Rusan Pharma Private Limited vs ORIENTAL INSURANCE CO. LTD.

THE Complainant -Rusan Pharma Private Limited is a Private Limited Company. The Opposite Party, Oriental Insurance Company Limited, issued "All risks open Marine Policy" bearing No. 121600/2381/12973/2/95/00112 to the Complainant to cover all the risks during transit of exporting goods. The Complainant had a continuous business relationship with the opposite party, and as per the terms of the said open policy, the Complainant was required to make declarations and inform Insurance Company as and when the complainant required to export the goods. Accordingly, complainant furnished the particulars of two consignments, one consignment of 192 corrugated boxes containing medicines for value of Rs. 12,67,200 from Bombay to Moscow and the second consignment of 197 corrugated boxes for the value of Rs. 15,36,186 from Bombay to Moscow. The goods were exported through vessel m.v. "KONSTANTIN PAUSTOUSKIV" under Bill of Lading No. KP -M 19/BO 147 dated 16.10.1994. The vessel sailed from Bombay on or about 24.10.1994, and due to technical defect, the Steamer Company transhipped the goods at Dubai and loaded into another vessel "DIMITRIY ULYANOV" and the second vessel sailed from Dubai on 6.11.1994 and reached Venice on 30.11.1994. The goods were loaded in trucks and trains and reached Moscow on 28.12.1994. The complainant submitted that the transhipment is also covered under the said policy.

AT Moscow, the Government Department found the goods i.e., medicines were totally damaged as fhey were frozen and declared unfit for human consumption and got them destroyed. Russian Government issued a certificate to that effect and the translated copy of it in English is placed on record as Exhibit -B. Complainant claimed for total loss of this shipment due to reasons of climatic conditions in transit. The complainant by letter, dated 24.1.1995, lodged a claim with the Insurance Company, and on 25.1.1995, the claim was also lodged with the Steamer Company. A copy of the claim letter, dated 25.1.1995, lodged with the Steamer Company was also handed over to the opposite party. So, these are admitted facts from the parties.

THE complainant had a continuous business relationship with the consignee, a Russian party and always sent the goods packed in corrugated boxes, which is the usual accepted mode of packaging of medicines recognized all over the world. The goods got damaged in transit, which was beyond complainant''s control because the steamer had technical defect and the said goods had to be transhipped to Dubai and then to Venice and finally reached Moscow. Complainant suffered a total loss due to different climatic conditions in Dubai and at Moscow because the goods eventually were found to be totally frozen and not fit for human consumption. The complainant, in this case, had two options to recover the loss, (i) to initiate recovery proceedings against the Steamer Company, or (ii) to initiate recovery proceedings against the Insurance Company. Since additional premium has been paid by way of insurance premium over and above the freight and charges paid to Steamer Company, the insured always lodges a claim with the Insurance Company. It is averred by the learned Counsel Mr. H.H. Trivedi for the complainant that the Insurance Company, in normal course, pays the claim and then obtains subrogation letter to recover the said amount against Steamer Company. This is a known, usual and normal practice adopted all over the world. The Insurance Company could have also asked the complainant to take action against the Steamer Company, which they have not done. But, the insured has protected the Insurance Company''s rights by informing and lodging the claim with the Steamer Company.

COMPLAINAN T submitted invoice and packing list of the goods at the time of obtaining insurance cover, bill of lading and other documents from the Insurance Company immediately when the goods were loaded on the vessel. As for the certificate of damage and other documents from Russia, it took some time, as there was change of Government in Russia i.e., Communist Government into Democratic, during that time. The Russian Government issued a certificate and the same was submitted to the Insurance Company. Complainant received a letter, dated 15.3.1995, by the opposite party stating that complainant should advise the consignee to contact the claims settling agents viz. Messrs Ingosstrakh Insurance Company Limited, Moscow, Russia, with all original documents who would assist them to deal with this claim. Overseas Marine Claims Department of O.P. vide letter, dated 18.7.1995, wrote to the complainant that they had not heard from their Moscow Claims Settling Agents. One more letter, dated 2.5.1997, was sent stating that they had not received any information and cannot keep a file for an indefinite period and that they take it as no claim'' if no information is received within fifteen days. Thereafter, on 17.12.1997 they repudiated the letter, which is given here as under: "With reference to your above claim for breakage/damage to the consignment of medicines as reported to you by the consignees, we have to draw your attention to the fact that the damage/breakage to the consignment was not caused due to any perils insured but the proximate cause was due to delay in using unheated truck during the course of the road journey en route to the destination. The damage/breakage is attributable to container being loaded/hauled by unheated truck which was not suitable for transportation. The claim documents were submitted by you after a inordinate delay of more than 18 months and the right of recovery, if any, of the Underwriters has been prejudiced, since cause for the damage was due to delay'' hence the underwriters are absolved from liability to reimburse the loss under Exclusions 4.3 and 4.5 of the Institute Cargo Clause attached to the Marine Policy issued to you. The consignees failed to approach the designated claim settling agents at the destination and arrange for assessment of loss through Surveyor. Therefore, your consignees have failed to comply with the requisite formalities. Under these circumstances, we are repudiating our liability under the scope in view of the facts highlighted hereinabove."

OPPOSITE Party sent one more Fax, dated 21.1.1999, stating that no further correspondence will be entertained in this regard as the claim is not payable.

LEARNED Counsel for the complainant submitted that they have taken all the steps, which are possible within their power to take, but Insurance Company despite notice of loss and damage to the consignment did not take any action in the matter. In the present case, it was not possible to survey the goods, as the competent authority viz. Russian Government destroyed the goods under their Laws, on the ground that the medicines were inhuman for consumption. After the event of loss and damage, which caused filing a claim under the Insurance Law, it is for the Insurance Company to appoint a Surveyor to survey and submit the report. The opposite party repudiated the claim without obtaining opinion of their own Surveyors, which is deficiency of service. The consignee did not approach the Insurance Claim Settling Agent in Moscow, because he obtained "Commission''s Report", dated 20.12.1994, which stated that the breakage (shortage) occurred because (i) the goods were supplied in an unheated truck, and (ii) the container was not delivered in time. The Opposite Party was fully aware of the factual and true aspects of the case throughout, but did not make any inquiry with the Claim Settlement Authority, who is their appointed agent. Finally, the complainant has obtained a letter from the Surveyor and also legal opinion from Narichania and Narichania, Senior lawyer and an authority on Marine Law.

THE learned Counsel for the complainant referred to a letter written by Mr. Alexander Sharov, Average Agency Department, NHTOCCTTPAX Insurance Company Limited, which is associated with Opposite Party, on 16.3.2001, placed as Exhibit -B, inter alia, informed the complainant that "AKTL Commission Report issued by the Government approved warehouse could be treated as valid for considering claims, if any for settlement." Seabridge Maritime Agencies Private Limited sent a Fax, dated 7.12.1994, mentioning about the tele -communication between themselves and LEE N Muirhead stating that the delay, which was caused, was due to technical problem of the vessel, when it passed the Suez Canal and that it would be loaded on railway wagon to Moscow on 2.12.1994.

THE complainant submitted that they obtained the report from the competent authority of Russian Government and the report of the Government approved warehouse, which should be considered to pay the claim as per the notification issued under Sub -section 10 of Section 64UM of the Insurance Act. The Opposite Party, who is fully aware about this practical and legal defects of their own surveyor, delayed the settlement, and finally denied the claim, on the grounds, for which the complainant do not have any say in the matter.

THE complainant submitted that the consignment was shipped under usual Bill of lading with the usual terms and conditions. The consignee obtained Commission''s Report'', dated 20.12.1994, and hence, there is no deficiency in service by the consignee or the consignor in the said matter. The Commission''s Report is binding on all the parties. Mere letters, asking for documents, and adopting delaying practice by opposite parties is nothing but inaction and the same shows that the insurer did not peruse the matter to bring it to finality. The Insurance Company did not intimate the complainant to proceed against the Steamer Company, neither did it seek to execute a subrogation agreement and take action against the Steamer Company, nor did it take any action with their Surveyors.

THE complainant obtained legal opinion in his favour on all these issues raised by the opposite party from M/s. Narichania and Narichania, the Advocate on panel of the Oriental Insurance Company Limited and, who is an expert in marine matters.

THE learned Counsel for the complainant relied on the above expert opinion and contended that the grounds of repudiation by the opposite party are not justified. The goods insured have been covered by the policy and the reference to "the unheated truck" and the delay was due to the negligence on the part of the carriers in arranging for adequate transportation of the insured goods from the ship to the warehouse. It was not incumbent upon the complainant to ensure appropriate protection from exposure to the goods while they were being transported from the ship to the warehouse. The Exclusion Clause 4.5 of the Institute Cargo Clauses ( C ) is not applicable, in view of the "Commission''s report". The complainant contended that he is entitled to the claim as prayed for. The complainant pray for the compensation of Rs. 28,03,386 with interest at 18% with effect from 1st July, 1996 till the date of payment; a sum of Rs. 50,000 for mental torture and harassment and Rs. 1,00,000 for the legal fees.

THE learned Counsel Mr. A.K. Raina for the Opposite Party argued that the repudiation vide letter dated 17.12.1997 is justified because in the contract it was clearly mentioned that the claims were payable at destination by BRO II through their selling agents M/s. Insurance Company of the USSR (Ingosstrakh) Limited agents of Websters, London. It is the consignee who was required to contact the agents of the insured which they failed to do, despite repeated letters to this effect. Vide letter, dated 15.3.1995, the complainant was also advised to contact their Claims Settling Agents in Moscow and another letter, dated 18.7.1995 was sent as a followup. It is the complainant who did not act for 23 months. The complainant did not send the complete documents for processing the claim. Another letter was sent to the complainant on 21.2.1997 enquiring whether the complainant or their, consignee had contacted the insurers claim settling agents in Moscow. To this, vide letter, dated 6.3.1997, the complainant merely replied stating that they have not received any information from the consignee in this regard. Opposite Party vide letter, dated 2.5.1997 asked the complainant to provide relevant documents or else the files could not be open for indefinite period and it would be considered as no claim. The complainant replied to this on 29.5.1997 stating that the consignee obtained a "Commission''s report" and that it should be read as survey report. The learned Counsel for the Opposite Party argued that the so -called "Commission''s report" is inadmissible as evidence and the inordinate delay of over two years in submitting basic documents for processing of the claim was not explained. Further, the change of Government in Russia was smooth transition known as "the velvet revolution" and that this contention is irrelevant.

IT is also argued by the learned Counsel for the Opposite Party that the complainant did not clarify that they have taken action against the carrier, i.e., transporter, which they could have usually done immediately and the delay on the part of the complainant has prejudiced the rights of recovery to the insurer i.e., Insurance Company. It is contended that the Russian Government could not have destroyed the goods without intimation to the complainant and that the complainant would have been given intimation for destruction of the allegedly damaged consignment of the medicines by the Russian Government. It is also submitted that the destruction of goods by the Russian Government is illegal and unwarranted and the complainant ought to have sued the Government for recovery of the value of goods.

LASTLY , the learned Counsel for the opposite party contended that the alleged letter dated, 16.3.2001, issued by Mr. Alexander Sharov of the Average Agency Department of settling agents in Moscow i.e., Ingosstrakh Insurance Company is a forged letter. The learned Counsel contended that Mr. Sharov never wrote this letter. Mr. Sharov in his statement, dated 14.11.2001, stated that he never signed such letter nor did he sent it to the complainant and that this claim was never registered by the Average Agency Department. The learned Counsel contended that there is no deficiency of service by the Insurance Company and that the complainant has not come with clean hands as he forged the alleged letter of Mr. Sharov and that this complaint should be dismissed.

WE heard the learned Counsel for the parties and perused the documents on record. In our view, firstly, the policy in the present case is admittedly covered under all risks open marine policy, which covers all the risks during transit of exporting the goods and the opposite party cannot take advantage of the situations which arc beyond the control of the insured as well as the carrier; secondly, the allegation that there is enormous delay on the part of the complainant in pursuing the claim with the agents in Moscow is not justified because the complainant has informed the opposite party with whom the insurance policy has been negotiated and ultimately are accountable for the lapses of their agents i.e., their settling agents and any inaction of the settling agents is the responsibility of the opposite party ; thirdly, the settling agents in Moscow did not furnish any information regarding this consignment and report the action taken by the Russian Government in destroying the goods. It is the consignee, who obtained the said Commission''s Report, and only then the complainant came to know about what happened with the consignment; fourthly, the opposite party merely stated that Mr. Alexander Sharov denies the contents of the letter, dated 16.3.2001, whereas the letter, dated 16.3.2001, was on the original letter head of the Insurance Company, and the alleged statement made by Mr. Sharov, which is relied upon by the opposite party is on a plain paper and opppsite party did not file Mr. Sharov''s affidavit to prove their contention; fifthly, the Government''s "Commission report" shows that the goods were destroyed after quite some time, whereas the opposite party could have appointed the Surveyor immediately and get their own report, which they did not do, which itself is deficiency in service. The opposite party cannot take shelter under Clause 4.3, which relates to insufficiency or unsuitability of packing material. Now the case here is as to the declared consignment was pertaining to corrugated boxes, which were put into containers in the normal packing practice adopted. The damage to the goods is not because of the insufficiency of packing, and hence, this clause is not applicable for rejecting the claim of the complainant; sixthly, the Clause 4.5 relates to delay, which was unreasonable and caused by the insured and must be proximate and direct cause for damages/loss. The consignment sailed from Bombay on 24.10.1994 and arrived in Moscow on 20.12.1994, which is within a period of two months, hence there is no delay in voyage; seventhly, the technical problem with the vessel caused the delay and the complainants cannot be held responsible for the transhipment at Dubai to Venice and then the consignment was loaded on railway wagons and dispatched to Moscow. This is beyond the control of the complainant; eighthly, we agree with the opinion given by M/s. Narichania and Narichania, that the underwriters cannot reject this claim and the reasons are given vide letter, dated 13.12.1999 (Exhibit O''), which are as under: "If there was delay, the same was only slight delay which was caused as a result of unauthorized transhipment of the consignment and technical difficulties faced by the vessel en route Suez Canal. Under the B/L the Shipowners has liberties to tranship the consignment. Thus the delay cause due to the liberties granted to the Shipowner cannot be called delay caused by the insured so as to entitle the Underwriters to reject the claim under Clause No. 4.5 of the policy. Further, Clause No. 8.3 provides that the insurance shall remain in force during the delay beyond control of the assured, due to re -shipment or transhipment and during variation of the adventure arising from the exercise of liberty granted to the shipowners or carriers. Keeping in mind Sections 50 and 51 of the Marine Insurance Act and Clause No. 8.3 of the policy, the delay caused in the subject matter as a result of transhipment of the consignment and the technical difficulties faced during the Suez channel entitles the insured be excused, the same being caused as a result of transhipment, arising from the exercise of liberties granted to the Shipowner under the B/L and was beyond control of the insured. Thus the Underwriters cannot reject the claim on account of delay and the stand taken by them is wrongful."

Lastly, this case pertains to the year 1994 and the complainant suffered loss due to what happened to the consignment, and the events that took place during the transhipment were not even within his knowledge for quite some time and were beyond his control. When it was brought to his knowledge, he alerted the Insurance Company, which should have acted upon immediately, Surveyor or no Surveyor to settle the claim. It is the Insurance Company, which has appointed its settling agents, but they have not even raised a little finger during all these years to sort out the matter, despite having taken premium from the complainant. In our view, it is clearly deficiency of service on the part of the Insurance Company.

FOR the reasons given above, the petition is partly allowed, and we direct the Insurance Company to pay an amount of Rs. 28,03,386 with interest @ 12% from 1.7.1996 to till the date of payment along with Rs. 25,000 as costs to the complainant within two months from the date of this order. Complaint partly allowed.