Fiorio Coloria vs ORIENTAL INSURANCE COMPANY

ACCORDING to the allegations in the complaint, on 13th January, 1988 the Complainant which is a Company incorporated and registered in accordance with the Italian Laws and is having its principal place of business at Italia, Italy, placed anorderby telex through M/s. Bizinco (an agent of Opposite Party No. 2 -M/s. San Chem Enterprises, Ahmedabad) for purchase of 5000 kg. of 6 Nitro/ 1 Diazo/2 Naphtol/4 Sulphonic Acid (hereinafter called the chemical) with the Opposite Party No. 2 - Manufacturer of the chemical. As per the agreement, Opposite Party No. 2 supplied the consignment of the aforesaid chemical to the Complainant on CIF basis. The Complainant was to open a Letter of Credit in favour of Opposite Party No. 2 which was to be negotiated by Opposite Party No. 2 on presenting the shipping documents/proof of despatch of the consignment to their bankers. As per agreement the Complainant opened a Letter of Credit dated 28th January, 1988 for US $ 40,000/ - towards the purchase price of the consignment. The shipment of the consignment was to be made latest by March 31st, 1988. The Complainant through their Banker M/s. Cassa Di Risparmio Delle Province Lombarde appointed Central Bank of India, Lai Darwaja Branch, Ahmedabad as their corresponding Bank in India. Opposite Party No. 2 had the consignment insured with Opposite Party No. 1 - Oriental Insurance Company covering all risks. The consignment was insured for US $ 44,206.80. On 16th February, 1988, Opposite Party No. 2 sent Invoice No. EXP/37/ 87/88 to the Complainant. As per the Insurance Policy the value of the consignment which included the freight, packing and all such other charges was US $ 44,206.80. The said amount as per the then prevalent rate in Indian rupees worked out to Rs. 5,74,690/ - for which the total amount towards premium and other charges were paid by the Opposite Party No. 2 to Opposite Party No. 1. The consignment was packed and shipped in 140 bags on 23rd February, 1988 and loaded on S.S. Medikpas Sea (the name of the vessel) from Bombay to Genova (the port of destination). The expected date of arrival of the consignment/ vessel in Genova was 28th March, 1988. During the voyage the entire consignment was completely destroyed due to fire. The Complainant on 18th March, 1988 received a notice of destruction of goods from Italia Navigazxione, Genova (Port Authorities of Genova). A survey of damage was carried out in Djibouti by M/s. Gellety Hankey & Ciesa. Since the vessel belonged to M/s. Gondrand spa, the Complainant sent the relevant documents to the said owner of the vessel for lodging a claim with the Insurance Company. In the meantime Opposite Party No. 2 on presenting the shipping documents had got the Letter of Credit encashed. The Complainants account was debited for a sum of US $ 40,188 on 9th March, 1988. Videletter dated 5th April, 1988, M/s. Gondrand spa sent all relevant documents to M/s. Administrazione Mackenzie, the survey and claims settling agents of Opposite Party No. 1 to forward the documents to the Insurance Company to ensure that the Complainant was reimbursed for the damage suffered. The said Survey Agents of Opposite Party No. 1 confirmed the loss and informed the Complainant that its claim was pending with the Insurance Company. On 13th April, 1998 M/s. Administrazions Machenzie sent a standard form letter to M/s. Gondrand spa informing that their claim was being dealt with and confirmed that the documents had been sent to the Insurance Company. The Complainant received a letter dated 26th April, 1988 from M/s. Gondrand spa confirming that their claim was being dealt with through the regular channels. In spite of various reminders to the Agents of Opposite Party No. 1, the Complainant did not receive any favourable reply. There was some correspondence between the different parties named above but Opposite Party No. 1 turned a deaf ear to the repeated reminders. On 24th April, 1991 the lawyers of the Complainant brought to the notice of Opposite Party No. 2 the breach of the sale contract because it was Opposite Party No. 2 who had got the consignment insured and had not taken any steps to get the Complainant compensated by Opposite Party No. 1. As Opposite Party No. 2 was named as the beneficiaries in the policy, the Insurance Company took the stand that it did not have any direct relationship with the Complainant. A demand for Rs. US $ 40,188 alongwith bank interest was made by the Complainant against Opposite Party No. 2. Opposite Party No. 2 sent a reply to the effect that the insurance policies were transferable by endorsement and the bank should have endorsed the policy to the Complainant. However the Complainant was advised that the insurance contract did not provide for any endorsement of the policy. Thereafter, there was a meeting between the lawyers of the parties. The Complainants lawyer also met Manager of the Insurance Company who after discussing the case in detail and after going through the records accepted the fact that money/ compensation was payable by the Insurance Company to the Complainant subject to furnishing of a certificate from the Bank of the Opposite Party No. 2 confirming that payment had been received by it from the Complainant for the consignment in foreign exchange by encashment of the Complainants Letter of Credit. The Complainants lawyer was also assured that once proof of payment in foreign exchange was furnished to the Insurance Company they would advise the Agents in London to pay the claim directly to the Complainant. On 11th September, 1991, Opposite Party No. 2 provided their requisite bank certificate to the effect that it had received payment of their invoice amount in foreign exchange. A declaration entitling the Complainant to claim damages from the Insurance Company was also submitted to the Opposite Party No. 1. In spite of various meetings by the lawyer of the Complainant with the different officers of the Insurance Company, the amount was not paid to the Complainant. Ultimately the Complainant instructed its lawyer to serve a notice to the Insurance Company. In April, 1992 the Complainant, to its dismay, received a cheque from the Agents of the Opposite Party No. 1 for a sum of US $ 21,955.85 alleged to be on the basis of foreign exchange rate which was prevailing in February, 1992 equivalent to Rs. 5,74,690/ -. No interest was paid for the delayed payment. The payment was received by the Complainant under protest and it was made clear to the Agents of the Insurance Company that it was being received without prejudice to their right to claim balance amount alongwith interest and other charges. The Complainants lawyer served a notice upon the Opposite Party No. 1 and called upon it to pay US $ 58,626.38 towards compensation for loss which the Complainant has suffered. In reply, Insurance Companys lawyer wrote back denying the liability of the Insurance Company to pay the amount claimed or a part thereof to the complainant. The reason given in the reply justifying the payment of US $21,955.85 was that the said amount was equivalent to Rs. 5,74,690/ - for which value the consignment had been insured. It was denied by the Insurance Company that the consignment had been insured for US $ 44,206.88.

ACCORDING to the Complainant the contract was on CIF basis and in the Insurance Policy it is clearly stated that the consignment was insured for a sum equivalent to US $ 44,206.90. The purpose for getting the goods insured was to cover the risk of loss with the consignee i.e. the Complainant possibly suffer by loss of the goods. The Insurance Company has been negligent and has committed a default in regard to the settlement of the claim of the Complainant. It has also caused wilful delay for which no explanation has been given thereby amounting to deficiency in service. The Complainant is entitled to full reimbursement of its loss and compensation on account of delayed payment. The Complainant claims following amount : (a) Balance of the assured amount US $ 18,232.12 (b) Interest @ 18% per annum on US $ 40,188 from April 1988 to March 30, 1992 US $ 28,935.36 (c) Interest on US $ 18232.12 from April 1, 1992 to October 31,1992 @ 18% per annum or 1.5% per month US$ 1,914.37 (d) Towards legal expenses US$ 5,000.00 Total : US$ 54,081.85

Hence the complaint for the recovery of the above amount. Opposite Party No. 2, M/s. San Chem Enterprises did not enter appearance. The complaint was contested only by Opposite Party No. 1 i.e. the Oriental Insurance Company. It was pleaded in the counter that the Complainant has received US$ 21,955.85 vide cheque dated 23rd March, 1992 towards the full and final settlement of the total sum insured i.e. Rs. 5,74,690.00 under the policy and thereafter preferred legal notice dated 12.8.1992 followed by the complaint which was filed on 11 -11 -1992 and thus the complaint is an abuse of the process of law. There has been no deficiency on its part in the rendering of service as the claim has been fully settled through the Processing/Survey /Settling Agents -M/s. Administrazione Machenzie, Italy. The relevant clauses are : Sum Insured : Rs. 5,74,690/ - Claims payable at : Ahmedabad, R.O. Navjivan Press Ahmedabad.

THERE was no inordinate delay in the process of settlement of claim especially in the circumstances of the case when the consignee happened to be a foreign Company and Settling Agents also in Italy. There was no intention implied or express that the amount under the policy was to be payable at US $ 44,206.80.

WE have heard the learned Counsel for the parties and have gone through the records. The first question that arises for determination is what was the sum insured ? The insurance policy issued by Opposite Party No. 1 is on the file. The sum insured has been specified as : Rs. 5,74,690/ -. Subject matter of the contract of insurance has been described as ''On 5023.50 kgs. 6 Nitro 1 Diazo 2 Naphol 4 Sulphonic Acid in Bags on 1(X)% Basisat US$8/kg on 100% Basis CIF Genova (Italy) (140 x 50 kg). The sum insured was equivalent to US $ 44,206.80 (US $ Forty four thousand two hundred six and eighty). Against the column Claim Payable. It is mentioned, ''At Ahmedabad by R.O. Navjivan Press, Ahmedabad'' R.O. means Regional Office of the Company. The total premium charged was shown as Rs. 2,192.30. The name of the assured was described as M/s. San Chem Enterprises, A -Bagh. A reading of these columns will show that claim was payable equivalent to the sum insured i.e. Rs. 5,74,690/ -. It is a different matter that by the time the claim became payable, on account of devaluation of rupee, the equivalent of Rs. 5,74,690/ - in US$ came to 21,955.85. Thus it is clear that the sum insured was in Indian currency and was payable as such. The fact that the consignee had to pay to the consignor of goods in US dollars has no relevance whatsoever to the risk covered by the policy. The value of the consignment was Rs. 5,74,690/ - only and thus as far as the Insurance Company is concerned this amount was payable in Indian currency only. A contract of marine insurance is a contract of indemnity. The above sum was the maximum extent to which the liability of the Insurance Company could extend.

IT is not the case of the Complainant that the amount paid to them in US dollars is not equivalent to Rs. 5,74,690/ -at the then prevailing rate of exchange. Therefore, we hold that the Complainant is not entitled to say that they have been paid less amount than the sum insured under the policy.

THE next question that arises is if there has been inordinate delay in the settlement of the claim. We are of the opinion that there has not been unavoidable delay in the settlement of the claim. The Claimant lodged the claim with the Insurance Company. However, as noticed earlier the name of the assured was M/s. San Chem Enterprises. The name of the Complainant nowhere appears in the Insurance Policy. Therefore, the Insurance Company was entitled to! ignore the notice sent by the Complainant. The Complainant realised its mistake and changed its lawyer as mentioned in Para No. 17 of the Complainant and that lawyer wrote to M/s. San Chem Enterprises on 24 -4 -1991 putting them to notice of the breach of the sale contract because it was they who had got the consignment insured and had not taken any steps to get the Complainant compensated by the Insurance Company and the Insurance Company had taken the stand that it did not have any direct relationship with the Complainant. Thereafter a meeting took place on 4th September, 1991 between the Complainants lawyer Shri D.S. Narula and Shri R.P. Mishra of the Insurance Company. As mentioned in the complaint the latter showed his inability to help in the matter because the case was being handled by their Ahmedabad Office. Shri Narula went to Ahmedabad Office and met the Manager of the Insurance Company who after discussing the case in detail and after going through the records accepted the fact that the money/Compensation was payable by the Insurance Company to the Complainant subject to furnishing a certificate from Consignees bank confirming that payment had been received by them from the Complainant for the consignment by encashment of the Complainants Letter of Credit. Only on 11th September, 1991 the Consignor provided the requisite certificate and also gave a declaration to the effect that the Complainant was entitled to claim damages on the Insurance Company. In April, 1992 the Complainant was given a cheque by the Agents of the Insurance Company for a sum of US $ 21,955.85. Thus there has been no inordinate delay in the settlement of the claim and thus the Insurance Company cannot be held deficient in the rendering of service. For the reasons given above we do not find any force in the present complaint and dismiss the same. In the facts and circumstances of the case we leave the parties to bear their costs.