DR. INDER JIT SINGH, MEMBER

1.         The present Revision Petition (RP) has been filed by the Petitioner against Respondent as detailed above, under section 21(b) of Consumer Protection Act, 1986, against the order dated 24.09.2007 of the State Consumer Disputes Redressal Commission, Delhi (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 07/506  in which order dated 04.05.2007 of District Consumer Disputes Redressal Forum (Central), Delhi (hereinafter referred to as District Forum) in Complaint (CC) No. 586/2003 was challenged, inter alia praying for setting aside the order dated 24.09.2007 passed by the State Commission.

2.         While the Revision Petitioner(s) (hereinafter also referred to as Opposite Party) was  Appellant before the State Commission and Opposite Party before the District Forum and the Respondent (hereinafter also referred to as Complainant) was Respondent before the State Commission in Appeal No. 07/506 and Complainant before the District Forum in Complaint No. 586/2003.

3.         Notice was issued to the Respondent on 24.01.2008.  Parties filed Written Arguments on 08.11.2012 & 28.04.2022 (Petitioner) and 20.02.2017 & 21.03.2022 (Respondent) respectively. 

4.         Brief facts of the case, as presented by the Complainant and as emerged from the RP, Order of the State Commission, Order of the District Forum and other case records are that: -

The complainant/respondent herein obtained a Marine Cargo Inland Transit Cover Type A (Rail/Road) Open Policy from the Petitioner on 10.11.2000 for a sum of Rs.10.00 lakhs to cover the Transit Risk of the AC, AC Kit in corrugated and wooden box from New Delhi to anywhere in India and Nepal, which was raised from time to time on different occasions to cover the material dispatched and the increased premium was paid as per the demand by the OP. At the request of complainant the limit of the policy was further enhanced by Rs.10.00 lacs, Rs.5.00 lakhs and Rs.5.00 lakhs on 02.02.2001, 27.02.2001 and 19.03.2001. The information regarding the risk to be covered was provided to the OP through requisite declaration forms from time to time in which there is specific mention about the value of the sum insured as well as the balance amount of the risk coverage. On 27.02.2001, the complainant dispatched material vide Invoice No. 85 amounting to Rs.5,01,529/- to Pondicherry and the said material was damaged in transit and the damaged material was received by the purchaser on 09.03.2001. The information regarding the said damage was sent to the OP by the complainant and the Insurance Company appointed M/s Jaayaar Engineers as surveyor to assess the quantum of loss suffered due to damage.  The surveyor assessed the loss to the tune of Rs.95,200/-.  The complainant requested the OP to re-assess the loss as the actual loss suffered by the complainant was very high.  The representative of the OP advised the complainant to call for the material at Delhi for its verification and assessment which was again done at the cost of the complainant.  The complainant received 100 cartons of completely damaged material and as per information given vide letter dated 24.03.2001, the complainant suffered a loss of approx. Rs.3,77,000/- in respect of damaged A.C.Kits.  Thereafter, on 04.04.2001, the OP appointed  another surveyor Sq. Ldr.Kapil Mohan as Surveyor to assess the loss.  The newly appointed surveyor  also asked about many documents and proof regarding the said damage which were supplied by the complainant.  After providing the information, despite the several requests and demands, there was complete silence from the OP.  On 09.09.2002, the complainant received a letter from the OP-2 thereby repudiating the claim of the complainant, which was applied in February/March 2000.  The complainant served a legal notice dated 27.10.2002 upon the OPs but in spite of service of notice, the OPs failed and neglected to do the needful.   Hence, the complainant filed complaint before the District Forum. 

5.         Vide Order dated 04.05.2007, in the CC No. 586/2003, the District Forum allowed the complainant and directed the OP to pay Rs.2,84,646/- towards the loss which was insured.  The District Forum also directed the OP to pay Rs.15,000/- towards compensation and Rs.3,000/- towards litigation within 30 days of the receipt of order.

6.         Aggrieved by the said Order dated 04.05.2007 of District Forum, Petitioner appealed in State Commission and the State Commission vide order dated 24.09.2007 dismissed Appeal No.07/506 and directed the OP to pay the amount within one month from the date of receipt of order. 

7.         Petitioner/OP has challenged the said Order dated 24.09.2007 of the State Commission mainly on following grounds:

(i)      The Fora below committed a grave error of law and fact in as much as they failed to consider that the respondent committed breach of the policy.  The Policy was “Open Marine Cargo Policy” which covers all consignments upto the limit or enhanced limit on which the premium was paid.  The said policy covers all the consignments till the limit is exhausted or policy lapse by efflux of time. Admittedly the insured did not declare all consignments between 10.11.2000 to 27.02.2001.  From 10.11.2000 to 27.02.2001 insured consigned the goods worth Rs.46,34,674/-, whereas the limit available with the insured was Rs.33,00,000/-.  Therefore, on the date of loss the limit or the enhanced limit had already exhausted.

(ii)    The State Commission completely mis-construed and mis-interpreted the Open Marine Policy and Section 31 of the Marine Insurance Act. As per the policy and provisions of section 31 of the Marine Insurance Act, the limit can be enhanced by paying additional premium.  Thus the benefit under Open Marine Policy is that the insured does not have to take cover for each consignment.  All consignments are covered under the policy till its limit or enhanced limit is exhausted.  The insured is under an obligation to declare all transactions.  The policy does not cover the dispatch after the limit or enhanced limit has exhausted.  As per the statement supplied by the insured, all the dispatches were not declared and therefore due to breach of the condition of the policy, the claim was not payable.  Even otherwise the total sum insured was exhausted prior to the dispatch of the consignment in question.  As such the consignment in question was not covered under the policy. The Petitioner has relied upon the judgment passed by this Commission while interpreting the Open Marine Policy in Ram Lal Inder Lal Versus Oriental Insurance Company reported as 1(2006) CPJ 13 (NC). The State Commission misinterpreted the decision of this Commission and gave its own interpretation which is contrary to the decision of this Commission. 

(iii)   The District Forum failed to consider that admittedly the respondent had taken the policy.  The respondent nowhere denied that it did not have the policy with complete terms and conditions.  If the complainant disputes the terms of the policy, it could have filed the policy issued to it.  The policy is issued under the provisions of section 31 of the Marine Insurance Act, 1963 and in view of the mandatory requirements all dispatches were required to be declared by the insured.

(iv)   The District Forum came to the conclusion that the XEROX copy of the policy placed by the insurer on the record was not the policy and wrongly came to the conclusion that the terms mentioned in the policy were not in accordance with the insurance law. 

(v)     Both the Fora below failed to appreciate that the surveyors only asses the loss and the factors leading to loss.  Assessment of loss by the surveyors is one thing and whether the insured had insurable interest or the consignment was covered by the policy is different aspect.  Mere assessment of loss by the surveyor would not mean that the claim is payable.  The claim is to be examined under the various terms and conditions of the policy before deciding whether the claim is payable or not.

(vi)   The Fora below failed to appreciate that the respondent committed a fraud by concealing the consignments between 10.11.2000 to 27.02.2001 and therefore the contract of insurance was vitiated and the respondent is not entitled to any amount.

(vii)  Both the Fora below committed a grave error of law and fact in coming to the conclusion that the petitioner was guilty of deficiency in service .  The claim was repudiated because there was no limit in respect of the goods in question and delay, if any, was on account of non-cooperation of the respondent in not providing details of all shipments.  The repudiation was strictly as per the terms and conditions of the policy and the provisions of the Marine Insurance Act. 

8.         Heard counsels of both sides.  Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

8.1       In addition to the averments made under the grounds (para 7), the petitioner contended that the Open Marine Policy is issued under the provision of section 31 of Marine Insurance Act, 1963 and as per the said provision a floating policy is a policy which describes the insurance in general terms and leaves the name or names of the ship or ships and other particulars to be defined by subsequent declaration.  It further provides that unless the policy otherwise provides, the declarations must be made in the order of dispatch or shipment and they must in the case of goods, comprise all consignments within the terms of the policy and the value of the goods or other property must be honestly stated.  An Open Policy describes the insurance in general terms and covers all the consignments to the extent of the limit declared by the insured.  The limit can be enhanced upon the request of insured.  The insured is under obligation to declare all consignments and other particulars as per the Declaration Clause under the Policy to the Insurance Company.  It is further contended that the Open Policy was from Delhi to anywhere in India and not from anywhere in India to Delhi so even if the said policy would have been in force, the journey from Pondicherry to Delhi is out of the scope of the policy.  The subsequent damages during the return journey from Pondicherry to Delhi were not payable under the policy in question.  The Respondent sent AC, AC units to Pondicherry through Yash Freight Carriers valued at Rs.5,01,529/-.  The consignment reached Pondicherry on 09.03.2001.  On 19.03.2001 the respondent reported the damage caused to the said consignment.  The petitioner appointed M/s Jaayaar Engineers, surveyors to survey and assess the loss, who inspected the goods at Pondicherry i.e. at the place of destination and assessed the loss at Rs.95,200/-. In its report, the surveyor recorded the parts damaged in the transit.  On persistent request of the respondent, the petitioner engaged Sqn.Ldr. Kapil Mohan, Surveyor as the second surveyor to assess the loss at Delhi. , who assessed the loss at Rs.2,84,646/- . The Petitioner also appointed an investigator Shri O.P Chawla to verify the  dispatches made during the policy period.  This was important so as to see that the total dispatches made before the dispatch of consignment in question were well within the total sum insured.  The Investigator demanded the documents of all the dispatches made by the respondent.  However, the respondent could not provide the details of the invoices 87 to 100 as these documents were taken by the Excise Department.  The investigator asked the respondent to provide details of the sales made by the respondent Company during the period of the policy, whereupon the respondent provided the statement of sales of consignments between 10.11.2000 to 31.03.2001. It is further contended that as per statement, the Respondent made the total sale of Rs.48,05,204/- between 10.11.2000 to 31.03.2000 excluding sales of invoices 87 to 100.  The Respondent submitted the declaration of Rs.24,40,024/-.  Thus, it is clear that the Respondent did not submit the declaration of consignment worth Rs.23,65,180/-.  The investigator submitted its report on 08.06.2002. Hence, the claim was repudiated and aggrieved by the decision of the repudiation, the complainant preferred complaint.  In support of  its contentions, the Petitioner has relied upon the judgment passed by the Hon’ble Supreme Court in M/s Suraj Mal Ram Niwas Oil Mills (P) Ltd. Vs. United India Ins. Co. Ltd. & Anr., Civil Appeal No. 1375 of 2003.

8.2       On the other hand Respondent contended that  the order dated 24.09.2007 is well-reasoned and justified order, as the insurance company/petitioner herein has filed the appeal before the State Commission, solely on the ground that the open Marine Insurance Policy is covered by provisions of section 31 of Marine Insurance Act and sought setting aside of the order of the District Forum.         The petitioner fails to establish that there was any violation as per the said provision, which is duly complied with by the respondent.  The petitioner has accepted the existence of insurance cover through existing policy, declaration of the consignment to be covered under the policy, goods dispatched, loss occurred due to damage on the consignment and submission of the claim, got investigated after appointing the surveyors and investigator and they affirmed such loss and calculated the damage and compensation of claim.  It is further contended that the petitioner has totally changed their stand taken before the District Forum that “the said declare form and other relevant papers were accepted by the OP after receiving the premises of the Insurance Policy occurred during the transit period.  These facts are not denied by the OP.  He has failed to declare each and every contents of the said consignment in the declaration forms which is a mandatory direction”.  However, in the written submission filed by the petitioner the stand was changed to declare all transactions instead of contents of the said consignment of the declaration form.  By changing this stand the petitioner has defrauded and misled this Commission.  The documents containing the alleged terms and condition of the policy, which were never supplied to the respondent are also different as filed in the District Forum from the one which is filed herein.  It is also contended that that the authority cited by the insurance company is not on the issue of interpretation of section 31 of Marine Insurance Act but relating to the factual circumstances existed in that case, that are quite distinguishable from the present case.  In the present case, there is no such dispute relating to the transaction and loss occurred even by the Insurance Company.  The State Commission has rightly observed in the impugned order that there is no such term in the policy in question. “It is not understandable as where was the need to appoint a surveyor, if the claim of appellant did not fall within the ambit of insurance policy.”  It is further contended that the transaction in dispute is fully covered under the policy, as the same was for an amount of Rs.5,01,529/- and the amount insured in the open policy (marine cargo/inland transit/cover-A/Type-A/Rail road/Open Policy) for a sum of Rs.10,00,000/- which was raised from time to time as per the requirement of the respondent before availing the insurance cover on every transaction for which the insurance cover is sought.  In the present case, the respondent did not require the insurance cover, for the transaction for which the delivery was taken by the customer from godown of respondent or the counter/local sale made.  The petitioner has been trying to avoid the payment of compensation to the respondent.  The policy covers the clear consignments and it being the marine open policy, it cover the entire loss of the goods in transit.  It is difficult to believe that the report of the Surveyor Sh. Kapil Mohan has stated that AC kits damaged during the transit from Pondicherry to Delhi, therefore loss is not covered under the scheme.  This ground is  against the terms and conditions of the policy.  The Marine insurance policy covers the loss of goods in transit and the reason for non submission of invoices of sales done during the questioned period, is because of the invoices being issued for counter sale/cash sale and the supplies/sales made to the persons who have taken the delivery from the godown of the unit of the respondent, so the insurance cover was not taken by the respondent and the same was not to be declared.  Moreover, no insurance cover is/was to be sought, hence there was no need of declaration of invoices from 87-100.   Had there been any malafide intention of the respondent, the respondent might not have given the complete statement of account to the surveyor.  The repudiation of claim is against the terms and conditions of the policy.  It is also contended that the declaration form was filled in presence of the representative of the company, who checked the amount whether covered by the left out balance from the previous consignment, calculation for the same is also to be done in the declaration form showing balance of the amount to be covered.

9.         We have carefully gone through the orders of the State Commission, District Forum, other relevant records and rival contentions of the parties.  The short point for determination in the present case is whether under the policy in question it was mandatory for the insured to declare all the consignments.  In this regard, observations of the State Commission are reproduced below:

“5. In the instant case, there is no such dispute. The transaction was one. Even otherwise the parties are governed by the terms of the contract. There is no such term in the policy in question. It is not understandable as to where was the need to appoint a surveyor if the claim of the appellant did not fall within the ambit of the insurance policy. The contention of the appellant that the cover was upto the extent of Rs.28,00,000/- on 27.02.2001, whereas respondent had transaction which was upto the value of Rs.46,00,000/- and therefore the consignment sent was not covered under the policy does not hold water as the consignment in this case was only for Rs.5,26,121/- .

6.  In our view the provisions of Section 31 are applicable if a consumer has more than one or two transactions but if the insured sends only one consignment declaring it value, it has to be treated as one transaction. This provision does not apply in respect of past transaction. Every transaction is an independent transaction unless there are more than two or more transactions at the given point of time. Therefore the insurer is liable to indemnify the loss arising in terms of the policy particularly when insured declares the value of the consignment. Thus ratio or the view taken by the National Commission is not applicable in this case. Had it not been such a case, both the surveyors would have recommended to the insurance company to repudiate the claim on the ground that respondent had failed to declare each and every transaction and rightly so because the transaction in question was one and the past transaction was neither significant nor relevant.”

Relevant observations of District Forum are also extracted below:-

“In view of the facts and circumstances of the complaint, we inclined and find with stand of the complainant who is a consumer and who availed the services against the consideration. He was obtained the said Insurance Policy vide exhibit CW-1/1 which was enhanced time to time upto a sum of Rs.30,00,000/- and paid its premium in accordance to the contract. He informed about the loss vide his letter well within time and also issued his legal notice which was responded by OP's Lawyer. The terms and conditions of the Policy have remained unchanged and the same specifically mentioned in the Policy. Thus the said clause does not find place and the same is not part and parcel because the Policy is its Xerox and unsigned copy and not in accordance with the insurance Law. The contention of OP's counsel that the Forum has no jurisdiction to hear and determined the same is unjustified. The main object of the Consumer Protection Act 1986 is to provide a speedy inexpensive and simple redressal to the consumers against deficient services and it empowered to provide relief of specific nature and to award. Prior to this Act, the consumers were required to approach the Civil Court for securing the justice which takes years and now the Forums are discharge the functions of Civil Courts. Therefore, the contention for rejection the complaint and directing the complainant approach the Civil Court, is unjustified. Thus the Forum has jurisdiction to hear and determined the same as the consignment was booked in Delhi and the same is filed within the prescribed territorial jurisdiction of the Forum.”

10.       The policy in question is ‘Marine Cargo-Inland Transit- Cover Type A- Rail Road- Open Policy’, it covers voyage from ‘New Delhi to anywhere in India and Nepal’. Initially Comm. sum insured was Rs.13 lakhs, which got enhanced subsequently from time to time, commodity description is ‘AC and AC Kits’ and policy period is from 10.11.2000 to 09.11.2001.  During the hearing, counsel for Petitioner/Insurance Company have drawn our attention to the sales book records of the Insured/Complainant and ‘open policy clauses’ attached to and forming part of policy No. 2001/246, extract of relevant clauses of which is reproduced below :-

“1.1. This open Policy is effected to insure the interest specified herein despatched either by or for account of the Assured in which they have an insurable interest.

It is a condition of the Policy that the Assured are bound to declare hereunder each and every cons t not exceeding the amount specified in Clause IV below:- ignment without exception, underwriters being bound to accept upto bu

II. PERIOD OF POLICY:-

This Policy is to remain in force for a period of 12 months from_______ to_______ (both days inclusive) unless cancelled, previously by either side as per Cancellation Clause herein or Şum Insured is exhausted by declarations whichever is earlier.

III. DECLARATION CLAUSE:-

 The assured warrants that during the currency of this Open policy they will declare to the Company within 48 hours from the time risk attaches, all shipments to which this Open Policy attaches, failure to so declare shall at the Company's option render this Open Policy void as from the date of such failure. Acceptance of any declaration by the Company declared after the time limit stipulated in this warranty shall not be taken as a waiver as a precedent for future-declarations.

OR

 It is hereby agreed that the Insured will record full particulars of each despatch in Declaration Statement in the chronological order assigning declaration number for each such despatch. A copy of the statement so completed, should be posted to the Company every fortnight/month, preferably during the first week of the following fortnight/month.

(Strike whichever is not applicable)”.

[Emphasis supplied]

A perusal of above said clauses of the policy show that insured/Complainant was bound to declare all consignments, without exception and failure to do so renders the policy, at the option of the insurer, void.  Further, the policy comes to an end when sum insured is exhausted by declarations or at the end of 12 months, whichever is earlier.  It is not in dispute that all consignments were not declared by the insured, as it is the case of the Insured that under the policy, it was not mandatory to declare all consignments/sales.  It is only those consignments/sales which the insured wanted to cover under the policy, needed to be declared, hence the insured has not declared remaining consignments/sales.  The insured contends that he did not require the insurance cover for the transactions for which the delivery was taken by the customer from godown of insured or the counter/local sale made. No insurance cover is/was sought, hence, there was no need of declaration of invoices from 87 – 100. 

11.       On a careful consideration of the clauses of the policy cited above, we are unable to accept the contentions of insured/complainant that it was not necessary for the insured to declare all the transactions/consignments/sales.  We are in agreement with the contentions of Petitioner/Insurance Company in this regard.  It is not in dispute that if the undeclared transactions/consignments are taken into account, as on the date of loss, the sum assured/enhanced sum assured had already been exhausted,  making the policy lapse/come to an end on the day sum assured got exhausted.  When questioned as to why the Petitioner/Insurance Company accepted premium for enhancement of the sum assured after the date of loss, it stated that in the absence of correct and complete declaration by the insured, the Insurance Company was unaware that sum assured limit has already been exhausted.  In good faith, believing the declaration made by the insured, based on which the sum assured had not been exhausted yet, it accepted further premium for enhancement of sum assured during the twelve months currency of the policy.  The explanation of Insurance Company in this regard seems acceptable.

12.       In view of the foregoing, we hold that both the State Commission and District Forum went wrong in interpreting the policy terms and conditions and coming to a conclusion that it was not necessary for the insured to declare all the transactions.  Hence, the order of State Commission suffers from a material irregularity and cannot be sustained.  Accordingly, we set aside the orders of State Commission and District Forum and dismiss the complaint. 

13.       The pending IAs in the case, if any, also stand disposed off.