Precision Drilling Equipments India Ltd vs NEW INDIA ASSURANCE CO

M /s. Precision Drilling Equipments (India) Ltd. hereinafter referred to as the complainant, is engaged in the manufacturing of Rock Roller Drill Bits used for drilling purposes in Mines and Oil Research Organisations. Among others, the complainant had been marketing the said RF Drill bits to ONGC. The complainant obtained a Marine Insurance Cover from M/s. The New India Assurance Company Limited, opposite party -1 from year to year for the last eight years. The policy obtained was an open policy for value of Rs. 1.00 crore and there was not even a single occasion when the complainant had to lodge any claim with the Insurance Company. The policy was last renewed for the period 15.6.1991 to 14.6.1992. Further case of the complainant is that in pursuance to an order placed by ONGC, the complainant booked a consignment containing 22, 8 1/2 Diameter Tricone RR Bits vide their Invoice No.607 dated l3.12.1991 to ONGC, Baroda with M/s. ABC India Ltd., opposite party -2. Copy of the invoice was produced as Annexure -2 with the complaint and me invoice value was Rs. 2,80,019.80. The paid consignment was cleared under Gate Pass No. 26 and Marine Declaration Form dated 13.12.1991. The consignment was insured under the Marine Policy aforesaid for A.R. and SRCC risks. The carrier, namely M/s. ABC India Limited were the approved carriers of ONGC. On l6.3.1992 ,the complainant received telegram Annexure -3 from the consignee that they were not retiring documents as the material was found to be in a damaged condition. The complainant, therefore, contacted the Insurance Company opposite party 1 and the complainant was advised to have the goods surveyed by an approved Surveyor. Survey was carried out by Sh. H.N. Thakkar, Surveyor and Loss Assessor at Baroda, holding Licence No. SLA 14527. The said Surveyor after assessing the loss submitted his report dated 2.4.1992. It was reported by the Surveyor that out of 22 Bits, 20 were damaged beyond acceptance limit/repairable condition. ONGC, therefore, refused to take delivery of the consignment. The complainant lodged a claim with the Insurance Company on 20.4.1992 claiming compensation for the sum of Rs. 2,58,019.80 as the goods had been damaged by negligent handling thereof by the carrier. Claim in the prescribed form was lodged on 9.5.1992. The Insurance Company was also furnished damage certificate issued by the carrier. The Insurance Company, however, appointed Mr. Rakesh Kapoor, Surveyor, to carry out a survey of the damage. The documents required by the Surveyor were made available to him but the Insurance Company failed to settle the claim. The present complaint was filed claiming the following amounts : (1) Towards claim lodged by complainant with opposite party No. -l on 9.5.1992 Rs. 2,58,019.80 (2) Interest @ 20''%, from 9.5.1992 till the date of filing the complaint Rs. 94,607.00 (3) Towards exemplary damages for not settling the claim within reasonable time of one month Rs. 50,000.00 (4) Towards damages for mental torture and harassment Rs. 1,00,000.00 (5) Towards payment made to First Surveyor Rs. 4,138.00 Total Rs. 5,06,764.80.

IN the written statement filed by the Insurance Company, a number of legal objections were raised. It was further stated that the Insurance Company was not liable to settle the claim as the complainant failed to supply all the documents asked by the Insurance Company in order to determine the amount payable under the policy. The claim was repudiated by letter dated 27.2.1993 which was reiterated on 26.8.1994. In the alternative, it was pleaded that the Company was liable to the extent of Rs. 2,20,000/ - only minus the Excise Duty. In their written statement M/s. ABC India Limited opposite party -2 stated that the complaint was not maintainable against it as no relief had been prayed by the complainant against them. It was also not maintainable as notice under Section 10 of the Carriers Act had not been served before the institution of the complaint. With regard to Mr. H.N. Thakkar, Surveyor it was stated that he had submitted the report dated 2.4.1992 long after the expiry of his licence on 7.2.1991. With regard to the amount claimed as compensation it was pointed out that the value of the goods declared in the G.R. was only Rs. 38,175/ -. It was admitted that opposite party - 2 had issued Damage Certificate to the complainant but it was firmly denied that the carrier was careless in handling the goods.

IN the rejoinder to the written statement of opposite party -1 the complainant stated that period of limitation started running from the date of repudiation namely 27.7.1993 and the present complaint having been filed on 28.6.1994 was well within limitation. With regard to territorial jurisdiction, it was stated that the insurance cover was taken from the office of the opposite party -1 at Delhi and the FORA in Delhi had territorial jurisdiction. It was denied that the goods in question had been purchased for commercial purposes; on the contrary, the goods had been purchased for priority area of ONGC for oil exploration which was not a commercial purpose. In any case it was further pleaded that no such objection had been taken by the Insurance Company in any of its letters or even in the letter of repudiation. It was further stated that the goods reached the destination on 6.1.1992. The complainant received a telephonic call on 13.1.1992 and again on 17.1.1992 from ONGC, Baroda reporting about the damaged condition of the consignment and this fact was duly mentioned by the complainant in his letter Annexure -XVIII dated 22nd December, 1992, addressed to Rakesh Kumar & Co. with a copy to the Senior Divisional Manager of the Insurance Company. In other words the consignee had seen the goods within one week of their arrival at the destination and had found the same to be damaged beyond limits of acceptance/repairs. It was firmly denied that the goods had not been properly packed of they were packed in poor packing materials.

IN the replication to the written statement filed by the carrier, namely, opposite party -2 it was stated that the carrier was deficient in service and was liable to make good the loss. It was maintained that no notice under Section 10 of the Carriers Act was required. With regard to licence of H.N. Thakkar, it was stated that same is renewed at every five years and he had sent the licence for renewal well in advance in October, 1991 as the renewal was due in December, 1991. The licence was duly renewed upto December, 1996 and this fact was confirmed by H.N. Thakkar in his letter dated 3.8.1995 Annexure -XII filed with the rejoinder. Copy of the renewed licence was enclosed with the said reply. It was denied that the declared value of the consignment was Rs. 38,175/ - and it was reiterated that the value of the consignment was Rs. 2,80,019.80. Apart from the documents, the complainant has filed affidavit of Mr. D.S. Grewal, Chairman -cum -Managing Director of the Company opposite party -1 has filed affidavit of Mr. J.C. Verma, Sr. Divisional Manager of the Insurance Company. Opposite party 2 has filed affidavit of Mr. T. Chakravarty, Senior Branch Manager, New Delhi Branch of ABC (India) Limited.

WE have heard Mr. Shiv Prakash Pande, Advocate for the complainant, Mr. Salil Paul Advocate for the opposite party -1 and Mr. A.K. Sharma, Advocate for opposite party -2.

THE first question for consideration is whether the complaint is barred by limitation. In this case admittedly the letter of repudiation is dated 27.7.1993 and the complaint was filed on 28.6.1994. Faced with this difficulty, Mr. Paul contended that limitation started running from the date of accrual of cause of action namely the loss which according to the complainant came to notice on 13.1.1992. According to Mr. Paul, the complaint having been filed in June, 1994 was beyond the period of limitation of two years laid down in Section 24 -A of the Consumer Protection Act. We find no merit in this contention. No doubt loss or damage to the goods was one of the facts which constituted the cause of action but cause of action comprises a bundle of facts which together gave the complainant a right to move the appropriate Court or Forum. One such material fact is either failure of the Insurance Company to settle the claim within a reasonable period or repudiation. In this case, the repudiation was done through letter dated 27.7.1993 and, therefore, the complaint was filed well within the period of limitation allowed by law. The objection regarding territorial jurisdiction is also untenable as admittedly the policy had been taken from Delhi office of the Insurance Company and admittedly the Insurance Company is functioning through its various offices situated in Delhi.

COMING to the third legal objection, we find that the same is also untenbale. The instant case does not relate to purchase of goods and, therefore, it is not relevant whether the goods were purchased for commercial purposes or otherwise. The case relates to service of opposite party -2 in transporting the goods from NOIDA to Baroda and opposite party -1 being liable under the contract of insurance to indemnify the loss suffered by the insured. In the case of service, as distinguished from purchase of goods, it is not relevant whether the service had been secured for goods of commercial nature or otherwise.

WE further find that the goods had been found to be damaged within seven day of their arrival at Baroda and, therefore, there can be no objection that the Insurance Company was absolved of its liability to cover the risk after the expiry of seven days from the date of arrival of the goods at the place of destination. The fact that the damage had been seen by ONGC on 13.1.1992 is borne out from the telephone received by the complainant on 13.1.1992. Not only that we have the word of the complainant supported by affidavit of Sh. D.S. Grewal, the aforesaid fact is duly established by copy of the letter dated 22nd December, 1992 which was written by the complainant M/s. Rakesh Kumar & Co., the Second Surveyor appointed by the Insurance Company with a copy to Sr. Divisional Manager of the Insurance Company; ONGC followed -up their objection by sending telex on 20th Feb., 1992 and 24th February, 1992, besides a telegram. The material fact remains that within a period of seven days from the date of arrival at the destination the damaged goods had been inspected the damage, reported to the complainant. With regard to the alleged poor packing of the goods, we find that the report of the first Surveyor, H.N. Thakkar is self contradictory. In Columns No. 10 & 11 of the report of Mr. H.N. Thakkar (at page 16 of the record) he stated the nature of the packing to be wooden boxes and external condition of the packages to be damaged. In the next following column i.e. Column 12 he stated that no packing boxes were preserved and tile items were lying loose. If the packing boxes had not been preserved and seen by the Surveyor, it must be on the basis of information received by the Surveyor that he mentioned the fact that the goods had been transported in wooden boxes and he must have accepted somebody''s words that the boxes had been damaged. In the nature of things, the complainant who has been manufacturer of the aforesaid costly item and had been supplying the same to well established Government Organisations, could never be interested in not ensuring necessary safety of the goods by proper packing. Mr. Rakesh Kapoor of Rakesh Kumar & Co., the second Surveyor appointed by the Insurance Company, inspected the goods, at the factory of the complainant after the goods had been brought back in damaged condition from Baroda to NOIDA on 19.11.1992 vide Annexure -IX on page 25 of the paper book. He did not mention about the packing condition of the goods being poor.

THERE is also the affidavit of Mr. D.S. Grewal, CMD of the complainant Company that the goods were properly packed and that they had been doing so for a long time and the goods were safely delivered to the consigness without any complaint about packing used by the complainant. Moreover, the carrier would not have accepted the consignment for transportation unless the goods were properly packed. Our conclusion, therefore, is that the plea that the goods had been damaged because of poor packing is untenable and deserved to be rejected.

THE renewed licence of Mr. H.N. Thakkar produced alongwith his letter dated 2.8.1995 goes to show thaton the material date the Surveyor held valid licence. Once the licence is renewed it relates back to the due date and it will follow that at the time of inspection of the goods Mr. H.N. Takkar held a valid Surveyor''s licence. The complainant sent a copy of the invoice alongwith the L.R. which states the value of the goods being carried in the consignment. The amount declared was Rs. 3,81,757/ - and not 38,175/ -. The objection is based on a misreading of the L.R. The irresistible conclusion is that goods were damaged excepting in respect of two packages owing to want of reasonable care on the part of the carrier. They are guilty of deficiency and are liable to make good the loss. The National Commission has repeatedly held that notice under Section 10 of the Carriers Act is not required before filing a complaint under the Consumer Protection Act. Reference may be made to the following : (1) 1992 (1) CPR 811 (NC) (2) 1992 (1) CPR 468 (NC)

IN this case the Insurance Company failed to settle the claim within a reasonable time even though the loss was clearly established within the terms of the insurance policy. For the reasons, discussed in detail above, we find that the rejection of the claim was not for good and valid reasons and the repudiation could not, therefore, be accepted as bona fide repudiation after due application of mind. This constitutes deficiency in service. There is also deficiency in Service as far as the carrier opposite party -2 is concerned because the goods were damaged while they were in custody of the carrier.

FOR the foregoing reasons, our findings are as follows : (1) The New India Assurance Company Limited opposite party -1 is liable to pay to the complainant the price of 20 out of 22 Bits as found by Mr. H.N. Thakkar, namely Rs. 2,58,019.80 after deducting the following amounts : (i) Rs. 10,000.00 on account of salvage as per the report of the Surveyor. (ii) The actual Excise Duty paid by the complainant on those 20 Bits which were damaged beyond repairs. The complainant shall intimate to the Insurance Company the exact amount of Excise Duty paid in regard to 20 Bits to enable the Insurance Company to deduct the same. The net amount after deducting the aforesaid two items shall carry interest @ 12% per annum from 15.6.1992 till date of payment and the said amount shall be payable alongwith the aforesaid net amount.

(2) On payment as stated above, the Insurance Company shall stand subrogated in place of the complainant and shall be entitled to be reimbursed of that amount by the carrier, opposite party -2 by enforcing this very order. It will not be necessary for the Insurance Company to file a separate complaint to recover the amount as the carrier opposite party 2 was a party to the present complaint and opposite party -2 might and ought to have raised all pleas between opposite party -2 and opposite party 1 as if the complaint had been brought by opposite party -1 as subrogatee of the complainant.

(3) The complainant shall also be paid initially by opposite party -1 costs of the proceedings which are quantified as Rs. 5,000/ - this amount shall also be reimburseable by opposite party.

No further amount is considered necessary by way of damages as substantial amount has been awarded by way of interest. The rate of interest of 12% and the date from which the same has been directed to be paid are in accordance with law laid -down by me Supreme Court in United India Assurance Company Ltd. v. M.K.J. Corporation, III (1996) CPJ 8 (SC). A copy of this order be communicated to the parties. Complaint allowed.