Oral Order: (R. Lakshminarsimha Rao, Member)
1. The complaint is filed under Section 17(A) (1) of the Consumer Protection Act claiming for an award for a sum of Rs.68,74,384/- towards sum assured under insurance policy with interest @18% p.a. and an amount of Rs.10 lakh towards compensation as also a sum of Rs.2 lakh towards expenses.
2. The complainant is engaged in manufacture of sugar mill rollers, mill spare equipment for sugar, cement, thermal, mining and allied engineering industries and supplying them to its customers basing on the orders placed therefor. M/s Kinyara Sugars Limited, Uganda placed an order with the complainant-company for supply of different items on 19.01.2010 and accepted to pay the amount in US currency. As per the service order, the complainant-company manufactured the items and booked them on14.07.2010 through the opposite party no.3. from Vijayawada to Mombasa. The licence number and reference number are mentioned in the Bill of lading.
3. The complainant-company prepared total consignment of 18 packages of Sugar Mills Rollers and spare parts in 18 wooden boxes and dispatched by road to Jawaharlal Nehru Port, Nhavasheva and the containers were subsequently loaded on board the vessel MSC Chitra for onward dispatch to Mombasa on 3.08.2011 and the vessel sailed from Jawaharlal Nehru Port and met with an accident at 9.30 a.m. on 7.08.2010 when another vessel by name Khalija-3 collided with it as a result of which both vessels suffered extensive damage and they were grounded at the collusion point. Professional Salvers were appointed to stabilize the vessel and cargo of MSC Chitra. Several containers came out from the deck and salvage of the rest of the containers was not possible to be treated as total loss with no salvage value.
4. The complainant –company insured the articles with the opposite party no.1-insurance company under Marine Cargo-Single Voyage(SEA) from Enkipadu, Vijayawada, Krishna, A.P. to Mumbai, India to Mombasa, Uganda and the mode of transit is SEA under six bills of lading. The basis of valuation is cost of insurance plus freight (CIF) plus 10% -, i.e., value of the product, paid insurance premia, freight charges plus 10% as over and above cost. The policies were in force from 3.08.2010. MSC Chitra sunk in water depth of about 3000 mtrs with the containers and cargo on board. The opposite party no.2 addressed letter dated 7.06.2011 to the opposite party no.3 confirming that the cargo on board of the vessel was under water since 10 months and it can be treated as total loss and the opposite party no.2 issued another letter on 7.06.2011 to the effect the survey of the sunken vessel and identification of the cargo was not possible.
5. The complainant-company made claim intimation on 7.08.2010 to the opposite party no.1-insurance company and lodged claim for the loss of the export shipment. The opposite party no.1-insurance company sought for explanation on 8.08.2011 for the delay in intimation and demanded the complainant to submit documents and bills of lading for the consignments. The complainant-company submitted the documents on 09.08.2011 to the opposite party no.1-insurance company. The complainant–company also lodged claim with the opposite party no.2 for $ 203800 and requested the opposite party no.2 to settle the claim. The complainant-company in its reply dated 19.08.2011 clarified the doubts raised by the opposite party no.1 in its letter sent on 3.08.2011. The second opposite party issued certificate to the effect the cargo was lost in MSC Chitra and rejected the claim of the complainant denying their liability.
6. The opposite party no.1-insurance company issued claim forms on 21.10.20111 and the complainant submitted the same along with relevant documents on 25.10.2011 and informed the opposite party no.1-insurance company that the complainant-company had not lodged claim with the C& F agents and no recovery agent was appointed to proceed against Kaleja-3 and the complainant is not in position to obtain total loss certificate from the captain of the ship. The opposite party no.1-insurance company repudiated the claim on 24.05.2012. The complainant-company requested the opposite party no.1-insurance company through letter dated 6.06.2012 to settle the claim and informed the first opposite party that they had insurable interest in the articles insured at the time of taking the policy and utmost good faith was maintained and loss of the material was immediately informed to the opposite party no1. The complainant issued reminders on 21.06.2012 and 5.07.2012. The opposite paryt no.1 on 1.08.2012 informed the complainant that their head office did not consider the request made by the complainant. Hence, the complaint.
7. The opposite party no.3 remained exparte.
8. The first opposite party resisted the claim on the premise that no policy was in existence on the date of Bill of lading on 3.08.2010, on the date of risk on 7.08.2010. The complainant-company obtained the six insurance policies on 09.08.2010 subsequent to deposit of the premium of Rs.60,000/-, And payment of consolidated stamp duty. As on the date of the insurance policies, the complainant was not having insurable interest in the articles. The complainant is guilty of cheating the opposite party no.1 with misrepresentation of facts which fall within the preview of Clause no.11 of the Institute Cargo Calluses ‘A’ and Sections 19 and20 of the Marines Act. All the 6 insurance policies were obtained on 09.08.2010 with the items damaged on 07.08.2010 due to collision of Vessels in the sea.
9. Sincerity and honesty is mandatory to sustain claim under Marine Insurance Policy. The complainant is guilty of suppressing the material facts before this Commission which amounts to playing fraud on this Commission and defraud the opposite party no.1-insurance company and for the purpose of wrongful gain. The complainant attempted to cover up the date of bill of lading which was mentioned as 12.08.2010 in the first instance to obtain the 6 insurance policies. The complainant deposited Rs.60,000/- on 09.08.2010 towards the premium and the premium was debited to the cash deposit account of the complainant on the same date as the balance amount was inadequate to adjust the insurance premiums
10. The coverage of risk would be effective from the date of receipt of premium. The acts of the complainant complicating the issue warrant an elaborate trial and enquiry and examination of the witnesses. The complaint is not maintainable before this Commission. ExA2 and E3 relate to the transactions between the second opposite party and the complainant and the third opposite party and the complainant respectively have to be proved by acceptable and cogent evidence. As there was no scope for the first opposite party to verify the contents of the 18 packages sad to have contained sugar mill rollers, the same is required to be proved in accordance with law.
11. The first opposite party denied the occurrence of accident of collision of vessels and appointment of salvers and their finding as to the impossibility of salvage of the rest of the containers. The date of issue is corrected in policies as 03.08.2010 which was done at the instance of the complainant-company. The insurance policies were obtained suppressing the risk taken place on 07.08.2010. The complainant had not given proper reply to the query of the opposite party made on 224.05.2010. There is no deficiency in service on the part of the first opposite party and prayed for dismissal of the complaint.
12. The second opposite party filed written version contending that the complainant is not a consumer as it availed the service of the opposite party for commercial purpose. The opposite party no.2 is the agent of disclosed principal. The complainant has no cause of action against the agent and their cause of action is against the owner of the vessel. The third opposite party issued Bill of Lading and the complainant can have claim for deficiency in service only against the opposite party no.3 with which they have contract. There is no priviity of contract between the opposite party no.2 and the complainant. Even assuming that collision took place between the two vessels due to negligence of the master of MSC Chitra on whom the complainant’s goods were loaded, the provisions of Indian Carriage of Goods by Sea Act, 1925 apply and Article IV Rule 2 of the Act exempts the second opposite party from any such liability.
13. Article III Rule 6 of Indian Carriage of Goods by Sea Act, 1925 bars any suit not filed within one year from the date of delivery of goods or from the date when the goods should have been delivered. If the suit or complaint is not lodged within one year, the claim is barred by limitation. The complainant’s claim is time barred in August, 2013. The complainant’s claim is essentially against the opposite party no.1 which is liable to compensate the complainant as the goods were insured and the loss of goods gives rise to claim under the insurance policy.
14. The managing partner of the complainant-company, T.Raghava Prasad has filed his affidavit and the documents, ExA1 to A33. On behalf of the opposite parties no.1 and 2, the Divisional Manager Sri K.Ramesh Babu of the opposite party no.1-insurance company and the Manager Mr.K.S.Suvarna of the opposite party no.2-company filed their affidavits and the documents, ExB1 to B6.
15. The learned counsel for the complainant and the opposite party no.2 have filed written submissions.
16. The points for consideration are:
i) Whether there is deficiency in service on the part of the opposite parties?
ii) To what relief?
17. POINT No.1: The complainant-company is engaged in manufacture of sugar mill rollers, mill spare equipment. M/s Kinyara Sugar Limited, Uganda placed service order dated 19.01.2010 to the complainant-company for supplying of Mill rollers and other parts. The complainant-company manufactured the items and booked them vide delivery challan cum invoice dated 14.07.2010 and as per the six invoices a sum of Rs.57,77,058/- is payable in US dollars by M/s Kinyara Sugar Limited, Uganda to the complainant-company. The complainant-company booked the items in 18 packages with the opposite party no.3 which agreed to transport them from Vijayawada to Mombasa. The opposite party no.3 issued 6 Bills of Lading dated 03.08.2010 in favour of the complainant-company.
18. The 18 packages packed in wooden boxes were dispatched by road to Jawaharlal Nehru Port, Nhavasheva and subsequently loaded on board MSC Chitra for onward dispatch to Mombasa. The Vessel started from the Port at 9-30 a.m. on 07.08.2010 and within a few hours, there was collision between Khalijia-3 and MSC Chitra. The complainant-company obtained 6 Marine Insurance Policies on 09.08.2010. The opposite party no.2 in its reply dated 27.09.2011 explained how the collision of the two vessels occurred, as under:
'The 'MSC CHITRA' completed cargo operations at the Jawaharlal Nehru Port (JNP) on the morning of 7 August 2010. She then sailed with a pilot, departing the Mumbai area via the main outbound channel.
As for the 'KHALIJA 3', she was being salved when, on the morning o f7 August 2010, she weighted anchor to enter Mumbai escorted by two tugs. In order to proceed into the port she had to cross the outbound channel and then to alter course towards the north, in order to join the traffic flow of the inbound half of the channel, on its eastern side.
As the 'MSC CHITRA' proceeded outbound in the channel, the 'KHALIJIA 3' crossed in front of the 'MSC CHITRA' from her starboard side to her port side.
For some unknown reason, after the 'KHALIJIA 3' had safely cleared the channel, she then continued altering course to port back towards the channel into the path of the 'MSC CHITRA'. The vessels then collided within the navigation channel at 0937 hours local time.
The reasons for such an erratic and unusual manoeuvre by the 'KHALIJIA 3' cannot then reasonably be explained: indeed there does not appear to have been any attempt to do so by the owners of 'KHALIJIA 3'. It was on any reasonable view, a highly dangerous manoeuvre made at a late stage when the vessels were less than half a mile from each other that was the cause of the collision.
The navigation of the 'MSC CHITRA' was not the cause of the collision, even if that were a material question which, in view of the Clause Paramount, it is not.'
19. The learned counsel for the opposite party no.2 has contended that the items consigned are part of the business transaction between M/s Kinyara Sugar Limited, Uganda and the complainant meant for commercial purpose and as such the complaint is not maintainable. Admittedly, the complainant-company manufactured and sent the items for consideration of the amount payable in US dollars and the profit therefor speaks the commercial purpose of the transactions.The second opposite party specifically averred in the written statement that the complainant is not consumer and the complaint is not maintainable as the complainant does not fall under the definition of 'consumer' as defined under section 21(1)(d). This provision of law clearly excludes a person who avails of any services for any commercial purpose.
20. The question of jurisdiction is one of the vital aspects for a court or tribunal since it involves the challenge to the very competence of or tribunal.The order or decree passed by the court or tribunal is not treated on the same footing where it passed without territorial jurisdiction and pecuniary jurisdiction and the jurisdiction as to the subject matter as well. The order passed without the jurisdiction of the subject matter is no order in the eye of law as the very power required to pass the order or decree is lacking in the court or tribunal.
21. Section 2(1)(d) of the Consumer Protection Act confers status of consumer on a person who avails service or purchases goods not for any commercial purpose and in case the service is availed or goods are purchased for commercial purpose it is subject to the condition that such commercial purpose is meant for his eking out his livelihood by means of self-employment. The word ‘commercial’ is an adjective defining the nature of a transaction or activity irrespective of the fact whether that transaction or activity is on a large scale or on a small scale. If any activity or transaction is for the purpose of profit making it becomes commercial. The appellant, as such cannot maintain the complaint before the Consumer Forum.
22. In 'Birla Technologies Ltd vs. Neutral Glass and Allied Industries' reported in 2011 NCJ 390 (SC), it was held that service provided by a service provider for commercial purpose is excluded from the ambit of Section 2(1)(d) of the Consumer Protection Act. The Hon’ble Supreme Court held that goods purchased and service utilized for commercial purpose does not come under the purview of the provisions of C.P. Act. Section 2(1) (d) of the Consumer Protection Act excludes the person invoking its jurisdiction on account of the purchase of goods or utilization of service by him for any commercial purpose.
23. Insofar as the claim against the opposite parties no.2 and 3 is concerned, the complainant has failed to establish that he would fit in the definition of ‘consumer’ in terms of Section 2(1) (d) of the Consumer Protection Act. As such, we are of the considered opinion that the complainant can seek his remedy against the opposite party no.2 and 3 elsewhere and not by this Commission. The complaint against the opposite parties no.2 and 3 is liable to be dismissed.
24. The complainant obtained 6 marine insurance policies in respect of the items such as TOP LOTUS ROLLER 1 no.p.o.no. ksl09002376, 5 nos. cost of shelling mill rollers, 9 nos. trash plate cast steel, mill bottom roller gm bearing liners drg qty 16, 2 packages plate scraper cs and 01 package gear (130t) & pinion (16t) for feeder table, on 9.08.2010 and in the insurance policies the date of bill of lading is noted as 03.08.2010 and the date of voyage is mentioned as 09.08.2010. A correction is made as to the date of voyage as 03.08.2010. The opposite party no.1 has disputed authenticity of the correction of the date in the insurance policies. The complainant has stated that it used to seek for correction of the date of issuance of the insurance policy dating back to certain previous date than the date on which the insurance policy was issued. The insurance policies under Ex22 to A32 support the statement of the complainant as all of them bear corrected date as regards date of commencement of risk. Thus, we find no substance in the plea of the opposite party no.1-insruance company that the date of 03.08.2010 mentioned in the 6 insurance policies is not authenticated.
25. The complainant lodged claim on 07.06.2011 claiming a sum of 125180 USD. The opposite party sought for explanation on 08.06.2011 for the delay in making the claim intimation and the explanation tendered therefor, by the complainant was that the complainant waited till 10 months in order to see whether the containers would be recovered from the vessel. The opposite party no.1 sought for the documents,
1) Claims Forms duly filled in all respects (Ocean Transit Claim Form 6 nos. enclosed)
2) Please confirm whether the Invoice price is inclusive of duties, if so please furnish details.
3) Please confirm whether any exemption of duties from the authorities.
4) Please confirm whether the Sum Insured is inclusive of freight, if so, specify.
5) Please confirm whether actual freight is paid, if so, arrange the copy of the receipt.
6) Please confirm whether any monetary claim lodged with the C & F agents. If so arrange the copy of the claim.
7) If C & F agents has denied the liability, arrange the latest reply.
8) Please arrange copy of Professional Salvors and Black Box report.
9) Please confirm whether any recovery agent has been arranged to proceed against M.V.Khalija.
10) Please arrange Captain/Master Certificate about the loss.
26. The complainant addressed letter dated 25.10.2011 to the opposite party no.1 which goes to show that the complainant has submitted the documents sought for, by the opposite party no.1-insurance company. The first opposite party repudiated the claim on 24.05.2012 for the following reasons.
* 'Non-compliance of Clause No.11 of the Institute Cargo Clauses ‘A’ which is reproduced below.
Clause 11.11.1:- In order to recover under this insurance, the Assured must have an insurable interest in the subject matter insured at the time of the loss.
Clause 11.11.2:- Subject to Clause 11.1 above, the Assured shall be entitled to recover or insured loss occurring during the period covered by this insurance, not withstanding that the loss occurred before the contract of insurance was concluded, unless the Assured were aware of the loss and the insurers were not.
* Non-compliance of Section 19 of the Marine Insurance Act, 1963 which reads that 'A contract of marine insurance is a contract based upon the utmost good faith, and if the utmost good faith be not observed by either party, the contract may be avoided by the other party'.
* Non-compliance of Section 20 of the Marine Insurance Act, 1963 which reads as follows.
(1) Subject to the provisions of this section, the Assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known to him. If the assured fails to make such disclosure, the insurer may avoid the contract.
(2) Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk'
* Whereas the date of collision of the vessels MSC Chitra and MV Khalijia occurred in Mumbai port area on 07th August 2010, you have deposited Rs.60,000/- in your Cash Deposit account with us on 09th August, 2010 and the premium for the Marine insurance policies cited above was adjusted from your CD account on 09th August 2010. On the date of loss (07th August 2010), the Marine insurance policies cited above were not existing and thus there is no liability for insurer.
27. The opposite party no.1 issued the 6 marine insurance polices on 9.08.2010. Subsequently, the opposite party no.1 made correction of the date of commencement of risk in all the 6 insurance policies. The first opposite party cannot be presumed to have issued the insurance policies without verifying the bill of lading as the number and date of bill of lading are mentioned in the 6 marine insurance policies. The first opposite party has consciously corrected the date of risk commencement as 03.08.2010 in the insurance policies and thereby it invited the risk of coverage of risk with effect from 3.08.2010. However, the contention of the learned counsel for the complainant that there was sufficient amount in the cash deposit account of the complainant and yet the first opposite party demanded the complainant to deposit an amount of Rs.60,000/- on 09.08.2010 is not acceptable as there was in adequate amount which was not sufficient for premium to issue the 6 insurance policies. It is the complainant on its own volition, deposited the amount of Rs.60,000/- towards the premium for purchasing the 6 marine insurance policies from the opposite party no.1-insurance company.
28. The Vessel, MSC Chitra met with accident on 7.08.2010 when it collided with Khalijia-3. The opposite party no.2 has stated that it is on account of lapse on the part of captain of Khalijia-3, the accident occurred. The opposite party no.2 issued certificate on 07.06.2011 to the effect that the refloating plans had been made to discharge as much of the containers remaining on board as possible. On refloating the containers and spilled cargo remaining in the holders were found to be in an appallingly bad state. The MSC Chitra suffered accident shortly after refloating requiring her to be towed out of the roads. The deterioration gave cause for concern to all parties. An independent salvage company was contracted who towed the vessel to a location in deep water. The MSC Chitra sank in a water depth of about 3000 meters with the remaining containers and cargo still on board as such the requested survey could not be made possible and it would have been possible to identify the container(s) or cargo, even if she was still afloat. Thus, the complainant suffered loss to the tune of Rs.68,74,384/-. The complainant stated stated to have been compensation claimed from Opposite Party No.2/premise M/s Kinyara Sugar Limited, Uganda claimed compensation from it. The claim against the opposite party no.1 has to be confined to the sum assured and not the remote loss such as the loss of business. In assessing the amount towards the loss suffered by the com
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plainant company, the primary duty of the complaint as to mark immediate claim intimation was ignored and neglected by the complainant-company. The complainant company strangely pleaded that it was waiting for one year for the containers to be recovered from the sinking vessel. 29. The complainant has to provide opportunity to the opposite party no.1-insurance company to conduct survey by deputing a surveyor immediately after the accident occurred. The complainant deliberately has refrained itself from making claim intimation immediately after the occurrence of the accident. Thus, the opposite party no.1-insurace company was deprived of the opportunity to verify whether the entire containers were sunk or some of them were recovered and taken away by any other persons. The complainant has not taken any immediate steps to minimize the loss. The complainant has also lodged claim with the opposite party no.2 which declined to honour the claim and in view of jurisdictional aspect, we have not decided arbitrariness or otherwise of the repudiation of the claim by the opposite party no.2 and leave the parties to approach the competent Forum. Keeping in view the negligence of the complainant in inmaking the claim intimation, minimizing the loss and not affording opportunity to the opposite party no.1 to verify the loss caused to the insured items, the claim lodged with the opposite party no.2 and the liability of the opposite parties no.2 and 3, we are inclined to hold the complainant company entitled to a sum of Rs.20,00,000/- (rupees twenty lakhs) from the opposite party no.1 insurance company. The opposite party no.1 is liable to pay interest @9% per annum on the amount of Rs.20,00,000/- for the unjust repudiation of the claim and accordingly the complaint deserves to be allowed. 30. In the result, the complaint is allowed. The opposite party no.1 is directed to pay an amount of Rs.20,00,000/- (rupees twenty lakhs only) with interest @ 9% per annum from the date of filing of the complaint till payment together with costs of Rs.10,000/-. The complaint against the opposite parties no.2 and 3 is dismissed with liberty for the complainant to approach the Civil Court or any competent Forum. In the event the complainant approaches the Civil Court or any other Forum, the period spent between the filing of the claim and the disposal of the matter today will be excluded under Section 14 of the Limitation Act, 1963 in the light of the decision of the Hon’ble Supreme Court in 'Trai Foods Ltd vs National Insurance Company Ltd and others' reported in III (2012) CPJ 17'.