Metro Exporters Private Limited vs United India Insurance Company Limited .

Sl. No.,Case no.,Title

1.,CS(OS) No. 1408/1979,"Elephanta Oil Vanaspati Industries Ltd. Vs. The New India

Assurance Co. Ltd. & Anr

2.,CS(OS) No. 1409/1979,"Elephanta Oil & Vanaspati Industries Ltd. Vs. The New India

Assurance Co. Ltd. & Anr.

3.,CS(OS) No.1417/1979,M/s. Jain Export P. Ltd. Vs. New India Assurance Co. Ltd.

4.,CS(OS) No.672/1980,"Indo Foreign Commercial Agency Vs. National Insurance Co.

& Ors.

5.,CS(OS) No.738/1980,Canara Bank & Anr. Vs. Oriental Insurance Co. Ltd.

6.,CS(OS) No.739/1980,"Canara Bank & Anr. Vs. Oriental Fire & General Ins. Co.

Ltd

7.,CS(OS) No.1/1982,"M/s. Sawhney Bros. Vs. Hong Kong Shanghai Banking

Corpn. & Ors.

8.,CS(OS) No.922/2004,Metro Exporters P. Ltd. Vs. United India Insurance Co. Ltd.

company pleaded that Bill of Lading and connected documents with respect to shipping of the goods are fake documents because in fact goods which,,

were the subject matter of the contract between the plaintiff and M/s. Palmex Enterprises were never shipped by M/s. Palmex Enterprises, Singapore",,

to Mumbai, India.",,

The following issues were framed by the Mumbai High Court on 24.12.1999 in this suit:-,,

“1. Whether the Plaintiffs prove that on or about 11th June 1979 they entered into a contract in writing with one Palmex Enterprises for the,,

purchase of 800 metric tons of PVC Resins Suspension grade (hereinafter referred to as the “said goodsâ€) as more particularly alleged in,,

paragraph 3 of the plaint?,,

Whether the Plaintiffs prove that the said goods had been shipped on board the vessel “OH-DAIâ€​ as more particularly set out in paragraphs,,

7, 8 & 9 of the plaint?",,

Whether the Plaintiffs are entitled to recover from the defendants the sum of Rs.76,70,056/- together with interest thereon being the amounts",,

payable by the Defendant under the policies of insurance dated 5th September 1979 issued by the Defendants, on account of loss of the said goods as",,

alleged in paragraph 19 and the prayer clause of the plaint?,,

Whether the Defendants prove that the Plaintiffs have not fulfilled the condition precedents before their claim could be entertained and accepted by,,

the Defendants as alleged in paragraph 1 of the written statement?,,

Whether it was obligatory upon the Plaintiffs to prove by independent evidence that the goods in question were in fact loaded on the vessel,,

“OH-DAIâ€​ as alleged in paragraphs 1 and 10 of the written statement?,,

Whether the Defendants prove that under the insurance policy issued by them, it was incumbent upon the Plaintiffs to take all reasonable steps for",,

ensuring all the rights against the carriers, bailees or third parties are carefully preserved and exercised as alleged in paragraph 2 of the written",,

statement.?,,

Whether on the Plaintiffs failing to file a suit or take any action against the shipping company and/or the consignor, the Plaintiffs are disentitled for",,

maintaining the claim under the insurance policies as alleged in paragraph 2 of the written statement?,,

Whether the Defendants prove that the Plaintiffs have no insurable interest and hence are not entitled to make any claim under the insurance,,

policies as alleged in paragraph 5 of the written statement?,,

Whether the insurance contracts entered into between the Plaintiffs and the Defendants are vitiated by failure to disclose all material facts as,,

alleged in paragraph 6 of the written statement?,,

Whether the Defendants prove that the Bill of Lading issued and evidencing shipping of the said goods on board “OH-DAI†was issued by a,,

company which has issued a false Bill of Lading as alleged in paragraph 9 of the written statement?,,

Whether it was incumbent upon the Plaintiffs to prove that their goods were lost as a result of the perils of the sea insured against as alleged in,,

paragraph 11 of the written statement?,,

What order.,,

Generally. â€​,,

Issue Nos. 2,5,8,10 and 11",,

Issue nos. 2, 5, 8, 10 and 11 can be decided together inasmuch as all these issues pertain to whether insurance policies did not come into existence",,

in the sense that no claim under the insurance policies can be filed because goods which were subject matter of the insurance policies never existed,,

and were never shipped by the foreign seller M/s. Palmex Enterprises to the plaintiff.,,

On behalf of the plaintiff, it is argued that plaintiff has proved the factum of shipment of goods because the Bill of Lading dated 1.9.1979 bearing",,

no. SB-15 has been proved and exhibited as Ex.PW1/31. It is argued that once plaintiff proves the Bill of Lading, plaintiff is said to have discharged its",,

burden of proof of goods having been shipped by the seller M/s. Palmex Enterprises to the plaintiff/buyer. This argument is sought to be buttressed by,,

the plaintiff by pleading that plaintiff has proved the Mate's Receipt of the shipping company of the ship OH DAI as Ex.PW1/14 and which shows,,

that the said goods were received on board, the ship OH DAI for transportation to Mumbai. Reference by plaintiff is also invited to the Tally Sheets",,

Ex.PW1/28 issued by the same agents of the shipping company Union Ocean Shipping (PTE) Limited so as to show that goods were shipped. It is,,

argued that once these documents i.e Bill of Lading, Mateâ€s Receipt and Tally Sheets are taken together, the plaintiff has to be held to have",,

discharged the burden of proof of shipping of the goods. It is also argued on behalf of the plaintiff that the fact that the insurance policies refer to the,,

fact that insurance policies cover the goods which have been shipped, therefore for this additional reason this Court must hold that the goods which",,

are subject matter of contract between the plaintiff and M/s. Palmex Enterprises were shipped Ex-Singapore to Mumbai via the ship OH DAI.,,

Plaintiff also draws the attention of this Court to the oral depositions made in the examination-in-chief of the plaintiffâ€s witnesses with respect to,,

shipping of the goods Ex-Singapore to Mumbai by the ship OH DAI under the subject Bill of Lading. It is also argued on behalf of the plaintiff that the,,

defendant/insurance company has led no substantive evidence to show that goods were in fact not shipped or that the goods which were the subject,,

matter of the policies did not come into existence and were not shipped, and it is argued that the onus had shifted upon the defendant/insurance",,

company to prove that goods were not shipped by M/s. Palmex Enterprises to plaintiff once plaintiff had proved Bill of Lading, Mateâ€s Receipt and",,

Tally Sheets.,,

On behalf of the plaintiff, in support of its case, reliance is placed upon the following judgments:-",,

(i) Peacock Plywood (P) Ltd. Vs. Oriental Insurance Co. Ltd. (2006) 12 SCC 673,,

(ii) Shaw Wallace and Company Limited Vs. Nepal Food Corporation and Others (2011) 15 SCC 56.,,

(iii) Ellerman and Bucknall Steamship Company Ltd. Vs. Sha Misrimal Bherajee AIR 1966 SC 1892.,,

Plaintiff has also placed reliance upon the provisions of the Indian Bills of Lading Act, 1856.",,

On behalf of the defendant/insurance company, it is argued that the entire arguments urged on behalf of the plaintiff are misconceived because",,

existence of a Bill of Lading or a Mateâ€s Receipt or Tally Sheets is not sufficient evidence to discharge the burden of proof upon the plaintiff of the,,

shipment of goods because of the provisions of the Commercial Documents Evidence Act, 1939 (hereinafter referred to as “the Actâ€) and that",,

the facts of the present case show that grave fraud is sought to be perpetrated upon the defendant/insurance company. It is argued that the,,

defendant/insurance company has led evidence of Captain Jose Varghese Paloccaran who was working at Palco Surveyors and Adjustors Limited,,

and who has deposed with respect to Criminal Investigation Department Division of Singapore conducting investigations leading to the owners of the,,

ship OH DAI and MV AVERILLA being convicted. Captain Jose Varghese Paloccaran has deposed with respect to making inquiries from the,,

sellers M/s. Bentrex and Company and M/s. Palmex Enterprises and as to how he was stonewalled by the employees of these companies thereby,,

arousing suspicion. Captain Jose Varghese Paloccaran also deposed that there was doubt with respect to sinking of the ships as all the employees of,,

the ship were found to be residing in their houses. Captain Jose Varghese Paloccaran has also deposed with respect to the factum of non-receipt of,,

the goods because of non-existence of the lorry/truck passes with respect to lorries/trucks containing goods entering the custom/port/dock area,,

authority of Singapore. Captain Jose Varghese Paloccaran has also deposed of remaining in touch with the police personnel including Sh. Abu Bakar,,

Moosa who has deposed as CW-2 on behalf of the defendant/insurance company. Captain Jose Varghese Paloccaran has deposed with respect to the,,

lengthy trial taking place in the Singapore Court which heard the details of how the plan had been chalked out to play a massive fraud upon the,,

insurance companies and banks thereby defrauding them of huge amounts running into crores of rupees and how the Singapore Court concluded with,,

the accusations leveled against all the accused persons who were duly proved to be faking Bills of Lading, shipping documents without actual cargo,",,

and so on showing that no goods were ever loaded on ships OH DAI and MV AVERILLA. Captain Jose Varghese Paloccaran also deposed with,,

respect to yellow water being shipped instead of palm oil and rice bags being shipped as bags containing cloves of Zanzibar origin and that water,,

drums and tins were passed off as brass scrap or copper scrap etc.,,

I may note that in the present suit the goods are not of brass scrap or copper scrap or palm oil or cloves because the goods in question which are,,

subject matter of the present suit and insurance policy is 800 M.T. of PVC Resin Suspension Grade, however Captain Jose Varghese Paloccaran",,

deposed with respect to palm oil, cloves, copper scrap, brass scrap which are subject matter of the other suits, and that Para 11 of the affidavit of",,

Captain Jose Varghese Paloccaran specifically uses the expression “etc†after the words palm oil, copper scrap. On behalf of the",,

defendant/insurance company it is argued that the deposition of Captain Jose Varghese Paloccaran is also with respect to the subject goods and which,,

becomes clear from the question put by plaintiff itself in the cross-examination of Captain Jose Varghese Paloccaran on 25.7.2014 and which question,,

when put by the plaintiff was replied by Captain Jose Varghese Paloccaran by specifically referring to 800 pallets of PVC resin and Captain Jose,,

Varghese Paloccaran deposed that he had made enquiries with the port authorities itself with respect to 800 pallets of PVC Resin which is subject,,

matter of the present suit.,,

On behalf of the defendant/insurance company, reliance is also placed upon the evidence led of Sh. Abu Bakar Moosa as CW-2. Sh. Abu Bakar",,

Moosa was working in the capacity of the Deputy Head and later on Head of the Crime Division in the Criminal Investigation Department of,,

Singapore during the years 1979 to 1983. Sh. Abu Bakar Moosa has deposed with respect to conspiracy hatched between Sh. Bhagwan Singh Aujla,",,

Sh. Manmohan Singh Aujla of M/s. B.S. Aujla & Co. Pte. Ltd., M/s. Bentrex & Co. and M/s. Palmex Enterprises with respect to scuttling and",,

sinking of the ships and preparing false documentation showing shipment of the goods which were in fact never shipped. Sh. Abu Bakar Moosa has,,

referred to the investigations conducted by various persons including himself and thereafter submitting their investigation reports to the Public,,

Prosecutor office in Singapore giving the entire details of the conspiracy, conspirators and co-conspirators. Sh. Abu Bakar Moosa has also deposed",,

with respect to the proceedings in the Court at Singapore and as to how Sh. Bhagwan Singh Aujla, Sh. Manmohan Singh Aujla, Sh. Isaac Paul",,

Retnam and Sh. Rethinasamy were handed over different sentences for their part of the conspiracy in terms of the judgment dated 31.3.1983. It is,,

accordingly argued on behalf of the defendant/insurance company that merely because insurance policies were issued by it would not mean in the,,

facts of the present case that plaintiff has been successful in proving that goods which are subject matter of the insurance policies were in fact,,

shipped and once the goods which were subject matter of the insurance policies never existed and were never shipped, hence the insurance policies",,

did not come into operation for plaintiff to be compensated for the alleged loss of goods which were subject matter of the insurance policies.,,

The crucial issue to be decided in the present case is as to whether the goods which are subject matter of the insurance policies ever came into,,

existence and ever commenced their journey of shipment Ex-Singapore from M/s. Palmex Enterprises to Mumbai on the ship OH DAI. I may note,,

that there is a statute called as the Commercial Documents Evidence Act. This Act has in its Schedule two parts. As per Section 3 of this Act with,,

respect to documents which are subject matter of Part I of the Schedule, a Court “shall presume†that the documents stated in Part I of the",,

Schedule were so made and the statements contained therein are accurate. With respect to documents which are stated in Part II of the Schedule,,

instead of “shall presume†so far as Part I of the Schedule is concerned, it is only “may presume†so far as documents which are stated in",,

Part II of the Schedule of the Act. The Bill of Lading, Mateâ€s Receipt and Tally Sheets which are proved by the plaintiff will fall under Entries 15",,

and 18 of Part II of the Schedule of the Act i.e court “may presume†with respect to the validity of these documents. Therefore once Court has,,

to only “may presume†the factum of the Bill of Lading, Mateâ€s Receipt and the Tally Sheets having been issued by the appropriate authority",,

and the Court may only presume accuracy of the contents of these three documents, in the facts of the present case this Court refuses to hold that the",,

Bill of Lading, Mateâ€s Receipt and the Tally Sheets should be taken as accurate with respect to statements contained therein. In fact if the plaintiff",,

wanted some benefit of the Part II of the Schedule of the Act, then, the plaintiff should have filed documents which are subject matters of Entries 1, 3,",,

4, 5, 7, 14 and 16 of Part II of the Schedule because it is these documents stated in these entries which will show that goods in fact came within the",,

dock area or port area or the customs area and coming of the goods in such areas is a pre-condition and sine qua non before loading the goods on to,,

the ships and with respect to which loading a Bill of Lading is issued. In fact, the plaintiff was duty bound to file documents under Entry 19 in the Part",,

I of the Schedule of the Act which talks of a receipt of payment of custom duty issued by the custom authorities and which would have shown that,,

goods which are subject matter of the insurance policies and the shipment did come into existence because it is when custom duty is paid to the,,

custom authorities would the goods have been shown to be entered the custom area in the concerned port at Singapore.,,

At this stage, it will be necessary to draw cross-reference to the deposition of Captain Jose Varghese Paloccaran who specifically deposed that as",,

per the process in the port at Singapore, lorries/trucks which bring the goods from outside the custom/port/dock area to the said custom/port/dock",,

area, then in such cases passes are issued with respect to the lorries/trucks showing entry into the custom/port/dock area and admittedly there are no",,

documents before this Court in the form of those lorry/truck receipts to show that the goods which are subject matter of the insurance policies ever,,

had reached the custom/port/dock area in the port at Singapore.,,

There are also various very curious aspects and which this Court is forced to note. It is surprising as to why the plaintiff/buyer has only sued the,,

insurance company but has not sued the foreign seller M/s. Palmex Enterprises or the shipping company which owned the ship OH DAI. Counsel for,,

the plaintiff argued that when the suit was filed no payment was made under the letter of credit to the foreign seller and therefore the foreign seller,,

was not sued as a defendant in the suit but it is conceded that the foreign seller was in fact paid during the pendency of the suit but even thereafter the,,

plaintiff did not amend the suit to add the foreign seller M/s. Palmex Enterprises as a defendant in this suit for seeking of the money decree against,,

M/s. Palmex Enterprises on the ground that M/s. Palmex Enterprises has received the value of the goods but plaintiff has not received the goods. No,,

other independent suit has also been filed by plaintiff against M/s. Palmex Enterprises. In fact besides the plaintiff ought to have sued the seller M/s.,,

Palmex Enterprises, the plaintiff should also have sued the shipping company because now it is clear from the record that shipping company was also",,

part of the fraud and conspiracy because the subject goods never came to be loaded on the ship OH DAI. Therefore it is indeed very curious, strange",,

and suspicious as to why the plaintiff has chosen to file a suit only against the insurance company and the plaintiff has not sued the seller M/s. Palmex,,

Enterprises who has received the price of the goods without delivering the goods and the plaintiff has also not sued the shipping company who has,,

issued the Bill of Lading and which never shipped the goods.,,

Reliance placed on behalf of the plaintiff on the judgments of the Supreme Court is misconceived because in none of these judgments, the facts",,

existed that with respect to the goods which were subject matter of the Bill of Lading never came into existence and that the Bills of Lading were,,

fake/forged. In all the cases cited before this Court on behalf of the plaintiff the facts show that there was no quarrel with respect to genuineness of,,

the Bills of Lading and shipping of the goods under the Bills of Lading in those cases. Therefore, any observations made by the Supreme Court in the",,

facts of those cases would not assist the plaintiff because in the facts of the present case it is seen that the Bill of Lading is fake and false or putting it,,

in other words in fact no goods were ever loaded on the ship OH DAI with respect to which the subject Bill of Lading was issued and which is proved,,

as Ex.PW1/31.,,

Even the provision of Section 3 of the Indian Bills of Lading Act read with Preamble of the said Act does not in any manner assist the plaintiff,,

because the Preamble and the provision of Section 3 of the Indian Bills of Lading Act with respect to bindingness of the contents of the Bill of Lading,,

as to shipment of the goods is to be taken as final only between the shipping company and the consignees/endorsees and which is also held in the,,

judgments of the Supreme Court referred to by the plaintiff, and it is noted that there is no provision in the Indian Bills of Lading Act nor any",,

observations in any judgments of the Supreme Court cited on behalf of the plaintiff that merely because a Bill of Lading exists, then only for such",,

reason the Court has to necessarily hold that goods which are subject matter of the Bill of Lading were in fact loaded on the ship and it must be held,,

that the journey of shipment of goods commenced and thereby making such goods as being covered under the insurance policies with respect to those,,

goods.,,

I would also like to note that in fact reliance placed by the plaintiff upon the Bill of Lading Ex.PW1/31 does not prove that in fact goods which,,

were sold by the M/s. Palmex Enterprises being 800 pallets of PVC Resin were in fact loaded on the ship OH DAI because the Bill of Lading begins,,

with the expression “said to contain goodsâ€. Obviously such statements are normally found generally in the Bills of Lading because a shipping,,

company does not physically inspect complete details of all the goods which are loaded on the ships which are written in the Bills of Lading. In fact, it",,

is for this reason that normally there is bound to exist a survey report of the goods showing that an approved surveyor has inspected the goods which,,

are subject matter of the consignment contained in the Bill of Lading and it is seen that the plaintiff in the present case has not filed and proved any,,

survey report with respect to the 800 metric pallets of PVC Resin. Therefore in my opinion mere proving of the Bill of Lading etc, besides the fact",,

that a Court only has to “may presume†the accuracy of the same, that therefore even if “may presume†presumption has to be drawn in",,

favour of the plaintiff, yet in the absence of a surveyorâ€s report with respect to the contents of the goods loaded on the ship which are subject matter",,

of the Bill of Lading, it cannot be held that the 800 metric pallets of PVC Resin which were subject matter of the insurance policies were loaded on to",,

the ship, were shipped or the journey/shipment of the goods which were subject matter of the insurance policies commenced at Singapore from the",,

warehouse of the M/s. Palmex Enterprises firstly to the port then to the ship and thereafter in terms of the shipâ€​s voyage to the Mumbai port.,,

For all the aforesaid reasons, this Court rejects the case of the plaintiff that goods which are subject matter of the insurance policies were ever",,

shipped by the seller M/s. Palmex Enterprises or that the goods ever at all came into existence which were owned by M/s. Palmex Enterprises and,,

commenced their journey from the warehouse of the M/s. Palmex Enterprises firstly to the port, then to the ship and then via the OH DAI ship to",,

Mumbai port.,,

The aforesaid conclusion with respect to the goods which are subject matter of the insurance policies not coming into existence and not being,,

shipped also has to be held against the plaintiff because it is very curious that plaintiff has made no efforts to summon or seek from the seller M/s.,,

Palmex Enterprises documents with respect to existence of the subject goods in the warehouse of M/s. Palmex Enterprises, then as to how those",,

goods were transported to the port/dock and by which lorries/trucks to the port in Singapore, and as to where are those documents which are subject",,

matter of Entry 19 of Part I of the Schedule of the Act or where are those documents which are covered in Part II of the Schedule of the Act in the,,

Entries 1,3,4,5,7,14 and 16. This Court therefore has no doubt whatsoever that a fraud is sought to be played upon the defendant/insurance company",,

by claiming amounts from the defendant/insurance company under the subject insurance policies although the goods which are subject matter of the,,

insurance policies never came into existence and were never brought into a port in Singapore and were never shipped much less through the Bill of,,

Lading Ex.PW1/31.,,

Issue nos.2,5,8,10 and 11 are therefore decided in favour of the defendant/insurance company and against the plaintiff.",,

Issue no.1,,

This issue is with respect to whether plaintiff entered into a contract with M/s. Palmex Enterprises and this issue is proved in favour of the plaintiff,,

because of the contract Ex.PW1/1, but in any case mere fact that a contract was entered into between the plaintiff and M/s. Palmex Enterprises",,

would not mean that plaintiff will succeed in this suit against the defendant/insurance company.,,

Issue No.3,,

In view of the discussion on the aforesaid issue nos.2,5,8,10 & 11, it is held that plaintiff is not entitled to succeed in the suit and the plaintiff is not",,

entitled to a money decree as against the defendant/insurance company.,,

This issue no.3 is therefore decided against the plaintiff.,,

Issue Nos.4, 6 and 9",,

These issues are not pressed on behalf of the defendant/insurance company.,,

Issue No.7,,

In the facts of the present case, it is held that plaintiff cannot fail because plaintiff has not sued the shipping company or the seller/consignor",,

inasmuch as liability of the insurance company is independent of the liability of the seller/consignor and the shipping company, however as already",,

discussed above the fact that plaintiff has not sued the shipping company or the seller M/s. Palmex Enterprises is an aspect to be held against the,,

plaintiff with respect to the lack of genuineness of the claim of the plaintiff and the fact that goods which are subject matter of the insurance policies,,

never came into existence or never commenced their journey Ex-Singapore to Mumbai port. Issue no.7 is decided accordingly.,,

Issue Nos. 12 and 13,,

Accordingly, the suit of the plaintiff stands dismissed, leaving the parties to bear their own costs.",,