CADCHEM LABORATORIES LTD. vs New India Assurance Company Ltd.

M/s. Cadchem Laboratories Limited deals in the manufacture of Bulk Drugs and Formulation of various kinds. The registered office of the Company is situated at 1060, Industrial Area, Phase-II, Chandigarh. Mr. Navneet Gupta is the Managing Director of the Company-M/s. Cadchem Laboratories Limited. The Company is registered with the Registrar of the Companies at Punjab, Himachal Pradesh and Chandigarh.

THIS complaint has been filed by the complainant-Company M/s. Cadchem Laboratories Limited under Section 12 of the Consumer Protection Act, 1986 (for short hereinafter referred to as the C.P. Act) claiming compensation for business loss, for mental harassment and agony to the tune of Rs. 2,50,000/-. Apart from the compensation as aforesaid the complainant has prayed for the payment of the principal amount of 14,794.69 U.S. Dollars converted @ Rs. 43.50 per Dollar to Rs. 6,47,000/-. The Company has also prayed for award of interest on the amount as aforesaid @ 18%. The interest up to the date of filing of the complaint has been worked out at Rs. 1,26,298/-. The complainant has also prayed for the payment of the survey fee of Rs. 2,900/-. The total amount claimed on all accounts is Rs. 9,25,297/-. The claim has been laid against the opposite parties - New India Assurance Company Limited, Regional Office, SCO No. 36-37, Sector 17-A; The New India Assurance Company Ltd., Head Office, New India Assurance Building, 87, Mahatama Gandhi Marg, Fort, Mumbai, and M/s. The People''s Insurance Co. of China, Jiangsu Branch, 88, Hanzhoung Road, Nanjing, China impleaded through its Claim Settling Agents, opposite party Nos. 1 and 2 i.e. the New India Assurance Company, 87, Mahatama Gandhi Marg, Fort, Mumbai. The complaint has been filed on the averments which may briefly be narrated as under : The complainant-Company had placed an order for supply of material known as L-Base 99% MIN 1300 kgs. with M/s. Sinochem Jiangsu Import and Export Corporation, 50, Zhonghua Road, Nanjing, China through M/s. Shivam Phara Chem 3/A, Crystal, 19 Juhu Road, Santacruz (West) Bombay. The consignment of the said material was to be imported and M/s. N.T. Company Clearing and Forwarding Pvt. Ltd. are Shipping and Transport Agents besides being Clearing, Freight Forwarding Agents, 4th Floor, Mustafa Building, Sir Pherozeshah Mehta Road, Mumbai. Consequently, the consignment consisting of 52 drums of the said material L-BASE were shipped by the aforesaid Corporation - M/s. Sinochem Jiangsu Import and Export Corporation, ex s.s. Zealand Motivator IGM 762 of 12.3.1998. The Bill of Lading is numbered GDIL-9801022 dated 25.1.1998. M/s. Sinochem Jiangsu Import and Export Corporation, China got the said consignment insured from the opposite party No. 3 which issued a policy called Ocean Marine Cargo Policy bearing No. N.K.-08/98010519 dated 16.1.1998 (copy Annexure R-2). The contention of the complainant is that it was specifically mentioned in the body of the policy aforesaid that the opposite party - The New India Assurance Company Ltd., 87, Mahatama Gandhi Marg, P.B. No. 969, Bombay (India) were the agents of the Company and in the event of loss or damage which may result in a claim under the policy aforesaid, notice be given to the aforesaid agents - The New India Assurance Company Limited.

M/s. N.T. Company Clearing and Forwarding Pvt. Ltd. took the delivery of the consignment from the customers after the consignment had arrived in the Container No. MAEU 2549478 IGM 762 which was certified by the Container Corporation of India Ltd. vide Certificate dated 31.3.1998. The said consignment was destuffed on 21.3.1998 at C.F.Z. Mulund, Mumbai. The copy of the certificate issued by the Container Corporation of India Limited has been placed on record as Annexure A-3. Exhibit A-4 is the copy of the letter dated 1.4.1998 issued by the Clearing and Forwarding Agent. It has been averred that as per the certificate of the Container Corporation of India Ltd. and letter dated 1.4.1998 aforesaid (copies Annexures P-3 and P-4), the consignment was received in sound condition. The Clearing and Forwarding Agent booked the consignment aforesaid from Mumbai to Lohgarh by road. The factory site of the complainant Company is situated in Lohgarh. M/s. Bombay Okare Carrier has its office in 4, Transport Area, Chandigarh and the same was the carrier who was asked to take the booked consignment from Mumbai by road to Lohgarh. The consignment reached at the office of the carrier at Chandigarh, then, intimation was sent to the complainant to send its representative for inspection of the goods consigned. The representative of the complainant Company inspected the aforesaid consignment and found that seals of some drums were tampered. The representative of the complainant Company got one drum opened and found that inner polythene was cut and the material was short. Accordingly, the complainant Company declined to take the delivery of the consignment and the consignment remained with the Transporter.

THE complainant immediately sent intimation of loss to the Regional Office of the Company situated in Sector 17, Chandigarh with its copy to Head Office in Mumbai. Another copy was sent to the suppliers M/s. Sinochem Jiangsu Import and Export Corporation, China. THE opposite party Nos. 1 and 2 i.e. THE New India Assurance Company Limited both Regional Office at Chandigarh and Head Office at Mumbai were requested vide letter (copy Annexure A-5) to appoint Surveyor to assess the exact loss in the consignment aforesaid. It was contended that no delivery of the consignment in question was effected at all at factory side of the complainant Company where the consignment was not received at all and the same had been taken by the Carrier to Chandigarh. THE complainant placed on record copy of Form ''N'' as Annexure A-6, Bill of Entry as Annexure P-7, Receipt issued by the Transporter against gate pass as Annexure A-8, copy of Bill No. 9253 dated 30.3.1998 as Annexure A-9 and copy of G.R. as Annexure A-10 with the complaint. A copy of the shortage certificate issued by the Transporter has also been placed on record as Annexure A-11. The Insurance Company and their agents, i.e. the opposite parties asked the complainant to supply the documents. The complainant Company sent the relevant documents including photo-copies of registered A.D. Receipts, Landing Remarks, Analysis Certificate, Certificate of Origin, Copy of Insurance Policy, Copy of Invoice, Copy of Bill of Lading, Copy of G.R., Shortage Certificate, Bill of Entry, Delivery Challan, Copy of L.C. and Copy of Indent were duly sent to the Regional Office of the New India Assurance Company at Chandigarh who was the Claim Settling Agent of opposite party No. 3. The copy of letter dated 16.4.1998 aforesaid has also been placed on record as Annexure A-12.

RAJAN Sharda - Vinay Mittal, Chartered Accountants, Surveyors and Loss Assessors were appointed to assess the loss. Their survey report regarding the assessment of loss was prepared by the aforesaid RAJAN Sharda - Vinay Mittal, Chartered Accountants/Surveyors (vide copy Annexure A-13). The loss was assessed by the Surveyor at Rs. 5,58,009/-. The rate of conversion of dollar at the relevant time was Rs. 39.75 per dollar. The Surveyor found the value of the loss suffered by the complainant in terms of U.S. dollars 1347.90 for the quantity found short i.e. 302.2 kg. The complainant Company has claimed the loss assessed in dollars as 13447.90 U.S. Dollars as the value of the goods lost. The claim was lodged with the New India Assurance Company Ltd. on 16.6.1998 vide copy Annexure A-15. The complainant Company also paid the fees of the Surveyor to the tune of Rs. 2,900/- vide letter dated 25.5.1998 (copy Annexure A-18). On 22.7.1998 a letter was sent to the opposite parties complaining about the delay in the settlement of claim of the complainant Company vide copy Annexure A-19. On 26.5.1998 the Regional Office of the New India Assurance Company Ltd. at Chandigarh wrote to MCTD, Head Office, Mumbai mentioning that they were Claim Settling Agent and the claim was reported by the Chandigarh Office to the Head Office after a lapse of two months. The report of the Surveyor was also attached with the communication. Thereafter, reminders were also sent to the opposite parties. The complainant Company received reply (copy Annexure A-21) wherein it was mentioned that the matter had been referred to the Overseas Insurers and after hearing from them, the opposite parties will revert back to the complainant. It was also mentioned that according to the Exchange Control Regulations, claim on policies issued outside India are payable on receipt of remittance from the Insurers abroad, if liability is accepted. The opposite party Nos. 1 and 2 in the capacity as Settling Agents for opposite party No. 3 did not settle the claim of the complainant Company and negligent in dealing the matter by referring the same to opposite party No. 3 located in China. Ultimately, the opposite party No. 3 i.e. M/s. The People''s Insurance Company of China wrote a letter bearing No. 181832 to opposite party No. 2 that reply from Inland Carrier was required along with report, if any, filed with the police for alleged pilferage along with the final investigation report in this communication (copy Annexure A-24), along with letter of opposite party No. 2 dated 24.4.1998 (copy Annexure A-25). This was replied by the complainant vide letter (copy Annexure A-24/A). The complainant had informed the opposite parties vide their letter dated 22.9.1998 that no report had been lodged with the police because the material was pilferaged and found short at Chandigarh before reaching the factory site of the complainant Company. The claim of the complainant Company was allegedly declined only on the ground that no report had been lodged about the pilferage in the goods consigned with the police concerned. Feeling aggrieved against the repudiation of the claim of the complainant Company, this complaint was filed under the C.P. Act for the reliefs which have already been narrated in the earlier part of our judgment. Notices were issued to the opposite parties. Opposite party Nos. 1 and 2 filed their joint written statement. They took the preliminary objection that this Commission had no jurisdiction to try the claim as there was no privity of contract between the complainant and the opposite party Nos. 1 and 2. The policy of insurance was obtained by the complainant from the opposite party No. 3 in China. The opposite party Nos. 1 and 2 were only Claim Settling Agents of opposite party No. 3 and as a Settling Agents, the opposite party Nos. 1 and 2 are to process, handle insurance claim i.e. collecting documents on behalf of opposite parties. The decision to accept or denied liability under the insurance is totally that of opposite party No. 3. The opposite party Nos. 1 and 2 act like a Post Office only and admissibility of the claim under the terms and conditions of policy is to be seen by opposite party No. 3. The opposite party Nos. 1 and 2 collected all the documents and forwarded the same to opposite party No. 3 who has already rejected/repudiated the claim of the complainant. It was also contended that being Settling Agents, the opposite party Nos. 1 and 2 are not even in a position to defend any case/law suits on behalf of opposite party No. 3. Under the law, the opposite party No. 3 is required to be served and without effecting service, the complaint case cannot be proceeded further. It was also contended that the opposite parties 1 and 2 have no authority to accept or reject the liability and, therefore, the complainant is not the consumer qua the opposite party Nos. 1 and 2 under the provisions of the C.P. Act. The other preliminary objection raised was about the complaint being bad for non-joinder of necessary parties. It was alleged that the complainant has contended that the goods were damaged due to the negligence of the Transporter - M/s. Bombay Okare Carrier who were necessary parties to the complaint case for the just and proper decision in the case as rights and liabilities of the parties can be decided after negligence on the part of the Transporter is established. The complaint case is, therefore, bad for non-joinder of the aforesaid Carrier - M/s. Bombay Okare Carrier. It was further alleged that there was no defect, deficiency or negligence in rendering service to the complainant Company in their capacity as Settling Agents. The next preliminary objection raised is about the contract of insurance being void ab-initio as policy of insurance was obtained outside India without following the law of the land. No person, firm, Company residing or located in India is permitted to take Marine Insurance Cover with Insurance Companies in foreign countries without prior permission of Reserve Bank of India. Apart from permission from Reserve Bank of India, permission from Government of India under General Insurance Business (Nationalisation) Act, 1972 is required to be taken in such cases. On merit of the case, the opposite party Nos. 1 and 2 denied any liability on their part to pay the amount of compensation or the value of the shortage in the consignment to the complainant. It was pointed out that the Surveyor has assessed the loss subject to the terms and conditions of the policy. The amount is payable only if the liability is accepted by the insurer i.e. the opposite party No. 3 and even in that eventuality the payment is to be made in Indian currency.

THE opposite party No. 3 filed a separate reply. Three preliminary objections were raised to the complaint case. THE first preliminary objection is that the complaint is misconceived and barred under Section 86 of the Code of Civil Procedure because the opposite party No. 3 is State owned Company functioning under all pervasive control of Chinese Government. In the absence of sanction of the Central Government, the present complaint is not maintainable. THE second preliminary objection raised is that it is M/s. Sinochem Jiangsu Import and Export Corporation aforesaid which is insured under the insurance cover and, therefore, only they can bring any action in respect of the insurance policy. THE present complainant i.e. M/s. Cadchem Laboratories Limited has no locus standi to file the instant complaint. Lastly, it was urged that the present complaint was bad for non-joinder of Carrier, which was a necessary party in the present case.

ON merit, the complainant was put to strict proof regarding the averments made in the complaint case regarding the pilferage of the drums and shortage in the goods consigned. It was also contended that the goods in question were destined for village Lohgarh, Distt. Patiala, Punjab and there was no need for the Transporter to take the goods to Chandigarh first. It was further contended, if the goods were brought to Chandigarh first then transportation of goods to Chandigarh is not in the normal course of transit which obviously is not covered under the Insurance Policy. If, however, the goods had actually reached village Lohgarh, District Patiala, Punjab in the first instance, where the shortage was discovered then the complainant is making a false averment that the shortage was discovered at Chandigarh, only with a view to bring the dispute within the jurisdiction of this Commission. Regarding the opposite party Nos. 1 and 2, it was alleged that the opposite party No. 3 had appointed the New India Assurance Company Limited, 87, Mahatama Gandhi Marg, Fort, Mumbai and Regional Office of the New India Assurance Company, Sector 17, Chandigarh were never appointed as the agents. It is only with a view to bring the present complaint within the jurisdiction of this Commission that the complainant has made the above false averment. Apart from it, Form ''N'' (Annexure A/9) and GR (Annexure A/10) contained false and misleading information inasmuch as these documents show Chandigarh as the place of destination of the goods. A perusal of the Insurance Policy (Annexure A/2) makes it clear that the place of destination was village Lohgarh, Distt. Patiala, Punjab. It was alleged that above documents have been procured by the complainant with the connivance of the Carrier only to fasten an unjust liability on the opposite parties. It was further mentioned that the Surveyor''s report had made it clear that the drums of the goods consigned were taken to village Lohgarh exclusively for the purpose of weighment. It was submitted that if there was any doubt regarding pilferage from the drums, they could have been weighed at Chandigarh and there was no need to send the drums to Lohgarh to be weighed. The complainant has, therefore, not come to this Commission with clean hands and concealed vital fact and made false averments in the complaint with a view to extort money from the opposite parties who are not liable to pay any claim to the Company. The complainant has also not reported the alleged theft/pilferage to the police and because of this, the claim of the complainant cannot be entertained. The opposite party Nos. 1 and 2 filed amended written statement and materially and substantially took the same defence as was taken in the first written statement. The opposite party No. 3 also filed an amended written statement seeking amendment of the fact that the policy of insurance was obtained by M/s. Sinochem Jiangsu Import and Export Corporation, China and not by complainant from respondent No. 3 in China. ON behalf of the complainant Company, affidavit of Shri Navneet Gupta, Managing Director of the Company in support of the averments made in the complaint. The opposite party Nos. 1 and 2 filed affidavit of Shri B.L. Jagwan, Legal Officer of M/s. The New India Assurance Co. Ltd., Regional Office, S.C.O. No. 36-37, Sector 17-A, Chandigarh. The opposite party No. 3 filed affidavit of Mrs. Liu Zhenghuan, General Manager, The People''s Insurance Company of China, Jiangsu Branch, China. After hearing the arguments of learned Counsel Mr. Deepak Arora, Advocate for the complainant Company, Mr. R.K. Bashamboo, Advocate, Counsel for opposite party Nos. 1 and 2 and Mr. P.S. Bajwa, Advocate, Counsel for opposite party No. 3 and going through the record of the case, the points which crop up for decision of the case, are mainly as under :

The main contention of the opposite parties raised by way of preliminary objections is that the complaint case has been filed by a person who had no privity of contract with the Insurance Company - opposite party No. 3. It has been contended that the insured under the policy issued by opposite party No. 3 is M/s. Sinochem Jiangsu Import and Export Corporation, 50, Zhonghua Road, Nanjing, China. The complainant - M/s. Cadchem Laboratories Limited, Chandigarh was not a party to the said Insurance Policy and consequently, the complainant - M/s. Cadchem Laboratories Limited is not a consumer under the C.P. Act and he cannot legally file and maintain the complaint case under the C.P. Act. The other preliminary objection raised by the opposite party No. 3 - M/s. The People''s Insurance Co. of China, Jiangsu Branch, 88, Hanzhoung Road, China is that the Insurance Company is State owned and as such the complaint filed without obtaining the prior sanction of the Central Government is not maintainable under Section 86 of the Code of Civil Procedure. The other preliminary objection raised is about the complaint being bad for non-joinder of the necessary party i.e. the Carrier of the goods consigned from Mumbai to the place of destination in India i.e. Lohgarh, Distt. Patiala, Punjab, where the factory of the complainant is situated. The goods Carrier by road in India is M/s. Bombay Okare carrier. This objection has been raised on the ground that the Carrier aforesaid is the best person to tell as to how the goods consigned were carried after the same were unloaded at Mumbai in India to the place of destination and where the pilferage in the goods consigned took place. Apart from these preliminary objections, the opposite party Nos. 1 and 2 have taken a plea that they are only Claim Settling Agents on behalf of opposite party No. 3 with no specific right of taking a decision regarding the acceptance or rejection of the claim preferred under the Insurance Policy issued by the opposite party No. 3 - Insurance Company. The opposite party Nos. 1 and 2 acted only as a Post Office on behalf of the opposite party No. 3 in receiving the claim case from the concerned party and after collecting the relevant material to forward the same to the Insurance Company - opposite party No. 3 which alone had an exclusive authority to take a decision regarding the claim of the party and to accept or reject. It has also been urged that the contract of insurance is void ab-initio as the policy of insurance was obtained outside India without prior permission of the Reserve Bank of India and the permission of the Government of India under the General Insurance Business (Nationalisation) Act, 1972.

WE deem it appropriate to deal with the preliminary objections raised by the opposite parties regarding the non-maintainability of the complaint case. So far as the first preliminary objection regarding the complainant being not an insured under the policy of insurance and having no privity of contract with opposite party No. 3 and consequently not being a consumer under the C.P. Act, it is abundantly clear from the pleadings of the facts that the goods which were consigned from China to be taken to destination place in India on the order of the complainant Company and which were supplied by M/s. Sinochem Jiangsu Import and Export Corporation, China were got insured under the insurance policy involved in this case issued by the opposite party No. 3, by the supplier i.e. M/s. Sinochem Jiangsu Import and Export Corporation. The complainant Company in not evidently the insured under the policy issued by the opposite party No. 3. In other words, there is no privity of contract under the Insurance Policy in question between the complainant Company on one hand and the Insurance Company-opposite party No. 3 on the other hand. It is significant to note that supplier i.e. M/s. Sinochem Jiangsu Import and Export Corporation located in Nanjing, China was not approached by the complainant Company to take up the matter regarding the pilferage in the consignment of goods supplied by it during transit through allegedly in India and consequently the Insured i.e. M/s. Sinochem Jiangsu Import and Export Corporation did not initiate the matter under the policy aforesaid with the Insurance Company - opposite party No. 3. The supplier Company M/s. Sinochem Jiangsu Import and Export Corporation has not been impleaded even as a proforma opposite party in the complaint case. At best, the complainant Company is the beneficiary of the goods consigned and insured under the policy issued by opposite party No. 3 but it is having no direct contract of privity with opposite party No. 3 regarding insurance of the consignment of goods aforesaid. The General Manager of opposite party No. 3 - The People''s Insurance Company of China, Mrs. Liu Zhenghuan has deposed in Para 2 of her affidavit under the heading Preliminary Objections as under : "2. That in any case it is M/s. Sinochem Jiangsu Import and Export Corp., 50, Zhonghua Road, Nanjing, China, which is the insured under the insurance cover and, therefore, only they can bring any action in respect of the insurance policy. The present complainant has no locus standi to file the instant complaint."

The same averment was repeated in Para 4 of the affidavit under the caption "On Merits". Subsequently in Para 15 of the affidavit of Mrs. Liu Zhenghuan, it was deposed as under : "15. In reply to para 15 of the complaint, it is submitted that the complainant cannot raise any claim against opposite party No. 3 because it is M/s. Sinochem Jiangsu Import and Export Corp., 50, Zhonghua Road, Nanjing, China who are the insurer under the insurance policy and they alone have the locus standi to file any claim."

It will appear from the affidavit of Mr. Navneet Gupta, the Managing Director of the complainant Company that the Insurance Policy was taken by M/s. Sinochem Jiangsu Import and Export Corporation, China. In para 4 of his affidavit, it was averred as under : "4. That the above consignment, before being shipped by M/s. Sinochem Jiangsu Import and Export Corporation, China, got the insurance effect from the respondent/O.P. No. 3, policy No. N.K-08/98010519 dated 16.1.1998."

A careful perusal of the affidavit of Mr. Navneet Gupta will go to show that the complainant was not the party to the Insurance Policy and there was no privity of contract under the policy of insurance between the complainant Company and the Insurance Company - opposite party No. 3. It is only after intimation that it sent a copy to the opposite party Nos. 1 and 2 with a copy to the supplier M/s. Sinochem Jiangsu Import and Export Corporation, China etc. and made a request to the opposite party Nos. 1 and 2 to appoint Surveyor to assess the exact loss. This averment was to be found in Para 9 of the affidavit. In view of these averments, there is no dispute regarding the fact that there was no privity of contract between the complainant Company M/s. Cadchem Laboratories Limited and opposite party No. 3 - Insurance Company. Consequently the complainant Company had not hired the services of the Insurance Company - opposite party No. 3 in respect of the consignment of goods shipped from China to India and to the place of destination in India and as such the complainant cannot be held to be a consumer under the C.P. Act and the opposite party No. 3 cannot be held to be the Insurance Company whose services had been hired and that it rendered service to the complainant Company which service is being alleged to be deficient in this complaint case. So far as preliminary objection regarding the complaint being not maintainable under Section 86 of the Code of Civil Procedure on the ground that the opposite party No. 3 - The People''s Insurance Company of China, Jiangsu Branch, 88, Hanzhoung Road, Nanjing, China is strictly Government owned Insurance Company, it may be useful to (1) of the Code of Civil Procedure provides for suits against foreign Rulers, Ambassadors and Envoys and runs as under : "86. Suits against foreign Rulers, Ambassadors and Envoys- (1) No foreign State may be sued in any Court otherwise competent to try the suit except with consent of the Central Government certified in writing by a Secretary to that Government : Provided that a person may, as a tenant of immovable property, sue without such consent as aforesaid (a foreign State) from whom he holds or claims to hold the property."

Sub-section (2) of Section 86 of the C.P.C. deals with various situations in which consent referred to in Sub-section (1) of Section 86, C.P.C. may be given. It lays down, inter alia, as under : "(2) Such consent may be given with respect to a specified suit or to several specified suits or with respect to all suits of any specified class or classes, and may specify, in the case of any suit or class of suits, the Court in which (the foreign State) may be sued, but it shall to be given, unless it appears to the Central Government that (the foreign State). (a) has instituted a suit in the Court against the person desiring to sue (it), or (b) (itself) or another, trades within the local limits of the jurisdiction of the Court, or (c) is in possession of immovable property situate within those limits and is to be sued with reference to such property or for money charged thereon, or has expressly or impliedly waived the privilege accorded to (it) by this section."

So far as the factum of opposite party No. 3 being Government owned Insurance Company is concerned, Mrs. Liu Zhenghuan, General Manager of opposite party No. 3 - Insurance Company has in Para 1 deposed about it as under : "1. That the present complaint is misconceived and barred under Section 86 of the Code of Civil Procedure because opposite party No. 3 is a State owned Company functioning under the all-pervasive control of the Chinese Govt., which fact is clear from Annexures R-3/1 and R-3/2 already attached with reply. In the absence of sanction of the Central Government, the present complaint does not lie."

A perusal of Annexure R-3/1 will go to show that The People''s Insurance Company of China is a State owned Insurance Company transacting various classes of domestic and foreign insurance business in the People''s Republic of China.

SINCE its establishment in 1949, the People''s Insurance Company of China has enjoyed a history of 35 years. The People''s Insurance Company of China commits itself to the developing of China''s insurance industry, building-up of a socialist economic compensation system through insurance, stabilizing of the enterprises operation and the people''s life and accumulating of funds for construction as well as to the promoting developing of the friendly co-operation with insurance circles in other countries.

The People''s Insurance Company of China takes upon itself the duty to provide various types of reliable insurance protections to its Chinese and foreign clients.

ANNEXURE R-3/2 shows that the People''s Insurance Company of China is a State owned Company. The complainant has not controverted this averment of the opposite party No. 3. The material which has been placed on record of the complaint case leads no room for doubt to hold that The People''s Insurance Company of China is a State owned Company. In view of this established fact that opposite party No. 3 - The People''s Insurance Company of China is a State owned Company, the provisions of Section 86 of the Code of Civil Procedure will be attracted. Section 86, C.P.C. came up for consideration before the Hon''ble Supreme Court in the case of Veb Deutfracht Seereederei Rostock (D.S.R. Lines) a department of German Democratic Republic v. New Central Jute Mills Co. Ltd. & Anr., JT 1993 (6) SC 479. In Para 7 of the judgment - Veb Deutfracht Seereederei Rostock (supra), an earlier case decided by the Supreme Court was referred to as under : "7. This Court in the case of Mirza Ali Akbar Kashani v. United Arab Republic, (1966) 1 SCR 319, pointed out in respect of Section 86 : ''......Section 86(1) proceeds to prescribe a limited liability against foreign States. The limitation on the liability of foreign States to be sued is two-fold. The first limitation is that such a suit cannot be instituted except with the consent of the Central Government certified in writing by a Secretary to that Government. This requirement shows the anxiety of the Legislature to save foreign States from frivolous or unjustified claims. The second limitation is that the Central Government shall not give consent unless it appears to the Central Government that the case falls under one or the other of Clauses (a) to (d) of Section 86(2)''."

Dealing with the facts of the case in hand, the Hon''ble Supreme Court observed in Para 11, as under : "11. In the present case, the appellant had produced the Constitution of the German Democratic Republic, Article 12 whereof has been reproduced above, which provides that larger industrial enterprises, Banks, Insurance Companies, nationally-owned farms, means of transport of the railways, ocean shipping and civil aviation post and telecommunication installations, are nationally-owned property, private ownership thereof is inadmissible. In view of the aforesaid Article 12 of the Constitution and the certificate granted by the Counsel General of the German Democratic Republic, the appellant shall be deemed to be a department of the Government of German Democratic Republic."

In Para 12, it was observed as under : "12. Sub-section (2) of Section 86 of the Code says that such consent shall not be given unless it appears to the Central Government that the suit in question has been filed under the conditions mentioned in Clauses (a) to (d) of Sub-section (2) of Section 86. Clause (b) of Sub-section (2) provides that consent shall be given, in respect of a suit, which has been filed against a foreign State, if such foreign State ''by itself or another, trades within the local limits of the jurisdiction of the Court''. When Sub-section (2) provides that such consent shall be given by the Central Government in respect of cases covered by Clause (b) of Sub-section (2), then a person who is to sue in any Court of competent jurisdiction, against any such foreign State or any Company or Corporation, which can be held to be a foreign State in respect of any breach of contract, is entitled to apply for consent of the Central Government and the Central Government is expected to consider the said request taking into consideration the facts and circumstances of that particular case. While considering the question of grant of refusal of such consent, the Central Government is expected to examine that question objectively. Once the Central Government is satisfied that a cause of action has accrued to the applicant against any foreign Company or Corporation, which shall be deemed to be a foreign State, such consent should be given. The immunity and protection extended to the foreign State on the basis of International Law should not be stretched to a limit, so that a foreign Company and Corporation, trading within the local limits of the jurisdiction of the Court concerned, may take a plea of Section 86, although prima facie it appears that such Company or Corporation is liable to be sued for any act or omission on their part or for any breach of the terms of the contract entered on their behalf. It is neither the purpose nor the scope of Section 86 to protect such foreign traders, who have committed breach of the terms of the contract, causing loss and injury to the plaintiff. But, if it appears to the Central Government that, any attempt on the part of the plaintiff, to sue a foreign State, including any Company or Corporation, is just to harass or to drag them in a frivolous litigation then certainly the Central Government shall be justified in rejecting any such application for consent, because such motivated action on the part of the plaintiff, may strain the relations of this country with the foreign State."

In Para 13, Hon''ble Supreme Court held as under : "13. In the present case, the appellant having been held to be a foreign State within the meaning of Section 86 and the plaintiff-respondent not having obtained the consent of the Central Government, as required by Section 86, the suit filed on its behalf was not rightly entertained by the Trial Court. The question whether a suit should be entertained, cannot be deferred, till the stage of the final disposal of the suit, because that will serve neither the interest of the plaintiff nor of the defendant. The objection of Section 86 is to save foreign States from being harassed by defending suits in which there are hardly any merit. If the foreign State is required to file written statement and to contest the said suit and only at the stage of final disposal, a verdict is given whether in the facts and circumstances of the particular case, such foreign State is entitled to the protection of Section 86 of the Code, the very object and purpose of Section 86 shall be frustrated. The bar of Section 86 can be taken at the earliest opportunity and the Court concerned is expected to examine the same."

In view of the fact that the opposite party No. 3 is a State owned Insurance Company and the same is to be held to be a foreign State within the meaning of Section 86 of the C.P.C., the prior sanction of the Central Government to file the complaint case was required. It is an essential condition to obtain prior sanction of the Central Government before filing the complaint case.

WE are of the considered opinion that this complaint case cannot be held to be maintainable in the absence of the due sanction of the Central Government. WE may further point out that Section 3 of the C.P. Act clearly provides that the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. Provisions of Section 86 of the C.P.C. would normally be attracted even in cases filed under the C.P. Act. Since, we are of the considered opinion that the present complaint case is legally not maintainable in the absence of a sanction under Section 86 of the Code of Civil Procedure of the Central Government, it will not be appropriate for us to enter into other points of controversy raised in this case. WE are also of the considered opinion that this case involves intricate questions of facts and law and these cannot be appropriately dealt with in exercise of summary jurisdiction under the C.P. Act. The case can appropriately be considered by a Civil Court of competent jurisdiction. Resultantly, we deem it appropriate to leave the complainant Company to initiate appropriate action in a Court of competent jurisdiction in accordance with law keeping into consideration the bar placed under Section 86 of the Code of Civil Procedure. So far as the present complaint is concerned, the same is liable to be dismissed as being not maintainable and barred under Section 86 of the C.P.C. The complaint is dismissed with no orders as to costs. Copies of this judgment be supplied to the parties free of charges. Complaint dismissed.