w w w . L a w y e r S e r v i c e s . i n



ITW India Ltd v/s New India Assurance Co. Ltd

    Consumer Case No. 14 of 2012

    Decided On, 28 October 2021

    At, National Consumer Disputes Redressal Commission NCDRC

    By, THE HONOURABLE MR. C. VISWANATH
    By, PRESIDING MEMBER & THE HONOURABLE MR. JUSTICE RAM SURAT RAM MAURYA
    By, MEMBER

    For the Petitioner: L.R. Goyal, Advocate. For the Respondents: R.B. Shami, Advocate.



Judgment Text

1. Heard Mr. L. R. Goyal, Advocate, for the complainant and Mr. R.B. Shami, Advocate, for the opposite party, through video conferencing.

2. The complainant filed an application, i.e. I.A. No. 23597 of 2018, for changing the name of the complainant as “M/s. Singdone India Ltd.”. It has been stated that during pendency of the complaint, entire business, assets and liability of the complainant’s company has been transferred in favour of “M/s. Singdone India Ltd.” through agreement dated 30.11.2013 as such “M/s. Singdone India Ltd.” is entitled to be substituted as the complainant. No counter has been filed to this application as such I.A. No. 23597 of 2018 is allowed. “M/s. Singdone India Ltd.” is substituted as the complainant.

3. M/s. ITW India Ltd. (the complainant) (hereinafter referred to as the Insured) filed aforementioned complaint, for directing M/s. New India Assurance Co. Ltd. (the opposite party) (hereinafter referred to as the Insurer) to pay Rs. 1,08,23,432 (equivalent to USD 2,71,400) as damages to the consignment in course of transit and Rs. 51,59,000 being the value of custom duty and incidental expenses, under Insurance Policy No. 611900/21/07/01/00000636, (hereinafter referred to as Policy No. 636), as insurance claim, interest at the rate of 18% per annum on the said amount, from 1.4.2008 till the date of its realization, Rs. one lakh, for harassment, Rs. one lakh, as cost of litigation and any other or further relief which may deem fit and proper in the circumstances of the case.

4. It has been stated in the complaint that the Insured was a limited liability company and engaged in the business of Industrial packaging, Power Systems & Electronic, Transportation, Construction Products, Food Equipment, Decorative Surfaces, Polymers & Fluids and other segments. The Insurer was a Public Sector and engaged in business of providing Insurance Services. The Insured procured HDR System, manufactured by M/s. Amtek HDR Power Systems Columbus, OH, in the year 2006, which was erected and commissioned in February 2007. During operation, due to failure in electronic circuitry, the equipment failed in August 2007. The Insured informed the supplier, about the defect in HDR System, who advised to send the back HDR System to their workshop in Columbus OH, for its repairing. The cost of repair was estimated to be around US$ 19,100 by the manufacturer. Expert issued written instructions dated 10.9.2007, detailing therein, the precautions and steps to be taken to prepare the consignment before shipping, i.e. (i) Water drained in inlet and out let headers by opening the drain valves. (ii) Forced air through inlet header drain valve after closing the main inlet and outlet valves. (iii) Drained water through the drain of outlet header till water stopped gushing out. (iv) All the water pipes from inverter section were opened while separating both the cubicles and no water was found flowing from these pipes. The Insured approached the Insurer for insurance of the consignment against transit risks, while being transported to Columbus. The Insurer deputed Deshpande Associates, Insurance Surveyor & Investigators, Secunderabad to pre-insurance survey and inspection, who inspected the equipment thoroughly and submitted his report dated 9.10.2007. On being satisfied with pre-insurance inspection report, the Insurer accepted the premium of Rs. 6,675 and issued Marine Cargo (Specific Voyage Policy), i.e. Policy No. 636, on 11.10.2007, extending coverage of Rs.1,18,80,000 and risk covered was “Institute Cargo Clause (A)”, of the said equipment, which was in two wooden packed consignments containing No. 1550 KW Heat Treat Power Supply as per invoice No. HDR/01, DT dated 6.10.2007, from warehouse to warehouse, along with extended cover of 10% at Rs. 51,59,000. The consignments were loaded in Vessel NORMANDIE BRIDGE Voyage: IO48W at port of Nhava Sheva on 24.11.2007 and discharged at port of Norfolk on 15.12.2007, thereafter shipped by railway to Cleveland OH, from where it were shipped by flatbed truck to Columbus OH arriving on 4.1.2008. On visual inspection, it was noticed that many of hoses were frozen and few hoses were split open from the water freezing in the components and rubber hoses. As a loss minimization measure, the supplier’s repairer opened the damaged hoses of the equipment after taking necessary photographs and kept the damaged ones for surveyor’s inspection. After taking approval from the Surveyor, the Unit was examined/tested in detail and owing to its high repair cost, finally it was declared as total loss. On information, the Insured lodged his insurance claim with the Insurer on 10.1.2008, who deputed M/s. W.K. Webster (Overseas) Ltd., their Claim Settling Agents in London for arranging the survey and assessment of loss. M/s. W.K. Webster (Overseas) Ltd. appointed International Surveyor & Adjuster (USA) for survey and assessment of the loss. The Surveyor conducted inspection of the consignment and submitted his report dated 28.4.2008, mentioning that loss appears to have been caused by improper preparation prior to transport. The transformer was not completely emptied of the coolant water and winterized before being shipped during winter months. The transformer was shipped to Norfolk, VA then shipped by rail to Cleveland, OH, and then by truck to Columbus, OH. All these area were prone to freezing temperatures during the months of October to April. This machine should have been properly and completely drained of the coolant water prior to shipping. M/s. W.K. Webster (Overseas) Ltd. forwarded the Surveyor’s Report dated 28.4.2008 to the Insurer along with his letter dated 19.5.2008. The Insurer wrote a letter dated 27.5.2008 to the Insured calling for his clarification as according to Surveyor’s Report dated 28.4.2008 the damage to the transformer was not caused due to insured perils. The Insured submitted his clarification through letter dated 25.6.2008, stating therein, that the procedure for preparation and packaging of the equipment for re-export back to supplier/manufacturer was issued by Mr. D. Sateesh, Head-Project and Electrical on 10.9.2007, which were fully followed before packing/fumigation. Thereafter pre-shipment inspection was conducted by Deshpande Associates, Insurance Surveyor & Investigators, on the instruction of the Insurer. Packing/fumigation and container stuffing of the equipment was carried by Deepak Packers & Movers, Hyderabad, a reputed professional. The Insurer by email dated 30.6.2008, acknowledged receipt of the clarification and informed that they had forwarded the papers to Claim Settling Department. Senior Divisional Manager through letter dated 11.7.2008, submitted all the papers relating to Insurance Claim of the Insured to M/s. W.K. Webster (Overseas) Ltd., along with his Special Claim Report, mentioning therein that “we opine that the Insured has taken reasonable steps to prepare the consignment to the best of their knowledge and information. They have employed professional agencies for packing. The reasons for frosting of the transformer parts, are reportedly not due to improper preparation but due to the circumstances beyond their control. Hence the loss may be treated as fortuitous in nature and the claim assessment may be completed by excluding pre-dispatch damages portion of repairs and recommend to consider the claim accordingly.” Station Head of M/s. W.K. Webster (Overseas) Ltd. sent email, recommending for settlement of the claim as insured value less the repair cost of US$ 19,100 for initial damage and salvage value of US$ 6,500. The Insurer then appointed Mr. P.V. Rajeswara Rao, for verifying the preparation activities under taken by the complainant before dispatch of the consignment. Mr. P.V.R. Rao inspected all the records, including instructions for preparation of consignment and verified actual preparation done before packaging of the consignment and submitted his report dated 20.12.2008. M/s. W.K. Webster (Overseas) Ltd. then took an expert opinion from Mr. P.S. Ramanathan, who submitted his report dated 30.7.2010, doubting the entire transaction and submitting that possibly no loss has been suffered. The Insurer then repudiated the claim. Senior Divisional Manager, by letter dated 20.12.2010, informed that appropriate authority has repudiated the claim on the ground that according to the Surveyor and Claim Settling Agents, cause of loss was due to improper preparation of the subject matter prior to its transport/shipment. The transformer was not completely emptied of the coolant water and winterized before its shipment in the winter month. The areas, through which, the transformer travelled are prone to freezing temperature during the months of October through April. The coolant hoses were replaced before survey and the transformer was beyond repair or they could not be tested at all. The Surveyor has concluded that no loss having been suffered due to any fortuitous circumstances during the course of voyage/transit and no loss has been established. It has been stated that initially the Surveyor has submitted report that the transformer was not completely emptied of the coolant water and winterized before shipping during winter months. But when D. Sateesh, Head-Project and Electrical of the Insured informed about the precautions and steps taken before packing of the consignment, then M/s. W.K. Webster (Overseas) Ltd. recommended for settlement of the claim as insured value less the repair cost of US$ 19,100 for initial damage and salvage value of US$ 6,500. Report of Mr. P.S. Ramanathan, report dated 30.7.2010 was merely conjectures and surmises. Repudiation of the claim on its basis was illegal. On these allegations, the complaints were filed.

5. The Insurer filed its written reply and contested the complaint. It has been stated that report of Deshpande Associates, Insurance Surveyor & Investigators was in respect of physical verification of the defects in the transformer. He reported that equipment was in two parts. First part was integrated cubicle bus-make Siemens-WLL2F330 which carries AC power supply to the converter with transformers and converting to DC and further to inverter to make it DC to AC with appropriate accessories. Second part was AMETEK DDR Power system-made Allen Dandle-panel view-1550. He noticed that second part inverter Bus Bars Bridge were in burnt/charred condition. Remaining all accessories of the equipment were found intact. Thereafter, Policy was granted to the Insured. On receiving the intimation of loss the answering respondent deputed M/s. W.K. Webster (Overseas) Ltd., their Claim Settlement Agent in London for arranging survey and assessment of loss, who deputed M/s. International Surveyors & Adjustors, USA for survey. They conducted survey and inspection of the equipment and submitted their report dated 28.4.2008. In the Survey Report, it has been stated that water used for coolant was not removed completely. During transit, the water inside the transformer froze and expanded causing damage to the coolant hoses and electrical components, which occurred due to improper preparation prior to the shipment. The damage was not caused due to insured perils. The Surveyor submitted amended report dated 11.11.2008, in which he has again mentioned that cause of loss appeared to be improper preparation prior to transport. At the time of pre-loading survey cost of repair of initial damage was estimated US$ 80,000. Mr. P.S. Ramnathan was appointed for investigation of the matter. He submitted his Final Investigation Report dated 30.7.2010, in which he doubted about any loss being suffered. After carefully examining all the materials the claim was repudiated.

6. The Insured filed Rejoinder Reply on 15.7.2013, in which, the facts stated in the complaint have been reiterated. The Insured filed documentary evidence, i.e. Written Instruction dated 10.9.2007 (Ann-C-2), Pre-insurance Inspection Report dated 9.10.2007 (Ann-C-3), Insurance Policy (Ann-C-4), Invoice dated 6.10.2007 (Ann-C-5), Insured letter dated 10.1.2008 (Ann-C-6), Survey Report dated 28.4.2008 (Ann-C-7), Letter of M/s. W.K. Webster dated 19.5.2008 (Ann-C-8), Letter dated 27.5.2008 (Ann-C-9), Insured’s Letter dated 25.6.2008 (Ann-C-10), Email dated 30.6.2008 (Ann-C-11), Email dated 12.8.2008 (Ann-C-12), Email of W.K. Webster (Ann-C-13), Inspection Report dated 20.12.2008 (Ann-C-14), Repudiation Letter dated 20.12.2008 (Ann-C-15), Insured letter dated 18.5.2011 (Ann-C-16),along with the complaint. Letter of Ben K.Ho dated 11.11.2008 along with Rejoinder Reply and Affidavit of Evidence of Y.G. Seetharam and Affidavit of Evidence of D. Sateesh.

7. The Insurer filed Survey Report dated 28.4.2008 and 11.11.2008, Investigation Report of Mr. P.S. Ramnathan dated 30.7.2010 and Repudiation letter dated 20.12.2010. Affidavit of Evidence of S.K. Kundra and Affidavit of Evidence of K.S. Kulkarni. Both the parties filed their written submissions.

8. The Counsel for the Insured submitted that the Surveyor in his Survey Reports dated 28.4.2008 and 11.11.2008 has mentioned that the transformer was not completely emptied of the coolant water and winterized before its shipment in winter month and the transformer was shipped to the areas, which were prone to freezing temperatures during the months of October to April, due to which loss was caused. Mr. P.S. Ramanathan went one step ahead and in his report dated 30.7.2010, has submitted that some extremely innocuous damage having been noticed at the destination; the Insured are now trying to take advantage of the same and desired to get rid of a possibility of bad acquisition. On its basis, the Insurer repudiated the claim through letter dated 20.12.2010, attributing the cause of loss to improper preparation of the subject matter prior to its shipment. He submitted that D. Sateesh, Head-Project and Electrical of the Insured, issued instructions dated 10.9.2007, in which he had clearly directed for completely emptying of the coolant water. He gave detail methods for emptying the coolant water. Technical staff followed the procedure as given in Instruction dated 10.9.2007, before packaging the consignments. D. Sateesh has filed his Affidavit of Evidence and proved that (i) Water was drained from inlet and outlet headers by opening drain valves (ii) Forced air through the inlet header drain valve after closing the main inlet & outlet valves. (iii) Drained water through the drain outlet header till water stopped gushing out. (iv) Opened all water pipes from inverter Section while separating both the cubicles and did not find any water flow from these pipes, before packaging the consignments. The insurer has not demanded for cross-examination of D. Sateesh. Before Issuing the Insurance Policy, a Pre-insurance Inspection Report dated 9.10.2007 was also obtained by the Insurer. On being satisfied, the Policy was granted. When all these reports were brought before M/s. W.K. Webster (Overseas) Ltd., who was Claim Settling Agent of the Insurer, then through Email (Ann-C-13), recommended for settlement of the claim. Senior Divisional Manager of the Insurer, himself wrote a letter dated 11.7.2008 and recommended for settlement of the claim. Repudiation letter dated 20.12.2010 is illegal.

9. The Counsel for the Insurer submitted that on the basis of Surveyor’s Report dated 28.4.2008, M/s. W.K. Webster (Overseas) Ltd., in his letter dated 19.5.2008 advised that under the coverage of policy issued for the insured transit from India to Columbus, the cause of loss appears to be improper preparation prior to transport. The transformer was not completely emptied of the coolant water and winterized prior to being shipped during winter months. The damage was not caused due to any insured perils, therefore we do not believe that your liability would attach. The Investigator, Mr. P.S. Ramanathan also doubted the bona fide of the Insured and in his report dated 30.7.2010, has mentioned that some extremely innocuous damage having been noticed at the destination; the Insured are now trying to take advantage of the same and desired to get rid of a possibility of bad acquisition. In Surveyor’s Report dated 28.4.2008, under heading “Condition of Goods” have noted as “Photographs shown to the surveyor at the time of survey showed that the transformer at the time of delivery with several cracked coolant hoses with ice protruding from hoses”. From which, it is clearly proved that the transformer was not completely emptied of the coolant water and winterized prior to being shipped. Pre-Insurance Survey Report dated 9.10.2007 is a visual report from outside. No reliance can be placed on it. The loss was not covered in insured perils rather falls in exclusion clause 4.3 of the Terms of Policy as such the claim was repudiated. He relied upon judgements of this Commission in Himalaya International v. Oriental Insurance Company Ltd., IV (2016) CPJ 109 (NC) and Greenlam Industries Ltd. v. United India Insurance Company Ltd., IV (2019) CPJ 43 (NC).

10. We have considered the arguments of the Counsel for the parties and examined the record. The Insured and the Insurer both took plea the plea that the consignment was damaged during transit. As such Pre-insurance Inspection Report dated 9.10.2007, which was based upon visual examination does not help in determination of cause of damage.

11. A perusal of Survey Reports dated 28.4.2008 and 11.11.2008, shows that the Surveyor was not permitted to verify the actual damaged parts either at initial stage of inspection on 23.1.2008 or at later stage. On 23.1.2008, he took some photographs of the transformer, burnt panel, rear view of transformer, red and blue coolant hoses, coolant hoses, coolant hoses on the side of machine, backside of transformer, part of the water cooled system, main coolant intake hoses, water cooled components and coolant radiator. He was shown some photographs of damaged coolant hose. Surveyor in his report dated 28.4.2008 has noted that photographs shown to him showed that at the time of delivery there were several cracked coolant hoses with ice protruding from hoses. These hoses were already repaired at the time of survey. He was shown two small pieces of damaged coolant hoses (approximately 3” each) but could not verify them from the photographs. The balance of the transformer did not indicate any outward sign of damage.

12. Mr. Ben K. Ho, Senior Project Engineer, Signode Glenview ILT, the representative of the Insured was present at the time of inspection. At that time they took plea that for finding out the fault in tr

Please Login To View The Full Judgment!

ansformer, coolant hoses were replaced as full power-up test was required. According to Mr. Ben K. Ho, Senior Project Engineer damage was caused due to freezing while in transport. On 4.2.2008, Mr. Ben K. Ho, Senior Project Engineer and Mr. Lichtenberg informed that the components test of transformer was completed. Later on Ms. Sharon A. Moris, Risk Manager of ITW Corporation (of which the complainant was a sister concern), informed that repairing of the damaged equipment exceeds the cost of new machine. As such at no point of time, the Surveyor was permitted to examine the damaged parts. The burden was upon the Insured to get verified, all the damaged part at the time of survey and inspection. 13. It is the case of the complainant that the consignments were securely packaged by engaging a professional. None of the parties took any plea that there was any defect in packaging. Neither Mr. Ben K. Ho, Senior Project Engineer, the agent of the complainant nor the manufacturer’s engineers informed that the damage was caused due to vibration or jerk during transit. On the other hand they also informed that damage was caused due to freezing while in transport. In such circumstances, if the damage was during transit, due to freezing of water and its expansion, then the only cause for damage was that water remained inside the machine before packaging. D. Sateesh, in his Affidavit of Evidence, has nowhere stated that the water was completely emptied from the transformer in his presence. So far as Email of Ms. Kamla Rampersaud, Section Head of M/s. W.K. Webster (Overseas) Ltd., (Ann-C-13) and letter dated 11.7.2008 of Senior Divisional Manager of the Insurer (Ann-C-12), are concerned, it were their opinion. The Insurer is not bound to follow it. In the circumstance, the finding in the repudiation letter dated 20.12.2010 that the loss had occurred due to improper preparation prior to the shipment, does not suffer from any illegality. ORDER In view of aforementioned discussions the complaint is dismissed. Complaint dismissed.
O R