M/S. E-Durables vs Oriental Insurance Co. Ltd.

V.K. Jain, Presiding Member

The petitioner obtained a Marine Transit Insurance Policy from the respondent company for the period 26th August 2010 to 25th August 2011. The said policy covered goods to the extent of Rs.2.00 crore against all risk of transit. The complainant claims to be a consortium partner company of M/s East India Technology Pvt. Ltd. The complainant sent 1009 TV Sets from Dehradun to M/s East India Technology Pvt. Ltd. The consignment was sent from Dehradun to Virudh Nagar in Tamil Nadu. The goods reached their destination in Virudh Nagar in Tamil Nadu. The goods were to be supplied by M/s East India Technology Pvt. Ltd., to Government of Tamil Nadu, which on inspection rejected the said TV sets. Consequently, M/s East India Technology Pvt. Ltd., transported the goods back to the complainant from Virudh Nagar in Tamil Nadu. On the way, the goods got damaged when the truck in which they were being carried met with an accident near Panipat on 10.09.2010. A claim was lodged by the complainant for reimbursement in terms of the insurance policy which it had taken from the respondent. The claim was however repudiated by the insurance company vide letter dated 16.03.2012, which to the extent is relevant reads as under:

"Delivery notice was issued by East India Technology but they have not raised invoice for the same on E Durable, Dehradun for sale and dispatched of TV sets to E Durable, Dehradun;

Goods were dispatched from M/s East India Technology, Virudh Nagar, Tamil Nadu to E Durable Dehradun, but policy was taken by E Durable Dehradun and declaration was also made by E Durable but it was purchase return of M/s East India Technology, Virudh Nagar, Tamil Nadu as mentioned by them in delivery note, therefore, M/s E Durable have to provide insurable interest in the goods at the time of loss;

GR was issued by Dhavan Transport for voyage from Virudh Nagar, Tamil Nadu to Dehradun but it was issued from transporter's Dehradun address instead of Virudh Nagar;

In GR carrying vehicle number was marked HR 55 B 1705 but again it was overwrite and marked HR 55 B 1615 but consignment was sent by Vehicle no. HR 38 F 5345 as it was proved from FIR and further a letter dated 25.09.2010 was issued by transporter wherein they confirmed vehicle replaced from HR 55 B 1705 to HR 38 F 5345 then why it was again changed to HR 55 B 1615 without intimating us and why these facts was not disclosed before accident of vehicle;

No survey request was made to us or any of our office nearest to the accident site further no spot survey was conducted thereon instead the goods were trans-shipped by another truck during raining which had small holes in the roof and water was trickling through it and as a result loss was further increased, why goods were not protected from rain after accident; and

Goods were dispatched from Tamil Nadu to Dehradun, but accident occurred at Panipat which is not en route from Virudh Nagar (T N ) to Dehradun".

Being aggrieved by the repudiation of the claim, the complainant approached the District Forum by way of Consumer Complaint. The complaint was resisted by the insurance company primarily on the grounds on which the claim had been repudiated.

The District Forum having allowed the consumer complaint, the insured approached the concerned State Commission by way of an appeal. Vide its impugned the order dated 11th July 2016, the State Commission allowed the appeal and consequently, dismissed the consumer complaint solely on the grounds that the petitioner/ complainant did not have any insurable interest in the goods.

Being aggrieved by the order, the petitioner/ complainant is before this Commission by way of this revision petition.

The question involved in this petition is as to whether the petitioner had any insurable interest in the goods, at the time when they were damaged while being transported from Virudh Nagar in Tamil Nadu to Dehradun.

Admittedly, before transporting the goods from Dehradun to Virudh Nagar in Tamil Nadu, the petitioner/ complainant had raised an invoice for the sale of the goods to M/s East India Technology Pvt., Ltd. The invoice is available at page number 46 of the paper book and clearly records the sale of 1009 TV Sets by the petitioner/ complainant to M/s East India Technology Pvt. Ltd., for a consideration of Rs.20,52,447/- including CST amounting to Rs.20,321.26. The submission of the learned counsel for the petitioner/ complainant is that despite invoice raised in favour of M/s East India Technology Pvt. Ltd., the ownership of the goods continued to vest with the complainant since the price of the goods was to be paid by the M/s East India Technology Pvt. Ltd., within 60 days of inspection of the goods by ELCOT which is stated to be an agency of Government of Tamil Nadu and therefore, the complainant continued to have insurable interest in the goods by the time when they were damaged on account of road accident.

I, however, find myself unable to accept the contention. Having sold the goods to M/s East India Technology Pvt. Ltd., and having delivered the goods to the above referred company through transporter, the complainant ceased to be the owner of the goods and the property in the goods passed to the M/s East India Technology Pvt. Ltd., the moment goods were delivered to the said company, through the transporter engaged by the petitioner/ complainant for this purpose.

Section 20 of Sale of Goods Act, 1930 provides, where, there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of the goods or both is postponed.

Section 23 (2) of Sale of Goods Act, 1930, provides that where in pursuance to the contract, the seller delivers the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.

Section 26 of Sale of Goods Act, 1930 provided that unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyers risk whether delivery has been made or not.

A conjoint reading of the aforesaid provisions of the Sale of Goods Act, clearly shows that if the goods in deliverable state are delivered by the seller to the purchaser, the property in the goods passes from the seller to the purchaser unless they have contracted otherwise. There is nothing in the invoice issued by the complainant in favour of M/s East India Technology Pvt. Ltd., to show that the property in the goods was not to pass to the purchaser till the payment was received or till the goods were accepted by the agency of the Government of Tamil Nadu after inspection at the premises of the purchaser. Mere postponement of the payment till the inspection of the goods by the agency/ Government of Tamil Nadu did not have the effect of the complainant/ petitioner continuing to be the owner of the goods, despite the said goods having been sold for a consideration and having been delivered to the purchaser through a carrier. No other document was filed by the petitioner before the concerned District Forum to prove that despite the delivery of goods to M/s East India Technology Pvt., Ltd., the property in the goods continued to vest in the complainant. Therefore, it would be difficult to say that the complainant continued to be owner of the goods in question even after having sold and delivered the goods to M/s East India Technology Pvt. Ltd.,

The learned counsel for the petitioner/ complainant refers to section 7 of Indian Marine Insurance Act, 1963 which defines insurable interest as under:

"Section 7 : Insurable Interest Defined:

Subject to the provisions of this Act, every person has an insurable interest who is interested in a marine adventure.

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, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof."

In my opinion, considering that the complainant had not only sold the goods but had also delivered the same to M/s East India Technology Pvt., Ltd., without reserving any right for disposal of the goods, it cannot be said to have retained insurable interest in the said goods in terms of Section 7 of the (Indian) Marine Insurance Act, 1963. The complainant was not to gain or lose due to damage/ destruction of the goods. In fact, aforesaid Section 7 has no application to the facts of the present case.

The learned counsel for the petitioner/ complainant has also referred to the following extracts from the Law of Insurance by C Kameshwara Rao:

"Insurable interest may generally be defined as an interest which the person insuring will be deemed to have in the subject matter of insurance if, in the event of its loss or destruction, that person will be exposed to the risk of losing some pecuniary benefit or advantage. It is interest or right which the law will recognise in the preservation of the thing, or the continuance of the life, insured. It is not an interest which is synonymous with legal interest as defined in Section 54 of the Transfer of Property Act, nor is it an interest which must necessarily be vested in the person effecting the insurance. All that is required to satisfy the test of insurable interest is that the assured must stand in such a relation to the event with the subject-matter of insurance that he must by the happening of the event contemplated sustain or be presumed to sustain some pecuniary loss".

The aforesaid statement of law would be of no help to the complainant since there is no material on record to show that the complainant was not to receive the sale consideration from M/s East India Technology Pvt.. Ltd., in the event of destruction of goods while being re-transported from Virudh Nagar in Tamil Nadu to Dehradun.

In my opinion, the petitioner/ complainant was entitled in law to recover the price of the goods from M/s East India Technology Pvt., Ltd., once the goods had reached the destination of the purchaser in Virudh Nagar in Tamil Nadu. The goods were returned by the purchaser - M/s East India Technology Pvt. Ltd., to the complainant at the risk of the purchaser and therefore, at the time they were damaged/ destroyed, the ownership of the goods vested in the purchaser - M/s East India Technology Pvt. Ltd. Therefore, the petitioner/ complainant would be entitled to have a valid claim against the purchaser to recover the price of the goods which it had sold and delivered to the purchaser. The complainant/ petitioner in my opinion was left with no insurable interest in the goods, once they were sold and delivered to the purchaser, since the transaction of sale stood completed on the sale and delivery of the goods. Mere postponement of payment would not alter the legal position as per the ownership of the goods is concerned. In my opinion, it was M/s East India Technology Pvt. Ltd., which owned the goods at the time they were destroyed/ damaged on account of being involved in a road accident.

For the reasons stated herein above, I find no ground to interfere with the order passed by the State Commission in exercise of the revisional jurisdiction of this Commission. The revision petition is dismissed with no order as to cost.