Insurance Co. Ltd. Vs. Sky Gems  Insc 11 (9 January 2002)
Mohapatra & K.G. Balakrishnan K.G. Balakrishnan, J.
Appeal (civil) 633 of 1994
Appeal No. 559 of 1994 by National Insurance Co. Ltd. and Civil Appeal No. 633
of 1994 by M/s Sky Gems are filed against the judgment dated 21st December, 1993, passed by the National Consumer
Disputes Redressal Commission (hereinafter referred to as 'National
Commission'). The respondent-Sky Gems exported two parcels of precious stones
(Emerald) to London through the Foreign Post Office, New Delhi on 10.9.1990. However, the
consignment did not reach the consignee and was believed to have been either
stolen or lost in transit. The respondent had taken two insurance policies from
the appellant-insurance company. The total sum assured was Pound Sterling
85,740.55 (CIF value + 10%).
W.K. Webster & Company, London, were
appointed as investigators and their report dated 25.3.1991 confirmed that the
consignment had either been lost or stolen. Non-delivery certificate was issued
by the Department of Posts (Foreign Post), New Delhi, in respect of the consignment. The postal authorities admitted their
liability and made payment at the rate of Rs. 10,254.50 for each parcel
representing the full insured value and service charges. In respect of the two
policies obtained from the appellant-insurance company, respondent preferred a
claim and the appellant agreed to settle the same for Rs. 28,30,000. The
respondent claimed from the appellant an amount of Pounds Sterling 1,07,175.60
and insisted that the payments be made in Pounds. For some reason or the other,
there was a delay in settlement of the claim and the respondent filed a
petition before the National Commission. The appellant resisted the claim and contended
that it was not liable to pay the respondent in Pounds Sterling. It was also
contended that as the title in the goods had not passed to the consignee, the
respondent continued to be the owner of the goods and, therefore, the payment
could be effected only in Indian currency.
National Commission held that as the insurance policies clearly stated that the
claim was "payable at London" and the declared invoice value and the
insured value of the consignments were in terms of Pounds Sterling, the appellant
was liable to pay to the respondent in Pounds Sterling and ultimately ordered
the appellant to pay Pounds Sterling 85,740/- + 10% or Pounds Sterling
94,314/-. The respondent was also held entitled to recover interest at the rate
prevalent on commercial borrowings in U.K.
from time to time, commencing from January, 1991 to the end of December, 1993.
The appellant was entitled to adjust the amount of Rs. 20,000 received as
compensation from the postal authorities. A sum of Rs. 50,000/- was also ordered
as compensation for delayed payment. This Order of the National Commission has
been challenged before us.
heard Mr. M.S. Nargolkar, learned senior Counsel on behalf of the appellant and
Mr. V.A. Mohanty, learned senior Counsel on behalf of the respondent. The
dispute in this case is only with regard to the mode of payment to be effected
by the appellant in favour of the respondent.
counsel for the respondent contended that as per the terms of the policy, the
insured amount was payable at London and,
therefore, the payment to be effected has to be in Pounds Sterling. The
consignment of the precious stones was dispatched in favour of M/s. Emdico (London) Limited. As per the insurance
policy, the claim for settlement was given to M/s. W.K. Webster & Company,
6 Lloyd's Avenue, London. The contention of the respondent
is that as the insurance policy specifically stated that the claim was payable
at London, the payment should be made by the
appellant only in Pounds Sterling.
some important facts are to be noted in this case. The two consignments were
sent from India on 10.9.1990. After survey, it was
found that these consignments were either lost or stolen. The consignee of
these goods had approached M/s. W.K. Webster & Company for the settlement
of the claim and there was correspondence between the consignee and M/s. W.K.
Webster & Company. Some of this correspondence has been placed before us.
It is noticed that in the letter dated 2nd April, 1991, M/s. W.K. Webster &
Co. had asked the consignee, M/s Emdico (London) Limited, for the original
Policies of Insurance together with all correspondence exchanged with the
postal authorities concerning their liability, and also a clarification as to
whether they had remitted full payment of the value of the missing merchandise
to the Indian suppliers. In another letter dated 20th June, 1991, M/s. W.K. Webster & Co. offered to settle the claim as
soon as they received the necessary documentation from India and also mentioned that they shall
present the same to the Bank in order to obtain the required funds against the
Letter of Credit, which was available to them for payment of claims. The
consignee, Emdico (London) Limited, sent a reply to M/s. W.K. Webster & Co.
on 8th April, 1991 and the last paragraph of their letter reads as follows:-
"As regards the question whether we have remitted full payment of the
value of the missing merchandise to our Indian suppliers, the answer is that we
haven't done so and we suggest that the settlement may be concluded direct with
Sky Gems in India, however, if you will feel it is more convenient for you to
deal with us as the consignees of the goods, we shall be happy to do so. One
way or the other it doesn't seem to make much difference." From the above
correspondence, it is evident that the consignee, Emdico (London) Limited, did not pay the value of
the missing merchandise to the respondent. There is no evidence to show that
the necessary documents were endorsed in favour of the consignee and that they
were transferred to them. These facts will show that the title to the goods in
question had not passed to the consignee, M/s. Emdico (India) Limited and the respondent
continued to be the owner having insurable interest over the goods.
learned senior Counsel for the respondent contended that the goods were sent on
CIF contract and the moment the goods were consigned, the title would pass to
the consignee. We do not find much force in this contention. It is true that
the goods are ascertained, but even then the title would pass based on the
contract between the parties.
rights and liabilities of the parties in a CIF contract have been described by
Lord Porter in Comptoir d' Achat vs. Luis de Ridder;
Julia  A.C. 293 at 309, which is quoted in the Book Schmitthoff's Export
Trade - The Law and Practice of International Trade by Leo D' Arcy, Carole
Murray and Barbara Cleave [10th edition], at page 29, and read as follows:
obligations imposed on a seller under a c.i.f. contract are well known, and in
the ordinary case, include the tender of a bill of lading covering the goods
contracted to be sold and no others, coupled with an insurance policy in the
normal form and accompanied by an invoice which shows the price and, as in this
case, usually contains a deduction of the freight which the buyer pays before
delivery at the port of discharge. Against tender of these documents the
purchaser must pay the price. In such a case the property may pass either on
shipment or on tender, the risk generally passes on shipment or as from
shipment, but possession does not pass until the documents which represent the
goods are handed over in exchange for the price. In the result, the buyer,
after receipt of the documents, can claim against the ship for breach of the
contract of carriage and against the underwriters for any loss covered by the
policy. The strict form of c.i.f. contract may, however, be modified. A
provision that a delivery order may be substituted for a bill of lading or a
certificate of insurance for a policy would not, I think, make the contract be
concluded on something other than c.i.f. terms." (Emphasis supplied) From
the above passage, it is clear that the right of the buyer to claim policy
amount would arise when he obtained title to the property and he must produce
the documents of transfer. Here, the buyer was not in possession of any such
documents of title. The letter written by the consignee, M/s. Emdico (London)
Limited on 8th April, 1991 clearly shows that they had not paid the value of
the missing merchandise and had suggested to M/s. W.B. Webster & Co. that
the claim may be settled with the respondent-Sky Gems in India. The consignee
could not produce any documents concerning their title to the goods before M/s.
W.K. Webster & Company and this evidently shows that the title had not
passed to the consignee at London. The
insurable interest over the goods continued to be with the respondent. Under
such circumstances, the respondent is not entitled to receive the payment in
respondent has paid the insurance premium in Indian currency and continued to
have title over the goods as it never passed to the consignee. Had the title
passed to the consignee, and if they had preferred the claim, the insurance
amount would have been payable in London in Pound Sterling. The National Commission did not notice these points
and directed the appellant to pay the amount in Pound Sterling mainly on the
ground that the policies issued by them stated that the insurance amount was
payable at London.
regard to the facts and circumstances of the case, we do not think that the
appellant is liable to pay the insurance amount in Pounds Sterling. We set
aside the direction of the National Commission to pay the amount in Pounds
Sterling and hold that the respondent is entitled to get Rs. 28,30,000 with
interest @ 18% from the date on which it preferred the claim petition before
the appellant, till payment. The respondent is also entitled to receive Rs.20,000
towards costs ordered by the National Commission.
Order passed by National Commission shall stand modified to the extent
the above directions, Civil Appeal No. 559 of 1994 is disposed of. Civil Appeal
No. 633 of 1994 is without any merits and is dismissed. The cost of these
proceedings shall be borne by the respective parties.
January 9, 2002.