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Judgment
THESE are seven original petitions filed by Mr. Oscar Stephen GMBH of Emden, Germany, through its locally constituted Attorney, Mr. K. V. Ramakrishna against the National Insurance Co. Ltd. represented by its Branch Office at Baruipur, West Bengal and by the CMD of the Company at Calcutta.
THE facts in all these complaints are similar and are as follows: the complainant entered into nine purchase contracts to import leather gloves from Eastern Export Company Ltd. , Tollygunj, Circular Road, Calcutta in July/august/september, 1995. The contracts were on CIF basis (Cost, Insurance and Freight), meaning that the cost of the goods, the insurance and the freight would be borne by the buyer, i. e. the complainant. The exporter, Eastern Export Company, Calcutta obtained an insurance cover known as Marine Ocean Policy for 110% of the contract price. The policy covered all the risks as per Institute Cargo Clause and risk to commence from the date of Bill of Lading. It is the case of the complainant that as per the Institute Cargo Clause, the insurer is responsible for the goods from the warehouse of the exporter to the warehouse of the importer on all risks that occur during the voyage from warehouse to warehouse. Clause 8. 1 with Sub-clause 8. 1. 1 of the Institute Cargo Clauses (A) reads: "the insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates, either on delivery to the consignees'' or other final warehouse or place of storage at the destination named therein. "
The cartons containing the leather gloves were loaded in the containers and shipped to Germany by different vessels. On reaching the destination in Germany, the containers were handed over to the clearing and forwarding agent. They found that the goods were water damaged and the matter was reported to the shipping company and a certificate to this effect was obtained from the shipping company. As per the general practice, the complainant immediately referred the matter to the authorized surveyor of the opposite party, namely, Gellantly Hanky and Co. , GMBH and Co. who surveyed the consignment and found that the goods were damaged.
THE policy provided that the above company who are the agents in Germany of W. K. Webstar and Company, London would settle the claim for any damages. The Surveyor of the opposite party immediately submitted his report mentioning that the entire goods were water damaged, moulded and smelled due to high humidity in the container. As the Defence Ministry of Germany for whom the goods were meant, refused to accept the damaged goods. The Importer tried to sell the damaged goods at a concessional rate through the above surveyor, but he could only sell 27% of the goods. His case is that he suffered total loss of the remaining 73% of the goods. As the claim-settling agent, namely, Webstar London could not settle the claim, the importer took up the matter directly with the opposite party. It is stated that after a long period of inordinate delay of four years, the opposite party repudiated the claim on 7/9/2000 without assigning any cogent reasons. In Original Petition No. 313 of 2002, the complainant claimed an award of the sum insured namely Rs. 27,60,000. 00 plus Rs. 2,00,000. 00 for causing agony and harassment and 20,00,000. 00 towards cost. Similar claims were made in the other complaints. Case of the opposite party
THE opposite party has not denied the fact that the goods are covered by the insurance or the fact that the goods were found damaged on receipt at the German port. However, their arguments are as follows: 1. There is no privity of contract between the complainant and The Insurance Company The privity of contract was between the exporter, Eastern Export Company, Calcutta and themselves (the Insurance Company ). The exporter, Eastern Export Company is an essential party to the dispute and has not been impleaded as a party to the proceedings. The present complaints are therefore bad for non-joinder of necessary party and are liable to be dismissed.
Clauses 4. 3 and 4. 4 of exclusion clauses of the Institute Cargo Clause would apply in this case. Clause 4. 3 reads as follows: ''loss, damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject matter insured''. Clause 4. 4 reads as follows: ''loss, damage or expense caused by the inherent vice or nature of the subject matter insured. ''
It is argued that the surveyor in Germany submitted his report dated 25/1/1996 and had opined in that report the consignment of gloves must have excessive moisture content already, when stuffed into the container for transit. In view of this, M/s. W. K. Webstar, London, who studied the survey report recommended that the Insurance Company should appoint Investigators to investigate the condition with regard to pre-shipment of the consignments in question.
Accordingly, different organizations, namely (a) M/s. SNM Consultants; (b) S. K. Bandopadhyay and Associates; (c) M/s. Survey and Superintending Company were asked by the opposite party on 25. 6. 1996 to carry-out investigation. After investigation all the three had opined in their reports of March 1997 that they had inspected the places of some of the leather-stitchers and some of those places were not upto the mark for the work of leather-stitching (there were no adequate measures to prevent rain water); that since the factory was located in a narrow lane where container trucks cannot go the cartons had to be carried in an open area upto the place where the trucks can be stationed and that there is a possibility of the consignments being damaged due to sudden rain. The argument is that there is an inherent vice in the goods and that no damage took place in the transit. It is also argued that no pre-dispatch inspection was done. Submissions of the complainant The learned Counsel for the Complainant submitted: (a) That in a CIF contract, the title to the goods including the title of insurance and freight is passed on to the buyer the moment the Bill of Lading has been issued and that any insurance under such circumstances is assignable and it is a common practice in marine transport.
(b) The argument of the Insurance Company that the entrance of the factory was located on a narrow road and that since the cartons are required to be loaded into the containers at a small distance, rains could have affected the goods before loading, is purely speculative and irrelevant.
(c) As regards the argument that no pre-shipment inspection has been done, it is pointed out that there is no policy condition that the goods/gloves shall be subject to pre-shipment inspection. The pre-shipment is an option to be exercised by the Insurance Company. If the Insurance Company so wishes it has to appoint a surveyor for such a pre-shipment inspection.
(d) The National Insurance Company did not opt for a pre-shipment inspection of the gloves and they have issued the policy without any reservations, which clearly showed that the opposite party was convinced of the sound nature of the goods. If they had not insisted on such a pre-shipment inspection, it is their fault and cannot be attributed to the complainant.
(e) The Clearing and Forwarding agent, "ruby Shipping Agency Private Ltd. Calcutta, issued certificates regarding the quality and fitness of the goods before loading.
THE learned Counsel for the complainant heavily relied upon the survey report in support of his contention that goods were damaged due to water during transit and loss assessed should be granted to him. Findings
THE first issue that is to be decided is about whether the complainants are entitled to file complaints and whether they can claim redressal for deficiency in this case. From the contract terms, it is very clear that it is a CIF contract and that the title of the goods and insurable interest passed to the complainants. The opposite party has laid down elaborate procedure in nominating their own surveyors at the destination and nominating a person in London who in turn has an agent in Germany to settle the claims. The complainants have followed all the requisite procedures in referring the matter to the shipping agents and to the designated surveyor. The opposite party themselves have not seriously challenged the locus standi of the complainants to file the complaints. Their only argument is that the Indian Exporter is a necessary party and that the complaints suffer from non-joinder of parties. However, we do not find that the Indian Exporter is a necessary party since the opposite party has not denied the damage to the goods. Secondly, the reports of the three investigators appointed by the opposite party to inspect the premises of the leather-stitchers have come too late in the day and have no evidentiary value. It is strange that the Insurance Company has assigned the task of conducting a thorough investigation into the pre-shipment history of the consignments or examining the manufacturing process of the leather gloves, to the three investigators, nine to ten months after the goods were exported, whereas it (the Insurance Company) ought to have studied these aspects before issuing the Insurance Policies. How can an investigator find out the pre-shipment conditions of the goods when they cannot physically see the goods in question? The reports of all the three investigators are identical except with minor difference in language and are in the nature of doctored documents, produced to suit the requirements of the Insurance Company. Their findings that rain could have effected the moisture content or damaged the leather gloves before being stuffed into the containers are purely speculative. Further, the argument that no pre-shipment inspection was made is self-defeating argument. When the Insurance Company has issued a policy covering the risk from warehouse to warehouse, it was essentially for them to have ensured that a pre-shipment inspection was carried out if they had so desired. If they have not done, it is a serious fault on their part.
There is also force in the argument of the Complainant that the exporter has been in the leather export business for 10 to 15 years and there was no problem with the quality of the gloves manufactured and exported by him, other than the present consignments.
A close perusal of the surveyor''s report dated 25. 1. 1996 clearly reveals that: "finally altogether eight containers containing 500 cartons of gloves arrived heavily water damaged". The surveyor gave a very vivid description of the damage caused to the cartons and to the gloves. "the gloves were moist to wet, partly heavily, mouldly and discoloured partly, partly badly rust marked from rusty staples and with an evil/nauseating smell". As regards the cause of the damage, at least as regards 160 cartons, the surveyor states that these cartons had obviously been affected by wetting at different stages of transit. These cartons were externally wet and moist at areas. The opposite party admits that in these circumstances, it must be assumed that the hundred and sixty cartons had partly been affected by water which had gained access to the inside of the container at different stages of transit. The other opinion given by the surveyor for water damage is that "the consignment of gloves must have had an excessive moisture content already when stuffed to the container for transit. It was obvious that there had been a development of container sweat during transit which had also contributed to the damage sustained. "
ASSUMING that these options have merit, it is clear that the container sweat developed during transit and the damage would be covered by the insurance. The opinion that the gloves must have had excessive moisture already when stuffed is only speculative and there is no evidence for it. Perhaps this contingency could have been avoided had the Insurance Company opted for a pre-shipment inspection, which it had not done. Since the insurance covers from warehouse to warehouse, we must hold that the total damage is covered by the insurance. Reference to the exclusion Clauses 4. 3 and 4. 4 fails for the above reasons. Further even as late as August 2000, the opposite party was promising the complainant that the matter is under examination and consideration and that they would revert back soon. They have taken almost five years in repudiating the claim, that too on speculative grounds and cannot be accepted. Under the circumstances, since the damage caused to the goods has been clearly established and since the surveyor of the opposite party has clearly assessed the loss due to damage, we allow the Original Petition in favour of complainant. The goods were ordered for being supplied to the Defence of Germany and the surveyor has considered the loss after taking into consideration of Indian Currency Exchange rate at that time being 1d. M. =rs. 24, and after considering the 27% cost was saved of the insured value in each invoice, the damage of 73% is estimated.
FOR the forgoing discussion we accept the surveyor''s report assessing the loss suffered by the complainant and direct the Insurance Company to pay the amount as under: (a) In Original Petition No. 313 of 2002, the opposite party is directed to pay an amount of Rs. 27,60,000. 00 plus survey fee of Rs. 76,782. 96 with interest @ 6% p. a. from 30th April, 1996 till date of payment and a cost of Rs. 10,000. 00 within four weeks from the date of order. (b) In Original Petition No. 431 of 2002, the opposite party is directed to pay an amount of Rs. 20,92,584. 96 with interest @ 6% p. a. from 30th October, 1996 till date of payment along with a cost of Rs. 10,000 within four weeks from the date of order. (c) In Original Petition No. 109 of 2003, the opposite party is directed to pay an amount of Rs. 20,92,584. 96 with interest @ 6% p. a. from 30th October, 1995 till date of payment along with a cost of Rs. 10,000 within four weeks from the date of order. (d) In Original Petition No. 430 of 2002, the opposite party is directed to pay an amount of Rs. 20,14,800 survey fee Rs 76,782. 96 with interest @ 6% p. a. from 30th April, 1996 till date of payment along with a cost of Rs. 10,000 within four weeks from the date of order. (e) In Original Petition No. 37 of 2003, the opposite party is directed to pay an amount of Rs. 50,40,000 plus survey fee Rs. 2,62,863. 52 with interest @ 6% p. a. from 30th April, 1996 till date of payment, along with a cost of Rs. 10,000 within four weeks from the date of order. (f) In Original Petition No. 34 of 2003, the opposite party is directed to pay an amount of Rs. 20,42,082 with interest @ 6% p. a. from 30th October, 1995 till date of payment along with a cost of Rs. 10,000 within four weeks from the date of order. (g) In Original Petition No. 315 of 2003, the opposite party is directed to pay an amount of Rs. 20,91,582. 96 plus survey fee Rs. 76,782. 96 with interest @ 6% p. a. from 30/4/1997 till date of payment, along with a cost of Rs. 10,000. 00 within four weeks from the date of order. Complaints allowed.