UETC- Singapore, the holding company of the UETC-Delhi, India Ltd., and four timber traders based in India entered into a sales contract whereby UETC- Singapore agreed to sell to the traders, at an agreed price, ‘Pyinkado Round Logs’ (PRL hereafter). The sales contracts mandated that marine insurance for the India shipment had to be arranged by the seller at the seller’s cost. The vessel, MV EDINA MARIA, carrying PRL from Yangon, Myanmar to Tuticorin, India, ran aground, in Indian territorial waters, and was abandoned, with cargo on board. This gave rise to insurance claims on the OP-United India Insurance Co. Ltd. (OP hereafter) by UETC-Delhi, the complainant herein. The OP denied the insurance claims, hence this consumer complaint.2. Heard arguments on 17.10.2019 and 17.01.2020.3. Learned counsel for the complainant referred to one of the sales contracts, that between UETC-Singapore and M/s MM Saw Mills & Industries, Kerala dated 30.06.2005 (Part III- additional document submitted vide IA 17594/2018) and to the Bill of Lading ( Ann. C), to submit that 173.372 H.Tons of PRL was loaded on MV Edna Maria (vessel hereafter) per the sales contract, part of a total cargo of 993.442 HT (1120 logs). Marine insurance was to be arranged by the seller at the sellers cost. Accordingly, insurance premium was deposited by Shri Biju Abraham on behalf of UETC-Singapore with the OP per receipt dated 4.7.2005, and a specific voyage policy dated 4.7.2005, for journey from Yangon, Myanmar to Tuticorin Port, India, carrying PRL, favouring the assured, M/s MM Saw mills & Industries, was issued. Similarly, policies were issued in favour of the other Indian importers. All these policies are at Ann. D-colly. On 23.07.2005, the vessel ran aground in Indian territorial waters owing to rough weather. The insured-consignees, vide letters dated 26.07.2005, intimated the OP about the incident; and vide letters dated 27.07.2005, intimated the OP about their irrevocably assigning their insurance policies to UETC-Delhi, the complainant (Ann. E & F-colly). On 11.08.2005, the complainant wrote to Shaba Maritime Co., the owner of the vessel, giving them the particulars of insurance policies and informing them that the letter be treated as a provisional claim intimation for the loss of entire cargo valued at US $ 455,496.09 (Rs.2,00,41,828/-); on the same date, the complainant also addressed the OP requesting registration of its claim with respect to the cargo loss of Rs.2,00,41,828/- (Ann. G-colly). Vide letter dated 25.10.2005, the complainant, informing that the vessel had been declared as “Constructive Total Loss”, requested OP to process the claim qua cargo on the vessel (Ann. J). Vide letter dated 09.12.2005, a claim for Rs.2,00,41,828/- , due to non-delivery of the consignment, was submitted to the OP (Ann.-L). Scansea services (Kerala), investigator/surveyors appointed by the OP submitted their report dated 15.12.2005 to the OP (Ann. OP-5). On 5.1.2006, complainant addressed the OP requesting urgent settlement in order that their right of recovery from the vessel owners did not get diminished. On 06.01.2006, complainant issued a legal notice to the owners and managers of the vessel (Shahba Maritime Co., Delaware, USA; Petroland LCC, Sharjah, U.A.E; Chahaya Shipping & Trading Co., Singapore and Terra Nova Protection & Indemnity Agency, London) making a claim for the loss and also restraining their insurer from making any payment till this claim was settled (Ann. O). However, vide letter dated 24.01.2006, OP repudiated the complainant’s insurance claim on frivolous grounds (Ann.-P). Thereafter, some exchange of letters between the complaint and the OP took place. Finally, the complainant issued a legal notice dated 24.1.2007 to the OP claiming Rs.5,00,41,828/- with 18% simple interest with effect from 24.1.2006, date of repudiation, on grounds of complete breach of contract and deficiency in service; OP duly replied, denying the breach of contract and other allegations, vide letter of its advocate dated 30.01.2007 (Ann. X-colly).4. After narrating the facts, as above, learned counsel for complainant took up the issues involved. Qua privity of contract between the parties and locus standi to pursue this complaint, he pointed out that UETC- Singapore, being the shipper/seller, had deposited the premium with OP for marine insurance through its disclosed agent/representative, Biju Abraham, in India. It was on record that OP had acknowledged a letter dated 4.07.2005 from Biju Abraham wherein he had stated that he was the authorized agent for UETC-Singapore and that for the purpose of insurance of timber logs valued at approx. Rs.2.50 crore, he was making a deposit of Rs. 25,000/- with the OP (Ann.-OP2). Further, section 23 of Marine Insurance Act, 1963 provided that “a contract of marine insurance is deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the policy be then issued or not; and for the purpose of showing when the proposal was accepted, reference may be made to the slip, covering note or other customary memorandum of the contract, although it be unstamped” His argument was that having received the premium, the marine insurance contract stood concluded. Thereafter, policies were issued in favour of the Indian consignees, the ultimate buyers of the cargo. He then referred to section 52 of Marine Insurance Act, 1963 which provided that “(1) a marine policy may be transferred by assignment unless it contains terms expressly prohibiting assignment. It may be assigned either before or after loss.” Accordingly, the policies were assigned by the insured-consignees in favour of the complainant, UETC-Delhi. It followed that the complainant was thus entitled to institute the instant consumer complaint as it had beneficial interest in the lost/abandoned cargo and therefore fell within the definition of a ‘consumer’ under section 2 (1) (d) of the Consumer Protection Act, 1986. Counsel submitted that this settled the issue of whether the complainant had locus standi to pursue this consumer complaint. Qua non-joinder of consignees in the complaint, he argued that since they had irrevocably assigned their policy in favour of the complainant, their impleadment was not necessary. Learned counsel concluded by drawing attention to para G of the consumer complaint and reiterated that since it had not been disputed by the OP that damage to the vessel and its cargo had been caused by the vessel having run aground, the liability of the OP to settle the claim of the complainant was immediate and absolute under the contracts of insurance.5. Learned counsel for the OP began by stating that a Singapore based company was sending consignment of logs to India which were stated to be insured through an agent in the names of buyers in India. Remarkably, he submitted, policies were in favour of the Indian buyers, not the company sending the timber. Since this was so, contract(s) between the Indian buyer(s) and the sending company became important. He argued that initially, the sales contract was on CIF basis. He explained that CIF is a seller’s contract and the contract ends only when the goods reach the destination and payment is made. This is the reason why it is called CIF (cost, insurance, freight) contract. He further explained that a C & F contract, on the other hand, is not a seller’s contract but a buyer’s contract. In such a case, it is the buyer who has to pay the freight. He argued that the impugned contracts were all seller’s contracts on CIF basis; if so, insurance taken in India on behalf of consignees was a case of pure and simple misrepresentation by Sh. Biju Abraham, acting on behalf of UETC-Singapore.6. He further argued that under a marine insurance policy, there has to be insurable interest which is then transferable by assignment. Insurable interest, he explained, is the risk of losing goods in the event of perils involved in the voyage or likely to be involved. In the instant case, the Indian consignees/buyers had no insurable interest in the cargo at the time the vessel ran aground. This was so because till the vessel reached the port of discharge and the cargo was taken over by them, they had no interest in the cargo, having not paid a penny till then. And this was so because these were all CIF contracts. Necessary implication is that UETC-Singapore could not have taken insurance on behalf of the Indian buyers, in the manner it purportedly did.7. He then drew attention to the letter of Mr. Biju Abraham to the OP dated 4.7.2005 (supra) referred to by the counsel for the complainant. In this letter, it was clear that the policy was to be for insurance of the cargo being sent by UETC- Singapore from Yangon to Tuticorin by MV Edna Maria. In other words, it was to be in favour of the Singapore based UETC. However, the policy was obtained in the names of Indian buyers, and not in the name of the consignor, UETC, Singapore. When the peril occurred, the Indian buyers assigned these policies to another Indian company, UETC, Delhi, and not to the Singapore company who had the actual insurable interest. He argued that there was nothing on record to show that the Indian buyers had any insurable interest in the cargo. This has been, he submitted, discussed in the surveyor’s report.8. Further, learned counsel for the OP argued that Shri Biju Abraham could not have bought insurance for a foreign company and any attempt to regularize this by having a certificate from RBI was of little avail. He also submitted that the goods lying in the sea when the vessel had run aground were salvageable; however, no effort had been made by the insured to take any steps in this direction.9. He drew attention to Institute Cargo Clauses (A) (Ann. OP-4): clause 11.1 lays down that 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. He submitted that section 7 of the Marine Insurance Act, 1963 has also defined insurable interest: (1)…every person has an insurable interest who is interested in a marine adventure; (2) In particular, a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss,… In the instant case, the counsel argued, the Indian buyers had no interest in the cargo till it reached them.10. Learned counsel elaborated that there were six insurance policies in the names of four Indian buyers of the cargo on the vessel when it ran aground. These policies were on CIF basis. This put the risk with the exporter/ seller till delivery was made and payment defrayed by the indian buyer. Therefore, buyers’ interest would start only when goods were delivered. Before that, buyers had no interest and therefore, no insurable interest. The argument was that if the goods were not to reach the Indian buyers, they would have lost nothing because they had paid nothing. In such a case, however, the Indian buyers have assigned their ‘insurable interest’, which they did not have, to UETC-Delhi, whose holding company is UETC- Singapore. He pointed out that all the four Indian consignees had sent identical intimations dated 26.7.2007 to the OP regarding the vessel having run aground. All the four had also sent identical intimations dated 27.7.2005, to the OP to the effect that they had irrevocably assigned their policies to UETC, Delhi, the complainant.11. He then drew attention to the legal notice of the complainant received on 12.1.2007, and to the reply dated 30.01.2007 to this legal notice by the OP, standing by it’s decision to repudiate the claim (Ann. X- colly). He submitted that this reply had explained in detail why the OP could not accept the claim as per extant law: Mr. Biju Abraham had no authority to arrange for insurance cover on behalf of his foreign principal; the four Indian consignees insured had no insurable interest at all times and at the inception of the policy, and therefore, the question of assigning their interest to UETC-Delhi did not arise; Mr. Biju Abraham had only disclosed the true state of affairs at the time of inception or prior to that when he bargained marine transit cover in respect of shipment in question. Counsel referred to sections 7 and 53 of Marine Insurance Act, 1963 to emphasize that as per section 7, the Indian buyers had no insurable interest and therefore, under Section 53, they could not have assigned insurable interest they did not have.12. In a brief rebuttal, counsel for the complainant made a few points. One, qua the complainant not making any attempt to salvage the cargo, he submitted that the same was not practicable as would also be clear from the surveyor’s report which clearly stated that there was no road facility near the grounded vessel so as to enable salvage by road. Two, regarding suppression of facts in respect of Mr. Biju Abraham, counsel denied the same and reiterated that in OP’s own letter dated 30.03.2006 (Ann. –R), it had been stated that it was not their allegation that Mr. Biju Abraham made representation to deceive them. Three, on the issue of CIF basis of the sales contract, he pointed out that sales contract showed the unit price as being on CIF basis. Therefore, CIF was only the basis of valuation. Invoking a decision of the National Commission in the case of Oriental Insurance Company Ltd. Vs. M.S. Ajanta International, he pointed out that this would clearly show that over the issue of C & F v/s CIF, the OP was clearly at fault. He then referred to the insurance policies: pointing out that the basis of valuation was CIF, he argued that this was at the instance of the OP, and could not be now used against the complainant. Drawing attention to complainant’s rejoinder, counsel submitted that it had been clearly explained therein that insurable interest existed in respect of the Indian buyers as well as the complainant company, and that it was the duty of the OP to have honoured the claim.13. Responding to the rebuttal, counsel for the OP pointed out that the case invoked by the learned counsel for the complainant was a case of C & F, not CIF. The instant case involved Indian buyers, if contract, insurable interest and assignment thereof.14. After hearing the learned counsels and carefully perusing the record, I am of the considered view that the complainant has not been able to establish it’s case that it was entitled to claim insurance for the lost cargo, on the basis of assignment of the insurance policies in the names of four Indian buyers, premia for which had been paid by UETC-Singapore, through their agent, Mr Biju Abraham.15. Admittedly, UETC-Singapore, the holding company of the complainant, UETC-Delhi, had sold timber to four Indian companies. This was sent on a vessel, EDNA MARIA, from Myanmar to Tuticorin. On way, the ship ran aground and had to be abandoned. All the cargo on the ship was therefore lost. All the four Indian buyers, through identical letters, intimated the OP the incident (26.7.2005) and then assigned their insurance policies (27.7.2005) to the complainant who is now before this Commission claiming over Rs.5 crore for the value of cargo lost. These are the core admitted facts.16. Arguments advanced by the complainant are that the OP was intimated immediately. Surveyor was also appointed. However, the claim was repudiated, wrongly. On the other hand, counsel for the OP has argued that the repudiation was justified since the sales contracts were on CIF basis. Under this, export was made at the seller’s risk, and insurance too had to be purchased by the seller. Therefore, there was no insurable interest of the Indian consignees/importers at the time the incident occurred. As such, the same could not have been assigned to the complainant. Learned counsel for the complainant however held that there was insurable interest and in support thereof invoked an order of the National Commission in which the Indian insurance company had been held liable for paying the insured amount for goods stolen in transit from port of discharge, Dar-es-Salam, till it reached it’s final destination, Lusaka. Counsel for the OP however felt that this citation was irrelevant, since the contract in the citation was on C & F basis and the insurance was on CIF basis; and it was the Indian seller which had taken insurance.17. In my considered view, the arrangements under which the entire transaction was seemingly carried out lends credence to OP’s stance that the present insurance claim of the complainant is not sustainable. Admittedly, UETC Singapore was exporting timber to the four Indian buyers on CIF basis. The consideration was to be paid only when the shipment reached the destination and delivery taken by the Indian buyers. Insurance policy for the cargo and responsibility for the cargo including risk in the cargo was therefore with the seller till it reached Tuticorin. It is only after this that the Indian consignees’ interest in the cargo commenced. Since this never happened, as the ship did not reach Tuticorin, the Indian buyers’ insurable interest did not get created. If so, their assigning the insurance policy in favour of UETC-Delhi has no meaning. Quite clearly, since the Indian importer had not paid for the cargo, the question of them sustaining a loss on it being lost in transit cannot arise. The loss was on account of the seller and ought to have been insured by the seller in it’s own name, not in the manner in which it came to be insured in the names of the Indian consignees. It is this aspect of the matter which has been discussed and debated at some le
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ngth in the proceedings. The clear conclusion, to my mind, is that the Indian companies, in whose names insurance policies had been issued, had no insurable interest at the time of the incident. Consequently, they could not have assigned what they did not have.18. This leads to the question: how did the insurance policies come to be issued in the names of the Indian buyers? Per record, Mr Biju Abraham, vide a handwritten letter dated 4.7.2007, declaring himself to be the authorized agent of UETC-Singapore, deposited Rs. 25,000/- towards insurance of the timber cargo of Rs. 2.5 crore value. He also made it clear that details regarding cargo would be made available later for issuing policy certificate and in case of any claim, the payment was to be made to UETC-Singapore. This was duly receipted by OP, recording that it was deposit premium for marine cargo insurance from Yangon to Tuticorin by MV Edna Maria by consignee UETC-Singaore. Thus, what is clear is that in both the letter dated 4.7.2005 and the receipt dated 4.7.2005, the representation was that premium was being paid for cargo of UETC-Singapore. However, the policies issued thereafter, all dated 4.7.2005, showed the Indian consignees as the assured parties. The act of declaring intent in the name of UETC-Singapore and thereafter having the policies issued in the names of Indian consignees did amount to misrepresentation by Mr. Abraham, one of the reasons cited by the OP for repudiating the claim. Be that as it may, it stands established that the entire contract was on CIF basis and the seller, UETC-Singapore therefore ought to have taken insurance for the cargo in it’s own name, and not in the names of the Indian buyers, adopting a circuitous route through Mr Biju Abraham. OP therefore cannot be faulted for having repudiated the claim.19. In view of the discussion above, this consumer complaint, after consideration, stands dismissed. In the facts of the case, there shall be no order as to costs.