HINDUSTAN ZINK LTD. vs Oriental Insurance Co.Ltd.

BOTH these complaints under Section 17(1)(a) of the Consumer Protection Act, 1986 (the ''Act''), between the same parties arise out of part rejection by the opposite parties of complainants seperate claims preferred under the same "Special Declaration Policy" No. 242500/21/96/00002 dated 7.6.1995. These were, therefore, heard together and are now disposed of by this consolidated order. The main order shall be placed on the record of Complaint Case No. 35 of 1999 and a copy thereof on the record of the other complaint.

M/s. Hindustan Zinc Ltd., the complainant, is a Government of India Enterprise Unit, registered and incorporated as a Company under the provisions of the Companies Act, 1956. It deals in the mining of Zinc and process of Lead Zinc Ingots etc. It has its registered office at Udaipur (Rajasthan), its factory, Chanderiya Lead Zinc Smelter at Putholi in district Chittorgarh (Rajasthan) and godowns at various places in the country. The Oriental Insurance Co. Ltd. is also a Company registered and incorporated under the provisions of the Companies Act, 1956. It is a subsidiary company of the General Insurance Corporation of India. It is engaged in the business of general insurance with its Registered and Head Office at New Delhi and Divisional/Regional/Branch Offices at various places in India including that at Udaipur City in the State of Rajasthan.

On June 7, 1995 the complainant company purchased the above-mentioned insurance policy from the opposite party company with reference to the cover note (marine) initially issued by the latter in favour of the former. This policy was issued on declaration basis for the period from 1.5.1995 to 30.4.1996 and the sum assured was Rs. 500 crores with per sending limit at Rs. 2.5 crores. The premium paid was Rs. 21,72,724/- and the policy covered all risks on all consignments of finished goods, except silver/gold, pertaining to insured, from anywhere in India to anywhere in India. The terms and conditions of the policy, inter alia provided that the insurance was attached from the time the goods left the warehouse and/or the store at the place named in the policy for the commencement of transit and continued during the ordinary course of business including customary shipment, if any, (i) until delivery to the final warehouse at the destination named in the policy, or (ii) in respect of transit by rail only or rail and road, until expiry of seven days after arrival of the railway wagon at the final destination railway station.

TRANSIT by rail only was to include incidental transit by road performed by Railway Administration to or from Railway Out-Agency. It is under the aforementioned policy that the present complaints have been filed under the following circumstances : Complaint No. 35 of 1999

IN order to transfer part of its stock of Zinc INgots and Lead INgots from its godowns at Chanderiya (Chittorgarh) to its Central Ware-housing Corporation, 15-B, Goragacha Road, Majerhal Poodar Godown Calcutta the appellant company delivered in 34 BCN covered wagons four consignments of 41,680 pieces of Zinc INgots and three consignments of 28,080 pieces of Lead INgots to the Railway Administration at Hindustan Zinc Siding Chanderiya under INvoice/Challan Nos. 001047 to 001050 and 00503 to 00505 dated 22.1.1996 against R/R Nos. G.145326 to G.145332, all dated 22/23.1.1996. Those consignments were duly declared to the opposite parties vide Declaration Nos. 1047 to 1050 and 503 + 505, all dated 22.1.1996 (Annexure 17). The consignee was the Regional Manager, M/s. Hindustan Zinc Ltd. C/o C.W.C., 15-B, Garagacha Road, Calcutta. Mr. Bidya Nand Chaturvedi Parsudih, P.O. Tatanagar, Jamshedpur was appointed as complainants'' Clearing and Handling Agent. The consignments were to be unloaded on 28.1.1996 and subsequent day(s) at Shalimar (Howrah) Railway Station. The aforesaid consignments reached Shalimar Railway Station (Howrah) on 28.1.1996 at 10.15 A.M. Complainant''s representative duly informed opposite parties Calcutta office of the arrival of the consignments and requested for deputing Surveyor for purposes of continuous survey during the period of unloading of the goods from wagons and re-loading thereof in lorries in order to take the same to the place of its final destination. The opposite parties appointed M/s. The General Surveyors of India, Surveyors and Loss Assessors, Calcutta and the unloading and reloading of the goods took place on 28.1.1996 and 29.1.1996 in their presence. Only 29 wagons could be unloaded on 28.1.1996 and the remaining five wagons were unloaded on 29.1.1996. On counting the Zinc/Lead Ingots in the course of unloading and thereafter re-loading the consignments, Zinc Ingots were found short by 489 pieces and Lead Ingots by 35. The Railway Administration issued short delivery certificate in respect of 294 pieces of Zinc Ingots and refused to issue shortage certificate in respect of the rest. The complainant company lodged a claim with the opposite parties for reimbursement of loss at Rs. 9,05,751/- aginst which the claim for Rs. 5,16,499/- was accepted by the opposite parties. The complainant company had allegedly, accepted the cheque for the aforesaid amount under protest and subject to their rights which are being agitated through this complaint. Complaint No. 36 of 1999 The only distinguishing features of this complaint from that mentioned above are that the comlainant company had despatched 5 consignments of 66,400 pieces of Zinc Ingots in 30 BCN covered wagons under invoice/challan Nos. 001268 to 001272 vide Railway Receipt Nos. G 145333 to G 145337 dated 20/21.3.1996, for the same destination, and were duly declared to the opposite parties vide Declation Nos. 1280 to 1284 (Ann.13), that at the time of unloading of the wagons on 26.3.96 at the Shalimar Railway Siding in the presence of the aforementioned Surveyors while seals on 24 wagons were found intact, the protection tags on the remaining six were found in torn condition, though the doors were found locked, that on counting the Zinc Ingots on completion of unloading from the wagons and at the time of reloading in lorries 270 Zinc Ingots were found missing and short, that the Railway Administration refused to certify the short delivery on the ground that all the wagons were found quite locked and the Railway Administration was not liable and responsible for short delivery as it might be a case of short loading, that the complainant lodged its claim with the opposite parties for Rs. 4,57,120/- on 18.5.1996 but the same was repudiated by the opposite parties on 17.3.1997 on the ground that it was a case of short loading at the Chanderiya Railway Siding.

THE case of the opposite parties in their defence is that at both the occasions the wagons were loaded with the insured goods at Chanderiya Railway Siding in Chittor (Rajasthan) there was short loading of Zinc and Lead Ingots by the numbers the respective Ingots were found less on counting at Shalimar Railway Siding in Howrah and that fact was amply evident and proved by the condition of the wagons which were found sealed/locked at the station of destination of the consignments.

BOTH the parties have supported their respective versions with affidavits of their officers/officials and other relevant documents. We heard the learned Counsel for the parties at sufficient length and studied the material placed before us. At the hearing before us the sole controversy between the parties in both the complaints remained limited to the question as to whether the Zinc and Lead Ingots were actually loaded less by the numbers those were found short at Shalimar Railway Siding (Howrah) or those were lost in transit. On this pertinent question we find that the complainant has adduced quite satisfactory evidence in support of its version on the point. Shri C.D. Gupta, General Manager and Unit Head of the complainant company at Chanderiya Lead Zinc Smelter, Chittorgarh, in his detailed and quite elaborate affidavit, has solemnly affirmed and stated on oath that the despatch of goods in question was done on both occasions with utmost care and duel check and counting by the complainants'' men under his direct suprevision and the C.I.S.F. personnel, which is directly governed and managed by the Ministry of Home Affairs, Govt. of India. This statement of Shri Gupta stands corroborated by the certificates issued by the Inspector (Plants) C.I.S.F, Unit CLZS, Chittorgarh, and is also signed by the Assistant Commandant CISF Unit CLZS, Chittorgarh. It has been clearly mentioned in such certificates that despatches of Zinc/Lead Ingots from CLZS Chittorgarh premises are executed under direct supervision of CISF personnel and quantity, consignment and pieces counting are also carried out by the representatives of CISF and Sales Department. It has been certified that the despatches made through various Railway rakes during the period from December, 1995 to May, 1996 were in order and the number of ingots despatched were properly weighed and counted as per the quantity and number of pieces shown in Excise Gate Pass-cum-Challan. The nature of goods transported and the practice and procedure involved and adopted in its transporation fits in the version stated.

Zinc/Lead Ingots were, undisputedly, excisable articles. Their production and transportation would, therefore, necessarily attract the attention of the concerned authorities. It was, therefore, not unusual for the CISF personnel to have supervised the despatches of the goods from complainants'' premises at Chanderiya. In view of the quantity of goods, to be transferred from Chanderiya to the Ware-housing Corporation at Goragacha Road (Calcutta), Shri Gupta could reasonably be expected to directly supervise the despatches. Since it was simply a transfer of part of its stock from one place to another, the complainant was in no way likely to be benefitted by short loading.

THE argument of the respondent that the goods were not loaded in wagons at Chanderiya in presence of their officials, and therefore, they could not be held liable for the acts done in their absence does not impress us. In the nature of its business and the risk involved, it may reasonably be expected of the respondents that they must have acquainted themselves with the despatching system and procedure involved in transfer of such goods from the factory premises of the complainant company at Chanderiya, before issuance of the cover note/insurance policy to them. It was after making such acquaintance with the practice, procedure and system involved in the transfer of goods from one place to another that in the policy they had mentioned that "Bill of Leading Number/Consignment Note Number and date will be declared on monthly basis". THE respondents had charged premium against the subject consignments accordingly. It was for the respondents to have provided in the agreement that information of intended consignment would be given to them in advance, looking to the volume of risk involved, so that they may depute their personnel to supervise the weighment, counting and loading of the consignments. Once they had agreed to the declaration of the goods, consigned by the insured, on monthly basis and the sum assured was to get reduced by way of Marine Certificates after the receipt of the declarations, the respondents had undertaken the liability to indemnify the losses to the subjected consignments. As stated above, the insurance was attached from the time the goods left the warehouse and/or the store at the place named in the policy for the commencement of transit and continued during the ordinary course of transit, including customary transhipment, if any, until delivery to the final warehouse at the destination named as the policy. If the practice, procedure and system being adopted by the complainant in the transfer of its goods and the degree of supervision of such transfer by the CISF personnel was to be doubted by the respondent it was for them to have made arrangement for supervision of such transfer of goods. THE respondents having failed in that, they cannot attribute "misconduct" to the complainant. Even if it be assumed for arguments sake that some sort of misconduct may be attributed to the complainant, then what type of misconduct it should be in order to attract the Exclusion Clause 2(1). This clause requires that it should be "wilful misconduct" of the assured. Short loading of stock may be indicative of "misconduct" but there must be something more to convert such misconduct into "wilful misconduct". The word "wilful" in ordinary parlance means "intentional", "deliberate" and not simply "negligent" and "careless". There is absolutely no evidence on the record of either of the complaints and even to indicate that the complainant was in any way guilty of any "wilful misconduct" in order to attract the Exclusion Clause 2(1) of the policy to the facts in either of the two complaints.

THE sole stress of the opposite parties in support of escape from their liabilities, is on the fact that once it was noted by the Surveyors that part of the goods, taken out from such wagons which were found sealed and locked, was found short, it was proved that no theft or loss thereof was committed in the course of transit. In support of such contention much reliance was placed on Surveyors report and the affidavit of Shri S.L. Agarwal, Constituted Attorney and Senior Regional Manager in respondent''s company. Insofar as the affidavit of Shri S.L. Agarwal is concerned it is based on information gathered from Surveyors report and other documents maintained in the offices of the respondent. He has no direct knowledge either of the loading or unloading and counting of the subject goods. It is, therefore, not of much help to decide the point in controversy between the parties. Now insofar as the question of loss or theft of the goods in the course of transit by Railways and thereafter till it reached the final destination is concerned, we find that admittedly on both occasions some of the wagons were found opened/with broken seals. It clearly establishes that in the course of transit the consignments were partially disturbed and dishonestly removed. Loss was thus caused to the complainant by acts of dishonest removal of part of consignments by some unknown persons. It was such types of loss that the opposite parties had promised to reimburse to the complainant. They had willingly accepted the risk of loss and had charged huge premiums as consideration for the risk and the services to be rendered by them. The opposite parties cannot now plead immunity from their liability.

IN addition to the above, it is Surveyors'' own case that all the ingots could not be counted on the day of their arrival at Shalimar Railway Station for absence of proper light arrangement. The counting work had to be resumed on the following day at the time of reloading the consignments in the lorries to carry the same to their final destination. The opposite parties had covered the risk against loss/damage of the goods till it reached the final destination. Loss to the consignment could have been caused at the Shalimar Railway Siding where it was left for the night. Viewed thus also, the opposite parties cannot shirk their liability to reimburse the complainant for the loss of part of consignments.

IN view of the above discussion we hold that the opposite parties did render deficient services to the complainant in not timely reimbursing it for the loss caused to the consignments on both the occasions, which make the subject matter of the two complaints. We, therefore, order and direct the opposite parties to do the following : Complaint No. 35 of 1999 (1) The opposite parties shall pay to the complainant a sum of Rs. 3,89,252/- towards the value of 185 pieces of Zinc INgots and 35 pieces of Lead INgots with interest and 18% p.a. w.e.f. 1.6.1996 i.e. from four months after the date of occurence till the date of full and final payment thereof. (2) The opposite parties shall also pay interest @ 18 % p.a. on Rs. 5,16,499.50 from 1.6.1996 to 17.6.1996 to the complainant. (3) The opposite parties shall further pay Rs. 5,000/- as cost of litigation to the complainant. Complaint No. 36 of 1999 (1) The opposite parties shall pay Rs. 4,57,120/- to the complainant towards value of 270 pieces of Zinc INgots with interest @ 18% from 1.7.1996 till the date of full and final payment. (2) The opposite parties shall also pay Rs. 5,000/- to the complainant as cost of litigation. The above order in the two complaitns shall be complied with by the opposite parties within a period of three months from today failing which the decretal amounts shall attract interest @ 24% p.a. from the dates of default.

Complaint disposed of.