Prem Narain, Presiding Member:
1. This first appeal has been filed by the appellant National Insurance Company Ltd. against the order dated 13.2.2018 of the State Consumer Disputes Redressal Commission, Punjab (in short ‘the State Commission’) passed in Consumer Complaint No. 256 of 2016.
2. Brief facts of the case are that on 25.1.2013 appellant/opposite party issued a marine cargo open policy No. 404402/21/12/4200000496 for a period of 25.1.2013 to 24.1.2015. Total sum assured was Rs. 5,00,00,000 . Respondent/complainant sent 67,700 Kgs of wheat flour through ship from seaport at Mundra to Yeman and same reached on 14.9.2013. On reaching there, the entire consignment was found damaged. Same was found unfit for consumption and was destroyed. Survey was conducted on 8.10.2013. Total loss as per surveyor report was U.S $ 26,741. Claim was filed by complainant as he got to know about the damage. On 10.2.2016 same was declined as excluded under general exclusion Clause 4.4 of the Insurance Policy.
3. Aggrieved, the respondent/complainant filed consumer complaint before the State Commission being No. 256 of 2016. The complaint was resisted by the Insurance Company by filing written statement on the ground that the complaint was time barred and that the claim was covered under the exclusion Clause 4.4. The State Commission partly allowed the complaint as under on 13.2.2018:
“(i)to pay to complainant 50% of Rs. 17,25,228 i.e. Rs. 8,62,614 along with interest at the rate of 9% per annum w.e.f. 1.1.2014 as the survey report was submitted on 11.12.2013 and the payment was to be made within one month from the date of submission of the survey report;
(ii) to pay Rs. 50,000 as compensation for not settling the claim under the IRDAI regulations; and
(iii) to pay Rs. 11,000 as litigation expenses.”
4. Hence the present appeal by the Insurance Company.
5. Heard the learned Counsel for the parties and perused the record. Learned Counsel for the appellant stated that the complaint was time barred as the repudiation was done vide letter dated 17.3.2014 of the settling agent of the Insurance Company and complaint has been filed on 10.8.2016. No application for condonation of delay has been moved by the complainant and therefore, there is no question of condoning the delay. The State Commission entirely accepted the complaint without considering the question of delay in filing the complaint. The learned Counsel mentioned that the State Commission has considered an e-mail dated 10.2.2016 as the repudiation letter which was filed by the complainant. Though this letter is also relating to repudiation of a claim under the same policy, however, this is not the repudiation letter for claim in question because this letter mentions ten containers, whereas in the claim in question only three containers were used. Though it has been stated by the complainant that this letter has been obtained under RTI from the Insurance Company, however, no such proof has been filed by the complainant to show that this letter has been given by the Insurance Company in reply to a RTI question. Thus, the complainant is trying to take advantage of another repudiation letter for the claim in question. Actual repudiation letter was sent on 17.3.2014 and the complaint is clearly time barred. To support his argument, learned Counsel referred to the following judgments:
(i) Panipat Thermal Power Station HPGCL, Panipat through its Executive Engineer/LRE-7 v. New India Assurance Co. Ltd., I (2013) CPJ 114 (NC). It has been held that:
“6. …………It is well settled principle of law that after repudiating the claim or making some payment under claim as final payment subsequent correspondence between the parties does not extend period of limitation and complaint has to be filed within the prescribed statutory period of two years ……………………………..”
(ii) State Bank of India v. B.S. Agriculture Industries (I), II (2009) CPJ 29 (SC)=II (2009) SLT 793=(2009) 5 SCC 121. It has been held that:
“12. As a matter of law, the Consumer Forum must deal with the complaint on merits only if the complaint has been filed within two years from the date of accrual of cause of action and if beyond the said period, the sufficient cause has been shown and delay condoned for the reasons recorded in writing. In other words, it is the duty of the consumer Forum to take notice of Section 24A and give effect to it. If the complaint is barred by time and yet, the consumer Forum decides the complaint on merits, the Forum would be committing an illegality and, therefore, the aggrieved party would be entitled to have such order set aside.
20. On its plain averments, the complaint is barred by time and ought to have been dismissed as such but curiously this aspect was not examined by any of the consumer Fora although specific plea to this effect was taken by the Bank.”
6. Learned Counsel further stated that the appellant had taken a special plea that the complaint was time barred however, the State Commission has decided otherwise. The State Commission has not considered the actual repudiation and has relied upon another repudiation letter filed by the complainant, which is in respect of some other claim.
7. It was further argued by the learned Counsel for the appellant that the cause of action actually arose when the goods were found damaged and the date of repudiation is not important. Limitation period shall run from the date of knowledge of the complainant about the damage of the cargo. To support his assertion, learned Counsel referred to judgment of Hon’ble Supreme Court in Kandimallai Raghavaiash and Company v. National Insurance Compnay & Anr., III (2009) CPJ 75 (SC)=(2009) 7 SCC 768, wherein the following has been observed
“18. The term “cause of action” is neither defined in the Act nor in the Code of Civil Procedure, 1908 but is of wide import. It has different meanings in different contexts, that is when used in the context of territorial jurisdiction or limitation or the accrual of right to sue. Generally, it is described as “bundle of facts”, which if proved or admitted entitle the plaintiff to the relief prayed for. Pithily stated, “cause of action” means the cause of action for which the suit is brought. “Cause of action” is cause of action which gives occasion for and forms the foundation of the suit. (See: Sidramappa v. Rajashetty). In the context of limitation with reference to a fire insurance policy, undoubtedly, the date of accrual of cause of action has to be the date on which the fire breaks out.”
8. Apart from the complaint being barred by limitation, learned Counsel mentioned that the claim is excluded under Clauses 4.4 and 4.5 of exclusions mentioned in the policy. Clause 4.4 read as under:
“4.4. loss damage or expense caused by inherent vice or nature of the subject-matter insured.”
9. Learned Counsel for the appellant further argued that the surveyor has mentioned the reason for damage of the product as the condensation of moisture in the container, which would be clear from the following observations of the surveyor:
“Attendance & Findings:
Inspection of 3 x 20’ MSC containers-2708 bags
On 8th Oct., 2013 at 1000 hrs jointly with the consignee’s representative and his local insurers.
1. All the 3x20’ containers were noted to be positioned on trucks in the yard.
2. General external condition of the containers was satisfactory without notable flaws.
3. Fermented odour emanated from the containers on opening the same.
4. First stack of bags sighted to sustain heavy discoloration with fungus stains.
5. Condensation droplets sighted on the inner roof of the containers.
6. We did not sight any kraft paper lining or moisture absorbing silica gel bags in the container.
Extent of Damage:
Extent of Damage:
The Port Health Authorities rejected all the 3x20’ containers deeming the same unfit for consumption. Total loss.
Cause of Damage:
Cargo damage is attributed to the phenomenon of condensation with the containers.
We opine that the bags were cold and holding high moisture while stuffing at supply source and condensation effect took place in the containers during passage through different climatological zones.
Understand that loading port experienced intermittent rain showers at the time of shipment.”
10. From the above observation of the surveyor, the learned Counsel emphasised that the material got damaged because of its inherent vice and nature of the subject matter. Hence, clearly exclusion Clause 4.4 is applicable in the present case and therefore, the claim is not payable.
11. On the other hand, the learned Counsel for the respondent/complainant stated that the complainant had been taking insurance from the same Insurance Company for about 10 years and therefore, he is not a new client for the Insurance Company. It was argued that the alleged letter dated 17.3.2014 has been written by the alleged settling agent of the Insurance Company, however, the name of the Insurance Company is not written anywhere in the letter. Moreover, it is the Insurance Company which can repudiate the claim as the contract of insurance is with the Insurance Company and not with the settling agent. The Insurance Company has not been able to show any letter which has been written by them for repudiation for the present claim. The complainant got the information under RTI and then the Insurance Company has given the letter/e-mail dated 10.2.2016 mentioning the repudiation of the present claim. So far as the mentioning of ten containers in that letter is concerned, the same may be typographical mistake. This letter is also in respect of the same policy. The learned Counsel for the Insurance Company has not specified the other export for which this letter has been sent for repudiation. The complainant has received only this letter as repudiation letter and therefore, the same was filed before the State Commission. If the Insurance Company is claiming that this repudiation letter is in respect of some other cargo, the Insurance Company should have clarified the details of that cargo. The State Commission has agreed with this letter of repudiation and accordingly the complaint is well within limitation of two years prescribed under the Consumer Protection Act, 1986. It was further contended by the learned Counsel for the respondent that the policy in question was ICC(A) policy and all risks were covered. The learned Counsel further mentioned that the complainant obtained the copy of the terms and conditions from the Insurance Company under RTI and those terms and conditions do not include Clause 4.4 and it ends at Clause 4.2 only. Hence Clause 4.4 cannot be applied on the complainant’s case.
12. The surveyor has clearly stated that the cause of damage is condensation of moisture in the container. This cannot be attributed as inherent vice and nature of the subject matter in the present case as the subject matter was wheat flour.
13. The learned Counsel further stated that in certificate given for cargo handling at Mundra Port against the column climate condition, it is mentioned ‘dry and fit for stuffing’ Thus, it is clear that there was no defect in the stuffing of the material in the container. It was further pointed out that the surveyor in his report under the column cause of damage has opined that loading port experienced intermittent rain showers at the time of shipment. This observation of the surveyor clearly goes against the certificate of cargo handling at Mundra port. Thus, the surveyor has tried to prove that damage occurred due to condensation of moisture, which could become possible due to intermittent rain shower at the loading port which is against the record.
14. The learned Counsel for the respondent/complainant stated that the State Commission has only allowed 50% of the claim though the State Commission should have allowed the total claim as it has clearly held that Clause 4.4 is not attracted in the present matter. As the complainant has not preferred any appeal against the order of the State Commission, he is not pressing this point. However, the appeal filed by the appellant Insurance Company does not have any merit because the complaint was filed in time and exclusion Clause 4.4 of the policy is not applicable in the present case.
15. I have given a thoughtful consideration to the arguments advanced by the learned Counsel for the parties and have examined the material on record. Though the whole material got damaged, but the State Commission has only allowed 50% of the insurance claim on the basis of the facts and circumstances of the matter. The Insurance Company has even then preferred the appeal. First of all, I do not find any force in the contention of the learned Counsel for the appellant that the complaint was time barred. The alleged repudiation letter dated 17.3.2014 is a letter of a settling agent and cannot be said to be repudiation letter issued by the Insurance Company. Moreover, the Insurance Company has not been able to prove that the letter/e-mail of repudiation dated 10.2.2016 filed by the complainant relates to some other shipment as no specific proof has been filed for the same. The complainant has also not filed any proof that he obtained the letter under RTI. In these circumstances, because there was no other letter of repudiation issued by the Insurance Company, the State Commission was right in believing that the actual repudiation letter was only dated 10.2.2016. Once this position is accepted, the complaint is within limitation period of two years.
16. Coming to the merits of the Insurance claim, it is seen that the repudiation has been done under exclusion Clause 4.4 of the policy. This Clause relates to inherent vice and nature of substance. In the present matter, the wheat flour was exported and that was the subject matter. Whatever are the qualities of wheat flour are known to everybody including the officials and agent of the Insurance Company. If insurance was allowed by the Insurance Company, then the question of inherent vice or nature of substance cannot be raised subsequently because the Insurance Company fully knew the nature of the substance insured. The surveyor has clearly stated that damage occurred due to condensation of moisture inside the containers and as such this is not excluded under the policy because this is ICC(A) policy which covers all the risks. Thus, in my view exclusion Clause 4.4 of the policy is not attracted in the present case. The State Commission has awarded interest @ 9% p.a. from 1.1.2014. Hon’ble Supreme Court Chengalrayan Cooperative Sugar Mills v. Oriental Insurance Co. Ltd. & Anr., (2000) 10 SCC 213 has observed that the interest is to be granted from the date of filing of the complaint. The head-note reads as under:
“B. Consumer Protection Act, 1986 — Sections 22, 18 and 14 — Interest — Interest on the amount of compensation — Date from which should be awarded — Appellant filing claim before National Commission for compensation for insured gunnies destroyed in fire — National Commission, quantifying the compensation and awarding interest thereon @18 per cent fro
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m the date of its order — Supreme Court, while retaining the rate, directing the interest to be paid rather from the date of filing of the claim before the National Commission — Interest — Interest on compensation—Date from which to start.” 17. Accordingly, the order dated 13.2.2018 needs to be modified and interest shall only be applicable from the date of filing of complaint i.e. from 10.8.2016. When interest is being provided, no separate compensation can be given and particularly when complainant is a private limited company, in the light of the decision of Hon’ble Supreme Court in Sikka Papers Limitedv. National Insurance Company Limited and Ors., III (2009) CPJ 90 (SC)=(2009) 7 SCC 777, wherein the Apex Court has held that: “19. By way of footnote, we may observe that claim of Rs. 10,00,000 made by the complainant for mental harassment is wholly misconceived and untenable. The complainant is a company and, therefore, claim for mental harassment is not legally permissible. It is only the natural person who can claim damages for mental harassment and note the corporate entity.” 18. Based on the above discussion, the order dated 13.2.2018 of the State Commission is modified to the extent that the appellant shall be liable to pay Rs. 8,62,614 (Rupees eight lakh sixty two thousand six hundred fourteen only) with interest @ 9% p.a. from date of filing of the complaint i.e. from 10.8.2016 till actual payment. The order relating to compensation of Rs. 50,000 is set aside, however, the order relating to cost of Rs. 11,000 is maintained. The order be complied within a period of 45 days. First Appeal No. 720 of 2018 stands disposed of accordingly. Appeal disposed of.