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Judgment
V.K.Jain, J
No one is present for the complainant/respondent despite service. I have heard the learned counsel for the appellant.
The complainant/respondent which is in the business of manufacturing and exporting chemicals sought to export a product, namely, 3 Meta Chloro Perbenzoic Acid to Spain. The said product was packed in UN approved fibre drums purchased by the complainant from Bharti Pulp and Paper Products Pvt. Ltd. Thereafter, the complainant/respondent obtained a Marine Export Insurance (Open) Policy from the appellant as per the terms and conditions contained in the said policy. The insurance obtained by the complainant covered the transit of the consignment of the product from Ahmedabad to Spain. The consignment was sent by the complainant to Harish and Logistics Pvt. Ltd at Jawaharlal Nehru Port Trust, Nhava Sheva, Mumbai. Though a stuffing sheet for the consignment was prepared on 8.5.2008 and the cut off date to load the container was 14.5.2008, the container could not be loaded on the vessel on 14.5.2008 on account of the space not being available in the vessel. On 16.5.2008, the container was brought to JNPT for loading on the vessel. On 21.5.2008, the container was shipped from JNPT, Nhava Sheva Port Gateway Terminal India Port. On 24.5.2008, the container was found to be leaking heavily and, therefore, was shifted from yard to reclamation area. Fire tenders were called to control the fumes by cooling the container.
On receipt of the information about the incident, the appellant appointed Cunnigham Lindsey International Pvt. Ltd, as surveyors to conduct the survey and assess the loss. In their report, the surveyor interalia reported that as per Section 7 of the Material Safety Data Sheet of the consignment, it was recommended to be kept in refrigerator at temperature below 4oC / 39oF, whereas during transit and subsequent storage, it was consigned in a dry box office through container and was over stowed with other containers thereby ignoring the safety guidelines for storage. According to the surveyor, the situation was out of the control of the complainant and the requisite precaution was required to be taken by the concerned handling agencies. The surveyor therefore suggested to the complainant to hold the said handling agency liable for the loss. The claim was eventually repudiated vide letter dated 8.9.2008 which to the extent it is relevant, reads as under:-
"This pertains to the shipment of 3000 Kgs of Meta Chloro Per Benzoic Acid (MCPBA), packed in 120 cardboard drums, shipped by road from the insured's works at GIDC Vatva to Punjab Conwere, Navi Mumbai, where the cargo was stuffed inside container number HLXU 2094823 and then sent onward to JNPT port for onward sea journey to Valencia Sea Port, Spain. At JNPT Port, the affected container was shut out from the vessel 'CMA CGM Sambhar, Voy. No.1738, and was subsequently shifted from JNPT port to GTI terminal, Nhava Sheva for loading onto the next immediate vessel of the shipping line Northern Endurance, Voy No.1838 where the scheduled date of loading was further extended till 25th May 08. Finally, at the GTI terminal, a leak was noticed in container number HLXU2094823 accompanied by plumes of thick smoke.
The surveyor for the said claim has observed that the subject matter MCPBA - 77% purity, melted and decomposed on exposure to direct sunlight and heat. Further, Section 7 of the Material Safety Data sheet for such cargo explicitly states that the cargo should be kept refrigerated and stored at a temperature below 4 degrees Celsius or 39 degrees Fahrenheit. However, during the transit and the subsequent storage, the subject matter was shipped in a dry box high cube container, which, was over stowed with other containers at the GTI yard. The surveyor opines that the absence of refrigeration ultimately resulted in the cargo heating and melting on exposure to sunlight and heat thereby causing the said loss. This inherent vice, the surveyor has noted was warned against in commercial/tax invoice number HBV/01/ 2008-09. As per exclusion number 4.4 of the ICC-A clauses, loss, damage or expense caused by inherent vice or nature of the subject matter Insured is excluded from the scope of the policy."
Being aggrieved from the repudiation of the claim, the complainant / respondent approached the concerned State Commission by way of a complaint.
The complaint was resisted by the appellant primarily on the ground on which the claim had been repudiated.
The State Commission having allowed the complaint, the appellant is before this Commission by way of this appeal.
It would be seen from the repudiation letter that the repudiation of the claim is based solely on the ground that as per Section 7 of the Material Safety Data Sheet for the cargo it should have been kept refrigerated and stored at a temperature below 4oC / 39oF but in fact it was not kept refrigerated at the recommended temperature and was shifted in a dry box high cube container, which was over stowed with other containers at the GTI yard. The surveyor felt that in the absence of refrigeration, the cargo had heated and melted on exposed to sunlight and heat thereby causing loss to the complainant. The claim was repudiated relying on clause 4.4 of the ICC(A). The clause under which the claim was repudiated by the insurer, reads as under:-
"4.4 loss damage or expense caused by inherent vice or nature of the subject matter insured."
In my view, even if the product sought to be exported by the complainant was not kept refrigerated and was exposed to a temperature higher than 4oC / 39oF that did not breach clause 4.4. of the insurance policy. A careful perusal of the said clause would show that it applies to a case where loss or damage is caused due to an inherent vice or nature of the subject matter of insurance. Admittedly, the subject matter of insurance in this case was Meta Chloro Per Benzoic Acid. This is not the case of the appellant that the overheating and consequent leakage had occurred due to inherent nature of the product itself, the case being that the product was not kept refrigerated and was exposed to higher than the recommended temperature. In other words, even according to the insurer had the product been kept at the recommended temperature, the loss would not have happened. The omission / failure to keep the product refrigerated and at a temperature below 4oC / 39oF, therefore, is not covered under clause 4.4 of the exclusions contained in the Institute Cargo Clause (A) attached to the insurance policy.
The learned counsel for the appellant was requested to point out any such clause in the insurance policy or in Institute Cargo Clauses which would apply to a case where the product gets overheated and leaks on account of improper storage such as exposing it to a higher than the recommended temperature. I also requested him to point out any clause which would entitled the insurer to repudiate the claim or deny reimbursement in terms of the insurance policy if the product is not stored and/or transported at the prescribed temperature during the course of its transit including during the process of moving it at the port and loading it on the vessel. The learned counsel, however, was unable to point out any such clause in the policy. Therefore, the appellant, in my opinion, was not justified in repudiating the claim on the ground that the product covered under the insurance policy was exposed to a temperature much higher than a temperature at which it was recommended to be stored.
For the reasons stated hereinabove, I hold that the repudiation of the claim was not justified. However, since the sum insured in respect of consignment in question was only Rs.4371979.50 as is evident from the Certificate of Insurance and policy excess is 0.5% of the consignment value, the respondent is required to pay only 99.5% of Rs.4371979.50, i.e., Rs.41,53,381/- to the respondent. The said amount shall be paid to the respondent within three months from today along with interest at the rate and for the period awarded by the State Commission. The appeal stands disposed of.