MODERN SYNTEX vs Oriental Insurance Co. Ltd.

THIS complaint has been filed by M/s. Modern Syntex (India) Ltd. claiming an amount of Rs. 2,92,964/- and interest on various amounts from various dates as mentioned in para 20 of the complaint. Apart from that an amount of Rs. 1,00,000/- has been claimed as expenses incurred by the complainant in pursuing the claim.

THE complainant has obtained an insurance policy from the opposite party with respect to the period from 21.7.1980 to 20.7.81. THE sum insured was Rs. 21 crores and the risk covered was for TR, RR TPND, theft, pilferage, nondelivery, fresh and rain water damage, warehouse to warehouse risk for incoming raw material and outgoing finished product. THE complainant has despatched synthetic blended yarn to their agent M/s. Manak Trading Company, M/s. Swaran Woollen Mills and M/s. Ladlaa Knitwear of Ludhiana on consignment basis valuing Rs. 1,65,64,821.50 during the period from 1.12.80 to 30.4.81. Out of this amount payment worth Rs. 1,27,03,063.50 were released by the agents. Goods worth Rs. 38,61,758/- remained unpaid and it was despatched between 22.12.80 to 3.3.81. Goods worth Rs. 30,07,632/- were despatched through M/s. Yadav Tpt. Services and goods worth Rs. 8,54,126/- were despatched through M/s. Yadav Transport Company. It has been alleged in the complaint that Mr. Swaranjeet Jain and other partners of M/s. Manak Trading Company by making conspiracy with the Manager of Ludhiana office of M/s. Yadav Transport Servicesand M/s. Yadav Transport Company took the unauthorised delivery of goods from the transporter without obtaining original MIRs/FRs from the bank/consignee and caused loss to the extent of Rs. 38,61,758 /- to the complainant. The complainant lodged the claim on 19.5.81 on account of theft and non-delivery of goods of Rs. 29,00,000/- with the opposite party-Insurance Company and further lodged another claim for Rs. 10,01,318/-. The opposite party appointed M/s. J.B. Boda Marine & General Service Agencies Pvt. Ltd. as Surveyor for investigating the claim. After investigation the opposite party accepted the claim of Rs. 38,61,758/- of the complainant and informed about it by letter dated 24,4.1982. Out of this accepted claim of Rs. 38,61,758/- the opposite party had already paid a total amount of Rs. 27,91,126/- to the complainant upto 29.6.1982. A sum of Rs. 10,70,632/- remained balance payable to the complainant on the said date. The complainant has registered an F.I.R. against the accused persons with the assistance of Rajasthan Police and Detective Agency and recovered goods for Rs. 4,84,703/-. After giving credit to this amount, it has been alleged that a sum of Rs. 5,85,929/- remained payable by the opposite party. After a lot of pursuation, the opposite party ultimately agreed to release 50% of the above claim of Rs. 5,85,929/- by way of loan on certain terms and conditions which were communicated to the complainant on 11.5.84. As required by the opposite party, the complainant submitted an undertaking to it. Upon furnishing of the undertaking the opposite party released a sum of Rs. 2,92,965/- in favour of the complainant in June, 1984 leaving a balance of Rs. 2,92,964/-. This balance amount of Rs. 2,92,965/- has not so far been paid by the opposite party to the complainant. The complainant has, therefore, claimed a sum of Rs. 2,92,964/-. He has also claimed interest @ 24% p.a. on Rs. 38,61,758/- from 19.5.81 to 26.4.1982, and interest @ 24% p.a. on Rs. 25,47,069 /- from 27.4.82 to 6.5.82, interest @ 24 % p.a. on Rs. 18,26,151/- from 7.5.82 to 29.6.82, interest @ 24% on Rs. 5,85,929/- and again on Rs. 5,85,929/- from 30.6.82 to 31.5.84 at the same rate and further interest @ 24% p.a. on Rs. 2,92,964/- from June, 1984 till realisation. The complainant has also claimed a sum of Rs. 1,00,000/- on account of expenses incurred by him in pursuation of balance amount of the claim by continuous discussions and visits to Delhi, Jaipur and Bhilwara offices of the opposite party and also on account of harassment caused by the opposite party to the complainant. Upon reference being made, the opposite party filed its version on 29.7.92. The case set up by the opposite party is that it was agreed upon between the parties that as the Court case might take some time, 50% of the balance amount i.e., Rs. 2,92,964/- has been released to the complainant by way of loan on the condition that in case the goods lying in custody of the Union Bank of India at Ludhiana belongs to the subject matter of the claim, the complainant shall take delivery of the goods irrespective of the physical condition and on receipt of such delivery of the goods, the complainant shall refund to the Insurance Company within seven days of the judgment of the Court, the loan amount of Rs. 2,92,965/- in proportion to the goods recovered and delivered to the complainant. The complainant has furnished an undertaking to this effect which is said to be Annexure 6. According to the opposite party, only a sum of Rs. 2,92,965/- was to be paid to the complainant and the rest amount was to be paid after the decision of the Court case. Apart from that, the opposite party also raised objection relating to limitation and pecuniary jurisdiction of the State Commission.

Parties completed their evidence on 25.11.92. The matter was adjourned for arguments on some dates. Appearance has put up on behalf of the complainant upto 23.2.93. Thereafter no presence was made by the complainant. It may also be stated that appearance was put up by the complainant on 27.4.94, but none was present on behalf of the complainant today and the case was fixed for arguments. We, therefore, heard the learned Counsel for the opposite party and perused the record.

IT is not in dispute between the parties that the claim made by the complainant on account of theft and non-delivery of goods was accepted by the opposite party for an amount of Rs. 38,61,758/- and out of this amount a total amount of Rs. 27,91,126/- had been paid by the opposite party to the complainant upto 29.6.82. IT is also not in dispute that the complainant has discovered goods worth Rs. 4,84,703/- and a balance amount of Rs. 5,85,929/- remained payable by the opposite party. Some goods had been recovered and was in the custody of Union Bank of India at Ludhiana. Litigation in that respect was going on between the parties and in this regard the opposite party had sent a letter dated 11.5.1984 (Annexure R.1) to the complainant wherein it was stated that in view of the difficulties pointed out by the complainant to obtain identification of the goods in the custody of the Union Bank of India and the time factor involved in getting a decision from the Court, the Insurance Company was agreeable in principle to give to the complainant a loan to the extent of 50% of the balance amount claimed by the complainant subject to the condition that if it was established later on that the whole or part of the goods lying in the custody of the Union Bank of India at Ludhiana (for which claim was being considered) belongs to the subject matter of the claim, the complainant will take delivery of the same irrespective of the physical condition of the goods at the time and refund to the opposite party the appropriate sum insured within seven days of the judgment. The complainant was required to give necessary undertaking to give effect to the above. In pursuance of this letter, the Board of Directors of the complainant decided on 2.6.1984 to execute an undertaking in favour of the opposite party to refund the loan amount of Rs. 2,92,965/- and to take delivery of goods as mentioned in the letter of opposite party dated 11.5.84. An undertaking was executed by the complainant on 2.6.1984. IT was provided in the undertaking that the Undertakee had requested the Undertaker to release a sum of Rs. 5,85,929 /- on the basis of calculations and detail furnished by the Undertaker. The Undertakee Insurance Company on the basis of the claim submitted by the Undertaker and in view of the difficulties pointed out by the Undertaker in identification of goods lying in the custody of Union Bank of India and time factor involved in getting the decision from Court agreed in principle to give to the Undertaker a loan to the extent of 50% of Rs. 5,85,929/- being the balance amount claimed by them subject to the conditions mentioned in the letter of the opposite party dated 11.5.84 regarding release of balance amount of claim. IT was agreed by the complainant in the undertaking that in consideration of the opposite party paying the amount of Rs. 2,92,965/- as a loan, the complainant agrees that in case it was established later on that the whole or part of the goods then lying in the custody of Union Bank of India at Ludhiana belongs to the subject matter of claim, the complainant shall take delivery of the same irrespective of the physical conditions of the goods and on receipt of such delivery of goods the complainant shall refund to the Undertakee Insurance Company within seven days of the judgment, the loan amount of Rs. 2,92,965/- in proportion to the goods recovered and delivered to the Undertaker. It would thus appear that with respect to the balance claim Rs. 5,85,929/-, an agreement had been arrived at between the parties as reflected in the undertaking and in consideration of the opposite party paying to the complainant 50% of the aforesaid amount i.e. an amount of Rs. 2,92,965/- as loan. This loan was to be continued till the matter regarding claim of the goods lying in the custody of Union Bank of India in respect of which litigations were pending were decided by the Courts. It has not been alleged by the complainant that the Courts have decided with regard to the ownership of the goods which were lying in the custody of Union Bank of India. Whether the complainant was entitled to any amount from the opposite party would depend obviously upon the result of the litigation pending in Courts regarding the goods lying in the custody of the Union Bank of India. In case the Courts find that the complainant was entitled to the said goods, then the claim of the complainant will have to be reduced by the amount of the value of goods delivered to the complainant as a result of the decision by the Courts. The complainant will have to refund Rs. 2,92,965/- in proportion to the goods recovered and delivered to the complainant. In view of the settlement arrived at between the parties with respect to the balance claim of Rs. 5,85,929/- by the undertaking referred to above, the claim of the complainant for the amount of Rs. 2,92,925/- is premature. As the claim of the complainant is premature, there does not arise any question of deficiency in service.

AS to the question of limitation raised by the opposite party, we have already observed above that the claim is premature and, therefore, question of limitation does not arise. One of the objections taken by the opposite party is that this State Commission lacks the pecuniary jurisdiction to entertain the claim filed by the complainant because the claim exceeds Rs.10 lakhs. It is true that apart from the amount of Rs. 2,92,964/-, the complainant has further claimed interest @ 24% p .a. on various amounts and from various dates as mentioned in para 20 of the complaint, apart from the sum of Rs. 1,00,000/- claimed by him as compensation. The Counsel for the opposite party has submitted before us a calculation of interest and according to that calculation the total claim of interest comes to Rs. 17,76,973/- and upon addition to this amount of interest of the claim the amount of Rs. 2,92,964 and that of Rs. 1 lakh, the total comes to Rs. 21,69,937/-. When the complaint was filed the pecuniary jurisdiction of the State Commission was only upto Rs. 10 lakhs. However pending this complaint, the pecuniary jurisdiction of the State Commission was increased to Rs. 20 lakhs. AS per calculation mentioned above, the total amount comes to Rs. 21,69,937/-. On this basis the State Commission has no pecuniary jurisdiction to entertain and decide the complaint. We therefore, hold that this State Commission has no pecuniary jurisdiction to entertain the complaint. The complaint be returned for presentation before a proper Consumer Forum. The complaint is disposed of accordingly. Complaint disposed of.