BHARAT BISCUIT CO. P. LTD. vs JAIN TRANSPORT And CO

THE case of the complainant is that it opened with the opposite party No. 3 an open Marine Policy bearing No. 2151060200083 for Rs. 8,39/38,702/- During the validity of the said Insurance Policy the complainant/petitioner dispatched one truck load Biscuit worth Rs. 1,01,787.92 to its distributor M/s. Mahadev Bhandar, N.S. Road, Agartala, Tripura. THE said stock was sent through the opposite party Nos. 1 and 2 vide consignment Note No. 3743 dated 8.4.1990. In transit, the consignment of biscuits got rainsoaked and it became spoiled and unfit for human consumption. THE entire stock was destroyed on 22.5.90 at the instance of Food Inspector, Agartala in his presence. Prior to it the said incidence was duly informed to all the opposite parties and the opposite party No. 3 appointed licensed Marine Surveyor to assess loss and he carried out inspection on 19.5.90 and on 20.5.90 at the godown of said Mahadev Bhandar, the consignee of the goods and the said Surveyor submitted its report on 29.5.1990 for total loss worth of Rs. 96,836/-. THEreafter the complainant/petitioner had been regularly perusing the matter for getting its claim settled but to no effect, hence this complaint arises.

THE opposite parties Nos. 1 and 2 filed it written objection denying all material allegations raised in the petition of complaint. THEy also contended that the consignor who is the complainant/petitioner in the instant case had dispatched the goods at its risk and on the basis of terms and conditions printed overleaf of the Consignment Note bearing No. 3743 dated 8.4.1990. THE opposite parties Nos. 1 & 2 also contended that it took proper care of the consignment and covered the materials with adequate tarpaulins and plastic covers while it was in transit to Agartala. The opposite parties Nos. 1 & 2 denied that all materials were damaged in transit. They also contended that freight amount of Rs. 42,640 / - were due on account of different freight bills not related to the instant consignment of goods as such the complainant/petitioner is not entitled to withhold payment of the said sums of Rs. 42,640/- on the other hand the complainant/ petitioner is liable to pay the sum of Rs. 42,640/- together with 21 % interest aggregating to Rs. 69,514/- to the opposite parties Nos. 1 and 2. The opposite parties Nos. 1 & 2 prayed for dismissal of the petition of complaint with cost.

The opposite party No. 3, the New India Assurance Company Ltd. filed its separate written objection wherein it contended that the petition of complaint is not maintainable in law, as the petitioner failed to observe the provisions of Insurance Act, 1938 and particularly the provisions of Section 64VB(1) where it has been provided that no risk to be assumed unless premium is received in advance, no insurer shall assure any risk in India in respect of any insurance business on which the premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner within such time as may be prescribed or unless and until deposits of such amount as may be prescribed, is made in advance in the prescribed manner.

THE opposite party No. 3 further contended that the Marine Insurance Policy made in favour of the complainant/petitioner specifically excluded the damage due to damp and to that effect it annexed the certificate No. 2651060200056 which originated out of the main open Policy No. 2151060200083. It is the contention of the opposite party No. 3 that a sum of Rs. 7,147/- was received by it from the complainant on 16.4.90 as against premium for declared value of consignments for the month of March and April, 1990 and the premium of Rs. 7,147/- paid by the complainant/ petitioner was in respect of dispatch made on 8.4.90 against which instant claim has been made by the complainant. Accordingly the opposite party No. 3 by its letter dated 17.8.1992 repudiated the claim of the petitioner/complainant as the premium was not available to cover consignment dispatched on 8.4.90. It is again contended that the opposite party No. 3 waf not on risk in respect of said consignments dispatched on 8.4.90 in terms of Rule 58(1) of the Insurance Rules, 1939 as the premium being the charges for rendering service by way of providing facilities for insurance having not been paid within the period, the complainant/petitioner was not entitled to have any service from the opposite party No. 3 as provided under the Consumer Protection Act, 1986 and in furtherance to that the opposite party No. 3 denied and disputed all the material allegations of the complainant/ petitioner made out in the petition of complaint and it contended that the opposite party No. 3 is not liable to pay compensation to the complainant as wrongfully and unlawfully claimed by it. In a petition of rejoinder, the petitioner/ complainant pleaded that the insurance service is included under Section 2(1)(o) of the Consumer Protection Act, the deficiency in service on the part of the Insurance Company definitely falls within the jurisdiction of the Consumer Disputes Redressal Forum. Under Section 2(1)(d)(II), ''Consumer'' has been defined that any person who hires any services for consideration which has been paid or promised or partly paid or partly promised or under any system of different payment system is a consumer.

THE complainant/petitioner also contended that from the date of alleged repudiation of the claim on 17.8.1992 by the opposite party No. 3 lodging of this complaint before the State Commission on 4.6.1993 is well within time and not barred by law of limitation. THE complainant/petitioner further contended that the captioned open Policy was for a limit of Rs. 8,39,38,702/- and during the period between 1.3.1990 to 12.4.1990 total value of business was assessed of Rs. 68,59,540/- against the said policy. THE complainant/petitioner kept a running advance deposit of Rs. 10,000/- and another running deposit of Rs. 20,000/- was made on 12.4.1990 and another running deposit of Rs. 10,000/- was made on 16.4.1990 aggregating to Rs. 40,000/- for which the receipts were also annexed with the petition of rejoinder, so the payment of premium for the captioned consignment was covered by the running advance deposit in addition to guarantee for payment of premium after actual assessment. It was contended by the complainant/ petitioner that in an open Marine Policy, the system is to keep a running advance deposit and then the dispatches are made every month and at the expiry of every month the total goods despatched during the months are assessed and the premiums dues on that score are paid up instantly. This system is followed from very beginning and from the statements submitted by the opposite party No. 3 being Annexure ''B'' to the written objection is cogent documents to that effect and during the course of 2 years from October, 1988 to April, 1990 the complainant/ petitioner paid Rupees in similar system the sum of Rs. 2,12,750/- as premium towards the dispatches made in the respective months during the said period and the same will be evident from the statement submitted by the opposite party No. 3 being Annexure ''B'' to the written objection. As regards contention of the opposite party No. 3 that ''damage due to damp is specifically excluded in the open Marine Insurance Policy as such the complainant/petitioner is not entitled to get any compensation. In reply to said allegation, the complainant/petitioner in its petition of rejoinder stated that the opposite party No. 3 vide its letter dated 25.8.1986 offered the complainant/petitioner to accept the risk of rainwater damaged and the said offer letter has been made Annexure ''Q'' to the petition of rejoinder and contended that it was not damaged due to damp specially in view that the said offer letter dated 25.8.1986 was accepted and the contracts of Marine Insurance Policy was entered into by and between the parties confirming the said letter dated 28.8.86 annexed as ''Q'' to the petition of rejoinder by the complainant/ petitioner. In the aforesaid premises the complainant/petitioner submits that the claim of the petitioner be granted as per prayer of the petition of complaint. DECISION

IT is admitted that the contract was entered for open Marine Insurance Policy with the opposite party No. 3. IT is also admitted position that the consignment on transit vide Consignment Note No. 3763 dated 8.4.90 was rainwater damaged. IT is not also disputed about the claim of the complainant/petitioner aggregating to Rs. 95,994.70.

THE only dispute raised by the opposite party No. 3 is that the premium in question for the captioned consignment was not paid in advance and the second dispute is that the claim of the complainant/petitioner is repudiated by the opposite party No. 3 by its letter dated 17.8.1992 and the third dispute is that the claim is barred by the specific clause ''damage due to damp'' is excluded in the policy itself. Now in dealing with the disputes raised by the opposite party No. 3 we take up the first dispute about alleged non-payment of premium for the damaged consignment.

It should be remembered that the insurance policy taken by the complainant /petitioner is under Marine Insurance Act, 1963 not under the Insurance Act, 1938. The Sections 23 and 54 of the Marine Insurance Act provides the procedure for payment of premium on account of Marine Insurance Policy. We reproduce those Sections for the sake of convenience. ''Section 23'' when contract is deemed to be concluded contract of Marine Insurance is deemed to be concluded when the proposal of the assured is accepted by the insurer whether the policy be then issued or not and for the purpose of showing when the proposal was accepted reference may be made to the slip covering note or other customary memorandum of the contract although it be unstamped. ''Section 54'' when the premium payable : - Unless otherwise agreed the duty of the assured or its agent to pay the premium and the duty of the insurer to issue the policy to the assured or its agent are concurrent conditions and the insurer is not bound to issue the policy until payment or tender of the premium.

IT is also relevant to refer Section 1 of the Rules framed under Marine Insurance Act, 1963 which provides that where the subject matter is insured ''lost or not lost'' and the loss has occurred before the contract is concluded the risk attaches unless at such time the assured was aware of the loss and the insurer was not. In view of the aforesaid legal position and the contract under Marine Insurance Policy being concluded as per open Marine Insurance Policy No. 2151060200083 and the certificate bearing No. 2651060200056 issued under the said Marine Insurance Policy does not leave any scope to presume that the captioned consignment was not covered by the said Policy. Further it is to be noted that there was a running advance deposit of Rs. 40,000/- with the opposite party No. 3 made on different dates and it was the system that against promise and guarantee to pay the premium all dispatches made during respective month are to be assessed in the following month and the premium thereof to be paid accordingly and this system has been followed between the parties for several months as per statement which has been annexed with the written objection as Annexure ''B'' by the opposite party No. 3. From the statement submitted by the opposite party No. 3 it shows that during the course of one and half year starting from October, 1988 to April, 1990 they accepted various sums on account of promises aggregating to Rs. 2,12,750/- in the similar process as stated above without any objection. It is contended by the complainant/ petitioner that apart from the advance running security deposit of Rs. l0,000/- made on 27.11.86 and 29.11.86 it deposited another running advance deposit of Rs. 20,000/- on 12.4.1990 and further running deposit of Rs. 10,000/- on 16.4.1990 altogether the complainant/petitioner had Rs. 40,000/- as running advance deposit with the opposite party No. 3 at the material point of time and the receipts of the said advance deposit have been made Annexure as ''P'', ''R'' and ''S'' to the petition of rejoinder.

IF we observe carefully the Section 64VB(I) of the Insurance Act, 1938 it also gives rise to following independent three clauses of satisfying payment of premiums : - (a) Payment of premium; (b) Guarantee of such payment by such person in the manner prescribed; (c) Deposit of the amount;

Although the Insurance Act, 1938 is independent of the Marine Insurance Act, 1963 till the principle of both the acts as regards payment of premium are more or less same. Namely guarantee of such payment by such person in the manner prescribed. It is needless to mention that in a Marine Insurance Policy, the system followed and agreed upon by and between the parties that the premium in respect of particular month to be paid by the next succeeding month after assessment of the value of the total dispatches made during the previous month, against a lump sum deposit of running advance with the insurer and guarantee or promise to pay the premiums as per assessments and running advance deposit in this regard is such guarantee to pay the premiums. As, regards contention of the opposite party No. 3 that the damage due to damp is excluded from the certificate issued under the Marine Insurance Policy as such the complainant/petitioner is not entitled for the damage caused due to damp but the offer letter dated 25.8.1986 being made Annexure ''Q'' to the petition of rejoinder given by the Insurer specifically. includes rain-water damage is to cover within the policy and the said offer letter was duly accepted by the complainant/petitioner by its letter dated 28.8.1986 which has also been Annexure ''Q'' to the petition of rejoinder, so practically the agreement is concluded by that offer and acceptances although the policy was issued later on. Damage due to damp and damage by rain water are completely different. The provisions under Section 23 of the Marine Act, 1963 -fully supports this contention of the petitioner/ complainant. Therefore, the objection of the opposite party No. 3 that as the petitioner complainant did not pay their requisite premium in respect of the damaged consignment is overruled and also we hold that the consignment was duly covered by the payment of premium, even it was not there it does not prejudice the rights of the petitioner/complainant on the ground that there was a promise to pay. The provision of Consumer Protection Act also is attracted by the said proposition that either paid or promise to pay and by the said feature it does not ouster the jurisdiction of this commission as alleged by the Opposite party No. 3. The complainant/petitioner cited decisions in the cases of New India Assurance Company Ltd. v. Uma Devi reported in II (1991) CPJ 516 (NC), L.I.C. of India v. Sri B.S. Reddy reported in II (1991) CPJ 189 (NC), New India Assurance Company Ltd. v. Vipro Electronics Private Ltd. reported in I (1991) CPJ 335 (NC), Sushilla Goutam v. National Insurance Company reported in II (1991) CPJ 3, National Insurance Company v. R.S. Oil and General Mills Private Ltd. reported in I (1992) CPJ 212 (NC), the ratio in the said cases supports the contention of the complainant/ petitioner.

WE observe from the said decisions that mere unilateral rejection of a claim of the insurer does not create any jurisdictional bar and also observe that where there is any delay and /or dilatoriness for finalising the insurance claim, the same would be tantamount to deficiency in service and in all cases the National Commission awarded 18% interest, on claim amount after expiry of reasonable time in addition to other compensation.

WE hold that the opposite party No. 3 has failed to perform his statutory duty to settle the claim of the petitioner/complainant within reasonable time after lodging the claim on 23.6.90 for Rs. 95,994.70 and accordingly the opposite party No. 3 is liable to pay interest at the rate of 18% on Rs. 95,994.70 effective from October, 1990. The opposite party Nos. 1 and 2 contested the case by filing written objection and contended that the rain water damage is immune under Force Major Clause. They also argued that the materials were fully covered by adequate tarpaulins and plastic cover. We observe that they are also negligent and failure to protect the goods under consignment of the complainant/petitioner for want of proper care is deficiency in service, for which the entire stocks had to be destroyed as per Annexure ''B'' issued by the Food Inspector, Agartala and such massive damage by rain water cannot be avoided by taking plea under Force Major Clause. We also observe the abnormal delay to reach the consignment to the destination at Agartala on 22.4.90 from Calcutta while the consignment was loaded on 8.4.90. It took about 15 days whereas normally it should reach Agartala within 2/3 days and for such delay also it might have caused contamination to the stock containing food stuff for which it had to be destroyed at the instance of Food Inspector, as such the opposite parties Nos. 1 & 2 are held to be partly liable.

As the rain water damage is specifically covered within the Marine Insurance Policy as per policy condition and letter dated 25.8.1986 issued by the opposite party No. 3 the principal claim of the complainant /petitioner cannot be shifted to the opposite party Nos. 1 and 2 but the liability of other compensation has to be borne by the opposite party Nos. 1 and 2.

ACCORDINGLY we award that the opposite party No. 3 will pay the sum of Rs. 95,994.70 together with interest at the rate of 18% effective from October, 1990 until payment. The sum of Rs. 40,200/- the dues of the complainant to the opposite party Nos. 1 and 2 is setoff to the extent of Rs. 10,000/-claimed by the complainant/petitioner towards harassment, torture and mental agony suffered by the complainant/petitioner forgetting the consignment rain water soaked for their negligence leaving a balance of Rs. 30200 in their credit.

THE opposite party No. 3 will pay the sum of Rs. 95,994.70 together with interest @ 18% p.a. from October, 1990 as aforesaid within 30 days from the date of communication of this order. THE parties shall bear their respective costs. Complaint allowed.