Sterling Computers Ltd. vs United India Insurance Co. Ltd.

THIS is a complaint under Sec. 17 read with Sec. 12 of the Consumer Protection Act.

THE complainant placed a purchase order with M/s. Spectra Innovations incorporated, U.S.A. for the purchase of 50 Nos. of quantum Winchester drives which are components of computers on 19.5.92. THE value of these goods comes to Rs. 24,750 USD. equivalent to Rs. 7,89,901-89. THEy were shipped through the 4th Opp. Party which is a break bulk agent. THE consignment was carried by the 5th Opp. Party Singapore Airlines and landed in the Madras International Airport on 10.6.92. THE consignment was insured with the first Opp. Party. THE bill of entry was filed by the complainant with the Customs Authority on 15.6.92 and they assessed duty at Rs. 11,66,555/-. Due to financial constraint the complainant could not pay the duty and clear the consignment immediately. On 9.3.93, the representative of the complainant went to the International Airport of Madras to pay the duty and clear the goods. THE consignment was found in shed ''A''. It was tampered with and the cartons were in a damaged condition. A request for inspection was therefore made to the Customs Authority and the third Opp. Party, International Airport Authority for survey. THE insurer was also informed. A survey was conducted by Mr. Subramaniam on 18.3.93. He found the carton in torn and tampered condition with adhesive tapes over the torn portions. THE complainant preferred a claim with the insurer. But there was no reply. He also preferred claims against the other Opp. Parties. As its claim has not been considered, it has filed this complaint against all the Opp. Parties claiming the value of the consignment at Rs. 7,89,901-89, Rs. 2,000/- as damages for loss of reputation and Rs. 10,000/- towards transport charges in all Rs. 9,99,901.89. The first Opp. Party, United India Insurance Co. Ltd., Whites Road, Madras admitted the issue of Marine Policy No. 011800/15/ 21/11/15042/92 covering 50 Nos. quantum Winchester drives against risk in transit from USA/Singapore to Madras Warehouse subject to other various clauses. The consignment has arrived at the Madras International Airport on 10.6.92, but the complainant has not taken delivery. In Feb. ''93 the complainant requested to grant storage extention under the policy but it was refused. The claim was made on 6.4.93 and not on 6.3.93 and was rejected by its letter dated 8.6.93. As per the policy, the liability continues from the time the goods leave the warehouse or place of storage named in the policy for commencement of the transit, continues during the ordinary course of transit and terminates either on delivery (a) to the consignee''s or other final warehouse or place of storage at the destination or (b) on the expiry of 30 days after completion of the discharge of the goods at the final port of discharge. Since the cargo in question was discharged at Madras on 10.6.92, no liability could be fastened on the Opp. Parties 1 & 2 after 10.7.92. It was also alleged that the complainant was guilty of breach of reasonable despatch clause in that he has not taken delivery for over 9 months. The claim against the first Opp. Party must therefore fail.

The second Opp. Party adopted the counter statement of the first Opp. Party.

THE third Opp. Party is the International Airport Authority of India, International Airport, Madras. It contended that the complainant is not a consumer so far as the third Opp. Party is concerned and the claim must fail. It is pleaded that the consignment landed in Madras Airport on 10.6.92 and notice was issued by the third Opp. Party to the 4th Opp. Party about the arrival of the consignment as soon as the consignment was handed over to the third Opp. Party by the 5th Opp. Party Airlines. THE cargo was not cleared within 45 days as required under Section 48 of the Customs Act and an uncleared import cargo notice was also sent to the consignee informing it that the goods could be disposed of under the Provisions of Secs. 48 and 150 of the Customs Act. Neither the complainant nor the 4th Opp. Party who is the agent of the complainant came forward to get clearance and simply slept over the matter. THE consignment was kept in ''A'' shed. Since the packaging was not adequate for multiple handling it was secured by the third Opp. Party by enveloping adhesive tapes on the consignment by way of precaution. THE goods were received on "said to contain" basis and the third Opp. Party was not aware of the contents. It is probable that the contents might have been short shipped or pilfered while in transit. This Opp. Party has taken all necessary steps for the safety of the cargo by providing security in the closed godown under lock and key. THE complainant has to blame itself for the loss allegedly caused because of its negligence in not clearing the goods. It therefore pray for the dismissal of the claim. The 4th Opp. Party was at first represented by Mr. Venkatesh, Sales Executive but subsequently he remained absent and no counter is filed. The 4th Opp. Party was set exparte.

THE 5th Opp. Party Singapore Airlines has filed a counter denying negligence or deficiency of service. It contends that the consignment was landed at Madras International Airport on 10.6.92 and was handed over to the custody of the third Opp. Party International Airport Authority of India on 10.6.93 in good condition. According to the 5th Opp. Party delivery to consignee shall be deemed to have been effected when the consignment has been delivered to the customs or other Government authorities as required by law or customs regulation. Reliance is also sought to be placed on Rule 27 of the First Schedule of the Carriage by Air Act. THEre has been no deficiency of service or negligence on the part of this Opp. Party and the claim against it has to fail. Exhs. Al to A 23 and Bl to B 23 are marked by consent. Proof affidavits are filed on behalf of the complainant and Opp. Parties 1, 2,3 & 5. No oral evidence has been let in. The points that arise for consideration are: (1) Whether there has been any deficiency of service or negligence on the part of the Opp. Parties or any of them? (2) Whether the complainant is a consumer as regards the third Opp. Party? (3) To what compensation if any is the complainant entitled and against whom?

POINT Nos. 1 & 2: The complainant has purchased 50 quantum Winchester Drives from M/s. Spectra Innovations Incorporated, U.S.A. and Exh. Al is the purchase order. The value is 24,750 USD equivalent to Rs. 7,89,901.89. The goods have been shipped through the 4th Opp. Party. M/s. Circle Freight International which is a break bulk agent for transport. The consignment has been carried from the United States to the Airport at Madras by the 5th Opp. Party, Singapore Airlines. Exh. A2 is the Airway Bill. The consignment has been issued with the United India Insurance Company represented by the Opp. Parties 1 & 2. Exh. A3 is the policy of insurance. The carton containing the quantum Winchester Drive was landed in the Madras International Airport by the 5th Opp. Party and handed over to the third Opp. Party International Airport Authority on 10.6.92. The consignment No. is 61893080654. Exh. B10 is the import manifest produced by the 3rd Opp. Party dated 10.6.92. It shows the receipt of this consignment bearing No. 8 61893080654 as O.K. which means that it has been received in good condition. Exh. A6 is the bill of entry filed by the complainant to the Customs Authority who assessed the duty at Rs. 11,66,555/-. Due to financial constraints the complainant could not pay the duty and take delivery immediately. Exh. B12 is the uncleared import cargo notice issued by the third Opp. Party International Airport Authority, Madras informing the 4th Opp. Party that if these goods are not cleared within 45 days from the date of arrival after payment of all charges including the demurrage charges accrued upto the date of clearance, the consignments will be disposed of in terms of the provisions of Secs. 48 and 150 of the Customs Act, 1962. Despite the notice, the complainant has not taken delivery. On 9.3.93 the representative of the complainant went to take delivery after payment of the duty and other charges, the consignment was found in shed ''A'' but it was found tampered with and the carton was in a damaged condition. He therefore made a request for inspection under Exh. A7 letter to the Duty Officer of the 3rd Opp. Party Airport Authority and to the Assistant Collector of Customs under Exh. A8 dated 18.3.93. The permission was granted. The Insurance Company which was also informed of the damage appointed a Surveyor and the Survey Report is Exhs. A13 and A14. The Surveyor found the carton in torn and tampered condition with adhesive tapes over the torn portion of the carton to cover them. There was no Winchester Drives found in the carton. The complainant preferred a claim to the Insurance Company and also against the other Opp. Parties. Its claim was not accepted and hence this complaint claiming compensation against all the Opp. Parties in the sum of Rs. 9,99,901-89.

WE shall deal with the case of the Opp. Parties separately. First in respect of the United India Insurance Company which is represented by the Opp. Parties 1 & 2. Exh. A3 is the policy of insurance. It covers risk in transit from U.SA./ Singapore to Madras Warehouse. The Institute Cargo Clauses in respect of Duration are as follows: "Duration 5.5.1 This insurance attaches from the time subject matter insured leaves the warehouse premises or place of storage at place named herein for the commencement of the transit. Continues during the ordinary course of transit and terminates either 5.1.1.on delivery to the consignees or other final warehouse, premises or place of storage at the destination named herein 5.1.2.on delivery to any warehouse, premises or place of storage whether prior to or at the destination named herein which the Assured elect to use either 5.1.2.1 for storage other than in the ordinary course of transit or 5.1.2.2 for allocation or distribution OR 5.1.3. on the expiry of 30 days after unloading the subject matter insured from the aircraft at the final place of discharge whichever shall first occur."

The insurance attaches from the time the subject matter insured leaves'' the warehouse, continues during the ordinary course of transit and terminates either on delivery to the consignee or other final warehouse, or on the expiry of 30 days after unloading the subject matter insured from the aircraft at the final place of discharge. This cargo in question has been delivered by the Singapore Airlines in good condition to the International Airport Authority, the third Opp. Party and kept in its warehouse. The liability of the insurer is over. At any rate the liability expires on the expiry of 30 days after unloading the subject matter insured from the aircraft at the final place of discharge. The consignment has been unloaded on 10.6.92 and the liability of the insurer expired by 10.7.92. There is absolutely nothing to show that any damage occurred during this period. The Insurance Company has therefore rightly rejected the claim under Exh. B8 dated 8.6.93. There is therefore no question of any deficiency of service or negligence on the part of the Opp. Parties 1 & 2. We shall consider the case of the third Opp. Party, the International Airport Authority of India, Madras last.

The 4th Opp. Party is Circel Freight International which is the break bulk agent through whom the consignment has been loaded in the Aircraft. There is absolutely no allegation of any negligence or deficiency of service on the part of the 4th Opp. Party. It is not the case of the complainant that the consignment was damaged even before it was loaded in the aircraft in U.S A The 4th Opp. Party cannot also be accused of any negligence or deficiency of service.

THE 5th Opp. Party Singapore Airlines which has carried the consignment from USA to Madras via Singapore. It has landed the consignment at Airport of Madras on 10.6.92 and delivered it to the third Opp. Party the International Airport Authority of India, Madras. THE third Opp. Party has also admitted in the counter itself that the consignment was received by the third Opp. Party from 5th Opp. Party who airlifted the cargo from USA to Madras (vide paragraph 7 of the counter of the 3rd Opp. Party). Exh. B10 dated 10.6.92 is the import manifest produced by the third Opp. Party International Airport Authority of India, which shows that this consignment bearing No. 61893080654 has been received as O.K. which means it was received in good condition. No negligence or deficiency of service can therefore be imputed to the 5th Opp. Party. Now to the third Opp. Party, the International Airport Authority of India, Madras. It is contended that the complainant is not a consumer so far as it was concerned and there was no privity of contract between the complainant and the third Opp. Party. The third Opp. Party International Airport Authority of India is a public undertaking which runs a cargo complex in every Airport in India. The cargo loaded and unloaded have to pass only through the third Opp. Party. The unloaded cargo is received by third Opp. Party and kept in its complex till its delivery to the consignee, after clearance by the Customs Authorities on payment of the Customs Duty and other charges. This service is not rendered by the third Opp. Party International Airport Authority of India gratis but for a consideration known as ''terminal processing and storage charges'', (TSP) or handling charges. If the consignment is not cleared for more than 7 days, the third Opp. Party is entitled to claim and recover demurrage charges. Exh. A21 is the pamphlet issued by the International Airport Authority which shows the rate of TSP charges and demurrage charges. Exhs. A20, A22 and A23 also show the receipt of handling charges from the complainant itself in respect of other imports. Under Sec. 2(1)(d)(ii) of the Consumer Protection Act a person is a consumer who hires or avails of any services for a consideration which has been paid or promised or partly paid and party promised, or under any system of deferred payment. The complainant who has imported this consignment has availed of the services of the Opp. Parties for consideration namely the payment of TSP charges at the time of taking delivery and is therefore a consumer within the meaning of the Act.

THE consignment in question which is a carton containing 50 Nos. of quantum WinChester Drives purchased by the complainant from M/s. Spectra Innovations incorporated U.S.A. under Exh. Al purchase order has been landed by the Singapore Airlines at Madras Airport on 10.6.92 and handed over to the third Opp. Party International Airport Authority. THE receipt of this consignment has been specifically admitted by the third Opp. Party in paragraphs 5 and 7 of the counter statement. Mr. G.V. Sekhar Babu, Assistant Law Manager of the third Opp. Party, International Airport Authority has in his affidavit also candidly admitted that the consignment was received from the 5th Opp. Party by the third Opp. Party. Exh. B10 import manifest filed by the third Opp. Party shows that this consignment bearing No. 61893080654 has been received as O.K. THE third Opp. Party which maintains the cargo complex has to keep the consignment in its custody until it has delivered to the consignee after customs clearance and on payment of the TSP or handling charges and in case the consignee fails to take delivery within 45 days from the date of unloading, it is open to the third Opp. Party to sell the same under Sec. 48 of the Indian Customs Act of 1962, and apply the sale proceeds in accordance with the provisions of Sec. 150 of the said Act. THE responsibility of the third Opp. Party International Airport Authority which takes custody of the consignment is that of a bailee governed by Sections 151 and 152 of the Indian Contract Act which run thus: "Section 151: In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take care of his own goods of the same bulk, quality and value as the goods bailed. Section 152: THE bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he had taken the amount of care of its described in Section 151."

THE third Opp. Party is bound to take as much care of the goods bailed to it as a man of ordinary prudence would in similar circumstances take care of his own goods. THE complainant in this case has not taken delivery of these goods for nearly 9 months and he has approached the Opp. Party No. 3 for taking delivery only on 9.3.93. Nodoubt under Sec. 48 of the Customs Act, as already pointed out, the third Opp. Party is entitled to sell the goods and apply the sale proceeds as per Sec. 150 of the Customs Act. THE third Opp. Party has not exercised this option, but has kept the consignment in its godown. But that does not in any way absolve the third Opp. Party as its responsibility as bailee to take proper care of the consignment as laid down under Sec. 151 of the Indian Contract Act. Exhs. A13 and A14 are the survey reports of the survey conducted by Mr. Subramaniam, Licensed Surveyor appointed by the insurer. His inspection reveals that the carton was torn along the corners on two sides with tapes fixed all along the damaged carton. According to him the carton was in torn and tampered condition with adhesive tapes over the torn portion of the carton to cover them. When opened it was found that it contained no Winchester Drive. It is significant to note that the Opp. Party in its counter statement has admitted that since the packaging of the consignment was not adequate for multiple handling it was secured by the third Opp. Party by enveloping adhesive tapes on the consignment by way of precaution. The adhesive tapes found on the carton have therefore been fixed by the third Opp. Party. The contention that the adhesive tapes were fixed by way of precaution is relied by the report of the Surveyor who has found that the carton was torn along the corners on two sides and adhesive tapes have been fixed to cover those portions. It needs no shrewdness to discern that the carton has been torn open, the contents removed and tapes are fixed on the torn portions while the consignment was in the custody of the third Opp. Party which has admitted fixing the adhesive tapes. It is contended by the third Opp. Party that it has taken all necessary precaution for the safety of the cargo by providing security in closed godown under lock and key and is not therefore responsible for the tampering and theft of the contents of the carton. The burden of proof lies on the bailee to show that such care as a man of ordinary prudence would have exercised was duly exercised by it. (Maung Po Theik v. Maung Tha Byawe, 74 Indian Cases page 18 quoted in Sanjiva Row''s Indian Contract Act page 1681 6th Edition). The law is thus stated in Indian Contract Act by Pollock & Mulla, 10th Edition page 785. "In cases governed by the provisions of Sections 151 & 152, the loss or damage of goods entrusted to a bailee is prima facie evidence of negligence, and the burden of proof, therefore, to disprove negligence lies on the bailee."

In I.L.R. 1957 Madras page 840 at 844, the High Court of Madras has held that it is for the bailee who seeks to be relieved of his responsibility for the loss, destruction or deterioration of the goods to prove that he had taken proper care of the goods to the extent required by Section 151 of the Contract Act. It is also well established that a bailee is responsible for the damages caused to the goods bailed by the negligence of his servants acting in the course of their employment about the use or custody of the goods. (Hasthmal v. Rafiuddin, AIR 1953 Bhopal 5 and Cooch Vihar Commercial Company v. Union of India, AIR 1960 Calcutta 455 at 457). The proof of loss by private steath committee by a third party is not sufficient to rebut the presumption of negligence of the bailee. (Narasimha Swami v. Muthukrishna, AIR 1962 Madras 244). It may also be pointed out that under Section 106 of the Indian Evidence Act, when any fact is especially within the knowledge of any person, the burden of proving that fact is upon that person.

AS per Exh. B 10 Import manifest filed by the third Opp. Party, this consignment bearing No. 61893080654 has been received by the third Opp. Party from the 5th Opp. Party Singapore Airlines in ''O.K.'' condition. It has been kept in the Shed ''A'' of the cargo complex of the third Opp. Party, Madras Airport. When the Surveyor inspected the consignment on 18.3.93, the carton has been found tampered with and torn open contents removed and the torn portions fixed with adhesive tapes. Nothing could be clearer than that this carton has been tampered with and the contents stolen while it was in the shed ''A'' in the cargo complex of the third Opp. Party and this should have happened at the instances of the employees of the third Opp. Party or with their convenience. The third Opp. Party has failed to discharge its burdens as to how this damage to the carton occurred while it was in its shed under lock and key. The conclusion is irrestible that there has been gross deficiency of service and negligence on the part of the third Opp. Party and it is solely and absolutely responsible for the loss sustained by the complainant. Point Nos. 1 & 2 are found accordingly.

POINT No. 3: The complainant is entitled to the value of the consignment which as per Exh. Al purchase order is 24,750 US$ equivalent to Rs. 7,89,901-89 as stated in the complaint. The complainant has paid freight charge of Rs. 13,787/- as per the bill of entry and insurance amount of Rs. 3,884/- (vide Exh. A3 policy) in all Rs. 8,06,572-89. The complainant has claimed damages in the sum of Rs. 2,00,000/-. It has imported these Winchester Drives used as components for computers. The loss of the consignment must have resulted in loss of business. The complainant''s directors must have also put to much mental pain and agony. However, the claim of Rs. 2,00,000/- appears to be high. We are inclined to grant compensation in the sum of Rs. 50,000/- and costs of Rs. 3,000/-.

In the result, we order as follows: (1) The third Opp. Party, International Authority of India shall pay to the complainant Rs. 8,06,572-89 towards loss sustained by the complainant. (2) The third Opp. Party shall also pay to the complainant Rs. 50,000/- as compensation. (3) The third Opp. Party shall pay to the complainant Rs. 3,000/- towards costs. (4) The claim of the complainant against the other Opp. Parties fails and is dismissed, but without costs.

BEFORE parting with this case, we would like to express our anguish and agony at the frequent loss of air cargoes. The third Opp. Party Public Undertaking should exercise greater vigil, take stringent action against the erring employees and recover the loss from them. Complaint allowed as against third Opp. Party.