M/s Aryan Exports vs Oriental Insurance Company Ltd

Dr. Inder Jit Singh, Presiding Member

The present Revision Petitions (RP) have been filed by the Petitioner against Respondent as detailed above, under section 58 (1) (b) of Consumer Protection Act 2019, against common order dated 03.09.2021 of the State Consumer Disputes Redressal Commission Uttar Pradesh (hereinafter referred to as the ‘State Commission’), inter alia praying for staying of order dated 03.09.2021 of the State Commission.

While the Revision Petitioner (hereinafter also referred to as Complainant) was Respondent and the Respondent (hereinafter also referred to as OP) was Appellant before the State Commission, the Revision Petitioner was Complainant and Respondent was OP before the District Forum.

As the aforementioned RPs have been filed against the common order dated 03.09.2021 of the State Commission, parties involved are the same and issues for consideration/determination are related, these are being taken up together under this order. However, for the sake of convenience, RP No. 942 of 2021 is treated as the lead case and facts enumerated herein under are taken from RP No.942 of 2021.

Notice was issued to the Respondent on 22.04.2022. Petitioner filed Written Arguments/Synopsis on 18.08.2023 and 20.09.2023 and respondent filed  written arguments / synopsis on 16.01.2023 and 20.09.2023

Brief facts of the case, as emerged from the RPs, order of the State Commission, order of the District Forum and other case records are that Complainant is engaged in the manufacturing and  export of handmade carpets and rugs.  Complainant received an offer for purchasing carpets and rugs from M/s Atlanta Rugs, America. The complainant as per the desire of the consignee exported the  handmade carpets and for the purpose of export, on the instructions of M/s Overseas Container, assigned consignment of carpets on different dates to M/s Niranjan Shipping Agency for total value of 41157.41 USD and sent all documents pertaining to it through Overseas Bank with instructions for delivering to the representative of consignee in the event of obtaining the original bill of lading.  State Bank of India was supposed to be assumed as the consignee till the time of realization of value by endorsement of Bill of  lading in favour of bonafide consignee.  The complainant failed to realize the value of exported items.  The complainant kept obtaining different information from the carrier company and the insurance company and finally on 12.09.1996, complainant sent a legal notice.  Since the demurrage could be estimated from the delay in release of the material, complainant threatened M/s Atlanta Rugs that he would sell the material to some other party and consequent to which they released some amount to the complainant which was accepted presuming that same might have  been transferred on account of bearing the loss of expenses borne during the said period.  The shipping company on 09.10.1995 informed the complainant that the consignment has been acknowledged by Atlata Rugs.  The complainant on 06.05.1994 had purchased a Marine policy covering the risk from Godown to Godown and all the said items were exported under the said policy.  The Complainant submitted that the material has been delivered to the consignee.  The OP vide letter dated 14.02.1997 and 04.03.1997, rejected the claim of the complainant.  Being aggrieved, the Complainant filed  CCs before the District Forum, which allowed the Complaints.  Being aggrieved of the said order of the District Forum,  OP filed Appeals before the State Commission and State Commission vide common order dated 03.09.2021 allowed the Appeals of the OP.  Therefore, Complainant is before this Commission in the present RPs.

Petitioner has challenged the said common order dated 03.09.2021 of the State Commission mainly on following grounds:

i. There was gross violation of Insurance Policy on the part of respondent in delivering the consignment.

ii. Consignment got insured from respondent vide policy number 222509/M/OC/95/00015 covering all kinds of risks arising during shipping from godown to godown.

iii. State Commission ought to have considered that from perusal of bill of lading, it would appear that consignor was the Petitioner herein and Consignee was M/s Atlanta Rugs Inc.  In the invoice of consignment which is in the name of buyer, it is written as Atlanta Rugs i.e. consignee, making it clear that it was other than ‘ the consignee’.

iv. State Commission failed to appreciate that as per law, State Bank of India was supposed to act as Consignee till the realization of value by endorsement of bill of lading in favour of bonafide consignee.

v. As per insurance policy and bill of lading, Petitioner shal remain the owner of the consignment until the final payment is made by the consignee and the necessary documents for release of goods were not provided to consignee by the State Bank of India.

vi. There is breach of insurance policy and insurance company is liable to make compensation for the loss caused to the Petitioner and insurance company cannot escape from its liability that consignee has received the consignment and the loss does not fall under any ‘exception clauses’

vii. In the insurance policy it is not mentioned that the goods have to be dispatched on C.I.F. basis only but  under the policy, the basis of valuation is CIF + 10%  and the amount of claim made by the respondent is very much less than the C.I.F. + 10% value.

viii. Any fraudulent means or otherwise on the part of the notifying party Atlanta Rugs Inc. ( consignee) does not legitimize transfer without documents which were with the bank, which have not been retired and payment has not been received by the Petitioner.

ix. As per bill of lading, the consignor is the original complainant and consignee was to furnish the bill or endorse the bill as per ‘unto order’ which clearly infers that lien over the consignment remained with the complainant.

Heard counsels of both sides.  Contentions/pleas of the parties, on various issues raised in the RPs, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

7.1 It is argued by counsel for the Petitioner that consignment got insured from the respondent covering all kinds of risk arising during shipping from warehouse to warehouse and respondent cannot escape from its liability that the consignee has received the consignment and the loss in the instant case does not fall under any exception clause.

7.2.  It is further argued that consignment left the shore of India through overseas container and as per law, their responsibility ends as soon as shipments have crossed Indian Territory. It is further argued that policy was marine cargo policy with a special condition covering risk from the consignor’s warehouse to consignee’s warehouse and insurance company repudiated the claim without any valid reason.  Even, no surveyor was appointed by the insurance company when petitioner intimated about the loss and there was no need to issue two repudiation letter by the insurance company.  Reliance is also placed on the order of this Commission in Original Petition No. 45 of 1997 M/s Hira Lal Ramesh Chand Vs. New India Insurance Co. Ltd. and Ors.

7.3.  Further, it is argued that  Petitioner has not received the full consideration amount and was kept in dark about the status of consignment and the bills were not being retired.  The Petitioner under the impression that goods must have suffered demurrage and storage charges threatened that the goods should be transferred to the alternate buyer.  Further, M/s Atlanta  Rugs sent some money without specifying the Petitioner under the impression that money sent was to cover crystallization charges and extra interest received the same.  The Petitioner also approached the State Court of Cobb County, State of Georgio USA whereby state court had passed a default judgment whereby $35,680/- (USD 35,680) was awarded to the Petitioner.  A Complaint was made to the Embassy of India in Washington and one complaint before the Ld. Consulate General of India , which replied and informed the petitioner that Company Atlanta Rugs are fraudulent, deceitful and are habitual defaults .

7.4.  Counsel further argued that letter dated 12.02.1996 written by State Bank of India acknowledges the fact that goods were released arbitrarily and illegal;y.  Further, insurance company is supposed to indemnify the petitioner against all risks except few exceptions.

7.5.  It is further argued that case of petitioner is covered under clause 9.1 of the Open Marine Policy  and the goods never reached the warehouse of the consignee the way it was pre-determined mutually and the bank also acknowledged that illegal delivery had taken place. Moreover, the letter by Niranjan Shipping just mentions that goods have  been delivered to the consignee without any documentary evidence of a guarantee enclosed in the letter.  No surveyor or any other unbiased party was appointed to scrutinize about the goods and the statement of overseas container ( carrier ) and Niranjan Shipping ( agent of the carrier ) cannot be relied  upon, since Niranjan Shipping is the agent of the carrier himself and owner of the carrier and the buyer / consignee.  Further, it is argued that Sun Trust Bank returned the original papers / documents of Bill of Lading back to the State Bank of India as they have not received any payment with regards to goods sent by the Petitioner.  The State Bank of India has stated vide letter dated 12.02.1996 that they have not authorized any party, person or shipping company for any release of cargo under cover of documents during the tenure of holding the documents and therefore the goods did not reach the warehouse of the original consignee since no payment was made by them to the bank to acquire the original bill of  lading to procure the goods.

7.6.  Counsel for the respondent argued that petitioner has acted in contravention of the utmost good faith and the petitioner has entered into contract of sale i.e sale on FOB basis when the insurance proceeded on the basis that the  transaction between the seller and purchaser meant to be covered by the policy would be on CIF basis.  Counsel has relied on the following judgments:

a. Court of King’s Bench in London in the case of Carter V.  Boehm ( 1766) 3 Burr 1905

b. B.K.Wadeyar Vs. M/s Daulatram Rameshwarlal  1961 AIR 311

c. Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. (2000 (2) SCC 734)

d. Contship Container Lines Ltd. Vs. D.K.Lall and Ors in Civil Appeal No. 3245 of 2005

e. United India Insurance Company Ltd. Vs. M K J Corporation  (1996 (6) SCC 428).

7.7.  Counsel for the respondent further argued that there is no actual loss of the consignment as failure of the buyer to make payment and take delivery is not a loss of consignment which is covered by the insurance policy.  Reliance has been placed on the order of this Commission in National Insurance Company Ltd. Vs. Bhawal Synthetics India Ltd.&  Anr., First Appeal No. 294 of 2008.  Further, there is  no averment or proof that consignment did not reach the destination or that the goods were not taken delivery by the overseas containers.  There is also no averment  as to whether the holder of the documents namely the Sun Trust Bank applied for delivery or attempted to take delivery of the consignment and store them in a bounded warehouse and whether they were refused delivery within the insurance cover period.

7.8.  Further, it is submitted that insurance cover was in regard to all risks from consignor’s warehouse to consignee’s warehouse and complainant is shown as consignor.  The complainants were not having any warehouse in Atlanta nor were they the holders of documents.  The consignee at the relevant time could only be Sun Trust Bank  in whose favour the documents had been endorsed.  It is further argued that it  not the case that Sun Trust Bank as the holder of document of title sought delivery of the consignment from the custom’s warehouse or steam ship line or from overseas containers.  Duration of insurance cover cannot be infinite or indefinite where there is no effort on the  part of consignee to take delivery from the shipping line / custom warehouse.  In such circumstances, the risk cover would terminate on the expiry of 60 days after completion of discharge overside of the insured shipment from the overseas vessel at the final port of discharge at Atlanta having regard to clause 8 of Institute Cargo clause. It is also not the case of the complainant that consignment was unaauthorisedly delivered to Atlanta Rugs or that such delivery was within 60 days  of the landing of the consignment at Atlanta.  In the absence of any averment or evidence as to when the consignment was discharged from the ship at Atlanta and an averment that within 60 days of the landing of the consignment at Atlanta the holder sought delivery and delivery was refused, the question of the insurer being made liable for non delivery does not arise.  After 60 days of the landing of consignment even if the consignment is destroyed, lost or mis-delivered, it is no concern of the insurer.

7.9 Further, it is argued that complainant has not produced even a single document making a claim on the insurer on the ground that the goods had  been lost or not delivered.  As there is no averment or proof that the consignor or the foreign correspondent Bank holding the documents of title or any person authorized by the said Bank applied for delivery within 60 days of the goods being discharged and as there is no averment or proof that consignments were lost or wrongly delivered within the said period of 60 days, the liability and responsibility of the insurer under the policy of insurance came to an with reference to each of those consignments.  Reliance is placed on the judgment of the Hon’ble Supreme Court in New India Assurance Co. Ltd. Vs. Hira Lal Ramesh Chand and Ors. ( supra )

7.10.  Counsel further submitted that District Forum has misinterpreted the plea of Uberrimea Fidei without even looking into the agreement between the consignee and consignor in contravention of the judgment of Hon’ble Supreme Court in Contship Container Lines Ltd. Vs. D.K.Lall and Ors in Civil Appeal No. 3245 of 2005 and B.K.Wadeyar Vs. M/s Daulatram Rameshwarlal  1961 AIR 311 .  The Petitioner has not deliberately filed the copy of contract  of sale between the petitioner and consignee. It is further argued that District Forum has wrongly interpreted ‘unto order’ in contravention of the judgment of Hon’ble Supreme Court in the case of New India Assurance Co. Ltd. Vs. Hira Lal Ramesh Chand and Ors. as ‘unto’ clause does not make the insurance company liable in this case where the goods are not lost or damaged but are wrongfully delivered by the carrier to the purchaser without the purchaser having retired the documents by making payment to the banker of the consignor.

7.11.  Further, it is argued that contractual obligations have been very well discharged by the respondent and the petitioner had been entertained by the insurer even after the repudiation of the claim.  Further, it is contended that amount payable under an insurance claim is purely a contract based on the policy terms and conditions and insurance rules, requirements and guidelines which are subject matter of a competent civil court. There, complainant does not fall under the purview of Consumer Protection Act, 2019.

7.12.  It is further submitted that petitioner has failed to prove that it has not sent the material on FOB basis and the State Commission has rightly  held that insurance company is not liable for the payment of balance amount not paid by the purchaser and that petitioner has also failed to prove that there has  been damage to the material during transit on godown to godown basis.

7.13.  Counsel has further argued that petitioner has not controverted the basis of the repudiation letter dated 14.02.1997.  Further, petitioner has concealed the fact that regarding particulars of ship by which consignments were transported and the dates on which the ships sailed and whether any loss or damage was caused to any of the consignments while in transit.  Further, nothing is said as to whether the  bank holding the documents of title applied for delivery by producing them.  The complainants did not obviously apply.  If no one ever applied or sought delivery and if there was no refusal, there is no question of loss or the question of liability on the part of the insurer. Also, there is no averment that the complainant or the holder of documents of title ever complained or reported loss of the consignment, or about any wrong delivery or mis-delivery to any one, in writing.  Even the bills of lading were issued by Non Vessel Owing Shipping Agent and the reason as to why the complainants did not demand for the supply of the copies of the master bills of lading issued by the shipping line / vessel which actually transported the consignment is not disclosed.  Counsel also argued that petitioner willfully concealed the fact of being awarded a foreign judgment, granting the petitioner an amount of USD 35,680.87 and during the pendency of complaint before the District Forum, the overseas judgment was delivered.  The Petitioner also admitted to have received an amount of USD 15,000 in view of settlement agreement between the petitioner and Inter-Cargo Insurance Company.  Further, the petitioner did not disclose the said facts before the Fora below and intended to take the compensation twice.

During the hearing on 27.07.2023,  the counsel for the petitioner stated that in these 6 Cases, 6 consignments were sent by the Petitioner M/s Aryan Exports to the overseas consignee M/s Atlanta Rugs through a shipping company named Overseas Container Lines, acting through its Agent Niranjan Shipping. The case of the Petitioner is that as per the terms and conditions/normal procedure adopted under such transactions, original documents/bill of lading are sent through their banker, which in the present Case was State Bank of India. The goods were to be delivered to the overseas consignee M/s Atlanta Rugs only when payment was made in the Bank and consignee took delivery of the original documents, based on which only the shipping company, i.e. Overseas Container Lines, was to make physical delivery of the goods to the consignee. However, in these cases, the shipping company made physical delivery of the goods to the consignee, without consignee making payment to the bank and shipping company without getting any instructions/original documents from the bank. The bank is on record to say that original documents were never delivered. Hence, it is a case where the shipping company Overseas Container Lines has wrongfully delivered the goods to the consignee Atlanta Rugs without original documents being released by the bank on receiving payment from the consignee. The case of the Petitioner is that even such loss is covered under the policy, while the case of the Respondent Insurance Company is that such loss, which is on account of wrongful/fraudulent action on the part of Overseas Container Lines, is not covered, as no loss or damage has happened to the goods from godown to godown, which is covered under the policy and the goods have reached the godown of the consignee safely.

It was also brought to our notice by the Petitioner’s Counsel during the hearing that on account of default on the part of overseas consignee M/s Atlanta Rugs, they did file a recovery suit in the Court of County, State of Georgia, which was decided sometime in 1998, and against their claim of USD 41000, USD 35680 were awarded. It was also mentioned that this amount awarded by the Court has already been received by the Petitioner. However, the Petitioner had not filed the copies of the suit filed by it in the overseas Court as well as the Orders of the said Court.

Accordingly, the Petitioner was directed to file following documents, which were considered essential for adjudication of the present RPs:

(a) Copy of the Case filed by the Petitioner in the overseas Court in the County, State of Georgia, pertaining to these 6 Cases only;

(b) Copy of the final order passed by the said Court;

(c) Amount claimed in the said Suit;

(d) Amount awarded in the said Suit;

(e) Amount already recovered in pursuance to the Orders of the said Court.

Petitioner was also directed to prepare a comprehensive chart of all the six cases giving all relevant details in terms of invoice date, invoice amount, date of shipping, date of landing, parties name, overseas consignee, shipping corporation, consignee bank etc.  In pursuance to the order, certain documents were filed.  Matter was  heard finally on 15.09.2023.  Liberty was given to both sides to file updated brief notes of written arguments, which were filed by both sides on 20.09.2023.

In the written submissions filed on 20.09.2023, petitioner has given details of the invoices as follows :

S.No.

Date

Invoice No.

Amount

1.

17.10.1994

30/94-95

7,994.56

2.

27.08.1994

21/94-95

4,891.80

3.

28.08.1994

31/94-95

6,445.98

4.

03.12.1994

39/94-95

10,008.18

5.

27.08.1994

19/94-95

8,525.97

6.

27.08.1994

20/94-95

3,290.92

Total Amount

41,157.41/- (USD)

12  The petitioner has contended in these submissions that he has not received the full consideration amount.  However, it is admitted in these submissions that M/s Atlanta Rugs paid $ 8500, although the petitioner contends that they did not specify that the money sent was to cover crystallization charges and extra interest received.  The petitioner also submits that they had approached the State Court of Cobb, County State of Georgia USA whereby the State Court had passed a default judgement dt.11.12.1998, whereby a sum of $35,680/- was awarded to the petitioner herein.  It is further admitted in these submissions that a Complaint dated 27.04.1996, was made to the fraud division of the Intercargo Insurance Company, Illinois ( insurer of the carrier) after which the said insurance company disbursed a sum of around $15,000/- vide a settlement agreement dated 28.01.1998. However, the Petitioner contends that after this, still the Petitioner incurred a loss of about  $26000/- which ought to be indemnified by the respondent – Insurance Company and this liability cannot be saddled on the insurance company of the carrier.  The said Interglobe Insurance Policy was never purchased by the petitioner herein and he was not the insured party in that settlement, rather a mere beneficiary after the insurance company had acknowledged the loss incurred by the acts of its ‘insured party’-  the Overseas Containers ( carrier).

From the above, it clearly emerges that against the total invoice amount of 6 invoices, $41,157/- the Petitioner received $35,680/- in pursuance to the judgment of the Overseas Court, $8500/- from consignee M/s Atlanta Rugs and $15,000/- vide Settlement Agreement with Interglobe Insurance Company i.e. a total amount of $59,180/- against the invoice amount of $ 41,157/-.  The Petitioner contends that he has incurred a further loss of around $26000, details of which have not  been furnished.  The respondent  - insurance company in its written submissions dated 20.09.2023 contends that Petitioner has concealed many material facts before the District Forum and it is only when this Commission specifically directed the Petitioner to furnish additional documents / details that petitioner came out with certain facts which were concealed before the District Forum. In particular, the respondent contended in the written submissions that Petitioner willfully concealed the fact of being awarded a foreign judgment granting the petitioner an amount of $35,680/- vide order dated 11.12.1998, amount of $15,000/- in view of the settlement between the petitioner and Interglobe Insurance Company dated 28.01.1998, which is in addition to $35,680/- awarded by Overseas Court.  Petitioner neither disclosed the said facts before the District Forum or State Commission at any point of time and this fact of the Overseas judgment came into light only during the hearing on 27.07.2023 when this Commission directed the Petitioner to file certain documents.

From the above, it is clear that Petitioner having received $59,180/- against the invoice amount of $41,157/-, now cannot make claim from the respondent insurance company on the plea of having incurred additional loss of around $26000/-,  for which no details have been given.  The Petitioner cannot indulge into unjust enrichment by making unsubstantiated claims for his loss.

The State Commission vide its order dated 03.09.2011 allowed the Appeals of the respondent herein,  had set aside the orders of the District Forum and dismissed the complaint on the ground that as per the contentions of the complainant / Petitioner herein, no damage is caused to the material during the transit from godown to godown, hence on the said ground alone, the insurance company is not liable.  Since the material was delivered to the consignee and part of sale price was also received from the consignee, therefore, the complainant can initiate proceedings for recovery of  balance amount against consignee.  The Insurance company is in no manner liable for payment of balance amount. Hence, the award by the District Forum is contrary. State Commission has considered at length the contentions of both sides keeping in view the facts and documents which were placed before it.

In view of the foregoing and after considering all the facts and circumstance of the case, including the rival contentions of the parties in their written submissions, especially the additional written submissions dated 20.09.2023, we are of the considered view that claim of the petitioner herein is  not bonafide and insurance company is justified in repudiating the same.  Accordingly, we agree with the order of the State Commission in setting aside the order of the District forum and dismiss the complaint.

Revision Petitions are dismissed.

The pending IAs in the cases, if any, also stand disposed off.