ADDI INDUSTRIES LTD. vs New India Assurance Company Ltd.

THIS original complaint is filed by Addi Industries Ltd. against the opposite parties General Manager, Assistant General Manager and Divisonal Manager of New India Assurance Company for deficiency in service in repudiating their claim. Submissions of the complainant :

THE complainant is engaged in the business of a manufacture and export of readymade garments to Russia, the U.S.A., Canada, Europe and Gulf countries. He has a manufacturing unit in Noida (U.P.) and despatches various consignments regularly from Delhi to Bombay by transport, inter alia, Best Roadways. M/s. Deluxe Shipping Agency, Bombay is one of the complainant''s Clearing and Forwarding Agents for overseas despatches. It is stated by the learned Counsel for the complainant that an Open Policy for Marine Insurance No. 2131060001784 dated 23.7.1993 for Rs. one crore valid for one year was taken from the opposite parties against loss/damage liability in the export shipments and this loss/damage liability was taken for shipments from New Delhi to Russia, CIS countries, U.S.A. Canada, Europe and Gulf countries by sea/rail/road covering all risks of physical losses and/or damages to the consignment, inter alia, as per Institute Cargo Clause ''A''.

As per the aforesaid policy/cover note, the complainant made Marine Declaration No. 71368 dated 18.12.1993 for Rs. 16,22,016 for 320 cartons polyester/cotton knitwears consisting of 3432 pieces of knitted Top Round Neck Plus 4248 pieces of knitted Top Round Neck Puffing print in front for despatch from Noida to Moscow. The goods were received at the godown of Best Roadways at Bhiwandi on 23.2.1993 and were stored at godown No. 5. It is further stated that godown No. 5 was a ground floor structure having brick walls with AC sheet roof on steel framework, admeasuring about 1800 sft. with height of 17 ft. Goods belonging to various parties were also stored in the said godown at the relevant point of time.

IT is further stated that the consignment was to be shipped to Kotka Port per s.s. Abakan (Moscow), Port of discharge being Kotka, as per advice from buyers M/s. Virgo Apparels Ltd. As the ship had not taken berth, the said consignment was required to be kept in the said godown of the transporters, Best Roadways Ltd., Bombay. Unfortunately, on 16.3.1994 around 12 noon, fire broke out in the neighbouring godown No. 7 and spread to the godown No. 5 belonging to the Best Roadways Ltd. Despite best efforts fire went on unabated and it was extinguished only on the next day. Complainant''s consignment comprising 320 cartons of polyester/cotton knitwear garments meant for export to Russia was badly burnt and damaged.

THE complainant intimated and lodged the claim with the opposite parties and all the requisite information and documents were supplied. THE opposite parties appointed M/s. Mehta and Padamsey Pvt. Ltd. Surveyors, Assessors and Valuers, who submitted Marine Survey Report dated 23.6.1994. After inspection and verification of records and deducting the nominal value of the loss, Surveyor assessed the complainant''s claim at Rs. 16,20,000. It is averred by the learned Counsel for the complainant that opposite parties raised only one query during the processing of the claim, seeking explanation as to the delay in taking the delivery of the consignment from the carriers and allowing the consignment to remain in the godown of the carrier. Although sufficient and satisfactory explanation regarding alleged delay was given that there was no delay in onward shipment; that the designated ship was not available; that no ship destined to the port of discharge, i.e., Kotka port was available at the relevant time and that the consignment was stored for a period of two and a half months on certain occasion in similar situations such as non-availability of the ship is not unusual. Opposite parties vide letter dated 20.8.1996 informed that the complainant''s claim was repudiated by the Head Office stating "Since there was no coverage of the consignment during the storage period at the transporter''s godown." Further it is stated that "this was communicated to you earlier also and the file is closed accordingly." It is contended by the learned Counsel for the complainant that the alleged communication earlier to 20.8.1996 was never received from the opposite parties and that it was an incorrect statement made by them. It is argued that there has been coverage of consignment during the storage period at the transporter''s godown and repudiation of the claim by the opposite parties amounts to deficiency in service.

THEREAFTER, complainant made a number of representations and vide letter dated 26.8.1996, opposite parties informed the complainant as under : "We are looking into the matter and revert back soon. Thanking you and assuring you of our best services always."

HEAD Office of the opposite parties vide telex message dated 28.1.1997 asked for some more details and stated "We would, therefore, await the same at the earliest". The complainant furnished all the details as asked for vide letters dated 28.1.1997 and 30.1.1997 itself and requested for early settlement. Subsequently, the complainant had written many letters dated 14.2.1997, 28.2.1997, 5.3.1997, 11.3.1997, 14.4.1997, 15.4.1997, 27.5.1997, 9.7.1997, 8.8.1997, 1.9.1997, 9.9.1997 and 24.11.1997 clearly stating "Our said Marine claim is lying at your end pending settlement for a long time. All the documents/information asked for by you were furnished long back. Thereafter, the undersigned has also met you and explained the facts, circumstances and merits of our case personally. We once again request you kindly to look into the matter personally and expedite your kind approval/sanction for the settlement of the claim." Thereafter, opposite parties stopped responding to the various letters written by the complainant and hence complainant issued a legal notice dated 4.3.1998 by Registered A.D. to make a payment of the claim along with interest @ 24% p.a. It is only then the complainant approached the Commission and filed the complaint for seeking following directions that the opposite parties should pay : (a) Rs. 16,20,000 being the loss assessed by the Surveyor as per the Marine Survey Report; (b) Rs. 14,90,400 being interest on the aforesaid amount of Rs. 16,20,000 at the rate of 24% p.a. from the date it has fallen due till the date of filing of this complaint. (c) Rs. 16,20,000 being compensation for the loss and legal injury caused by the complainant due to deficiency in service by the opposite parties. (d) Costs of these proceedings. Submissions of the opposite party :

Mr. Sunil Kapoor, learned Counsel for the opposite parties argued- (a) that Punjab National Bank whose financial interest is also shown in the policy has not been joined; (b) that claim of the complainant is not covered within the ambit of the policy and the same was rightly repudiated by the opposite parties, Insurance Company; (c) that no sufficient and satisfactory explanation was ever given as to why the consignment was kept lying in the carrier''s godown when the same had reached Mumbai in the last week of December; (d) that there was no reason for the complainant to wait for the same designated ship and to keep the consignment for two and a half months as they could have sent the consignment by some other ship; and (e) that the claim was repudiated earlier to 28.9.1996 and that being so the complaint is barred by time. Findings :

WE heard both the parties and perused the record carefully. Most of the facts are admitted regarding the letters and notices that have been exchanged between the parties except the letters that have been allegedly sent before 20.8.1996 by the Insurance Company. The Insurance Company has not placed any such letter that has been sent by them and there is no reason for us to believe the same. Hence, 20.8.1996 has to be taken as the letter of repudiation and there are also subsequent acknowledgements by the Insurance Company stating that they are looking into the matter. On 26.8.1996 and on 15.4.1997 letters were issued asking for such details. These facts clearly entitled the complainant to file the claim with the Commission which was done on 25.6.1998 which is very much within the limitation of two years and hence the complaint is not time barred. The complainant has time and again explained to the opposite parties that two export consignments were made on the same day, i.e., on 18.12.1993 under Invoice Nos. AIL/N/038 and AIL/N/039 for export to USSR. Since shipping/loading was not immediately possible at Bombay, the two consignments were kept in transporter''s godown waiting for ship berth and loading. Ultimately, shipment under Invoice No. AIL/N/039 was shipped "s.s. ABAKAN" on 16.4.1994. The other consignment which is now in dispute under Invoice No. AIL/N/038 could not be shipped since it was destroyed in the meantime due to big fire on 16.3.1994. It was not in complainant''s control as to the exact time of loading of export consignment on ship and the actual loading on a particular ship as such this consignment was kept in the warehouse of Best Roadways. The consignment under Invoice No. AIL/N/038 could not be loaded since it had been damaged in fire and this fact has not been disputed by anybody.

FURTHER, the letter dated 4.10.1996 addressed to Insurance Company clearly mentions that the complainant made two export consignments on 18.12.1993 and that the consignment in dispute could not be sent due to fire whereas the other consignment was sent as and when the ship was available which was on 16.4.1994. This justifies that both consignments would have been sent on 16.4.1994 or even earlier had there been availability of ship. Complainant had no control on this factor once the consignments were delivered for loading on the ship for onward shipment to U.S.S.R. The letter dated 14.2.1997 by Deluxe Shipping Agency also reflects facts that these were to be shipped per "s.s. ABAKAN" to port of discharge at Kotka nominated by the overseas buyer. We have no reason to disbelieve the complainant''s case that this shipment could not be sent because of non-availability of ship. Opposite parties letter dated 26.8.1996 stated that they were looking into the matter and shall revert back soon. Their telex message on 28.1.1997 asking for more details state, "We would, therefore, await the same at the earliest." Complainant gave all the details by letter dated 28.1.1997 and 30.1.1997. A dozen reminders were sent but they drew no response from the opposite parties. The alleged repudiation letter sent by the opposite parties is not placed on record. We have come to the conclusion that the opposite parties just sat on this claim after getting all the particulars from the complainant forever without repudiating the claim. It amounts to clear deficiency in service.

THE only question that has been argued was regarding the coverage of this loss under the policy in question. We have gone through the terms of the policy under Institute Cargo Clauses (A) and the risks covered under the same. THE relevant clause is regarding duration. Clause 8 (Transit Clause) is given as under : "8. Duration : 8.1 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 he ordinary course of transit and terminates either 8.1.1 on delivery to the consignees or other final warehouse, premises or place of storage at the destination named herein. 8.1.2 on delivery to any other warehouse, or place of storage, whether prior to or at the destination named herein, which the assured elect to use either, 8.1.2.1 for storage other than in the ordinary course of transit, or 8.1.2.2 for allocation or distribution or 8.1.3 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 8.2 If, after discharge overside from the overseas vessel at the final port of discharge, but prior to termination of this insurance, the goods are to be forwarded to the destination other than that to which they are insured hereunder, this insurance, whilst remaining subject to termination as provided for above, shall not extend beyond the commencement of transit to such other destination. 8.3 This insurance shall remain in force (subject to termination as provided for above and to the provision of Clause 9 below) during delay beyond the control of the assured, and deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to ship owners or charterers under the contract of affreightment."

FROM the above Transit Clause, it is very clear that consignment in dispute is definitely covered under this policy till delivery to the consignees or other final warehouse, premises or place of storage at the destination named herein. Here the destination is Moscow and there is no reason a to why this clause is interpreted by the opposite parties in a manner which is not legal. As per the policy, the two consignments were invariably insured from Noida to Bombay to Moscow and are covered under the terms of the policy and the complainant''s claim cannot be rejected by the Insurance Company. This amounts to clear deficiency in service by the Insurance Company. It is to be stated that the policy is a voyage policy and also provides a maximum period of 60 days after completion of discharge overside of the goods from the vessel at the final port of discharge. Section 27 itself provides that a contract for both voyage and time may be included in the same policy. By inclusion of Institute Cargo Clause, it is voyage and also time policy; Section 4 of the Marine Insurance Act specifically provides that a contract for maritime insurance may, by its express terms, or by usage of trade, be extended so as to protect the assured against losses on inland water or on any land risk which may be incidental to any sea voyage.

In this view of the matter, the repudiation of the claim by the Insurance Company is unjustifiable. Further, the Surveyor has assessed the loss at Rs. 16,20,000.

IN view of the above discussion, we pass the following order : Opposite party INsurance Company is directed to pay Rs. 16,20,000 with interest on the same at the rate of 9% p.a. from two months after the survey report till date of payment. Costs of Rs. 10,000 be also paid to the complainant by the INsurance Company. Original Complaint is accordingly allowed. Complaint allowed.