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National Insurance Co. Ltd., Rep. by Its Branch Manager Vs. S.M.S. Exports and Another - Court Judgment

LegalCrystal Citation
CourtTamil Nadu State Consumer Disputes Redressal Commission SCDRC Chennai
Decided On
Case NumberF.A.NO.540/2007 (Against order in CC.NO.74/2000 on the file of the DCDRF, Tuticorin)
Judge
AppellantNational Insurance Co. Ltd., Rep. by Its Branch Manager
RespondentS.M.S. Exports and Another
Excerpt:
.....forum, this commission made the following order: m. thanikachalam j, president 1. the 1st opposite party, who suffered an adverse order, in the hands of the district forum, tuticorin, in cc.no.74/2000, as per order dt.19.4.2007, is the appellant. 2. the complainant/ 1st respondent, who is carrying on export business, had consigned 1250 bags of indian palkkadan matta rice, worth about rs.3,37,343/-, to their customer/consignee/2nd opposite party, which was insured with the 1st opposite party/ appellant, under the policy no.651101/21/4301288/98. 3. the consignment reached the port of dubai, where it was found out that the rice was damaged, not fit for human consumption. therefore, after completion of insurance survey, as directed by dubai health department, the entire consignment.....
Judgment:

The 1st Respondent as complainants filed a complaint before the District Forum against the opposite parties praying for the direction to the opposite parties to pay Rs.3,37343/- with 24% interest p.a., alongwith compensation of Rs.1 lakh and cost of Rs.3000/-. The District Forum dismissed the complaint. Against the said order, this appeal is preferred praying to set aside the order of the District Forum dt.19.4.2007 in OP.No.74/2000.

This petition coming before us for hearing finally on 28.1.2011. Upon hearing the arguments of the counsels on both sides, perusing the documents, lower court records, and the order passed by the District Forum, this commission made the following order:

M. THANIKACHALAM J, PRESIDENT

1. The 1st opposite party, who suffered an adverse order, in the hands of the District Forum, Tuticorin, in CC.No.74/2000, as per order dt.19.4.2007, is the appellant.

2. The complainant/ 1st respondent, who is carrying on export business, had consigned 1250 bags of Indian Palkkadan Matta rice, worth about Rs.3,37,343/-, to their customer/consignee/2nd opposite party, which was insured with the 1st opposite party/ appellant, under the policy No.651101/21/4301288/98.

3. The consignment reached the port of Dubai, where it was found out that the rice was damaged, not fit for human consumption. Therefore, after completion of insurance survey, as directed by Dubai Health Department, the entire consignment was destroyed. The consignee viz. the 2nd opposite party has also not paid the value of the consignment, insisting the complainant, to approach the 1st opposite party, for claim under the policy. Despite several personal contact, through letters, including legal notice, calling upon the 1st opposite party to settle the claim, they failed, thereby committed not only negligent act, but also deficiency in service. Even till today, the claim was not settled, or even repudiated. Under the said circumstances, since the complainant suffered not only monetary loss, but also mental agony, this consumer complaint has been filed, for the recovery of the value of the consignment, as well for the recovery of a sum of Rs.1 lakh as compensation, alongwith cost.

4. The 1st opposite party admitting the despatch of consignment, as well as the policy issued by them, covering the consignment, resisted the claim of the complainant, interalia contending that, after 74 days, from the date of consignee taking delivery of the goods, since the claim was lodged, the same is not maintainable, since it is a violation of the policy condition, that after the consignee had taken possession of the goods consigned, consignor has no insurable interest over the goods, and in this view they are not answerable to the claim, that though the surveyor report would say the cause of damage is “contact of fresh water”, there was no rain from December to March, and therefore the damage if any had caused to the consignment viz. rice, that should be due to the presence of inherent moisture in the cargo, prior to the transit for which, the insurance company is not liable, thereby praying for the dismissal of the complaint, denying further averments also.

5. In the additional counter, the 1st opposite party would contend, that it is the duty of the insured to preserve the right of the insured, and the complainant not lodging any claim against sea carrier, had allowed the claim of this opposite party if any, as time barred, and in this view also, there is a violation, which empowers the opposite party, not to settle the claim.

6. The District Forum, reiterating the pleadings, describing the documents as such, without giving any definite findings, for the defense raised by the 1st opposite party, had deduced a conclusion, that the non-settlement of the claim should be construed as negligent act or deficiency in service, though such a finding is not available, then issuing a direction to pay a sum of Rs.337343/- with interest thereon, alongwith cost of Rs.2000/-, against the 1st opposite party alone, dismissing the claim against the 2nd opposite party, which is challenged in this appeal, on various grounds.

7. The learned counsel for the appellant argued that the insurance cover had lapsed, after 60 days of the discharge of the goods at Dubai airport, and therefore the claim made after 74 days, is not maintainable, not considered by the District Forum. It is the further submission of the appellant, that the goods were damaged only due to the presence of moisture in the cargo, prior to transit, which is not covered under the policy, not considered by the District Forum. A final submission was made, that the complainant failed to protect the recovery rights of the insurance company, by allowing the claim against the carrier to lapse, thereby violated the terms and conditions of the policies, and in this view, non-settlement of the claim will not give any cause of action, to lay claim for the value of the goods consigned. Elaborating the above submissions, taking us to the various documents also, an appeal was made by the learned counsel, to set aside the cryptic order passed by the District Forum.

8. The learned counsel for the complainant / 1st respondent, opposing the above submissions, urged before us, that as per the terms and conditions of the policy, the coverage was, warehouse to warehouse, and therefore question of lapse does not arise, and in this view, the order or the conclusion should be confirmed. It is the further submission of the learned counsel, that at the time of loading cargo, necessary certificates were obtained from the authorities concerned, certifying the quality of the rice, and therefore the submission, that if at all the goods should have been damaged due to inherent defect, or contents of moisture, should be negatived. As the final submission, when the 1st opposite party, who is bound to settle the claim, having remained silent, not even responding to the communications, is not entitled to say that their right was not protected, and therefore the right of the complainant should be defeated, which is not the purport of the Consumer Protection Act.

9. Having heard the submissions on either side, and by going through the documents, as well as the written submissions, we are of the considered opinion, that the 1st opposite party alone had committed negligent act, amounting to deficiency in service, in not honouring the terms and conditions of the policy, and in this view, the final conclusion of the District Forum is to be confirmed, though there are no reasons, which we will substitute, since there is no dispute regarding the quantum i.e. value of the consignment.

10. The learned counsel for the appellant also argued, that if at all the District forum or this commission, comes to the conclusion, that the non-repudiation, or delay should be construed as deficiency in service, there may be some compensation, but the 1st opposite party is not liable, to reimburse the value of the consignment, is not acceptable to us, since that is accepted, the very purpose of taking insurance, would be defeated, who was so lethargic and negligent, in dealing the customer, that too in this kind of cases, where export is involved.

11. Admittedly, the complainant had sent 1250 bags of Indian Palkattan Mata rice, worth of Rs.3,37,343/-, to the 2nd opposite party/ consignee, and the same was insured with the 1st opposite party/ appellant on 10.12.98, under Marine Cargo Transit Policy (Ex.A1). It is also an admitted fact, that the consignment reached the port of Dubai on 22.12.98. The consignee viz. the 2nd opposite party, as per the instructions of the consignor, cleared the documents from the bank, and took delivery of the consignment also, in the port. Before releasing the goods, when the Dubai Health Department, inspected the consignment, they found 100% damage, making it un-useable, for human consumption. In view of the fact the entire consignment was damaged, it was ordered to be destroyed by the Dubai Health Department, and accordingly on 26.4.99, the goods were destroyed, as evidenced by Ex.A10, B9. Before that, as per the application dt.7.3.99, goods were surveyed, and report given, viz. Ex.A8 = B3. The damaged rice was also subjected to test, which revealed that the goods were damaged due to contact of fresh water. Because of the fact that the consignee was unable to take the consignment, since destroyed, he has not paid the amount, or recalled the payment, as the case may be, thereby admittedly the value of the consignment had not reached the hands of the consignor viz. the complainant. The consignee also has given a letter to the consignor, stating that they have no objection, to claim the amount from the insurance company. On the basis of the above admitted facts, we would say, when a claim was made to the 1st opposite party, they failed to respond even, and we do not find the repudiation letter also. The inaction on the part of the opposite party was not, as expected from an insurance company. Thus accusing, leveling deficiency, a complaint was filed, succeeded, and as said above, impugned in this appeal.

12. In order to solve the dispute in this case, we have to remember certain conditions available in the insurance policy. In addition to the printed conditions available in the policy, “special conditions and warrantees”, are also included which reads “Marine insurance Covering Institute Cargo Clauses (A) Institute War clauses (Cargo) Including cover from consignors warehouse to Consignees Warehouse Insurance also cover the risks of jettisoning, and washing overboard due to stress of weather”, thereby making it undoubtedly clear, that the coverage is not based upon days alone, but from consignors warehouse to consignee warehouse, thereby meaning if anything had happened to the consignment, the insurer should make good, the loss. In the policy itself, there is a clause, which reads “on the expiry of 60 days, after completion of discharge overside of the goods hereby insured from the overseas vessel at the final port of discharge whichever shall first occur”. Admittedly, the container was discharged in the port of Dubi on 22.12.98. The goods were taken delivery on 6.3.99, i.e., after 74 days of its discharge at Dubai. Based upon the later clause, quoted by us supra, a submission was made, that as per the Marine Policy, the insurance cover came to an end, on the expiry of 60 days, after completion of discharge, whereas since the claim was made after 74 days, is unsustainable. By going through the conditions, as well as the special warranty incorporated, we feel, the submission is unsustainable. It is the common law, that Special overrules, the General. As special condition, the policy says, the consignors warehouse, to consignee warehouse, not restricting the period, therefore the general condition of 60 days, will not be applicable. The insurance policy is intended to benefit the insurer, and that is why premiums are collected, subject to other conditions also. Apart from the general conditions, when the insured had incorporated and accepted the special conditions, giving warranty, that should prevail. In this case, admittedly from the warehouse of the consignor, the goods traveled upto Dubai port, not beyond that, covering the warehouse of consignee, upto which point of place, the cover was given. Therefore, as rightly submitted by the learned counsel for the complainant, on the ground, the claim came to an end after the expiry of 60 days, from the discharge, cannot be extended to this policy, in view of the special conditions, and in this view, we are constrained to reject this defense, as unsustainable.

13. True, it is the duty of the complainant, to prove that the goods were damaged during transit, not offending any conditions of the policies. It is the specific case of the complainant, that rice was damaged due to contact of fresh water, during transit, which is not within the control of the complainant, or the carrier, as the case may be. An attempt was made on behalf of the appellant, to say that the consignment must have been moisture laden, even at the time of being shipped, and as such during the transit damage affected consignment, which was found soggi and putrefied, at the time of delivery, resulting Dubai authorities at Port, compelled to destroy the same, for which the insurance company cannot be held responsible. To support this submission, except the argument advanced by the learned counsel, we find no materials, whereas we are having materials, to repudiate this argument.

14. From Indian port, an exporter consigned 1250 bags to Dubai, and he might be knowing what would be the risk, if he had consigned the rice, affected by moisture, and what will happen during the transit. Therefore, any prudent, ordinary sensible consignor, will not take this kind of risk, and in this case, the complainant/ consignor had not taken such kind of risk, is also evident from Ex.A20 and A21. Before loading the consignment, Government of India, Ministry of Agriculture, had issued Official Phyiosanitary Certificate, regarding the quality of 25000 Kgs., of Indian Palakadan Matta Rice, where we find no defect at all, about the consignment. Further consignor has also obtained Fumigation Certificate on 11.12.98, as seen from Ex.A21, which discloses the fact, “we further certify that on subsequent inspection, there was no live insect pests noticed to exist in the above mentioned cargo”. Therefore it is impossible to conclude, that the rice became damaged, or putrefied due to inherent defect viz. moisture, at the time of loading rice. From the above stated facts, we feel in order to evade the liability alone, the insurance company is taking this kind of defense, which deserves to be rejected.

15. After shipping, admittedly till the survey was conducted, the goods were in the custody carrier, and at later point of time, they were held in customs custody. As seen from the surveyor report, as well as report of tests (Ex.A8), which is not under challenge, the goods sustained damage due to having come into contact, with fresh water, thereby showing, sea water has not entered or damaged the goods. Because of moisture, and fungal growth, under the direction of Municipal Officials, the goods were destroyed on 26.4.99. Ex.A19 would reveal that there were rain, in the month of December, i.e., from the date of loading and discharge, to some extent, thereby making it possible, fresh water entering into the container, resulting moisture followed by putrefaction. Therefore, the submission of the learned counsel for the appellant, that the goods would have been damaged, due to inherent moisture at the time of shipping itself, does not deserve acceptance, and we conclude, during the transit, since the ship reached Dubai, via. Ceylon, due to rain fall, the rice bag would have come into contact with fresh water, resulting damage, which is covered under the policy. Therefore, the non-settlement of the claim, by the insurance company, based upon the policy should be taken as deficiency in service.

16. The main point urged before us, on behalf of the appellant was, that there is a violation of policy condition, and therefore they are not liable to reimburse the alleged damage. Under the policy clause 16, a duty is cast upon the insured, to minimize the losses, and it reads

“It is the duty of the Assured and their servants and agents in respect of loss recoverable hereunder:

16.1 to take such measures as may be reasonable for the purpose of averting or minimizing such loss

16.2 to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised and the underwriters will, in addition to any loss recoverable hereunder, reimburse the assured for any charges properly and reasonably incurred in pursuance of these duties”.

Under the Sea Carriers Act, a claim against the Carrier should be filed within an year, and upon lapse of such period, the liability of carrier would stand extinguished. This proposition of law, is not in dispute. As pointed out supra, it is the duty of the insured also to minimize the losses, that all the rights against carriers, preserved and exercised. In this case, the period contemplated viz. one year, already lapsed. The carrier, which carried consignment, has not been impleaded as a party. In view of the legal position, in case the insurer pays the amount, to the consignor, they cannot proceed against the carrier, under subrogation, thereby they are deprived of their right to proceed against the Carrier, and according to the learned counsel for the appellant i.e., due to the act of the insured, and in this view, there is a condition violation, and therefore the non-settlement of the claim cannot be faulted. The contract between the complainant and the 1st opposite arty, is not unilateral, whereas bilateral, and it is binding upon both the parties. As soon as the complainant came to know, about the goods damaged, after necessary formalities including the survey, they lodged a claim, which fell in the deaf ears of the 1st opposite party. A person who seeks some right, under the terms and conditions of the policy, should discharge their duties and liabilities also, then only, they can take advantage of the provisions. If they have violated, and kept silent for years together, even without answering the claim of the complainant, it is not open to the insurance company, to say that since their claim against the carrier is barred by limitation, they will not answer the claim of the complainant, which is not the purport of the Consumer Protection Act, since we are governed by the provisions available under the Consumer Protection Act, where also limitation is prescribed. If the 1st opposite party had diligently discharged their duties, and liabilities, and the complainant negligently failed to act subsequently, then only we can say, there is a violation of clause 16, which is not available in this case, whereas we would say that being silent for somany months, despite request in person, notice and legal notice, the 1st opposite party cannot be heard to say, that the insured has failed to preserve their right or they have allowed the claim to be barred, against the carrier and that is why they are not liable to pay the damage, for the negligent act, as well as deficiency in service, in this case, which are proved, and even we would say admitted.

17. The learned counsel, for the appellant in support of the above submission, invited our attention to the decision of the Madras High Court, as well as the judgement of this commission, in EID Parry (India) Ltd., Vs. Registered Office at Dare House, reported in 1988-1-L.W, wherein it is held, it is the duty of the policy holder to keep alive his remedies against the carriers, or other 3rd party, and its failure to do so, by allowing the bar of limitation, to operate, liability of the insured, but availed his right of indemnity, repudiation is permissible or justifiable. As rightly submitted by the learned counsel for the complainant, in all the cases the claim was rejected by the insurance company, thereby making it possible, for the insured to proceed, which is not the case before us, and therefore on facts, the decision relied on by the learned counsel for the appellant is distinguishable and we would say, with great respect, not applicable to the present facts of the case.

18. In Patel Shanabhai Darubhai and Co., Vs. The Oriental Insurance Company Ltd., in O.P.No.136/2001, by the National Commission, the rights and liabilities of the carrier, insurance company was construed by the National Commission, and come to the conclusion, and the insurance company is liable to pay the value of the lost consignment, which on principle is applicable to our present case. In this case, when the lawyer notice was issued, the complainant was directed to approach the settling agent, viz. W..K. Webster and Co., (Ex.A16). Pursuant to the said instruction, when Ex.A17 was issued, W.K.Webster and Company, informed that they will not take any action, unless instructed to do so, by their principle. Thus it is seen, as instructed by the insurance company, the complainant also had taken steps, but want of instruction by the 1st opposite party, to the said agent, the case has not been settled, for which, we cannot find fault with the complainant. Therefore, the plea of the 1st opposite party, on their right to proceed against the carrier, has lapsed due to efflux of time, cannot be accepted, in view of the admitted fact, the 1st opposite party, was guilty of inaction for a considerable period, thereby causing mental agony, and suffering to the consignor. The insurance company, having failed to do so, what they are bound to do, cannot now claim, that they can repudiate the claim, on the ground, that the complainant do not take any action, against the carrier or their right to proceed against the carrier is barred by time. For the above said reasons, we are of the firm and considered opinion, that the 1st opposite party, having undertaken to reimburse the damage, under the marine policy, failed to do so, being the service provider, and when the case is filed within the time, before the consumer forum, as contemplated under Sec.24(A), the District Forum, was justified in ordering the payment of value of consignment, with interest, and the said conclusion should be accepted, for which we have substituted, our reasons. Hence the appeal is devoid of merits, liable to be dismissed.

19. In the result, the appeal is dismissed, confirming the order of the District Forum in CC.No.74/2000 dt.19.4.2007. There will be no order as to cost in this appeal.


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