Eastman Exports Global Clothing Private Limited vs ECGC Limited & Anr

M/s. Eastman Exports Global Clothing Pvt. Ltd., (hereinafter referred to as the 'Complainant'), a registered Company under the Companies Act, 1956, is the largest knitwear Manufacturer and Exporter from India.From the year 2008 the Complainant has been taking Insurance Policy, namely, Multi Buyer Exposure Policy (hereinafter referred to as "the Policy") from the ECGC Ltd., Opposite Parties (hereinafter referred to as "ECGC").The Policy was issued for the first time in September, 2008, wherein the Maximum Liability was 100.00 Crores and was valid for a period of one year from 01.09.2008 to 31.08.2009.The Policy was renewed every year by ECGC, with the same terms and conditions and with the same Maximum Liability of 100.00 Crores.The Policy covered the risk of non-payment from all Insured Buyers and as per definition of Insured Buyers in the Policy, all the Buyers of the Complainant were Insured Buyers, unless specifically excluded from the purview of the cover under the Policy.Under the Policy, the Complainant was to be indemnified by ECGC to the extent of loss of the Complainant or loss limit provided by ECGC, whichever was lower, on each Insured Buyer in case of non-payment by Insured Buyers owing to the following Risks Insured:

INSURED RISKS

Commercial Risks (Buyer Risks)

Protracted Default

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Contract Repudiation

Political Risks (Country Risks)

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Contract Frustration

Contract Cancellation

Import Restriction

Shipment Diversion

On 28.08.2017, the Complainant submitted proposal for renewal of the Policy on premium amount of 1,74,65,624/- and processing fee of 12,711.86, which was to be paid by the Complainant on monthly instalment basis.On 28.12.2017 the Policy was renewed by ECGC for the period from 01.09.2017 to 31.08.2018 with the Covering Letter, Policy Bond etc. Before that, as required in the renewal proposal, a List of Current Buyers was provided by the Complainant to ECGC.The Aggregate Loss Limit (ALL) mentioned in the Covering Letter was 100.00 Crores and Loss Limit was stated to be 10% of Aggregate Loss Limit (ALL). The Covering Letter issued by ECGC, inter alia, stated the Insured Buyers, which included M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and M/s KMART HOLDING CORPORATION, having address at United States. The Covering Letter further stated that the coverage was not available for those Buyers, whose names were included in the Defaulter Buyers List.However, no Definition or otherwise Explanation of the Defaulter Buyers List was provided in the Policy issued to the Complainant.

Likewise, on 24.08.2018 another proposal was submitted by the Complainant for renewal of the Policy.On premium amount of 1,68,58,128/- as also processing fee of 12,711.86 to be paid by the Complainant on monthly instalment basis, on 11.11.2018 ECGC renewed the Policy, covering the period from 01.09.2018 to 31.08.2019, wherein the Aggregate Loss Limit (ALL) and Loss Limit was stated to be 100.00 Crores and 10% of Aggregate Loss Limit (ALL) respectively.

During the validity period of the Policy renewed from time to time, the Complainant made exports of 9,84,99,894.07 to M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and of 16,65,19,308.70 to M/s KMART HOLDING CORPORATION between 29.05.2018 and 09.10.2018.Though the said two Insured Buyers were not Defaulters but due to Insolvency of these two Insured Buyers the payment of the exports made to them was not received by the Complainant, necessitating the Complainant to lodge a Claim with ECGC.

On receipt of a communication dated 16.10.2018 from the said Insured Buyers that they have filed for Bankruptcy with the United States Bankruptcy Court for the Southern District of New York on 15.10.2018 (Annexure IV), on 20.10.2018 the Complainant filed a Pre-Petition Claim of US $ 3943102.96 with the said United States Bankruptcy Court.However, despite assurances from the Insured Buyers and said Pre-Petition Claim, the payment of exports was not made to the Complainant and the Bank, which had discounted the export bills, started insisting for payment from the Complainant.The Complainant informed the Bankers regarding Bankruptcy proceedings initiated by the Insured Buyers and also repaid the entire outstanding amount to the Banks by 15.07.2019, otherwise Complainant's account would have been declared Non-Performing Asset (NPA) by their Bankers, restraining it from availing further banking facilities. The details of the payment made by the Complainant to the Banks for discounted amounts of export invoices have been annexed as Annexure VI colly with the Complaint.

On 05.08.2019 a Claim was filed by the Complainant with ECGC for indemnification of the loss suffered on account of non-receipt of payment of the exports made to the aforesaid two Insured Buyers due to Insolvency proceedings and also furnished the documents and clarifications sought for by ECGC for processing the Claim by 04.11.2019.When there was no response from ECGC in the matter, the Complainant sent an Email dated 21.01.2020 to the Chairman-cum-Managing Director of ECGC and requested for early settlement of the Claim.

ECGC vide Letter dated 23.01.2020(Annexure-IX) rejected the Insurance Claim of the Complainant on the ground that there was deviation of certain Conditions of the Policy, viz. Clause 7(a) & (b), Clause 8, Clause 3(d) and Clause 11, by the Complainant.The said Letter reads as under:-

"Ref. RCPC/SRO1/026-3612/26163/65/66/19-20 Date:23-01-2020

To

M/S. EASTMAN EXPORTS GLOBAL CLOHTHING (P) LTD.

5/591 SRI LAKSHMI NAGAR

PITCHAMPALAYAM PUDUR

TIRUPUR 641603

Dear Sir,

Sub: Claim filed by you on A/c of shipment(s) made to buyer M/s. SEARS ROEUCK & CO., USA under policy MBE-0260003612

*************************************************************

This is with reference to Claim filed by you with ECGC on 07/08/2019 on account of shipments made by you to the above mentioned buyer and the supporting documents submitted.

The supporting documents and clarifications have been duly scrutinized and we summarize our observations as below:

As per clause 7(a) & (b) of the policy, during the period of cover, if there is any change in the credit risk perception in respect of any of the Insured Buyers, it is the discretion of ECGC to exclude the cover on the insured buyer from the purview of the policy.

Such exclusions and their notifying or communication process has been explained as per the clause 7(a) & (b) of the policy.

As per the subject clause, the cover on the buyer on whom the Claim has been lodged has been excluded from the purview of cover and the shipments under Claim have been effected after such notification of exclusion of insured cover on the buyer.

Hence the cover on the buyer stand excluded from the purview of the policy as stipulated in the above clause.

Clause 8 of the policy stipulates about the process of notification of such cancellation of cover by either post or electronically including by e-mail.

The e-mail notification dated 10/04/2018 sent from the servicing branch regarding the exclusion of cover (non-availability of cover because of buyer being present in BSAL) has been attached herewith for your records.

The shipments under Claim have been effected after the notification/communication of such exclusion of cover under the policy, and hence the loss stands excluded from the purview of the policy.

In addition to the above, we bring to your attention the following deviations to policy terms and conditions:

The balance of the total quarterly premium due for the quarter beginning with 01/06/2018 has been remitted only on 05/07/2018 which is in deviation to policy clause 10 of the policy.

The report of non-payment of overdue has been delayed.For more details please refer to clause 3 of the policy bond.

Clause 3 d of the policy stipulates that in the event of occurrence of insured risks, the insured is to take all practicable measures to minimize loss.

We note that Shipments to the buyer have been effected when the earlier bills on the buyer were overdue, increasing the liability on the buyer. Such shipments have been effected without prior approval of the Corporation and in deviation to this clause.

As per clause 11 of the policy bond, a statement of turnover shall be submitted to the Corporation every quarter, which has not been submitted under the policy.

In the light of the above deviations, we express that the Claim for loss on the subject buyer cannot be considered favourably and stands rejected.

As per the terms and conditions of the policy, the Claim can be re-opened with any further representation submitted strictly within a maximum period of three months from the date of this letter with the requisite documents & clarifications, failing which the matter shall stand closed.

Kindly address your representation if any to

The Appellate authority:

ECGC LTD.

EXPRESS TOWERS, 10 TH FLOOR

NARIMAN POINT, MUMBAI 400021,

Please note to forward your representation through the Regional Claim Centre, Chennai.

Thanking You,

Yours faithfully,

Sd/-

For ECGC LTD.

Encl: our E-mail communication dated 10/04/2018 for cover exclusions on the buyer"

Further, in their Letter dated 04.02.2020, which was sent in reply to Complainant's email dated 21.01.2020, it was stated by ECGC that the aforesaid two Buyers were appearing in their Buyer Specific Approval List (hereinafter referred to as "the BSAL:) w.e.f. 01.02.2017, i.e. on the dates when the shipments under Claim had been made between 29.05.2018 and 09.10.2018 and, therefore, the insurance coverage was not available to the Complainant.The said Letter reads as under:

"HO/Pol.Clm/2020

04.02.2020

Shri S. Rajaseharan,

Whole-time Director and COO,

M/s Eastman Exports Global Clothing P. Ltd.,

Tirupur.

Dear Sir,

Reg: Shipments made to M/s K Mart Corporation, USA and M/s Sears Roebuck & Co., USA

We refer to your email dated 21.1.2020 addressed to our CMD and in reply, wish to present facts of the case:

We note that two Claims in respect of shipments made to the captioned buyerswere received at our Tirupur Branch on 08.08.2019. However, the final documents for processing the Claims have been received on 04.11.2019 after continuous follow up and discussions with Shri Manoj of your office. In this connection, we understand that you had also me the Regional Manager on 15.11.2019 in his office in Chennai and had detailed discussions.

As you are aware, as a credit insurer, the Corporation follows a well-established system of monitoring exposures underwritten on the buyers. Accordingly as soon as intimations with regard to overdue bills drawn on overseas buyers is received by us; and/or non-payment of bills and/or Claims filed on buyers due to defaults and also based on information from any other source is received, ECGC includes the names of such buyers in the Buyer Specific Approval List (BSAL).

After due processing of the said Claims, it is observed that the above two buyers were appearing in our Buyer Specific Approval List (BSAL) w.e.f.

02.2017 i.e. on the dates of shipments under Claim had been made (shipments period 29.05.2018 to 09.10.2018).

It is further observed that our Tirupur branch had advised you by mail on

4.2018 in reply to your email query of same date that the subject buyers were already appearing in our BSAL and that insurance coverage was not available under the Policy issued to you.

During your visit to our Head office on 22.1.2020, we had explained the reasons as to why we are unable to consider your Claim favourably. You are free to represent your Claims with supporting documents and clarifications within 90 days of receipt of our communication, which will further examined on its merits.

In view of the above, we had regretted our inability to admit the Claims and a detailed letter in connection with your Claim has been sent to you on 24.01.2020.

Thanking you,

Yours faithfully,

Sd/-

(DVS Sairaman)

Deputy General Manager"

It is averred in the Complaint that ECGC had nowhere stated from which date the said Insured Buyers were in BSAL, maintained by them, nor had they mentioned the fact about BSAL in the Policy nor had they informed about it any time after issue of the Policy nor had they issued any Notification in terms of Clause-8 of the Policy for removing the name of any Buyer from the purview of insurance coverage. In Claus-7(a),ECGC had stated that in case of any change in their credit risk perception about the Insured Buyers, the Notification will be issued, and this fact was to be mandatorily notified for information of all the Insured Exporters, including the Complainant, but no such Notification was made by ECGC and this fact has been admitted by ECGC in their letter dated 27.02.2020.No exclusion of the Insured Buyer was made by ECGC since 01.02.2017, as no inclusion in the "List of buyers who have come to adverse notice of the Corporation" has been Claimed by ECGC in any of their communications, rejecting the genuine Claim of the Complainant. ECGC had provided a copy of its internal computer system generated records (Annexure XI) to the Complainant, which unambiguously state and clarify that effective date of placement of buyers in alleged BSAL list was 15.10.2018.After clarifying the position about the deviation of some of the conditions of the Policy by the Complainant in the Letter dated 12.02.2020, there was no reason for rejecting the genuine Claim of the Complainant and ECGC have not repeated their observations relating to deviation of any of the conditions of the Policy in their letters dated 04.02.2020 and 27.02.2020.

While bringing on record a copy of the computer system generated record of ECGC, which is placed in the Paper-Book at page no. 368 (Part-I, Vol. II), the Complainant states that payment of an insurance Claim bearing no. 25444 made on 28.02.2019 under the same type of Policy (i.e. MBEP) in respect of one of the aforesaid two insured buyers, namely, M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE, to whom exports had been made in September, 2018, has been made to another Exporter, namely, Gardex India Pvt. Ltd. on 02.07.2019.

In the said background, alleging deficiency in service and unfair trade practice on the part of ECGC on the aforesaid counts in rejecting the Complainant's genuine Claim, the present Complaint has been filed, praying for the following reliefs:

"i) That the OP-1 be directed to make expeditious settlement of Complainant's Insurance Claim of 26,50,19,203/- (Rupees Twenty Six Crore Fifty Lakh Nineteen Thousand Two Hundred and Three only) for exports of 9,84,99,894.07 (Rupees Nine Crores Eighty Four Lakh Ninety Nine Thousand Eight Hundred Ninety Four and paise seven only) to insured buyer M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and 16,65,19,308.70 (Rupees SixteeenCrore Sixty Five Lakh Nineteen Thousand Three Hundred Eight and paise seventy only) to M/s KMART HOLDING CORPORATION during the period of policy i.e. from 29.05.2018 to 09.10.2018.

ii) That the Ops be directed to pay exemplary costs of 10,00,00,000.00 (Rupees Ten Crore only) towards costs and harassment caused by wrongful delay in Claim settlement and stating falsehood in their Claim rejection letter dated 04.02.2020 and 27.02.2020, regarding effective date of placement of insured buyers in BSAL.

iii) That the Opposite Parties be directed to pay interest as provided in (Policyholders Protection of Interests) Regulations, 2017 for non-payment of Insurance Claim within time.

iv) Any other relief that may deem fit and appropriate by this Hon'ble

Court."

The Complaint has been resisted by ECGC by filing the Written Statement. While admitting about issuance of the Policy to the Complainant, it is stated on behalf of ECGC that it is a fully owned Government Company established in the year 1957 by the Government of India to provide export credit insurance and trade related services to the Indian Exporters against loss in export of goods and services and to the Banks to enable exporters to obtain better facilities from them. The Complainant was holding the Policy since 01.09.2008, which had been renewed continuously with Maximum Liability of 100.00 Crores.In the present Case, total 74 shipments were made to M/s Sears, Roebuck & Co., USA and 120 shipments were made to M/s K Mart Holding Corporation, USA during the policy period 01.09.2017 - 31.08.2018 and 01.09.2018 - 31.08.2019, with insured percentage of 90%. If during the period of cover ECGC finds that there is a material change in the credit risk perception in respect of any of the Insured Buyer or in respect of any Insured Buyer's country, it can exclude the said Insured Buyer or the country from the purview of cover under Condition-7 of the Policy.The Policy for the period 01.09.2017 - 31.08.2018 was issued by ECGC with Aggregate Loss Limit (ALL) of 100.00Crores and Single Loss Limit of 10% of ALL on all shipments made to single Buyer.The Covering Letter dated 28.12.2017 consisted the Schedule, Policy Bond and a List of Buyers, including the name of M/s Sears, Roebuck & Co., USA.The name of M/s K Mart Holding Corporation, USA, was not mentioned in the said List.The Policy Bond issued to the Complainant along with the Covering Letter dated 28.12.2017 categorically provides in Condition 4(d) Part-III Exclusions that ECGC shall not be liable for any loss arising out of dispatch of goods to an Insured Buyer if at the time of such dispatch, the Buyer is excluded from the purview of cover in pursuance of the provisions under Condition 7(a).The said Covering Letter provided under point 4(i) that coverage is not available under the Policy on Buyers whose names are displayed on the website of ECGC under the 'List of buyers in adverse notice of ECGC', which is also known as BSAL.It is pleaded that in order to properly assess the Buyers on whom ECGC chooses to underwrite risks, ECGC maintains BSAL, in which those buyers are placed with whom ECGC has either had adverse experience or on whom adverse information has been received like Buyer having filed for Liquidation or heading for Liquidation, on receipt of a Claim on the Buyer by any Policyholder or Claim under Export Credit Insurance to banks - Post shipment (ECIB-PS) by Insured Bank.The purpose of this list is to give an opportunity to the Policyholders to do proper due diligence when dealing with Buyers placed in the BSAL and accord an opportunity to them to take an informed decision whether to take exposure. It is submitted that as per ECGC Buyer Master Records, both M/s Sears, Roebuck & Co., USA and M/s K Mart Holding Corporation, USA were excluded from the purview of cover under the Policy w.e.f. 01.02.2017 and, therefore, the said Buyers were not Insured Buyers.As per Condition 7(a)(i) of the Policy, the Complainant was under an obligation to check and verify the status of each Buyer, using the Login ID and Policy documents, before effecting any shipment to it but the Complainant acted in an utter callousness, disregarding the terms and conditions of the Policy Bond, and effected numerous shipments to the said two Buyers without verifying their status.Upon an inquiry by the Complainant regarding availability of cover to the said two Buyers, vide Email dated 10.04.2018 the Complainant was informed by ECGC that both the Buyers were in BSAL and coverage under the Policy was not available.It was the duty of the Complainant to ensure that the Buyers were not in BSAL before effecting the shipments in terms of Condition 7 of the Policy Bond, which the Complainant failed to observe, and there was no procedure mentioned in the Bond/Documents for mandatory intimation of removal/placement of any Buyer in BSAL. As shipments to the said two Buyers were made after ECGC Notification through ECGC website and Email dated 10.04.2018, sent by ECGC to the Complainant, and in the absence of any credit limit on the said Buyers in writing from ECGC, no liability is attracted in terms of Condition 7(b) of the Policy Bond, as no cover was available for the shipments under Claim and the Claim was not tenable. The Complainant had not filed Claims of 9.85 Crores and 16.65 Crores towards shipments made to the Buyers M/s Sears, Roebuck & Co., USA and M/s K Mart Holding Corporation, USA respectively.The Complainant had made Claims of 8,86,49,904/- and 14,98,67,377/-for the shipments made to the said Buyers.After continuous follow-up and discussions, the Complainant submitted the requisite information, clarifications and relevant documents only on 04.11.2019 and ECGC was duty bound to thoroughly examine the Claims filed by the Policyholders and take an informed decision in the light of the said documents and information.There was failure on the part of the Complainant to comply with terms and conditions of the Policy, viz. (i) the shipments under the Claim had been effected after cover on the said two Buyers had been excluded from the purview of the policy cover and such notification of exclusion was informed to the Complainant by email notification dated 10.04.2018, which is in violation of Condition 7 Part-II and Condition 4(d) Part-III; (ii) the report of default was submitted with a delay of 52 days in complete violation of Condition 3(b) Part-II of the Policy Bond whereas it was a condition precedent to ECGC's liability;

(iii) the Complainant also made further shipments to the Buyers when payment in respect of earlier shipments remained overdue, which is in complete violation of Condition 2(a)(i) Part-II of the Policy Bond; and (iv) the balance of the total quarterly premium due for the quarter beginning with 01.06.2018 was remitted with delay on 05.07.2018 in complete disregard of Condition 10 of the Policy Bond, whereas payment of premium/charges is a condition precedent to ECGC's liability in accordance with Condition 10.After due application of mind and careful examination of all the documents, the Claim of the Complainant was repudiated by ECGC. Further, same reasons for rejection of the Claim were given in the letters dated 23.01.2020 and 04.02.2020.Letter dated 04.02.2020 was only reply to the Email dated 21.01.2020 of the Complainant and Letter dated 27.02.2020 was reply to letter dated 12.02.2020 of the Complainant for re-examination of the Claim. The Loss Limit on the Buyers was not available on the date of shipments as they were placed in BSAL w.e.f. 01.02.2017 and subsequently continued to be placed in BSAL due to adverse experience on 15.10.2018, which is evident from the website generated copy of history of BSAL details of both the Buyers (Annexure R-1 to the Written Statement filed by ECGC).

As regards payment of insurance Claim no. 25444 made by ECGC to some other Exporter towards shipments made to one of the said two Buyers, it is submitted that the matter was examined by ECGC and the amount of 25.00 Lakhs paid for the Claim to the said other Exporter was recalled for return vide Letter dated 27.05.2020 (Annexure R-2 to the Written Statement).

It was also pleaded by ECGC that every policy should be read as per its own specific terms and conditions and they have to be construed and observed strictly as held in Para-17 of Oriental Insurance Co. Ltd. V. Sony Cheriyan, 1999 (6) SCC 451, wherein the Hon'ble Supreme Court has held that "The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot Claim anything more than what is covered by the insurance policy. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein." and further upheld by the Hon'ble Supreme Court in M/s BHS Industries Vs. Export Credit Guarantee Corp. & Anr., (2015) 9 SCC 414 .In support of their contention ECGC also relied upon an Order passed by the Hon'ble Supreme Court in " Sethi Auto Service Station & Anr. Vs. Delhi Development Authority & Ors." [AIR 2009 SC 904] .

We have heard Mr. Devesh Tripathi, learned Counsel for the Complainant, Mr. Bharat Sangal, learned Sr. Counsel for the ECGC and given a thoughtful consideration to the arguments advanced by them.

It is not in dispute that the Complainant has been obtaining Multi Buyer Exposure Policy from the ECGC since September 2008 till 31.08.2020 covering the risk of non-payment from all Insured Buyers, which included M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and M/s KMART HOLDING CORPORATION, having address at United States. As per Covering Letter issued by ECGC coverage was not available for those Buyers, whose names were included in the Defaulter Buyers List.However, no Definition or otherwise Explanation of the Defaulter Buyers List was provided in the Policy issued to the Complainant.The Complainant exported goods worth 9,84,99,894.07 to M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and 16,65,19,308.70 to M/s KMART HOLDING CORPORATION between 29.05.2018 and 09.10.2018, i.e., during the currency of the Policy.Though the said two Insured Buyers were not Defaulters but due to Insolvency of these two Insured Buyers the payment of the exports made to them was not received by the Complainant.On claim being filed, the ECGC rejected the claim on the ground that the two buyers, i.e., M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and M/s KMART HOLDING CORPORATION were excluded from the purview of the cover from 01.02.2017.It is the case of the Complainant that they were never informed / given notice about the inclusion of the two buyers, i.e., M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and M/s KMART HOLDING CORPORATION in the Defaulters List w.e.f. 01.02.2017.It is an afterthought and ECGC cannot take shelter of this frivolous ground for rejecting their genuine claim.

The main issue for our consideration is whether the Insured Buyers, i.e., M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and M/s KMART HOLDING CORPORATION were excluded from the list of Insured Buyers as per terms of the Policy or not?

Condition No.7 of the Policy, which is relevant in this context reads as under:-

"7.Cancellation of Your Cover

(a) If any time during the Period of Cover there is a material change in our credit risk perception in respect of any of the Insured Buyers or in respect of any Insured Buyers' country, we may at our sole discretion exclude that Insured Buyer or the Country from the purview of cover under the Policy. Any such exclusion will be notified to you either by communication addressed to you in that regard or through our web-site ( www.ecgcindia.com ) in the manner stated below:

(i) As regards exclusion of an Insured Buyer, by placing the name of the Insured Buyer on the website of the Corporation under the 'List of Buyers' who have come to the adverse notice of the Corporation; and

(ii) As regards exclusion of a country, by placing the country under the list of 'Restricted Cover' category of countries.

(b) If after you have been notified of exclusion from cover as aforesaid any shipment is despatched to an Insured Buyer or to a country so excluded and notified, we shall not be liable to indemnify you in respect of any part of the loss that you may suffer on any such shipments unless you have taken our prior written approval for cover before making such shipment.

Giving Notice

Any notice, which we may give to you under the Policy including any notice relating to a Loss Limits and / or the reduction or cancellation of cover may be given -

by ordinary post or by recorded delivery through a reputed private courier service to your address as stated in the Schedule or to any other address of which we have been notified by you for this purpose; or

by facsimile or electronically.

Any notice sent by ordinary post or by courier service shall be deemed to be served on the third working day after posting or handing over to the courier or on your receipt., whichever is earlier. For the purpose of this condition a working day means any day other than a Saturday or Sunday or a public holiday in the place to which the notice is addressed.

Any notice sent electronically, including by facsimile, shell be deemed to be served on viewing by you or on the first working day after transmission, whichever is the earlier. "

As per above-mentioned Condition No. 7, the name of Insured Buyer can only be removed when its name is put under the list of Buyers Who have Come to the Adverse Notice of the Corporation' and the same is communicated to the Complainant in terms of Condition No. 8 of the Policy or through website www.ecgcindia.com . But in the present case, the ECGC failed to do so. Their website www.ecgcindia.com is also not working. Therefore, the ECGC has committed deficiency in service in rejecting the genuine claim of the Complainant.

In "United India Insurance Co. Ltd. vs. Harchand Rai Chandan Lal [IV (2004) CPJ 15 SC]", the Hon'ble Supreme Court has held as follows:-

" 12. Similarly in the case of General Assurance Society Ltd. v. Chandumull Jain and Anr., reported in (1966) 3 SCR 500, the Constitution Bench has observed that the policy document being a contract and it has to be read strictly. It was observed :

"In interpreting documents relating to a contract of insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however, reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for fire and extended to cover flood, cyclone etc. had come into being."

Therefore, it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous.

From the above discussion, we are of the opinion that theft should have preceded with force or violence as per the terms of insurance policy. In order to substantiate a claim an insurer (insured) has to establish that theft or burglary took place preceding with force or violence and if it is not, then the Insurance Company will be well within their right to repudiate the claim of the insurer. "

In "Suraj Mal Ram Niwas Oil Mills (P) Ltd. vs. United India Insurance Company [IV (2010) CPJ 38 (SC)]", the Hon'ble Supreme Court has held as follows:-

" 23.  Similarly, in Harchand Rai Chandan Lal's case (supra), this Court held that:

"The terms of the policy have to be construed as it is and we cannot add or subtract something. Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended."

Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the Court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the Court should always be to interpret the words in which the contract is expressed by the parties. "

In "Export Credit Guarantee Corporation of India Ltd. vs. Garg Sons International [II (2013) CPJ 1 (SC)]", the Hon'ble Supreme Court has held as follows:-

" 8. It is a settled legal proposition that while construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the Court to add, delete or substitute any words. It is also well settled, that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed in order to determine the extent of the liability of the insurer. Therefore, the endeavour of the Court should always be to interpret the words used in the contract in the manner that will best express the intention of the parties. [Vide: M/s. Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd., IV (2010) CPJ 38 (SC)=VIII (2010) SLT 375=IV (2010) ACC 653 (SC)=(2010) 10 SCC 567].

The insured cannot claim anything more than what is covered by the insurance policy.

"...the terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely". The clauses of an insurance policy have to be read as they are... Consequently, the terms of the insurance policy, that fix the responsibility of the Insurance Company must also be read strictly. The contract must be read as a whole and every attempt should be made to harmonize the terms thereof, keeping in mind that the rule of contra proferentem does not apply in case of commercial contract, for the reason that a clause in a commercial contract is bilateral and has mutually been agreed upon.

[Vide : Oriental Insurance Co. Ltd. v. Sony Cheriyan, II (1999) CPJ 13 (SC)=VI (1999) SLT 565=II (1999) ACC 196 (SC)=AIR 1999 SC 3252; Polymat India P. Ltd. v. National Insurance Co. Ltd., IV (2004) CPJ 49 (SC)=VII (2004) SLT 243=AIR 2005 SC 286; M/s. Sumitomo Heavy Industries Ltd. v. Oil & Natural Gas Company, VI (2010) SLT 140=AIR 2010 SC 3400; and Rashtriya Ispat Nigam Ltd. v. M/s. Dewan Chand Ram Saran, III (2012) SLT 388=II (2012) CLT 187 (SC)=AIR 2012 SC 2829].

In Vikram Greentech (I) Ltd. & Anr. v. New India Assurance Co. Ltd., II (2009) CPJ

34 (SC)=IV (2009) SLT 35=AIR 2009 SC 2493, it was held:

"An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself.... The endeavour of the Court must

always be to interpret the words in which the contract is expressed by the parties. The Court while construing the terms of policy is not expected to venture into extra liberalism that may result in rewriting the contract or substituting the terms which were not intended by the parties.

[See also : Sikka Papers Limited v. National Insurance Company Ltd. & Ors., III (2009) CPJ 90 (SC)=AIR 2009 SC 2834].

Thus, it is not permissible for the Court to substitute the terms of the contract itself, under the garb of construing terms incorporated in the agreement of insurance. No exceptions can be made on the ground of equity. The liberal attitude adopted by the Court, by way of which it interferes in the terms of an insurance agreement, is not permitted. The same must certainly not be extended to the extent of substituting words that were never intended to form a part of the agreement. "

From the aforesaid decisions of the Hon'ble Supreme Court, the following two Principles emerge:-

(i) There is no difference between a contract of Insurance and any other Contract, and that it should be construed strictly without adding or deleting anything from the terms thereof.

(ii) It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties know. The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since the obligation of good faith applies to both equally."

Applying the Principles laid down by the Hon'ble Supreme Court referred to above, to the facts of the present case, we find that there is no material on Record to establish that the ECGC had notified / informed the Complainant about the exclusion of the names Insured Buyer, i.e., M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and M/s KMART HOLDING CORPORATION from the list of Insured Buyers as per terms of the Policy. Thus, the ground that the names of the Insured Buyers were included in the BSAL on the date of Claim, on the basis of which the Opposite Party Insurance Company had repudiated the Insurance Claim of the Complainant, cannot be sustained as the Opposite Party Insurance Company had not followed the procedure laid down under the Terms and Conditions of the Policy.The Repudiation letter is, therefore, set aside.There had been Deficient in Service by the Opposite Party Insurance Company in repudiating the genuine claim of the Complainant.

In view of the foregoing discussions we are of the considered view that the Complainant is entitled to the full Claim of Insurance made for loss due to insolvency of two Insured Buyers, i.e., M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and M/s KMART HOLDING CORPORATION.Therefore, the Opposite Party Insurance Company is directed to pay the Claim amount of 26,50,19,203/- (Rupees Twenty Six Crore Fifty Lakh Nineteen Thousand Two Hundred and Three only) to the Complainant alongwith interest @9% p.a. from the date of filing of the Claim till the date of payment.The Opposite Party Insurance Company is directed to make the payment within six weeks from today. The Consumer Complaint stands allowed in above terms.