Techno Ceramics Inc. And Ors. vs NATIONAL INSURANCE CO. LTD.

M /s. Techno Ceramics Inc (hereinafter referred to as complainant No. 1) and M/s. Jyoti Ceramic Industries P. Ltd. (hereinafter referred to as complainant No. 2) have filed a joint complaint against National Insurance Company Limited (hereinafter referred to as Opposite Party) alleging deficiency in service on the part of the opposite party in respect of the insurance claim regarding destruction of the insured consignment despatched by complainant No. 2 to complainant No. 1 in a fire accident.

BRIEFLY stated, the allegations in the complaint are that second complainant pursuant to the order received from the first complainant shipped a cargo comprising of "Zirconium Oxide Macro Micro Grinding Media" valued at US $ 53,965/ - to the complainant No. 1 vide invoice No. 220135 dated 31.03.2000. The second complainant before shipping the cargo obtained Open Marine Insurance Policy for US $ 59675/ - to ensure the risk during transit from complainant No. 2 factory at Nasik to anywhere in the world. The said cargo was unloaded at Toronto Port, the nearest port from the place of destination. The cargo from Toronto was transported by road to Eastern America Warehouse in Philadelphia, which was a customs appointed Warehouse. Although, at the relevant time, the import of ceramic products in USA from India was exempted from customs duty but the custom formalities and clearance of cargo were required to be complied with before the clearance of goods. According to the complainants, the first complainant submitted all the documents to US custom authorities for clearance of their cargo from the customs bonded ware house and obtained clearance from the custom authorities on 16.05.2000 at around 12.29 p.m. The copy of the clearance from the customs was forwarded to the customs bonded ware house for release of the cargo alongwith the requisite payment. Before the cargo could be released to the complainant No. 1 on 20.05.2000, a fire accident took place in the said bonded ware house resulting in complete destruction of insured consignment. The first complainant immediately informed the opposite party. The opposite party appointed M/s. Ewig International Marine Corporation, USA to carry out survey and loss assessment. The first complainant submitted duly filled marine claim form to the opposite party making it clear that the delivery of cargo was awaited when the fire took place. The first complainant lodged its claim on the local claim settling agents of the opposite party for US $ 53,965/ -. The second complainant also submitted claim bill to the opposite party for US $ 64,362/ - on behalf of the first complainant. It is the case of the complainants that M/s. Ewig International Marine Corporation carried out the survey but did not provide the copy of the same to the complainants and the copy of the survey report was sent to the second complainant after a lapse of about 1 year from the survey. According to the complainants they cooperated with the investigation and provided all the requisite documents and information to the opposite party but the opposite party has failed to settle the insurance claim and instead repudiated the insurance claim vide letter dated 17.10.2002. This according to the complainants amounts to deficiency in service. Thus, the complainants have raised the consumer dispute. The opposite party insurance company has resisted the complaint. The opposite party has pleaded in the written statement that insurance claim was rightly repudiated on the basis of survey/investigation report from M/s. Ewig International Marine Corporation, U.S.A.. It is alleged that it is clear from the report of M/s. Ewig International dated 20.06.2001 that a meeting was organised by the surveyor M/s. Ewig International with Mr. Chatru Wadhwani, director of consignee/complainant No. 1 to clarify certain facts and Mr. Wahdwani stated that Eastern America Ware House was the final destination and the shipment was to be distributed directly to the customers of complainant No. 1 in Ohio from the Eastern America Warehouse. It is thus, the case of the opposite party that consignment had reached final destination on 12.05.2000 much before the fire accident. Therefore, the claim was rightly repudiated in terms of clause 8 of Institute Cargo Clauses (A) of Marine Insurance Policy.

IN support of their case, the complainants have filed affidavit of Viraf Deboo, General Manager of the complainant, whereas Opposite Party has filed affidavits of Mrs. Shanta Gopinath of Ewig International Marine Corporation as also affidavit of Shri N.S. Dhillon, Deputy Manager, National Insurance Company besides the relevant report of the surveyor and the copy of the repudiation letter.

UNDISPUTEDLY complainant No. 2 had shipped the said cargo to the complainant No. 1 and that cargo was duly insured. It is also not in dispute that after being unloaded at Toronto port, the cargo was transported by road to customs bonded warehouse, namely, Eastern America Warehouse in Philadelphia. Complainant No. 1 obtained clearance for removal of goods from the custom authorities on 16.05.2000 but before the goods could be removed from the warehouse on 20.05.2000, the cargo was destroyed in a fire accident. The insurance claim of the complainant was repudiated by the insurance company on the premise that the goods before the incident of fire had already reached the final destination at Philadelphia with which the insurance contract stood terminated. Thus, the short point which requires determination in this matter is whether prior to the date of fire, the insurance contract had come to an end or on the relevant date the insurance was still in subsistence? Learned counsel for the complainant has contended that as per the terms and conditions of the insurance contract, the cargo was insured during transit from the factory of complainant No. 2 to anywhere in the world. Clause 8.1.3 of the Institute Cargo Clauses in the insurance contract provides that the insurance contract would terminate on expiry of 60 days after completion of discharge overside of the goods insured from the overseas vessel at the final port of discharge. It is argued that from the aforesaid clause, it is evident that insurance cover would remain in force upto 60 days from the completion of discharge of goods from carrying vessel. The cargo was discharged at Toronto port on 10.05.2000 as it is obvious from survey report of M/s. Ewig International and the fire accident took place before the expiry of said period on 20.05.2000. Thus, the opposite party was not justified in repudiating the insurance claim on the ground that insurance contract has come to an end. It is further argued on behalf of the complainant that otherwise also, the insurance contract was valid till the insured goods were received at the premises of the complainant No. 1 at Lower Make Field, Philadelphia. Expanding on the arguments, it is contended that from the report of the Surveyor, it is obvious that subject goods were destroyed in fire accident on 20.05.2000 while the goods were still in the custom bonded warehouse, namely, Eastern America Warehouse. It is argued that although complainant No. 1 after completing formalities had obtained clearance from the custom authorities on 16.05.2000, copy of which was forwarded to the bonded warehouse, the delivery was yet to be received by complainant No. 1. Thus, it is evident that goods at the time of fire accident had not reached the place of destination and, as such, insurance contract was in subsistence and there is no justification for repudiation of the contract. In support of his contention, learned counsel for the complainant has relied upon the judgment of this Commission in the matter of Addi Industries Ltd. V. New India Assurance Co. Ltd. : CPJ III (2007) 380 NC and Consumer Education & Research Society & Anr. Vs. The New India Assurance Co. Ltd. (NC) in RP No. 2721 of 2007 decided on 13.12.2007.

LEARNED counsel for the opposite party has contended that the insurance contract between the parties is governed by Institute Cargo Clauses (A). It is argued that in view of clause 8 of the aforesaid clause, the insurance contract has been rightly repudiated. Expanding on the argument, learned counsel for the opposite party has taken us through clause 8 of Institute Cargo Clauses (A) and submitted that clauses 8.1, 8.1.2, 8.1.2 and 8.1.3 stipulates the alternative contingencies on happening of which the insurance contract would come to an end. It is argued that clause 8.1 stipulates that insurance attaches from the time the goods leave the warehouse or the place of storage at the place named for the commencement of transit and continues during the ordinary course of transit and terminates on completion of either of the contingencies mentioned clauses in clauses 8.1, 8.1.2 and 8.1.3 of the contract. Learned counsel has submitted that from the report of M/s. Ewig International, it is clear that delivery had been effected on the final warehouse at Philadelphia, the destination named in the policy. In support of this contention, it is argued that Eastern America Warehouse was house for storage of the goods by complainant No. 1 and it was also meant for allocation/distribution of the said goods to the customers in Ohio as it is evident from the admission in the statement of Mr. Chatru Wadhwani, director of complainant No. 1 referred to in the report of Ewig International.

IN the light of the aforesaid admitted facts, now we proceed to analyse the insurance contract in order to find out the answer to the question whether or not at the time of fire accident resulting in loss of the subject cargo, the insurance contract was in subsistence? On perusal of the marine insurance certificate issued by the opposite party, it is clear that complainant No. 1 M/s. Techno Ceramics Inc, Makefield Executive Quarters, Suite 101A, 201 Oxford Valley, Lower Makefield, USA is the insured and as per the terms of insurance mentioned at the bottom of the certificate, the insurance cover is granted against all risks subject to Institute Cargo Clauses (A) and Institute War and Strike Clauses No. 1, 10, 11, 16 & 24. Thus, it is clear that the insurance cover provided by opposite party No. 1 is subject to Institute Cargo Clauses of the insurance contract.

CLAUSE 8 of the Institute Cargo Clauses deals with the duration of the insurance contract which reads as under: "8. Duration

8.1 This 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

8.1.1 on delivery of the consignees or other final warehouse or place of storage at the destination named herein.

8.1.2 on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which the assured elect to use either.

8.1.2.1 for storage other than in the ordinary course of transit or

8.2.2.2 for allocation or distribution Or

8.1.3 on the expiry of 60 days after completion of discharge overside of the goods hereby insured from the overseas vessel at the final port of discharge.

which shall first occur."

ON reading of the above, it is clear that clause 8.1 stipulates that the insurance cover starts from the time the goods leave the premises of the consignor for transit and continues during ordinary course of transit and terminates whenever either of the conditions stipulated in clauses 8.1, 8.1.2 and 8.1.3 is complete. On perusal of the supplier invoice dated 31.03.2000, Bill of Lading No. ANG/JNP/PHL/2094, Shipping Bill as also Marine Insurance Policy issued by opposite party, it is clear that in all these documents, the port of loading is shown as "India" and Port of Discharge is shown as "Philadelphia, USA" and in the column of "Final Destination" in the invoice " U.S.A." is mentioned. Similarly, in the Bill of Lading, place of delivery is specifically mentioned as Philadelphia. Same is the case in respect of Shipping Bill. In the Marine Insurance Certificate, the Port of Discharge is Philadelphia. In neither of these documents, a specific mention of place of delivery of goods to the consignee is mentioned. Thus, it can be safely inferred that place of delivery was Philadelphia USA. Admittedly, cargo in question were transported from Toronto Canada to Philadelphia by road and it reached Eastern America Warehouse Philadelphia on 16.05.2000. Therefore, it can be concluded that goods reached the place of discharge i.e. Philadelphia USA on 16.05.2000 when those goods were delivered in Eastern America Warehouse. As per clause 8.1.1, the moment goods reached at the destination at Philadelphia, insurance contract came to an end. Contention of the complainants is that clause 8.1.1 is not applicable in this case for the reason that the goods in question were neither delivered to the consignee nor Eastern America Warehouse, which was a custom bonded warehouse and was not the final warehouse or the place of storage of complainant No. 1 at Philadelphia. We do not find merit in this contention.

THE opposite party in support of its case had filed affidavit evidence of Shanta Gopinath of M/s. Ewig International Marine Corporation, who also is the signatory of the survey report Ex. R -1, proved on record. In para 2 of the affidavit, Ms. Shanta Gopinath has referred to certain information given by Mr. Chatru Wadhwani, director of complainant No. 1 in respect of identity of place of final receipt and storage. Relevant paragraph is reproduced as under: "2. I also state that we had a meeting on May 14, 2001 with the consignee Mr. Chatru Wadhwani. This meeting was arranged in order to clarify certain points about final receipt and storage of the subject shipment. At the meeting Mr. Wadhwani had stated that Eastern America Warehouse was the final warehouse and that this shipment was going to be shipped directly from Eastern America Warehouse to his customer in Ohio. We were also informed by Mr. Wadhwani that Eastern America Warehouse had two different sections : one section for holding shipments prior to customs clearance and one section for continued storage and distribution of customs cleared shipments awaiting delivery and/or pick up by the respective consignee. The surveyor later confirmed this."

ON reading of the above, it is clear that as per the evidence of Shanta Gopinath, Mr. Chatru Wadhwani, Director of complainant No. 1 had clarified that Eastern America Warehouse was final warehouse for the subject shipment and from there complainant No. 1 was to ship the goods directly to his customers in Ohio. It is further stated in the affidavit that as per the information given by Mr. Wadhwani, Eastern America Warehouse had two different sections: one section for holding shipments prior to customs clearance and other for storage of goods and distribution of cleared shipment awaiting delivery or pick up by the respective consignee and this fact was later confirmed by the surveyor. There is no reason to disbelieve the aforesaid evidence of Shanta Gopinath and also the report of the surveyor M/s. Ewig International Marine Corporation particularly when the complainants have not bothered to seek permission to cross examine this witness to test the veracity of the said witness nor complainants have examined Mr. Wadhwani to deny or controvert the aforesaid averments in the affidavit and the survey report. Thus, in view of the uncontroverted statement of Ms. Shanta Gopinath and survey report, it is established on record that M/s. Eastern America Warehouse was the final destination of the cargo at Philadelphia from where the complainant No. 1 was supposed to supply the aforesaid cargo to his customers in Ohio. Admittedly, customs department had cleared the goods lying in the aforesaid warehouse. Therefore, in view of clause 8.1.1 and 8.2.2, the duration of insurance contract came to an end on 12.05.2000 when the goods reached the Eastern America Warehouse at Philadelphia or in any case when the goods were cleared by the custom authorities at USA on 16.05.2000. It may be noted that since the subject cargo was to be supplied to customers of the complainant No. 1 in Ohio directly from Eastern America Warehouse, Philadelphia, the complainant No. 1 evidently got delivery of the goods as soon as customs authorities at USA had cleared the removal of the goods on 16.05.2000. Thus, the insurance contract comes to an end on 16.05.2000 in view of clauses 8.1.1 and 8.1.2 of Institute Cargo Clauses (A). Admittedly, the fire accident resulting in loss of goods took place on 20.05.2000 when the insurance contract was not in subsistence. Therefore, we find nothing wrong on the part of the opposite party to repudiate the insurance claim. Learned counsel for the complainants have heavily relied upon clause 8.1.3 which provides that insurance contract would terminate on expiry of 60 days after completion of discharge overside of the goods hereby insured at the final port of discharge. Learned counsel has argued that goods reached at Toronto Port on 10.05.2000 and the fire accident had taken place before the expiry of 60 days from the unloading of goods at the said port. Therefore, at the time of fire accident, the insurance contract was still in subsistence. Above contention of the learned counsel for the complainant is misconceived for the reason that in clause 8 dealing with the "Duration", there is a word "or" is used in between clauses 8.1.1, 8.1.2, 8.1.2.1, 8.1.2.2.2 and 8.1.3 and at the bottom it is mentioned '' which shall occur first", which makes it clear that as per agreement, the insurance cover would end on happening of either of contingency.

THUS , it is clear that subject goods were delivered at final place of destination latest by 16.05.2000 when the same were cleared by the custom authorities at USA, as such, clause 8.1.3 is not applicable. As regards the judgment relied upon by the complainants are concerned, those are of no avail to the complainants because the said judgments are based upon their own distinct facts.

IN view of the above, it is concluded that insurance claim was rightly repudiated by the insurance company. As such, there is no deficiency in service on their part. Complaint is accordingly dismissed.