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Judgment
Subhash Chandra, Presiding Member
This appeal under section 19 of the Consumer Protection Act, 1986 (in short, the Act) challenges the order dated 20.10.2016 in Complaint no.130 of 2008 of the Delhi State Consumer Disputes Redressal Commission, Delhi (in short, the State Commission) allowing the complaint and directing the appellant herein to pay the respondents Rs.42 lakh towards loss of consignment with interest @ 9% per annum till payment along with Rs.10,50,000/- towards expenses incurred, Rs.75 lakh towards surveyors fees and Rs.29,281.41 towards payment made as fee to the overseas surveyor. It is prayed toallow the appeal and set aside the impugned order and to pass any other order(s) as deemed fit and proper in the facts and circumstances of the case after calling for the records, if necessary.
We have heard the learned counsel for the parties and perused the records carefully.
The respondent/ complainant no.2 had insured a consignment of heavy melting scrap of approximate 450 MTs to be imported from South Africa to Ludhiana under a Marine Cargo Specific Voyage Policy dated 16.03.2006 obtained from the appellant for Rs.52,25,000/- against a premium of Rs.5759/- (in short, the policy). The consignment reached the Mumbai Port on 25.05.2006 and thereafter to ICD Tuglakabad (Delhi) on 12.06.2006. On 12.06.2006, the respondent informed the appellant that they had not taken the delivery of the consignment since they had reasons to believe that the material received was less and they had suffered an estimated loss of Rs.50 lakh. Appellant appointed M/s R K Singhal and Co. Pvt. Ltd. to assess the loss. The surveyor visited Tuglakabad on 14.06.2006 and 16.06.2006 as well as the site at Faridabad on 17.06.2006. During the inspection it was found that out of the 18 containers, 8 had already been de-stuffed and loaded in trucks and the balance 10 containers which were yet unopened were weighed at the official weight bridge of ICD and found to weight abnormally less than the stated weight. However, the original seals of these containers were found intact as per the Bill of Lading. The sealed containers were transported to the respondents premises and de-stuffed in their presence. The surveyor submitted a detailed survey report dated 05.03.2007 wherein it was mentioned that the insured and high sea purchasers were closely associated each other and belonged to the same family. It was also mentioned that (i) insured could not submit any pre-despatch weighment evidence including any weighment details from the supplier or the shipper or pre-dispatch surveyor; (ii) the packing lists prepared by the supplier could not be considered authentic since they recorded the same weight of all the containers which indicated that these had been prepared without inspection or weighment; (iii) the letter of credit dated 06.06.2006 was amended giving the effect from 31.03.2006 which indicated that the amendment was done after the containers were received at ICD Tughlakabad and, in effect, the amendment was applicable from a date that was prior to the date of invoice and dispatch without mentioning the reasons for such amendment; and (iv) the insured had stated during discussion that while they were regularly importing HMS since long they had not been obtaining insurance coverage except in this case since they were dealing for the first time with this party.
The respondent approached the State Commission alleging delay in settlement of the claim. Appellant was directed by the State Commission vide order dated 09.04.2008 to decide upon the matter within three months.
The appellant repudiated the claim vide letter dated 05.05.2008 on the basis of the surveyors report against which a complaint was filed by the respondent before the State Commission alleging that (i) it ffailed to consider the objections in the written version by relying upon this Commissions judgment in National Insurance Company Ltd., vs Mangalagowri Cashew Industries [AIR 2006, 2 CPJ 32 ]. It was stated that the ratio of this judgment did not apply to this case; (ii) the State Commission has erred in proceeding on the basis of the judgment of the Honble Supreme Court in New India Insurance Company Ltd., vs Pradeep Kumar [ AIR (2009) 7 SCC 777 ], that the report of the surveyor is not the final word; (iii) impugned order was erroneous in not considering the surveyors report which clearly shows that no physical weighment was carried out before the dispatch of the consignment and there was no confirmation of the weight of the goods dispatched apart from the fact that the condition in the LC requiring photographs of the containers with materials stuffed was waived at the request of the respondent; (iv) the State Commission erred in not appreciating that 8 out of the 18 containers shipped had already been de-stuffed prior to the approval of the surveyor and the balance 10 containers were opened in the presence of the surveyor were volumetrically filed only to the extent of 70 90% and therefore, such large shortage was not practically possible and (v) the State Commission had quantified loss of Rs.42 lakh and expenditure of Rs.10,50,000/- without any material on record.
Per contra, the respondent contended that it had obtained an All Risk Policy with ICC (Institute Cargo Clause) Clause A whereby the insurer would cover all risk of loss or damage to the consignment issued to the insured except under clauses 4, 5, 6 and 7. According to the respondent the claim did not attract these exclusions. It was submitted that the goods were being imported against a Letter of Credit in 18 containers which were shipped as per the Bill of Lading dated 07.05.2006 on C & F basis, with the freight charges being prepaid. Prior to the shipment, the consignment is stated to have been inspected by a Government recognised surveyor who issued a pre-shipment inspection certificate. All relevant documents such as invoice, Bill of Lading, pre-shipment inspection certificate, packaging list, etc., were sent in original to the respondent for release of payment from the bank and accordingly, the bankers had released the payment USD 98,616.20 to the overseas supplier. The consignment was sold on the High Seas Sale basis vide agreement for USD 48,721.15 + 2 % and for USD 49,895.05 + 2% to the respondent by respondent no.2. These documents were also forwarded for effecting delivery of consignment on arrival at ICD Tughalakbad, New Delhi. The custom duty on the consignment was also paid on arrival. However, on opening of the containers it was found that only approximately 10% of the total goods had been delivered and a joint survey was carried out in the presence of the surveyor for the CONCOR, the clearing agent, the surveyor of the insurance company and M/s J B Boda Surveyors (P) Ltd., authorised surveyor of the shipping line. Shortage of 90% of consignment weight was certified by M/s J B Boda, Surveyor against the consignment of 458.68 MT as only 36.18 MT of HMS scrap was found to have been delivered indicating a shortage of 422.500 MT. The respondent filed an insurance claim and deposited Rs.75,000/- with the surveyor as the fees. However, despite submitting the requisite documents as sought vide letter dated 23.04.2007 and 14.08.2007 the claim was not settled and therefore, the respondent approached the State Commission which directed the appellant vide order dated 09.04.208 in complaint no. 08/ 41 to decide the matter within three months. Based on the surveyors report dated 05.03.2007 (which was not supplied to the respondent), the appellant repudiated the claim against which the State Commission was again approached in complaint no. 130 of 2008 which came to be decided, on contest in its favour. It is argued that in response to the letter of the appellant to obtain the certificate from an independent agency confirming that; (i) the weight of the consignment was taken at appropriate places; (ii) confirm that no deviation was made for the standard practice of loading and dispatch; (iii) the independent accredited agency should collect the documentary evidence in respect of their findings the respondent had submitted report of the Overseas Surveyor, M/s Trevor Millard and Associates dated 30.10.2007 on 04.12.2007 which had certified that all the details were found to be correct and that the standard practice and procedure had been followed. It is the respondents contention that since all the required process and procedure had been followed and an independent Overseas Survey Report had also been provided, the claim had been rightly allowed by the impugned order and the appeal should therefore be dismissed.
From the records it is seen that the letter of repudiation dated 05.05.2008 has provided the following reasons for repudiation of the claim:
The surveyor have straightway ruled out the possibilities of pilferage after thoroughly examining and inspecting the condition of the containers, which were found absolutely intact;
The inspection of M/s Worldwide Logistics is from the angle of prohibited material and not confirming the weightage of the goods dispatched. No physical weighment was carried before dispatch of consignment.
You have waived the LC requirement of photographs of containers with materials stuffed therein.
There is no evidence of operation of insured peril.
As per the Policy, the risk covered was for Rs.52,25,000/- subject to Exception in Clauses 4, 5, 6 and 7 which related to General Exclusions in sea worthiness, unfitness exclusion clause, war exclusion clause an strikes exclusion clause. Clause 4 reads as under:
Exclusions
In no case shall this insurance cover
loss damage or expense attributable to wilful misconduct of the assured;
ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear of the subject matter insured;
loss damage or expenses caused by insufficiency or unsuitability of packing or preparation of the subject matter insured (for the purpose of this clause 4.3 packing shall be deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of this insurance or by the assured or their servants);
loss damage or expense caused by inherent view or nature of the subject matter inured;
loss damage or expenses proximately caused by delay, even though the delay be caused by a risk insured against (except expense payable under clause 2 above);
loss damage or expense arising from insolvency or financial default of the owners managers charterers or operators of the vessel;
loss damage or expenses arising from the use of any weapon of war employing atomic or nuclear fission and/ or fusion or other like reaction or radioactive force or matter.
[ Emphasis added ]
In the instant case, the report of the surveyor states that at the time of inspection of 4 containers which had already been de-stuffed and loaded in trucks and balance 5 containers were weighed at the official weigh bridge of ICD Tughalakabad and were found abnormally short, although the original seals as per the Bill of Lading were found to be intact.
As per the report of M/s R K Singhal and Co. Pvt. Ltd., Approved Valuers, Loss Assessors and Surveyors dated 05.03.2007 who were appointed by the appellant to inspect the consignment.
Verification, investigation and observations of loss
On going through the situation of consignment and seals of containers, we did not find any man marking on the containers. We carefully examined all the hinges, locking devices, sides etc., of all containers and found the same intact. Hence, the possibility of any pilferage is ruled out.
However we carefully examined the all 10 nos. sealed containers while being opened in our presence at M/s Jotindra Steel & Tubes Ltd., 14/3, Mathura Road, Faridabad. On opening we found the stuffing as under:-
The First container was having mainly 200 drum shells, that too circular in shape & other light iron material. The container was filled 70%, but shells were not dented & pressed; hence it seems that there was no heavy metal in the container.
The Second Container was found having various imported refrigerator body shells along with other light metal parts and container was volumetrically filled 90%.
In the Third Container we found drum shells with iron net and container was volumetrically filled 90%.
In the Fourth Container we found various cut tin wires mainly being used to fix electric poles and container was volumetrically filled 70%.
In the Fifth Container we found various refrigerator bodies and drums and container was volumetrically filled 90%, but all drums & bodies were physically intact.
In the Sixth Container we found imported truck bodies, particularly rear bodies and container was volumetrically filled 70% (practically 100% since bodies were hollow).
In the Seventh Container we found various drums with other metal sheets and container, was volumetrically filled 80%.
In the Eighth Container there were again sheet metal car parts along with some drums and gauges and container was volumetrically filled about 70%.
On inspecting the above drums/Body Shells and other metal parts physically, it looks that the material was foreign make.
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We asked the consignor M/s Starr Link FZC. Rak Free Trade Zone, P. O. Box 10559. Rasal Khaimah UAE Email: [email protected] & [email protected]. vide our letter dated 18.09.06 and followed by letter dated 23.12.06 (by email) to confirm if physical weighment was carried out by them or some independent agency before loading to ship. We also requested them to inform if weighment was carried out by Shippers M/s Laurel Navigation (Mauritius) Ltd., at the time of shipping on board. If so, kindly produce detail with supporting of weighment.
We received consignor's reply vide e-mail dated 23.12.2006 that the inspection of material quality and quantity was carried out by M/s World Logistics Survey and Inspection (WLSI) Group and Affiliates, Australia which is an approved Indian customs agency.
We also asked Pre-shipment inspection Surveyors M/s Worldwide Logistic Survey & inspection (WLSI) Group and affiliates, 18, Keyport Crescent, Glendenning, NSW 2761, Sydney (Australia) Email [email protected] vide our letter dated 23.12.2006 to confirm if physical weighment was carried out by them.
We received their reply on the same day by e-mail dated 23.12.2006 mentioning that their main purpose is to give inspection for non arrival of any explosive or any prohibited material in India and not for weight.
After noting the contends in the containers which on physical examination were found to be a foreign make. The surveyor sought clarifications from the consumer M/s Starr Link FZC, UAE who informed that pre-shipment inspection had been done by M/s Worldwide Logistic Survey and Inspection Group, Sydney, Australia who clarified by an e mail dated 23.12.2006 that the main purpose of their inspection was with regard to any explosive or prohibited material in India and not for weight, therefore, the following conclusions were arrived at:
Conclusions:
i. We found that insured and high sea purchasers closely associated with each other and belong to same family;
ii. Neither insured could submit any pre-despatch weighment evidence, nor supplier/shipper/ pre despatch surveyor has taken physical weighment, hence no physical weighment was carried out before dispatch of consignment;
iii. As given above even packing lists prepared by supplier may not be considered authentic, since, they record same weight of all containers which indicates that packing lists have been prepared without weighing, even without inspecting the containers;
iv. Amendment of L/C dated 06.06.2006 effective from 31.03.2006 clearly shows that amendment was done after reaching of containers at ICD Tughalakabad that too effective prior to even invoice and dispatch;
v. Insured also could not explain the reasons of amendment in L/C;
vi. Moreover insured Shri C D Sureka informed during discussion that though they are regularly importing HMS since long, but they are importing from known suppliers, hence not making any insurance coverage;
But since they have imported from this party for the very first time, hence, they have got the same insured.
At the request of the appellant, the respondent had also obtained a report from M/s Trevor Millard Associates, Marine Surveyors Claims Adjuster Recovery Agents, South Africa who vide their letter dated 30.10.2007 confirmed that the bill of lading had been found to be correct with regards to the details such as weight/ vessel name, verified as per the bill of entry export DA 550 and that to best of their knowledge standard practices and procedures were followed.
While the respondent has contended that the shipment in question has been duly verified for weight, it is evident from the report of the independent surveyor (M/s Trevor Millard and Associates) that it had only certified all weight and vessels name mentioned in the Bill of Lading, numbers indicated in their letter dated 30.10.2007 and that they had not certified the actual weight of shipment. The respondent has not been able to explain why it sought waiver of condition with regard to photographs of the scrapped stuffed in the containers. It has merely chosen to rely upon the container that since all the procedure had been duly followed and the overseas agency had also certified the same, the claim of insurer be allowed. Appellants case, however, is that the weight of the shipment was not certified nor supported by any evidence or photographs and therefore, shortage of 458.68 MT noted the weight at ICD, Tughalakabad could not be considered by them as a loss, even though the seals of the containers were found to be intact.
On the basis of documentary evidence that the weighment of the exported scrap was not verified or supported by any documentary evidence, the contention of the respondent that the claim was based on actual shipment cannot be accepted. Quite evidently, the short fall of 422.500 MT has not been satisfied to be established by any documentary evidence although the policy in question was required to indemnify the respondent against the loss or damage for exported metal scrap being shipped from South Africa to India, in the absence of any supporting documents, the same cannot be considered merely, because these items were shipped. It cannot also be said to confirm in terms of weight of the details shown in these invoices.
Even the report of the independent surveyor is of no avail to the respondent since it does not certify the weight of the metal scrap that was actually shipped in the containers by its own admission letter dated 30.10.2007. The assessor has mentioned that it has only verified that the details mentioned in the Bill of Lading, such as weight, the vessel name were verified to be correct as per the Bill of Entry Export DA 550. There is no reference to weight recorded by any weighment agency.
The fact that when containers were opened at ICD Tughalakabad the seals were intact leaves no doubt that the consignment ab initio did not conform the weight that was claimed. Therefore, the repudiation of the claim by the appellant cannot be found fault with. The order of the State Commission reliance this Commissions decision in National Insurance Company Ltd., vs Mangla Gauri Cashew Industries II (20060 CPJ 32 is erroneous. The ratio of that decision does not apply to the present case. In Mangla Gauri Cashew Industries (supra), the issue involved was damage to cargo containing cashew nut by rain water and repudiation of the claim on the grounds that the loss was not covered by any of the insured perils since the loss/ damage was due to germination of cashew nut and damage to consigned goods on account of inherent vice. The facts of the instant case are entirely different.
In the instant case, the issue involved is shortage in weight which is not supported by any documentary evidence produced by the respondent to establish dispatch of quantity for which the insurance was obtained. It is noteworthy to point out that the specific condition of photograph of the consigned goods had been sought by the respondent to be waived. In the light of this waiver, even in the absence of evidence with regard to proof of payment, there is no evidence available to establish the quantity of metal scrap exported, especially since on the unlocking of the containers which had admittedly not been disturbed until then, the containers were found to be relatively empty.
The State Commission has also held, relying on New India Insurance Company Ltd., vs Pradeep Kumar (2009) 7 SCC 777, that the report of the surveyor is not conclusive or sacrosanct. However, it has not provided any evidence to hold the report to be perverse or arbitrary. Therefore, this finding of the State Commission cannot be sustained..
For the reasons discussed above, the order of the State Commission is liable to set aside. The appeal is accordingly allowed and the impugned order is set aside. There shall be no order as to costs.
Pending IAs, if any, also stand disposed of by this order.