seller and as such the Respondents are liable to indemnify the loss fully. The Appellant has further contended that the risk of the goods were covered under the Insurance Policy and the same was still in force as on the date of the loss and that as such the liability of the Respondents doesn’t cease under the Marine Insurance Policy. As per the Appellant, the District Forum did not consider all these aspects in a right perspective and erred in observing that a Certificate was not issued by the Opposite Parties covering the risk despite existence of the Marine Policy. In fact, the Appellant had informed all the material facts relevant to the Insurance Contract but the District Forum didn’t appreciate this aspect and came to a wrong conclusion by observing that as per the invoice the amount was paid as FOB but not C.I.F. by the Complainant. Thus, as per the Appellant, the impugned order is contrary to law, material evidence on record and probabilities of the case and that as such liable to be set aside by allowing the appeal.
6. Perused the material evidence on record, impugned order and written arguments of the parties and heard both the learned counsel.
7. Now the point for consideration is that:
whether the impugned order is erroneous both on facts and under law and that as such liable to be set aside?
8. Point:- Evidently, the Complainant obtained two Insurance Policies i.e., Policy bearing no.550215/21/10/4300000031 under Ex.B1 & policy bearing no.550215/21/10/4300000034 under Ex.A1 from the Opposite Party no.1, Insurance Company covering the risk of consignment being transported from Hyderabad to South Sudan WAU by Road, Rail and Sea covering against all risks. The consignment was accordingly loaded on 07.08.2010 at JNPT Port, Mumbai in MSC CRITR-V-12-Vessel but unfortunately after traveling a distance of 3 nautical miles it collided with another vessel, KHALIJA-3 resulting in total damage of the consignment of goods. The Complainant came to know about the mishap on 08.08.2010. The surveyor, M/s. Subhash Chander & Associates, Mumbai assessed the damage and declared as total loss by issuing a Certificate to the said effect. Ex.A9 is a copy of the Survey Report dated 17.01.2011.
9. When the Complainant lodged a claim for the loss, the Opposite Party No.1 Company honoured the loss of the Consignment covered by the policy bearing no.550215/21/10/4300000031 as it was under C.I.F. [Cost Insurance and Freight] basis and repudiated another policy bearing no.550215/21/10/4300000034on the ground that it was covered by the contract on C & F [Cost & Freight] basis. This act of the Opposite Party no.1 Company was also justified by the Grievance Cell of the said Company and also the IRDA. The complainant has challenged the said repudiation by claiming the amount of Rs.10,20,568/- covered by the policy, Ex.A1 with compensation and costs which is the subject matter of the present dispute.
10. The complainant has contended that it did not suppress any material fact while entering into the contract of Insurance with the Opposite Parties and that though infact the initial contract between the Complainant and the Buyer of the goods from South Sudan was but subsequently it was amended on C & F basis mutually in accordance with law and that thus when the consignment of goods was covered with insurable interest of the Buyer, the repudiation of the claim by the Opposite Parties was arbitrary and illegal. Per contra, the Opposite Parties have contended that the Complainant has obtained the policy in question with regard to the consignment pertaining to a contract with the Buyer on C & F basis and that subsequent to repudiation sought its conversion to C.I.F. basis by way of an amendment which is not permissible. Further, as per the Opposite Parties, the Complainant has suppressed the material terms and conditions of the said C & F contract while obtaining the Insurance Policy from them and that infact their liability ceases once the consignment was loaded on board of the vessel. This is the only crux of the issue.
11. It is evident from the contents of the documents enclosed with the Claim Form under Ex.A13 that the C & F value of the consignment up to Mombassa was of $ 22186.45. Further, as per the letters of the Opposite Party no.1 Company addressed to the Complainant vide Ex.A14 & A16 the contract was on C & F invoice basis. But the Complainant has filed a letter of the Buyer, Emar Exports and Imports, WAU South Sudan addressed to the Opposite Party no.1 Company vide Ex.A20, in which a request was made to the complainant by the Buyer to obtain the policy on C.I.F. basis for the subject consignment even though the original contract was on C & F basis up to the destination and that accordingly it was later amended to C.I.F. basis on payment of the due premium by the Buyer to the Complainant. In this regard it is pertinent to note that such type of amendment is certainly permissible under section 85 of the Marine Insurance Act, 1963 which is as under:-
Where a contract of Marine Insurance is good faith effected by one person on behalf of another, the person on whose behalf it is effected, may ratify the contract even after he is aware of a loss.
In the present case the initial contract was on C & F basis but subsequent to the mishap on 07.08.2010 the contract was amended to C.I.F. basis even after knowing of the loss by the Buyer. Infact, the Opposite Party no.1Company has clearly noted in the letter, Ex.A14 that after the Complainant has placed the consignment safely on board thereby handing over the possession of the goods to the ship in terms of bill of lading, its responsibility ceases and delivery of the goods to the Buyer are complete and that from that stage onwards the goods are at the risk of the Buyer. Therefore, in view of the amendment of the terms of the contract from C.I.F to C & F the Buyer took the risk of the goods in terms of Section 85 of the Act, 1963. The said goods were un- disputedly covered by the Insurance Policy, Ex.A1. Thus, it is clear that the Buyer became owner of the goods irrespective of the mishap and thereby got insurable interest in the goods. To appreciate this aspect the learned counsel for the Complainant has relied on the unreported decision dated 05.09.2016 in F.A.no.435/2011 of the Hon’ble National Commission in, Oriental Insurance Company Ltd., Ahmedabad Vs. M/s. Ajanta International, Rajkot. In this case also the goods were sold on C.I.F. basis and not on C & F basis. Therefore, the insurer took the defence that the Complainant was responsible for the goods only till they were put on board of the vessel at the Port, Mumbai. The Hon’ble National Commission even in such situation held as under:-
……………Therefore, it cannot be said that the insurer was not aware that the transaction between the complainant and the overseas Buyer was on C & F basis, and not on CIF basis. …………… The insurer, despite knowing, through the invoice, that the transaction between the complainant and the overseas Buyer was on C&F basis, having issued a policy on CIF basis, has only itself to blame if in such a transaction it was not to issue a policy on CIF basis. Therefore, the claim cannot be denied on the ground that the transaction between the parties was on C&F basis, and not on CIF basis. ……………Having insured the goods up to Lusaka, without any concealment on the part of the complainant, the insurer, in our view, is stopped from repudiating the claim solely on the ground that the transaction between the parties was on C&F basis.
In the said case also the goods did not reach to the purchaser at the destination but were stolen away on the way. Having regard to the facts and circumstances we are of the considered opinion that the ratio laid down by the Hon’ble National Commission is certainly applicable to the facts of the present case. Further, a recent decision dated 29.06.2016 of the Hon’ble Supreme Court in Civil Appeal No.1004/2006 in United India Insurance Company Ltd., vs. Leisure Wear Exports Ltd., was referred to by the Hon’ble National Commission in the above noted case. In the said case the question before the Hon’ble Supreme Court was as to whether the Respondent had a locus standi to file the complaint on the strength of the contract of the Insurance Policy in question, claiming compensation for the loss sustained in the transaction. By referring to Section 17 of the Act, 1963 it was inter-alia observed and held as under:-
'26. Section 17, in terms, recognizes and permits the insured to make assignment of their contract of insurance policy in favour of an assignee and at the same time allows the insured even after making an assignment to retain all those rights which are available to them under the contract of insurance with the insurer (appellant). In other words, in terms of Section 17, even after making an assignment by the insured of their contract of insurance policy, the rights of insured under the contract of insurance policy are not assigned in favour of assignee by the deed of assignment but they are continued to remain with the insured.
27. We are, therefore, of the considered view that firstly, we do not find that the respondent (insured) assigned the contract of insurance policy in favour of their consignee as contended by the appellant. Secondly, even assuming that the respondent (insured) assigned the contract of insurance policy in favour of their consignee, yet the assignment so made did not have any adverse effect on the right of the insured under the contract of insurance policy as the rights continued to remain with them by virtue of Section 17 of the Act.
28. The respondent was, therefore, legally entitled and had the locus to file a complaint against the appellant on the strength of contract of insurance policy for enforcement of their all contractual rights available to them under the insurance policy for claiming compensation for the loss caused from the appellant and the complaint so filed by the respondent could not be dismissed as not maintainable on the ground of locus. It was thus rightly held as maintainable'.
In the above referred case of the Hon’ble National Commission a reference was also made to the earlier decision of the Hon’ble Supreme Court in, Contship Container Lines Ltd., vs. D.K. Lall & Others, II (2010) CPJ-12 (SC). This decision was made a basis by the Opposite Parties in the present case to sustain their defence. In this case, the declaration sent to the insurer no details of conditions of the shipment were mentioned. But even then it was held that the carrier was deficient in rendering service to the Complainant.
12. The learned counsel for the Respondents has relied on the decisions in :
I. Contship Container Lines Ltd., vs. D.K. Lall & Others, II (2010) CPJ-12 (SC) 1704.
II. S.K.Das, M.Hidayatullah, K.C. Das Gupta, J.C. shah vs. N.Rajagopala Ayyangar, JJ., AIR (1961) CPJ-12 (SC) 311.
III. BHS Industries vs. Export Credit Guarantee Corp. AND another, 2015(5) ALD 12(SC).
But all these decisions are prior to the decision of the Hon’ble Supreme Court dated 29.06.2016. Therefore, the latest view of the APEX Court has to be followed in view of its binding force.
13. In the present case the risk of the goods was covered under the insurance policy, Ex.A1 and the same was inforce as on the date of loss and that as such the liability of the Opposite Parties did not cease. Evidently, from the beginning the insurance contract between the Complainant and the Opposite Party no.1 Company was on CIF + 10% and the Marine Insurance Policy was issued accordingly. Moreover, the Complainant had given declaration to the Opposite Parties informing all the material facts at the time of the contract.
14. It is significant to note that the Complainant has specifically asserted that the terms and conditions of the policy were neither supplied nor explained to it by the Opposite Party no.1 Company. The Opposite Parties did not rebut the said claim by adducing any clinching evidence. Thus, the IRDA regulations were not duly followed by the Opposite Party no.1 Company. In this regard it is just, necessary and expedient to refer to the decision dated 03.05.2007 of the Hon’ble National Commission in R.P.no.3110/2016 in, National Insurance Company Ltd., Vs. Gynander
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Singh where in it was observed as under: We hope that companies in India would try to follow such a gesture towards the consumers and not to raise unnecessary dispute and litigate, so that the consumers are not driven for a small amount to the National Commission or to the Supreme Court. This type of practice is required to be adopted in the interest of consumers all over the country. Unfortunately, we have developed a genitive legal practice to such an extent that even established facts are denied in the written version. 15. In the instant case on hand the Collision was accidental and fortuitous in nature and was proximately caused by an Insured peril. The loss was not caused concurrently by any of the perils exempted in the policy or by the Marine Insurance Act. No Warrants implied or express were breached. There is no evidence with regard to non-disclosure of material fact nor misrepresentation on the part of the Complainant. But the learned District Forum did not consider these material facts in a right perspective and came to a conclusion which, in our considered opinion, is erroneous and illegal. Therefore, the same deserves to be interfered with. In this view of the matter, we hold that the appeal is fit to be allowed by setting aside the impugned order. In the given set of facts and circumstances, the Complainant is certainly entitled not only the amount covered by the Insurance Policy, Ex.A1 but also compensation which is reasonably settled at Rs.50,000/- to meet the ends of justice. 16. The point is answered accordingly in favour of the Appellant. 17. In the result, the Appeal is allowed by setting aside the impugned order directing the Respondents, jointly and severally, to pay the sum insured of Rs.10,20,568/- with interest @ 12% from the date of the claim i.e., 02.02.2011 till realization and compensation of Rs.50,000/- with costs of Rs.10,000/-. Time for compliance, 4 weeks.