Japna Chemicals Pvt. Ltd. vs National Insurance Company Limited

THIS case pertains to the transaction of sale of mosquito repellent mats and other related products, by a New Delhi based company to a buyer in the United States, for delivery in Russia. The transaction was under a contract of 20th January 1999 and was covered for shipment under a policy of 22nd July 1999. The consignment never reached the consignee. The vendor, who is the present complainant before us, had made a claim under the insurance policy on 24th September 2001, having failed to secure payment from either the buyer or the consignee. The insurance company rejected the claim on 24th October 2001 and hence this consumer complaint.

THE case of the vendor i.e. the complainant company, is that it entered into an agreement for exporting mosquito repellent mats and related products to M/s Blackfield International, a company incorporated in United States and the consignee was Inturtzentr, Moscow in Russia. THE goods were air lifted through Sam Aviation, New Delhi. THE sale was covered by a bank guarantee provided by the buyer?s bank, Bank of Latvia. Transit of the goods was covered under a valid insurance policy from National Insurance Company on ?warehouse to warehouse? basis. On behalf of the complainant, payments were to be received by the State Bank of Bikaner and Jaipur, who had provided the necessary credit to the complainant for this export. According to the complainant, the buyer?s bank made payment of the US $65,000 and the balance of US $ 202,595.12 has remain unpaid, despite protracted correspondence by the vendor''s bank. Having failed to get satisfactory response from the Bank of the purchaser, the complainant filed a civil suit in Latvia for pending payment as well as interest and damages. The case was decided against the complainant on the plea of the Bank of Latvia that the goods did not reach the buyer and that no certificate of delivery was produced. Complainant?s appeal, against this order, was dismissed by the regional appellate court in Latvia. Thus, having failed to recover payment from the buyer, the complainant filed a claim under the insurance policy on 24 September 2001. According to the complainant, in view of the decision of the Latvian courts that there was no proof of delivery of the goods to the buyer, the insurance company remains liable to compensate the insured i.e. the complainant. The National Insurance Company repudiated the claim through its letter of 24th October 2001. It was on the ground that under the policy document and the certificate of insurance, it was the duty of the assured or his agent to inform the foreign settling agents of the insurance company immediately. The address of the agent was given in the certificate itself. As the insured had failed to inform and register his claim, the insurer was not liable under the policy.

Aggrieved by this repudiation of his claim, the vendor has invoked the jurisdiction of this commission, with the consumer complaint filed on 3rd April 2002 the complainant has sought direction to the respondent insurance company to pay a sum of US $ 202595.12 along with interest and Rs.2,00,000/- as compensation for mental agony, loss of reputation in business suffered by the complainant. It needs to be noted at this stage itself, that in the original complaint the following were listed as the three respondents, 1. National Insurance Company Ltd, 2. State Bank of Bikaner and Jaipur, 3. Sam Aviation.

HOWEVER, the complainant had not sought any relief against respondent numbers 2 and 3. Therefore, on 4th September 2002, this Commission permitted the complainant to delete them from the list of parties. In a subsequent affidavit filed on 13th February 2011 by the complainant, it has been clarified that Respondent No 2, the State Bank of Jaipur and Bikaner, in a parellel proceeding before the Debt Recovery Tribunal of Delhi, had sought recovery of Rs.86,30,194.50 from the complainant and a compromise settlement of Rs.66,62,136.60 has been reached. In the written response of the opposite party, National Insurance Co, the main line of defense is that the entire matter is between the complainant on the one hand and the buyer, consignee, Sam Aviation the carrier, East Line Aviation company the airline and the Baltic International Bank, on the other hand. The insurance company is being dragged into this affair without any reason. According to the opposite party, it is an admitted position that the consignment in question had been dispatched in March -- May 1999 to Moscow and the controversy had later arisen about it. The complainant has also taken legal proceedings in the courts of Latvia, during this period against the Baltic International Bank. These legal proceedings were dismissed and during this entire period, there was no interaction by the complainant with the insurance company. The insurance company was not considered a necessary party in any of these proceedings. It is also pleaded on behalf of the opposite party that non-impleadment of the above mentioned parties by the complainant in the present proceedings before this commission makes the complaint petition non-maintainable and therefore liable to be dismissed.

ACCORDING to the opposite party, National Insurance Co, the cause of action, if any, arose during March -- May 1999 but the claim was lodged by the complainant, under the insurance policy in September 2001. ACCORDINGly, the claim is barred by limitation under the Consumer Protection Act 1986 and is liable to be dismissed on this ground alone. Independently of the above grounds, acceptability of the claim under the policy has been questioned by the insurance company on the ground of violation of policy conditions. According to the OP/insurance Co, the complainant was required to inform the foreign settling agents immediately about non-delivery of the consignment, which was not done. In terms of the policy, to enable the claim to be considered, the insured is required to provide supporting documents like the carrier?s certificate of non-delivery, any other documentary evidence of loss of consignment and copies of notices of claims against the carrier and other concerned parties with details of correspondence stock. None of these requirements were met. Further, the policy also stipulated that the claim was to be lodged at the destination i.e. Moscow. In view of this specific stipulation, the present proceedings before the commission cannot be entertained, as per the Opposite Party/Insurance Company. The written response of the OP/insurance Co has also raised the following other issues -- (a) The fact of non-delivery should have come to the notice of the complainant within a few days of the goods leaving India. Strangely, it took the complainant more than one year to find out that the consignment had not been delivered in Moscow.

(b) M/s Sam Aviation, the agents of the carrier, were primarily responsible for safe delivery of the consignment to the consignee in Moscow. However, no action was taken by the insured against Sam Aviation Pvt. Ltd, for non-delivery of the consignment and for protecting the recovery rights of the insurer.

(c) The initial payment of US $ 65,000 was made directly by the buyer?s banker in New York to the seller''s banker in India. It is not understood what prompted the seller of to change the payment clause in the agreement to a bank guarantee from the Baltic International Bank in Latvia, when the consignee was located in Moscow.

(d) The complainant/consignor had to obtain a written confirmation from the original American buyer about non-payment of the amounts due to them against dispatches to Moscow. No such documents were produced by the seller/complainant to realise the payment directly from the guaranteeing bank, arising from default by the American buyer under the Agreement.

(e) Under Article 10.1 of the Agreement between the seller and the buyer, any dispute between them was required to be settled by international commercial arbitration of the Trade and Industry Chamber of the Russian Federation in Moscow. Despite this provision, the seller/complainant resorted to legal action in the Latvian courts.

WE have examined the records of this case and heard the counsels for the two parties in detail.

IT is argued by the counsel for the complainant that their claim arises under a Marine Open Policy number 360201/4200047 and the insurance coverage was from warehouse to warehouse i.e. from the premises or place of storage before the commencement of transit and continuing till delivery to the consignee or the final place of storage at the destination. According to the complainant the insurance company had on 22nd July 1999 confirmed this in writing. Our attention was drawn to the claim filed by the complainant (in his letter of 24th September 2001) under policy number 360201/4200047. In an obvious explanation of the time gap between the dispatch of goods in May 1999 to filing of the claim under the policy in September 2001, the letter states that all this while the seller had assumed that the consignment had reached the consignee with the relevant documents. As the balance of payments were not received the complainant claims to have written four letters to the carrier Sam Aviation during June -- July 1999 period but, without receiving any response. The letter further explains the developments till the end of the court proceedings in Latvia on 6th September 2001. We find nothing in this letter, or in the arguments of the counsel before us, which can explain how does the complainant justify his claim relating to loss of goods ( 2 of the 6 consignments) dispatched in May 1999 when the period of the policy itself had come to a close on 23rd April 1999. But, we are not inclined to hold this against the complainant as the OP/insurance company itself has included these two consignments of May 1999 in its confirmation letter of 22nd July 1999.

The counsel for the complainant referred to an English translation of the judgement of the court in Riga, Latvia. The claim of the complainant has apparently been rejected by the court on two grounds. The first, that the claimant did not prove that it had provided the original documents or their duly notarised copies to the Baltic International bank, in proof of delivery of the goods. It is also observed that no such documents were produced even before the court. The second ground for rejection of the claim was that the obligation of the Baltic International bank as the guarantor was limited to the term of its guarantee i.e. to 1st July 1999. As against this, the claim of the complainant was lodged on 20th December 2000 i.e. after expiry of the term of validity of the guarantee.

EXPLAINING the reason for repudiation of the claim, the letter of 24 October 2001 from the National Insurance company to the complainant, had stated that "as per the procedure for claim given in our policy document and certificate of insurance, it is the duty of the assured and their agent to inform our foreign settling agents immediately, whose address is given in the certificates for the needful.? This refers to the Claims and Recovery Services (Moscow) Ltd, agents of Webster London mentioned in the relevant Marine Insurance Certificates. Learned Counsel for the complainant drew our attention, in this behalf, to a letter from Assistant ?General Manager, Technical Marine Department in the Head Office of the National Insurance company, addressed on 4th June 2002 to their Delhi Regional office-II. The counsel mentioned that a copy of this letter has been obtained by making an application under the Right to Information Act. In the context of the claim of the complainant, the letter states that "Even though three years have elapsed since the shipments were rejected, it is felt that a detailed investigation should be immediately carried out by INGOSSTRAKH at Moscow to ascertain the circumstances of the loss. Incidentally, it is extremely disappointing to note that Webster?s Agent?s (instead of INGOSSTRAKH) name still appears in the certificates issued by the operating office for shipment to CIS. A suitable explanation for such lapse may be obtained from leading officials and forwarded to us". The letter also talks about the need for a fresh investigation in India to trace out the movement of the consignments with the help of the seller, his banker and M/s Sam Aviation and ends with advice to the regional office that the matter may be dealt with on merits after investigation reports are received along with other relevant documents pertaining to the alleged loss is.

THIS, in our view, is a very important piece of internal communication within the National Insurance company. It clearly shows that even eight months after the letter of repudiation, the matter was still open within the insurance company. It also explains why the letter of 24th October 2001 repudiating the claim, had qualified its declaration of non-liability with the words ?at this stage?. In view of the above, we do not consider it necessary to examine the rival claims putforth by the Complainant and the Opposite Party/Respondent and to arrive at a finding on their relative merits. The Complaint petition is kept pending with a direction to OP/insurance Company to take a final view on the claim of the Complainant, on the basis of the outcome of the investigation contemplated in their letter of 4th June, 2002. If the investigation is yet to be completed, it should be brought to its logical conclusion expeditiously, preferably within three months. Thereafter a final decision on the claim should be taken, based on the outcome of such investigation. The complaint petition be listed for further directions on 19.08.2011.