The Supreme Court of India Civil Appellate Jurisdiction Civil Appeal Nos.
4306-4307 Of 2003
India Assurance Co. Ltd. ........Appellant(s) Vs. M/s Hira Lal Ramesh Chand
& Ors. ....Respondents in
No.4306/2003 M/s Ratan Chand Deep Chand & Ors ... Respondents in CA
V. Raveendran J.
appeals under section 23 of the Consumer Protection Act, 1986, are filed
against the common order dated 31.1.2003 passed by the NationalConsumer
DisputesRedressalCommission,New Delhi ('Commission' for short) allowing in part
OP No. 45 of 1997 and OP No. 49 of 1997. OP No.45 of 1997 was filed by M/s Hira
Lal Ramesh Chand and its partner Rajender Kumar Jain (respondents 1 and 2 in CA
No.49 of 1997 was filed by M/s Ratan Chand Deep Chand and its two partners
(respondents 1 to 3 in CA No.4307/2003).
As the ranks of parties differ in the two appeals and as some parties were
given up before the Commission, for convenience, we will also refer to the
parties as follows : New India Assurance Co. Ltd., as `Appellant' or Insurer';
M/s Hira Lal Ramesh Chand and its partners (Respondents 1 & 2 in the first
matter) and M/s Ratan Chand Deep Chand and its partners (Respondents 1 to 3 in
the second matter) as the `complainants'; M/s Niranjan Shipping Agency Pvt.
Ltd., (third Respondent in the first matter and fourth Respondent in the second
matter) as `Niranjan Shipping'; Punjab National Bank (fourth Respondent in the
first matter and fifth Respondent in the second matter), and Bank of Baroda
(sixth Respondent in the second matter) by their names; Atlanta Rugs Inc. as
the `Buyer'; and Overseas 3 Container Lines Inc. (the Non-Vessel Owning Common
Carrier acting as shipping Agent) as `NVOCC' or `Overseas Container'.
The case of the complainants, in brief, is as follows : Complainants are
manufacturers of Rugs and Durries, carrying on business at Mirzapur, UP. In
pursuance of orders placed by Atlanta Rugs Inc., Atlanta (for short the
`buyer'), M/s. Hira Lal Ramesh Chand dispatched 17 consignments of rugs and
durries of the value of US $ 4,06,096 between 15.3.1995 and 29.6.1995; and M/s.
Ratan Chand Deep Chand dispatched 38 consignments of the value of US $ 8,87,973
between 23.8.1994 and 4.7.1995. The consignments were entrusted to M/s Overseas
Container Line Inc., a non vessel owning shipping Agent represented by its
Agent Niranjant Shipping Agency (P) Ltd., for transhipment from Mumbai to
Atlanda (USA). The Bill of Lading issued by Overseas Container in regard to
each of the consignment showed the consignee as "Unto order" and
party to be notified as "Atlanta Rugs Inc.". All the consignments
were insured by the consignors, with the New India Assurance Co. Ltd. The
original documents relating to the consignments were forwarded by Niranjan
Shipping to the Bankers of complainant - Punjab National Bank. The complainants
obtained credit facilities from Punjab National Bank by discounting the Bills
and endorsed the Bill of Lading in favour of the said Bank. The said Bank, in
turn, forwarded the original documents of title to its agent Sun Trust Bank
(earlier known as Trust Company Bank) Atlanta, for collection, by endorsing the
documents in their favour. The buyer (Atlanta Rugs Inc.) did not make payment
and obtain release of the documents of title. They therefore made efforts to
contact the buyer and the shipping Agent Overseas Container. They were also not
able to locate them. Nor were they able to find out the whereabouts of the
consignments. Therefore they telephonically lodged an oral claim with the
insurer on 2.2.1996 seeking payment of the value of the consignments. The
insurer directed them to get in touch with their Surveyor-cum-Claim Settlement
Agent at Atlanda -- M/s.
and Hoarding Inc. They accordingly requested the said Surveyor to inquire and
investigate the matter and issue necessary certificates. The surveyor submitted
their reports to the Insurer, but failed to furnish copies thereof to the
complainants. Their claim was not settled by the Insurer for more than a year in
spite of reminders. Such failure amounted to deficiency in service and
consequently the insurer became liable to pay the value of the consignments and
the other amounts claimed, as compensation.
The complainants sought a direction to the New India Assurance Co.Ltd.
(appellant) to pay the following amounts as compensation :
Particulars Claim in OA 45/1997Claim in OA 49/1997 Amount (in US $) Amount (in
Insurance amount (unrealized value of shipments) : 406096 887973 ) Increase in
cost of goods (10%) :40609 88797 ) Compensation for mental agony :100000
100000 ) Business loss for one year :58091100000 ) Expenses for pursuing the
claim :10000 10000
Interest at 24% p.a. with quarterly rests 108253233072 on the unrealized value
of shipments from the date of claim to date of complaint
Pendente lite and future interest at 24% p.a. from the date of complaint to
date of payment.
Appellant - Insurer, the opposite party - Respondent in the two complaints,
resisted the said claims. It contended that the claim was not maintainable as
none of the consignments were lost or damaged in transit.
to them, the investigation report of the surveyor disclosed that one Kumar
Chaudhary was the common President of M/s. Overseas Container Lines Inc. (the
shipping Agent) and M/s. Atlanta Rugs Inc. (the buyer) and that the said Kumar
Chaudhary had admitted to the surveyors that the consignments had all been
received by the buyer. If the buyer, having taken delivery of all the
consignments, failed to pay the value of the consignments, such non-payment of
price by the buyer or non-realisation of 6 the price by the seller, will not be
a maritime peril giving rise to a claim against the Insurer under a Marine
Insurance Policy. When the insured consignments had been delivered to the
buyer, it cannot be said that there is a loss of the consignments. The claims
were repudiated on 4.3.1997. The reasons for repudiation were furnished to the
complainants by the Insurer as also by the surveyors. There was thus no
deficiency in service. It was also pointed out that when the goods are
entrusted to a sea going vessel, a master bill of lading is issued by the
vessel/shipping line showing the particulars of consignments and the names of
the consignees and the said Master Bill of Lading was not part of the documents
of title. The failure on the part of the complainants to take any action
against the buyer and the manner in which the transactions were conducted, gave
room for doubt that there has been a collusion between the complainants and the
buyer to foist false claims against the insurer. The Insurer also prayed that
the detailed reasons for repudiation given in its letter dated 4.3.1997 be read
as part of its written statement. The relevant portions of the letter of
repudiation are extracted below :
buyer had taken delivery of all the consignments but has not paid your Company
for the same. Non-payment of the price by the buyer is not an insured peril
under the captioned policies and hence your claim falls beyond the scope and
ambit of the policies issued by our company. xxxx 7
of taking up the matter with your buyer for the payment of the price of the
said consignments, you thought it fit to take no action whatsoever against your
buyer. xxxxxx D)You have failed and neglected to act with reasonable dispatch
as required by Clause 18 of the Institute cargo clauses (A) to which the above
polices were made subject to. Clause 18 reads as under :
is a condition of this Insurance that the Assured shall act with reasonable
dispatch in all circumstances within their control'.The consignments were
shipped from Bombay to Atlanta between the months of August 1994 to July 1995.
However, your company has informed our company and our aforesaid Surveyors of
the alleged loss allegedly suffered by you only in the first week of February,
1996. As you have failed to act with reasonable dispatch as required by the
said policies, our company is not liable to pay any amount under the captioned
As you are aware, it is a conditions of the policy that a certificate of
loss/damage should be obtained from our Surveyors who are the company's agents
at the Port of discharge. It is an admitted position that no such certificates
has been obtained by your company. In view of breach of the aforesaid condition
our company is not liable to pay any amount to your company under the captioned
We have to state that under the aforesaid policies, we had agreed to insure
that consignment subject to Institute Cargo Clause (A). Clause I of the said
Institute Cargo Clause (A) clearly stipulates as under :
insurance covers all risks of loss or damage to the
matter.....' As is pointed out by the surveyors, that the consignment under the
captioned policies have been received by the buyers. In view thereof, there is
no loss and/or damage to the subject matter i.e. the said consignments
entitling your company to seek an indemnity from our company.
Records in our possession show that you kept on sending consignments to your
buyer without caring to ascertain if the buyer was financially solvent and
would make payment in respect of the consignments shipped to you. In view
thereof, we have to state that the alleged loss is also attributable to the
aforesaid willful misconduct on the part of your company under provisions of
Institute Cargo Clause (A) -
4.1 and section 55 of the Marine Insurance Act, 193.
I) You will appreciate that our company has agreed to indemnify you for the
loss and/or damage suffered to the consignments during its journey from your
company's warehouse to the buyers warehouse due to the insured perils.
Financial insolvency and/or refusal of the buyer to pay for the price of the
said consignments is not one of the perils insured under the captioned policies
and hence your company cannot seek any indemnity under the captioned policies.
Initially, there were four common respondents in both the complaints.
Divisional Office, Regional Office and Head Office of New India Assurance
company Ltd. were respondents 1 to 3. Overseas Container Lines Inc., was the
fourth Respondent. By order dated 10.11.2000, the Commission directed the
complainants to implead M/s Atlanta Rugs Inc.
M/s Niranjan Shipping Agency Pvt. Ltd. (Forwarding Agent of the Complainants,
as also the agent of Overseas Container Lines Inc.), Punjab National Bank and
Bank of Baroda (Bankers of complainant), Sun Trust Bank, earlier known as Trust
Company Bank (the foreign correspondent Bank of Punjab National Bank) as they
were proper and necessary parties.
M/s Atlanta Rugs Inc., Niranjan Shipping Agency (P) Ltd., Punjab National Bank
and Sun Trust Bank, were impleaded as respondents 5 to 8 in OP no.45 of 1997.
However, subsequently respondents 4, 5, and 8 were given up by the complainants
as service could not be effected and their names were deleted from the array of
parties and consequently, when the matter was heard, the respondents in OP
No.45/1997 were the insurer, M/s
Niranjan Shipping Agency (P) Ltd., and the Pubjab National Bank.
the said four persons as also Bank of Baroda were impleaded as respondents 5 to
9 in OP No.49 of 1997. But later, the three respondents who could not be served
were given up and deleted and at the time of hearing the respondents were the
insurer, M/s Niranjan Shipping Agency (P) Ltd., Punjab National Bank and Bank
The parties did not lead any oral evidence nor mark any document as exhibits,
but produced some documents. The complainants and the insurer filed affidavits
supporting the complaint and the written statement. On the basis of the
pleadings, affidavits, copies of documents produced and arguments, the
Commission decided the complaints by its common order dated 31.1.2003. The
Commission held that the complainants held valid marine insurance cargo
policies which gave insurance cover against all risks of loss. The bills of
lading showed the consignee as "Unto order" and they were endorsed in
favour of Sun Trust Bank. The original documents were not retired by the buyer
and were returned by Sun Trust Bank to Punjab National Bank. As delivery could
be taken only after obtaining original bills of lading which were with the Sun
Trust Bank and as the original documents had been returned, and as there was no
evidence on record about the fate of the shipments, the shipments should be
covered under the term 10 "loss" and insurer will have to indemnify
the complainants for such loss.
if Atlanta Rugs Inc. had managed to receive the consignments by fraudulent
means without legitimate endorsement or transfer of the original documents of
title which were in the custody of the Sun Trust Bank, that amounted to loss of
goods. As the consignee was shown as "Unto order" in the bills of
lading, the complainants had lien and control over the consignments and
consequently, property in the goods did not pass to the buyer and in such
circumstances, delivery to Atlanta Rugs Inc. would still amount to loss of goods.
As the goods were lost, the insurer was liable to indemnify the complainants
for such loss and failure to do so was a deficiency in service. It therefore
allowed both the complaints in part.
In OP No.45/1997, the Commission directed the insurer to indemnify the
complainant - M/s. Hira Lal Ramesh Chand by paying US $ 367311 (equivalent to
Rs.1,32,78,293 at an exchange rate of Rs.36.15 per US Dollar) with interest at
12% p.a. from the date of complaint till the date of payment, and pay the said
amount to Punjab National Bank so that the said Bank could adjust the said
amount against the amount due from the complainants. In OP No.49/1997 the
Commission directed the insurer to indemnify the complainant - M/s. Ratan Chand
Deep Chand to an extent of
Rs.30,00,000/- with interest at 12% p.a. from the date of complaint to the date
of payment, and pay the said amount equally to the complainants' Bankers,
Punjab National Bank and Bank of Baroda, Mirzapur.
Feeling aggrieved the insurer has filed these two appeals. On the contentions
raised, the following questions arise for our consideration in these appeals :
is the scope of the policies of insurance issued by the Insurer to the insured?
(ii) Whether the complainants had proved that there has been loss of consignments
falling within the risks covered by the Marine insurance policies ?
(iii)Whether the Commission was justified in holding the insurer liable ? Re :
Question (i) 10.M/s. Hira Lal Ratan Chand had taken two marine policies (cargo)
which are in the nature of open covers, from the Insurer. They are open cover
Policy Nos.2142 11000 8745 dated 29.4.1994 (which was in force from 29.4.1994
to 28.4.1995) and No.2142 11000 9032 dated 19.5.1995
12 (which was in force from 19.5.1995 to 18.5.1996) each with an assured limit
of Rs.50 lakhs. The assured limit of Open Cover No.2142 11000 8745 was extended
by another Rs.50 lacs with effect from 22.2.1995 and by another Rs.7 lacs with
effect from 27.4.1995 the total assured amount being Rs.1.07 crore. The Open Cover
constituted the contract under which the insurer agreed to issue separate
Marine Insurance Certificates as and when the insured made declarations of each
shipment. The terms of the open cover are extracted below (from Policy No.2142
11000 8745) :
matter Insured :
consignment said to contain of Indian handmade knotted woolen carpets/Durries
packed in alkathene paper and double new hessiar cloths, dispatched vide
Road/Rail/Approved Vessel from warehouse Mirzapur to anywhere in world, from
time to time. Insured will declare each and every consignment within 15 days or
one month (as per insured) & dispatch with its value packing marks etc.
Total sum insured under this policy is Rs.50 lakhs.
covered : All risks 0.1525%; war and SRCC Rs.0.0275%. On receipt of
declarations, certificate of insurance will be issued for each consignment.
This policy will remain in force for one year i.e. 29.4.1994 to 28.4.1995
unless previously exhausted by way of declaration. If no declaration is
received from the insured the minimum premium will be retained by the company.
conditions & warranties Covered against : All risks (ICC), War & SRCC
from consignor's warehouse to consignee's warehouse : Inland transit clause (A)
Institute cargo clause (A), Institute War Clause (Cargo), Institute strike
clause (Cargo) Lorry warranty as attached hereto.
attached clauses and endorsements form part of this policy.
and claims settlement :
the event of loss or damage which may result in a claim under this insurance
immediate notice be given to carrier at destination.
of loss/damage be obtained from our surveyor, who are the company's agents at
port of discharge in order that they may examine the goods and issue a survey
report. Where the company has no agent, the notice must be given to Lloyd's
as per declaration.
were the terms of Open Cover No.2142 11000 9032 as also the Open Cover Policies
issued to M/s. Ratan Chand Deep Chand.
and when the complainants entrusted the consignments to OCL, they made
declarations and the Insurer issued Marine Insurance Certificates in respect of
each consignment. Each of these Marine Insurance Certificates specified the
particulars of the consignment, and the value thereof and confirmed that the
consignment was "covered against : All risks (ICC), war
SRCC from consignor's warehouse to consignee's warehouse." The
certificates required that in the event of loss or damage which may involve a
claim under the certificate, notice of loss or damage should be given to its
surveyors M/s. Toplis & Harding Inc., Atlanta (USA).
12.Clause (1) of the Institute Cargo clause (A) forming part of the Insurance
Policy stipulated that the insurance covered all risks of loss of or damage to
the subject matter insured (except as provided in clauses 4, 5, and 7 therein).
Clause (1) of the Inland Transit clause (A) stipulated that the insurance
covered all risks or loss or damage to the subject matter insured (except as
provided in clauses 2, 3 and 4 therein). Clause (1) of the Institute War Clause
(Cargo) stipulated that the insurance covered loss or damage to subject matter
insured caused by war, civil war etc. (except as provided in clauses 3 and 4
therein). Clause (1) of the Institute Strikes clause (cargo) stipulated that
the insurance covered loss or damage to the subject matter insured caused by
strikes, lock outs etc. (except as provided in clauses 3 and 4 therein). The
duration of insurance cover is specified in clause (8) of the Institute Cargo
Clause (A), and clause (5) of the Inland Transit Clause (A).
are extracted below :
(8) of Institute Cargo Clause (A) Duration.
This insurance attaches from the time the goods leave the warehouse or place of
storage at the place named herein for the commencement of the transit,
continues during the ordinary course of transit and terminates either 8.1.1on
delivery to the Consignee's or other final warehouse or place of storage at the
destination named herein, 8.1.2on delivery to any other warehouse of place of
storage, whether prior to or at the destination named herein, which the Assured
elect to use either 15 126.96.36.199 for storage other than in the ordinary course of
transit or 188.8.131.52 for allocation or distribution, or 8.1.3on the expiry of 60
days after completion of discharge overside of the goods hereby insured from
the oversea vessel at the final port of discharge, whichever shall first occur.
(5) of Inland Transit (Rail or Road) Clause (A) Duration "5. This
insurance attaches from the time the goods leave the warehouse and/or the store
at the place named in the policy for the commencement of transit and continues
during the ordinary course of transit including customary transhipment, if any,
(i) until delivery to the final warehouse at the destination named in the
policy or (ii) in respect of transits by Rail only or Rail and Road until
expiry of 7 days after arrival of the railway wagon at the final destination
railway station or (iii)in respect of transits by Road only until expiry of 7
days after arrival of the vehicle at the destination town named in the policy
whichever shall first occur." Similar duration clauses are found Institute
War Clause (Cargo) and Institute Strike Clause (Cargo).
Marine Insurance Act, 1963 governs the law relating to marine insurance.
Section 3 defines marine insurance as under :
"3. Marine insurance defined.--A contract of marine insurance is an
agreement whereby the insurer undertakes to indemnify the assured, in the
manner and to the extent thereby agreed, against marine losses, that is to say,
the losses incidental to marine adventure." 13.1) The term `marine
adventure' is defined in section 2(d). The term
peril' referred to in the definition of `marine adventure' is defined in
section 2(e). The said two definitions are extracted below :
adventure" includes any adventure where -
insurable property is exposed to maritime perils;
earnings or acquisition of any freight, passage money, commission, profit or
other pecuniary benefit, or the security for any advances, loans, or
disbursements is endangered by the exposure or insurable property to maritime
any liability to a third party may be incurred by the owner of, or other
persons interested in or responsible for, insurable property by reason of
"maritime perils" means the perils consequent on, or incidental to,
the navigation of the sea, that is to say, perils of the seas, fire, war
perils, pirates, rovers, thieves, captures, seizures, restraints and
detainments of princes and people, jettisons, barratry and any other perils
which are either of the like kind or may be designated by the policy;"
13.2) Section 4 makes it clear that a contract of marine insurance may, by its
express terms, or by usage of trade, be extended so as to protect the assured
against losses on inland waters or on any land risk which may be incidental to
any sea voyage. The provisions of Marine Insurance Act are therefore subject to
the terms of the policy of insurance.
13.3) Section 57 provides that where the subject matter insured is destroyed,
or so damaged as to cease to be a thing of the kind insured, or where the
assured is irretrievably deprived thereof, there is an actual total loss.
Insurance is a contract whereby the insurer undertakes to indemnify the assured
in the manner and to the extent thereby agreed, against marine losses, that is
to say losses incident to marine adventure. The instrument in which the
contract of marine insurance is generally embodied is called a policy. The
thing or property insured is called the subject matter of insurance and the
assured's interest in that subject matter is called his insurable interest.
That which is insured against is the loss arising from maritime perils and
casualties, and these are called the perils insured against or the losses
covered by the policy. When the insurer's liability commences under the
contract, the policy is said to attach; or in other words, the risk is said to
attach or to begin to run from that time. A marine insurance cover applies to
the shipment and if the shipment reaches the destination, in a safe and sound
condition, no claim can arise against the insurer. A contract of marine insurance
may, however, by its express terms or by trade usage, be 18 extended so as to
protect the assured against losses on inland waters or against any land risk
which may be incidental to a sea voyage. (Vide sections 3 & 4 of Marine
Insurance Act, 1963 and Hulsbury's Law of England, 4th Edition, Vol.25 paras
216 and 218).
insurers offer different types of insurance cover. There are three standard
types of Institute Cargo Clauses (and Inland Transit Clauses) denoted as A, B,
and C, providing insurance cover of varying extents.
Cargo Clause (C) provides the basic minimum cover as enumerated. Institute
Cargo Clause (B) offers a cover against wider range of enumerated risks. The
Insurer will also cover certain `extraneous risks' like theft, pilferage and/or
non-delivery in addition to the risks covered by Institute Cargo Clause (B) on
payment of extra premium. While Institute Cargo Clause (C) and (B) specify and
enumerate the risks covered, Institute Cargo Clause (A) which offers the widest
cover, does not specify or enumerate the risks covered. Institute Cargo Clause
(A) provides insurance cover against all risks of loss and damage to the
subject matter insured except those excluded by clauses (4) to (7) thereof
which are extracted below :
no case shall this insurance cover
4.1loss damage or expenses attributable to wilful misconduct of the Assured 4.2
ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear
of the subject matter insured 4.3 loss damage or expense 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 lift-van but only when such stowage is
carried out prior to attachment of this insurance or by the Assured or their
servant) 4.4loss damage of expense caused by inherent vice or nature of the
subject matter insured 4.5 loss damage or expense proximately caused by delay,
even though the delay be caused by a insured against (except expenses payable
under Clause 2 above) 4.6loss damage of expense arising from insolvency or
financial default of the owners, managers, charterers of operators of the
vessel 4.7 loss, damage or expense arising from use of any weapon of war employing
atomic or nuclear fission and/or fusion or other like reaction of radioactive
force or matter
5.1 In no case shall this insurance cover loss, damage or expense arising from
unseaworthiness of vessel or craft.
of vessel craft conveyance container or liftvan for the safe carriage of the
the Assured or their servants are privy to such unseaworthiness or unfitness,
at the time the subject-matter insured is loaded therein, 5.2 The Underwriters
waive any breach of the implied warranties of seaworthiness of the ship and
fitness of the ship to carry the subject-matter insured to destination, unless
the Assured or their servants are privy to such unseaworthiness or fitness.
no case shall this insuration cover loss, damage or expense caused by 6.1war,
civil war, revolution, rebellion, insurrection, or civil strife arising
therefrom, or any hostile act by or against a belligerent power 20 6.2 capture,
seizure arrest, restraint or detainment (piracy excepted), and the consequences
thereof or any attempt thereat 6.3 derelict mines, torpedoes, bombs or other
derelict weapons of war
In no case shall this insurance cover loss, damage or expense 7.1 caused by
strikers, locked-out workmen, or person taking part in labour disturbances,
riots or civil commotions 7.2 resulting from strikes, lock-outs, labour
disturbances, riots or civil commotions 7.3 caused by any terrorist or any
person acting from a political motive." The exclusions under clauses (6)
and (7) get deleted when Institute War Clause (Cargo) and Institute Strikes
Clause (cargo) are included. Exclusion under sub-clause (1) of clause (5)
virtually gets deleted by sub-clause (2) of clause (5). As a result, an
insurance policy with ICC(A), ITC(A) and SRCC, providing cover against
"all risks" of loss or damage to the insured consignment from
consignor's warehouse to consignee's warehouse, provides a very wide coverage.
All risks except those mentioned in clause (4) of Institute Cargo Clause (A)
are covered. Theft, pilferage or non delivery of the consignment are therefore
risks covered by an insurance policy with ICC(A) and ITC(A). If the insured
goods are not delivered by the shipping company or shipping Agent, who issued
the Bill of Lading to the assured, due to theft, pilferage, loss or
non-availability, occurring within the duration of insurance cover, the insurer
will be liable under the policy of insurance.
16.Having regard to clause (8) of Institute Cargo clause (A) relating to
duration, the insurance cover attaches from the time the goods leave the
warehouse of the assured and terminates either on delivery at the consignee's
final warehouse or store at the destination named in the policy (or on delivery
to any other warehouse or place of storage, which the assured elects to use) or
on the expiry of 60 days after completion of discharge of the goods from the
vessel at the final port of discharge. The insurance cover commences when the
consignment leaves the warehouse or place of storage at the place named in the
policy for commencement of transit and the cover continues during transit and
continues until the consignment reaches the final destination specified in the
policy as the consignee's warehouse. Where the consignment is temporarily
stored on arrival at an interim destination (as for example on the dock, or in
the shipping lines' warehouse or in the custom warehouse, pending onward
journey to the consignee's warehouse mentioned as final destination in the
policy), the cover would remain only for a period of 60 days from the discharge
of the consignments from the ship irrespective of whether consignment is put on
onward journey to the consignee's warehouse/storage place, or not.
17.In view of the insurance cover extending `warehouse to warehouse' the consignments
are covered by insurance not only during the sea journey, but beyond as stated
in the policy. Therefore the contention of the insurer that the insurance cover
is available only in regard to maritime perils that is perils relating to or
incidental to the navigation of the sea may not be correct. Having regard to
section 4 of the Marine Insurance Act and the terms of the policy undertaking
insurance cover against wider risks, the policy of insurance would cover the
loss not only while goods or navigating the sea but also any loss or damage
during transit from the time it leaves the consignor's warehouse till it
reaches the consignee's warehouse. The cover against risks will however cease
on the expiry of 60 days after discharge of the consignment from the vessel at
the final port of discharge, if the goods do not reach the consignee's
warehouse or place of storage for any reason within the said 60 days.
learned counsel for the Appellant relied on two decisions, the first being a
decision of this Court in Bihar Supply Syndicate v. Asiatic Navigation [1993
(2) SCC 639] and the second being a decision of the Kerala High Court in
Concord of India Insurance Co. vs. Ravi Thokassaria
1974 Kerala 649]. In Bihar Supply Syndicate, this Court was
concerned with a marine voyage policy with Institute Cargo clause (FPA)
covering "warehouse to warehouse". This Court held that the
expression warehouse to warehouse' in the policy merely denotes the time during
which the policy would remain in force and cannot be interpreted as covering
each and every risk. This Court held that under a typical marine voyage policy
with Institute Cargo Clauses (FPA), in the absence of loss due to perils of the
sea, the insurance company was not liable, and the onus was on the plaintiff to
prove as a fact that the cargo was lost due to the perils of the sea. In
Concord of India Insurance Co., the Kerala High Court considering marine risk
policy, held that non-delivery may be a good ground against the shipping
company, but not against the insurance company as non-delivery was not a
is a difference between marine insurance policies which extend cover only
against marine losses or maritime perils (as enumerated) and marine `extra'
insurance policies which extend cover against all risks from consignor's
warehouse to consignee's warehouse which include not only the sea journey but
also the land journey at either end. The decision in Concord of India Insurance
Co. (supra) of the Kerala High Court and the decision of this Court in Bihar
Supply Syndicate (supra) relate to marine insurance 24 policies and not to
mixed sea/land risks policies or to marine `extra' insurance policies. They are
not of assistance while considering the scope of a policy covering all risks
including ICC(A), ITC(A), IWC(Cargo), ISC (Cargo). In fact in Peacock Plywood
(P) Ltd. v. Oriental Insurance Co. Ltd.
(12) SCC 673], this Court held that where the policy contained a wider term of
risk coverage, the decision in Bihar Supply Syndicate (supra) will not apply.
In Peacock Plywood, the extended warranty clause in the insurance policy
specifically extended the coverage to include the risks of theft, pilferage and
non-delivery. In view of it, this Court held that a claim by way of constructive
total loss on account of a ship being stranded on sea on account of its
unseaworthiness was maintainable, although the goods themselves were not
damaged. In that case when the ship carrying the goods got stranded at a port
due to its unseaworthiness, the assured took steps to recover the value of the
cargo with a view to minimize its total loss due to non delivery, but found
that the cost of recovering and getting the cargo back to the destination port
would be more than the value of the goods.
the assured effected sale of the insured goods at the port where ship was
stranded. Insurer was found liable to pay the insured value of the goods (less
the amount actually recovered by such sale).
: Questions (ii) and (iii) :
20.The complainants were manufacturers and exporters of carpets and durries,
having their principal place of business and manufacturing unit at Mirzapur.
They allege that M/s Atlanta Rugs Inc. based at Atlanta (USA) placed orders on
them for supply of rugs/durries. The orders are not placed on record. The
complainants allege that they sent several shipments of Rugs/durries to Atlanta
(USA) for the buyer. The two complaints relate to 17 consignments sent by M/s.
Hira Lal Ramesh Chand and 38 consignments sent by M/s. Ratan Chand Deep Chand,
for which they did not receive payment. The common procedure adopted for supply
is set out below.
The complainants handed over the consignment with an invoice made out in the
name of Atlanta Rugs Inc., to their Forwarding Agent at Mumbai, namely, M/s
Niranjan Shipping Agency Pvt. Ltd. The said Niranjan Shipping was also the
shipping agent of Overseas Container Lines Inc., which was a Non Vessel Owning
Common Carrier registered in USA.
Shipping as Forwarding Agent of the complainant entrusted the goods to Overseas
Container Line Inc. (also represented by Niranjan Shipping as Shipping Agent)
for transhipment from Mumbai to Atlanta.
Container Line Inc., represented by Niranjan Shipping issued a
Bill of lading in regard to each consignment. The Bill of lading showed the
complainant as the consignor and mentioned "unto order" in the
consignee column. Atlanta Rugs Inc. was shown as the buyer who should be
notified by the collecting Bank. Overseas Container Line Inc. (represented by
Niranjan Shipping) in turn entrusted the consignment to a shipping line which
actually carried the consignment and the Shipping Line would issue a Master
Bill of Manifest also known as Master Bill of Lading, showing the details of
all consignments loaded in the container for being carried from the load port
to the foreign destination port.
In regard to each consignment, M/s Niranjan Shipping as Custom House Agent
issued a `Shipping Bill for Export of Goods under Claim for Duty Drawback' showing
the complainant as the Exporter and Atlanta Rugs Inc. as the Consignee, giving
the particulars of the consignment and its value as also the name of carrier
(vessel). The said Shipping Bill contained an endorsement certified by the
Customs Officer giving the particulars of the vessel and date of sailing.
The original documents of title comprising (i) the Bill of Lading issued by
Overseas Container, represented by Niranjan Shipping as Agent,
(ii) the invoice issued by complainants, (iii) the packing list and (iv) the
shipping bill issued by Niranjan Shipping for claiming duty drawback, were sent
by Niranjan Shipping to the Complainant's Bankers - Punjab National Bank. The
copy of the Master Bill of Lading issued by the shipping line/ship was not included
by Niranjan Shipping as part of the documents of title.
The complainant had a foreign Out Bill Purchase Account with Punjab National
Bank. The Bank used to purchase/ discount the bills, and the Bill of Lading
(Negotiable copy) was endorsed by the complainant in favour of Punjab National
Bank or its order. The Punjab National Bank in turn endorsed the Negotiable
copy of Bill of Lading in favour of its foreign correspondent Bank namely Trust
Company Bank, Atlanta (subsequently known as Sun Trust Bank) and forwarded the
documents of title to the said Trust Company Bank for collection. The foreign
correspondent Bank would intimate the buyer about the receipt of the documents.
On the buyer making payment of the Invoice amount, the foreign Bank would
endorse the documents in favour of the buyer to enable the buyer to take
delivery of the consignment. If the buyer did not make payment and retire
within 90 days, the foreign correspondent Bank would return the documents to
the Punjab National Bank.
The complainant would make a declaration under the marine insurance open cover
issued by the appellant Insurance Company, in respect of each consignment as
and when entrusted for shipment, for which the appellant would issue a Marine
No.45/1997 filed by M/s. Hira Lal Ramesh Chand related to 17 consignments of
the total value of US$ 406,096. According to complainant, 12 consignments were
covered by Marine Insurance Certificates issued under marine open policy cover
No.2142 11000 8745 and 5 consignments were covered by certificates issued under
Marine open Policy Cover No.2142 11000 9032. The seventeen invoices were made
between 9.3.1995 and 13.6.1995 and corresponding Bills of Lading were dated
between 15.3.1995 to 29.6.1995.
No.49/1997 filed by M/s. Ratan Chand Deep Chand related to 38 consignments of
the total value of US$ 8,87,973. According to complainants, 33 consignments
were covered by Marine Insurance
Certificates issued under Marine Open Cover Policy No.2142 11000 8749 (validity
period 4.5.1994 to 3.5.1995), two consignments were covered by certificates
issued under Marine Open Policy Cover No.2142 11000 9038 (validity period
23.5.1995 to 22.5.1996) and three consignments were covered by specific policies
No.2142 11000 8868, 2142 11000 8869 and 2142 11000 8870. The invoices in regard
to these 38 consignments were made between 28.7.1994 to 25.6.1995 and
corresponding Bills of Lading were dated between 23.8.1994 to 4.7.1995.
According to the complainants, the original insured value of the two marine
open cover policies was Rs.20 lakhs and Rs.10 lakhs, but on account of extra
endorsements in respect of the open covers the extent of cover in respect of
the two open covers stood increased to Rs.3,70,00,000 and Rs.90,00,000, and the
three specific policies were for Rs.4,06,300, Rs.2,91,000 and Rs.2,81,700 in
all Rs.4,69,79,000/-. It is contended that the value of 38 consignments which
was US$ 887973 (equivalent to Indian Rs.3,21,00,224/-) was well within the
insurance cover amount and the commission erred in taking the total extent of
cover as only Rs.30 lakhs. The complainants (respondents 1 to 3 in CA
4307/2003) have therefore filed cross-objections seeking increase in the amount
awarded for Rs.30 lakhs to Rs.3,21,00,224/-. Be that as it may.
23.When the consignments were entrusted to Overseas Container, the complainants
were not aware of its address, as the Bill of Lading did not indicate any
address. On their request, Niranjan Shipping provided the address of Overseas
Container on 8.8.1995. The complainants claim to have written the following
letter on 8.8.1995 to the Overseas Container Lines Inc.
have to transfer our goods to other buyers in USA. We have to convey the
position of our cargoes to them and ask our bankers to transfer the documents
in their name. For this reason we need the current position of our all the
let us know the position of our cargoes carried by you which had been booked
with you for onward sea journey through forwarding agent M/s Niranjan Shipping
Agency Pvt. Ltd., Bombay.
treat the matter most urgent." There was no reply in spite of a reminder
complainants claim to have instructed their Bankers (Punjab National Bank) on
15.8.1995 to store the consignments sent to Atlanta in a Bonded Warehouse duly
insured. But apparently neither Punjab National Bank nor its Foreign
Correspondent Bank took any steps in the matter nor complied with the
25.On 25.1.1996, the foreign collecting Bank informed the Punjab National Bank
and complainants by telex message as follows :
have contacted the drawee on several occasions and on each occasion they
promised to make payment but as of date they have not make good on their
promises. We have exhausted all efforts to obtain payment and do not wish to
continue our fruitless efforts in pursuing these transaction. Please instruct
us to turn the documents over to your agent for them to pursue as we do not
offer the services you are requesting us to do and our policy is to return
document after we exhausted efforts to collect payment and also not to hold
documents over 90 days.
we do not receive your instructions to forward documents to your agent are
returned them yourself by latest February 10, 1996.
documents will be returned to you and we will close our files on these
transactions. It not our practice to investigate how the goods was released nor
to obtain any warehouse merchandise. We can assure you that we did not issue
any form of guarantee to the drawee nor release any of documents to them.
Please remit our charges of US $ 3930, presenting our collection charges of US
$ 85 each, US $ 5 each postage, cable charges US $ 50 and courier US $
195." (emphasis supplied) 26.Thereafter, the complainants telephonically
informed the insurer on 2.2.1996 about the non-realization of the Bills and
claimed the value of the consignments. The insurer instructed the complainants
to get in touch with their Surveyor and Claim settlement Agent -- M/s Toplis
& Harding Inc., Atlanta, to investigate into the matter and give their
the complainant sent a letter on 6.2.1996 to the said Surveyor
requesting for an inquiry and investigation in regard to the consignments.
that letter the complainant stated :
the above reference, we have to bring your kind attention that we failed to
trace out the consignment as per details enclosed. We made the correspondence
through our Bankers in India, that foreign Bank (Trust Company Bank now known
as Sun Trust Bank) to whom the documents were endorsed and sent for collection
of payments. Now foreign Bank has confirmed that the original documents are
with them. We presumed that the following consignments are either lost or
shipping company has done some fraud with our consignments with them."
(Emphasis supplied) The complainant also sent reminder dated 19.2.1996 to the
Surveyor. The Surveyor sent a Fax reply dated 4.3.1996 to the complainant
stating that the various shipments had been delivered to and/or picked up by
its customer -
Rugs Inc., with probable collusion from Overseas Container Line Inc., as Mr.
Kumar Chaudhry was the President of both companies. In its letter dated
20.3.1996 to the Surveyor, the complainant acknowledged the information that
the goods had been delivered by Overseas Container Line Inc., to someone other
than Sun Trust Bank (who was holding the documents) and stated that such act on
the part of Overseas Container Line Inc. in releasing the goods has resulted in
loss to them. The complainants therefore sought the following information from
the surveyor :
(a)The basis for the surveyor's finding that the Trust Company Bank was not the
and description of the person who actually took the delivery of the
particulars of documents on the basis of which releases were made by the custom
and description of the authority giving delivery/release.
surveyor sent a telex dated 1.4.1996 to the complainant reiterating that its
inquiry revealed that the President of Overseas Container Lines Inc. and
President of M/s Atlanta Rugs Inc. was one and the same person namely Kumar
Chaudhary and answered the four queries as follows:
the steamship line bill of lading (Master Bill of lading) Overseas Container
Lines Inc. was probably named/shown as the Consignee.
Atlanta Rugs Inc. was apparently the person who actually took the delivery with
the help of Overseas Container Lines Inc.
was named as the Consignee on the steamship line bill of lading.
the complainant had not furnished the details of the customhouse broker who
cleared the goods through US Customs, the answer could be provided by Kumar
release was probably by steamship line/custom warehouse.
surveyor also suggested that the complainant should contact S.K.
of M/s Niranjan Shipping as he was the signatory of the bills of lading issued
by Overseas Container Lines Inc. and as his role in the matter was not clear.
The surveyor also informed the complainant as the Marine Insurance cover
applied to shipments and as the shipments had reached the destination and were
delivered without loss or damage, as per the insurance contract, the claim was
The complainants also contacted the Federal Meritime Commission, Washington,
seeking their help to ascertain whether their consignments were lying at port
or had been released and if lying at the port under whose custody they were
lying or if they were released, when and to whom they had been released and
under what conditions. The Federal Meritime Commission sent a reply dated
1.3.1996 to the complainant stating that it had been unable to locate either
Overseas Container Lines Inc. or Atlanta Rugs Inc and advising the complainant
to seek legal advice. The Commission also informed the complainant that
Overseas Container Lines Inc. as a Non-vessel operating common carrier (NVOCC)
had maintained a bond for US $ 50000 and if any judgment is rendered, against
it, the 35 complainant could present a copy to Inter-Cargo Insurance Co.,
Illinois who were the insurer of Overseas Container Lines Inc. for payment.
the complainant wrote a letter dated 6.5.1996 to Overseas Container Line Inc.,
stating as follows :
is really strange that all our communications that is letters dated 8.8.1995
and 9.11.1995 have been un-replied. We are not able to contact you on phone and
fax. We have to come that all the goods have been released to you. How and why
you have done causing this huge lose to us.
will file a claim against you in proper forum at your entire risks."
(emphasis supplied) 29.The insurer informed the complainant that they were
awaiting the report from the Surveyor M/s. Toplis & Harding Inc. and as
soon as they receive the report, they will attend to the claims. The surveyor
sent two reports dated 27.6.1996 in respect of the consignments of the two
complaints. The relevant portions of the said report which are identical are
extracted below :
We noted that the original bills of lading on hand at Sun Trust Bank were
issued by Overseas Container Line Inc. which were the NVOCC involved in
arranging of the various shipments at origin. The authorized signatory of the
Overseas Container Line Inc. ocean bill of lading was a Mr. S. K. Verma of
Niranjan Shipping Agency Pvt. Ltd. We advised all concerned parties to contact
Mr. Verma for further information but we did not receive confirmation if this
was carried out."
Master Bills of lading should have been issued by the steamship line but none
were in Sun Trust Bank's possession. We noted that the Overseas Container Line
Inc. bills of lading were consigned to the order of Trust Company Bank with the
notified party as Atlanta Rugs Inc. At no time, have we been shown the master
bills of lading issued by the steamship line.
Chang at Sun Trust Bank stated that he met Mr. Kumar Chaudhary, President of
Atlanta Rugs Inc., on a number of occasions and he stated that to his knowledge
Mr. Chaudhary was going through financial difficulties in both his personal and
February 23, 1996, we attended at the premises of Atlanta Rugs, Inc., and
initially met with a person by the name of Rajesh Shorie, who said he was a new
employee and could not assist our investigations. However, during our visit,
Mr. Chaudhary arrived and was willing to speak with us but not to issue a
Chaudhary understood the reason for the shipper's concern and stated
unequivocally that he had received all the shipments and that very few pieces
remained although he would not allow us to inspect his storage facility. He
also did not give specifics as to how the cargo was cleared into his
possession. He referred us to an attorney in Atlanta, Georgia, a Marshall
Siegel. However, later Mr. Siegel informed us that he had only recently been
contacted by Mr. Chaudhary and had not been retained by him as counsel.
this time, we were contacted by another shipper, insured through a different
underwriter, who also informed us that their shipments had not been paid for.
We had been given a customs house clearing agents name in Atlanta - C.H. Powell
and Company and we contacted their import manager, Mr. Wick. Mr. Wick informed
us that he had acted as Atlanta Rugs, Inc. agent in 1994 and still had $40000 of
fees outstanding. We requested particulars details of the steamship lines
involved and he volunteered that Neptune Orient Line was one of the carriers.
Mr. Wick stated that on the NOL bill of lading the consignee and notify party
were listed as Overseas Container Lines.
confirmed our earlier suspicion that probably Overseas Container Lines were
using the steamship line master bill of lading to obtain and clear the
later became aware that Mr. Kumar Chaudhary is the registered President of
Overseas Container Lines, Inc. We contacted Bureau of Enforcement at the
Federal Maritime Commission (FMC) and we discussed that Overseas Container
Lines address is registered at the same location as Atlanta Rugs, Inc. They
also have a $50000 bond with
at Schaumberg, Illinoise since 1993. They could not act as a Custom House
Broker to clear the goods through US Customs as they would need to post a much
larger bond with FMC. Ratan Chand Deep Chand did not furnish us with details of
their customs house broker, although we did request this information on a
number of occasions.
May 1996 we received a request from Punjab National Bank stating that they had
purchased the `Bills' pertaining to the shipments and that the claim amount
should be remitted directly to themselves (see enclosed correspondence).
this time, we believe that Atlanta Rugs, Inc, has been dissolved and that Mr.
Chaudhary is operating a different company. Based upon all the available
information, at this present time, it would appear that all shipments were
picked up by Atlanta Rugs, Inc. who used fraudulent methods to obtain the
shipments without payment through the bank. We believe that the involvement of
the steamship lines will be necessary to prevent further acts and to obtain
more information on the stolen shipments. We are issuing our report to document
all the facts as known at his present time and it is our intention to issue an
addendum should our further involvement be necessary. Please note that we do
not comprehend, and have received no explanation as to why the shipments were
continually being sent even when the shipper was not receiving any
proceeds." 30.The copies of the reports were not furnished to
complainants. As the Insurer did not settle their claim, the complainants filed
complaints (OP Nos.45 and 49/1997) before the Commission on 25.2.1997 alleging
that the conduct of the Insurer in not settling the claim amounted to a
deficiency in service and consequently, claiming compensation from the Insurer
in regard to the value of the consignments and other losses (as detailed in
para 3 above). The Insurer sent letters of repudiation dated 4.3.1997 to
complainants giving reasons for repudiation, relevant portions of which have
been extracted above.
31.We have considered the detailed submissions made by learned counsel. We have
also considered the material that was placed before the Commission. We find on
a careful consideration that the Commission has not addressed itself to the
relevant issues. It is no doubt true that the complainants had booked the
consignments showing the consignee as `unto order' thereby indicating that the
goods covered by the Bills of lading should be delivered only to the
holder/endorsee of the Bills of Lading.
is also no doubt that the original documents were not cleared/retired by the
buyer `Atlanta Rugs Inc.' and that the original documents were ultimately
returned by the foreign correspondent Bank to Punjab National Bank and they are
lying with Punjab National Bank. There is also no doubt that the consignments
were insured against all risks of loss and damage.
basic and fundamental averment and proof required in a case of this nature is
that the consignments had been lost or damaged in transit or that when the
holder of the documents applied for delivery, the goods were not delivered on
account of the same being irretrievably lost that is having been pilfered,
stolen, lost or misdelivered. But there is no such averment or 39 evidence that
the consignments were lost or damaged. Nor is there any averment that the
holder of the documents of title applied for delivery of the consignments, and
was denied or refused delivery on account of non availability of the
consignments either due to pilferage, loss or misdelivery.
there is no allegation or proof of Sun Trust Bank having applied for delivery
and refusal of delivery, it is inconceivable how the complainants can maintain
a claim against the insurer.
of the buyer to make payment and take delivery is not a `loss' of consignment
which is covered by the Insurance Policy. The complainant should make out a
case of actual `loss' of the consignment covered by the contract of insurance
or non-delivery of the consignment, that is refusal to meet a demand for
delivery. The question is whether the complainants have proved such loss or
non-delivery. The case of the complainant as put forth in the complaint and
reiterated in the affidavit is that they have dispatched the consignment to
Atlanta, that the consignments were insured against all risks; that the buyer
did not retire the documents by making payment; that they do not know what
happens to the consignments and that therefore the Insurer ought to have paid
them the value of the consignment and failure to do so amounted to deficiency
in service as contemplated under the
Consumer Protection Act, 1986. We are afraid that these are not allegations or
proof of loss or non-delivery sufficient to foist any liability on the insurer.
question that arises for consideration is who was responsible for transshipment
and delivery. Admittedly Overseas Containers was only a non-vessel owning
common carrier (NVOCC) and not the actual shipping line. Necessarily therefore
Overseas Container had to entrust the consignment to an actual shipping line
for transportation and the Master Bill of Lading given by the shipping line
would show the Overseas Containers as the consignee entitled to receive the
delivery. The very fact that the Master Bill of Lading is not given to the
consignors/complainants and the fact that the complainants did not demand for
the same shows that they did not intend to apply for delivery directly from the
shipping line that carried the consignments but only intended that delivery
should be from Overseas Containers which had issued the Bill of lading. As the
contract for carriage was between complainants and Overseas Containers and as
the Bills of Lading issued by the Overseas Container showed that the
consignments were deliverable to the order of the complainants, necessarily
Overseas Containers were expected to take delivery of the consignment at
Atlanta 41 from the shipping line which actually transported the consignments
and then deliver it to the holder of the documents of title who seeks delivery.
If that is so, the Overseas Containers were entitled to take delivery from the
shipping line which transported the consignment and there was nothing
collusive, clandestine or irregular about delivery of consignments being taken
by Overseas Containers from the shipping line, as it had entrusted the
consignment to the shipping line for transportation.
is no averment or proof that the consignments did not reach the destination
namely the Port at Atlanta or that the goods were not taken delivery by the
Overseas Containers. There is no averment as to whether the holders of the
documents namely the Sun Trust Bank applied for delivery or attempted to take
delivery of the consignment and store them in a bonded warehouse and whether
they were refused delivery within the insurance cover period.
insurance cover was in regard to all risks from consignor's warehouse to
consignee's warehouse. There is no dispute as to what is the consignor's
warehouse as the complainant is clearly shown as the consignor. The difficulty
arises about the consignee's warehouse. If the consignee is treated as Atlanta
Rugs Inc., on delivery to Atlanta Rugs Inc., 42 the insurer is discharged of
any liability for risks. If the consignee is shown as `unto order' whose
warehouse is to be treated as consignee's warehouse? It does not obviously
refer to complainants' warehouse as admittedly the complainants were not having
any warehouse in Atlanta (USA), nor were they the holders of the documents. The
`consignee' at the relevant time could only be the Sun Trust Bank in whose
favour the documents had been endorsed. But it is not the case of the
complainant that Sun Trust Bank as the holder of the documents of title sought
delivery of the consignments from the custom's warehouse or steam ship line or
from Overseas Containers. Where there is no effort on the part of the
`consignee' to take delivery from the shipping line/customs warehouse, the
duration of insurance cover cannot be infinite or indefinite. 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 not the case of the complainant that within that
time (of 60 days), delivery was sought by the holder of the documents and that
such delivery was refused. It is also not the case of the complainants that the
consignments were unauthorizedly delivered to Atlanta Rugs or that such
delivery was within 60 days of the landing of the consignments at Atlanta.
In the absence of any averment or evidence as to when the consignments were
discharged from the ship at Atlanta and an averment that within 60 days of the
landing of the consignments 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 a consignment even if the
consignment is destroyed, lost or misdelivered, it is no concern of the
should be noted that a claimant insured in a marine insurance claim has to
plead and prove the following (i) his position - whether he is the assured or
an assignee; (ii) his insurable interest; (iii) the type or kind of the insurance
policy and its relevant terms; (iv) the duration of the cover; (v) the nature
of risk/loss; and (vi) the risk/loss is covered by the policy. In the absence
of necessary averments and evidence to establish a marine insurance claim, a
claim against the insurer is liable to be rejected. It is unfortunate that the
Commission disposed of the matter without examining the terms of the policy and
obligations undertaken by the insurer. In fact, having regard to the nature of
issues involved, this was more appropriately a matter for civil court. Be that
as it may.
44 38.Another significant aspect is that the consignments were being
continuously sent from August, 1994 to July, 1995 by M/s. Ratan Chand Deep
Chand and from March to June, 1995 by M/s. Hira Lal Ramesh Chand without making
any effort to ascertain the fate of the earlier consignments.
when they learnt none of the documents relating to the consignments had been
retired by the buyer, they merely gave the oral intimation to the insurer that
too on 2.2.1996 about the non-retirement of the documents. No claim was lodged
with the insurer in writing. The allegation that orally a claim for `loss of
goods' was made on 2.2.1996 cannot be true as according to complainants
themselves till that date they had no knowledge that the consignments had been
either lost or wrongfully delivered. In fact the complainant have not produced
even a single document making a claim on the insurer on the ground that the
goods had been lost or not delivered.
complaints, affidavits and the documents are also significantly silent about
the following aspects :
particulars of the ships by which the 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. [Though the 45 Xerox copies of the
`Shipping Bills for export of goods under claim for duty drawback' give the
name of ship and date of sailing, they are not authenticated or supported by
the evidence of the persons who prepared those shipping Bills or the Customs
officers who certified them].
If the consignments were not damaged or lost in transit, when did the ships
discharge the consignments in Atlanta Port; on such discharge whether the
consignments were with the shipping line or were shifted to a customs
warehouse; or whether they were immediately delivered to Overseas Containers
and if so when.
their rejoinder, the complainants stated that by letter dated 15.8.1995 they
asked their Bankers to take delivery of the consignments and store them in a
bonded warehouse duly insured. This assumes that the consignments had arrived
safely and soundly at Atlanta Port. The Sun Trust Bank was holding the original
documents at that time. There is no averment as to whether they complied with
the said instructions and took delivery of the consignment and place them in a
warehouse in its control. If they did not do so, the reasons ought to have been
(iv)Nothing is said as to whether the Bank holding the documents of title apply
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.
There is no averment as to whether the complainants or the holders of documents
of title ever complained or reported loss of the consignment, or about any
wrong delivery or misdelivery to any one, in writing.
consignments were entrusted to Niranjan Shipping, who was acting as the
forwarding agent of complainants as also the agent of a non vessel owning
shipping agent (NVOCC) namely Overseas container. The Bills of Lading were
issued by a NVOCC. In those circumstances 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 consignments,
is not disclosed. The failure of complainants to pursue the matter with
Niranjan Shipping to whom they had delivered the consignments, is also strange.
None of the Bills of lading issued by the Overseas Container Lines Inc.,
contains their address. The complainants did not care to seek their 47 address,
even though it would not have been possible to take delivery without knowing
the address. The complainants did not also care to enquire with Niranjan
Shipping, about the absence of address in the Bills of Lading.
was only long after all the consignments were dispatched, when the documents
were not retired by the buyer, the complainants woke up and requested Niranjan
Shipping to furnish the address of the Overseas Container and Niranjan Shipping
provided the address by communication dated 8.8.1995. This strange behaviour is
not explained. This indicates either willful negligence or willful misconduct
by way of collusion.
In regard to all the consignments, Niranjan Shipping had issued
bills for export of goods under claim for duty drawback' showing the
complainant as the exporter and the Atlanta Rugs Inc. as the consignee.
the Bills of lading showed the consignee as "unto order" (that is the
endorsee of the documents of title) and if the property in the goods had not
passed by the buyer (Atlanta Rugs Inc.), then the reason why the complainant
did not protest against the issue of such shipping bill showing Atlanta Rugs
Inc. as the consignee, is not stated.
40.The complainants have failed to plead and make out a case of loss, in
respect of each and every consignment, either during transit or within 60 days
of the consignments being discharged from the ship at Atlanta Port.
merely proceed the assumption that the Insurer is liable when the documents are
not retired by the buyer, which, to say the least, is untenable.
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 the 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 end with reference to each of
those consignments. Consequently the claim of the complainants against the
insurer is liable to be rejected.
Commission has referred to the delay of nine months on the part of the Insurer
in repudiating the claim, after receiving the surveyor's Report, and the
failure to furnish a copy of the reports to the complainants as deficiency in
service. But what is overlooked is that the complainants did not lodge any
claim in writing. At all events, they did not produce any document showing the
lodging of claim. It was on a mere oral intimation on
2.2.1996, the investigation by surveyor was set in motion. Further the contents
of the report had already been notified to the complainants by the surveyor in
the telexes dated 4.3.1996 and 1.4.1996. Therefore, the finding of deficiency
in service was not warranted.
this view of the matter, it is unnecessary to consider the counter claim of the
respondents 1 to 3 in CA No.4307 of 2003. Nor is it necessary to consider
whether such counter claim is maintainable in an appeal under section 23 of the
Consumer Protection Act, 1996.
view of the foregoing, the appeals are allowed and the order of the National
Consumer Redressal Commission is set aside and OP No.45/1997 and 49/1997 before
the Commission stand dismissed. Parties to bear their respective costs.
B. N. Agrawal)
P. P. Naolekar) New Delhi;
June 13, 2008.(R. V. Raveendran)