Andhra Pradesh

East Godwari-II at Rajahmundry

CC/8/2015

Sri Vijaya Sai Egg Exports Pvt. Ltd., - Complainant(s)

Versus

Divisional Manager, United India Insurance Company Ltd., - Opp.Party(s)

K.S.N. Sarma

22 Feb 2016

ORDER

 

                                                                                                                       Date of filing:   17.01.2015

                                                                                                Date of Order:  22.02.2016

 

BEFORE THE DISTRICT CONSUMER FORUM-II, EAST GODAVARI

DISTRICT AT RAJAHMUNDRY

 

                           PRESENT:   Smt H.V. Ramana, B.Com., L.L.M.,   PRESIDENT(FAC)

                      Sri A. Madhusudana Rao, M.Com., B.L., MEMBER          

    

                           Monday, the 22^nd day of February, 2016

 

C.C.No.08 /2015

Between:-

 

Sri Vijaya Sai Egg Agencies,

Per its Proprietor: M. Rama Srinivas,

W/o. M. Srinivasa Rao,

Office: 5-4-585, Nampally,

Hyderabad – 500001.                                                             …        Complainant

 

                        And

 

1)  Divisional Manager,

     United India Insurance Company Ltd.,

     6-10-3, Hota vari Street, Innispeta,

     Rajahmundry – 533101.

 

2)  Manager,

     State Sector Branch,

     United India Insurance Company Ltd.,

     United India Towers, 3-5-817 & 818,

     Basheerbagh, Hyderabad – 500029.

 

3)  Registered & Head Office,

     Represented by its Chairman/Managing Director,

     United India Insurance Company Ltd.,

     24, Whites Road, Chennai – 600014.                                …        Opposite parties         

 

 

 

            This case coming on 04.02.2016 for final hearing before this Forum in the presence of Sri K.S.N. Sarma, Advocate for the complainant and Sri M. Sambasiva Rao, Advocate for the opposite parties, and having stood over till this date for consideration, this Forum has pronounced the following:  

 

O R D E R

[Per Smt.H.V. Ramana, President(FAC)] 

This is a complaint filed by the complainant U/Sec.12 of Consumer Protection Act 1986 to direct the opposite parties 1 to 3 to indemnify the loss sustained by the complainant during transit of goods covered by the Marine Insurance Policy consignment Rs.1,87,996/- including Surveyor fee of Rs.7,814/- towards compensation for the total loss of the goods with interest @ 18% p.a. on Rs.1,87,996/- from the date of claim i.e. 6.8.2012 till the date of payment and pay Rs.25,000/- towards compensation for the harassment, inconvenience, frustration and mental agony mental agony and Rs.10,000/- towards legal and other expenses.

2.         The case of the complainant is as follows:- It is submitted that the complainant obtained a Marine Cargo Insurance Policy bearing No.151100521/11//02/00000084 from the 1^st opposite party covering of Eggs in plastic trays, pulp trays and cartons initially for a sum of Rs.2,00,00,000/- and he paid Rs.43,570/- towards premium vide Receipt No.151100/81/11/0000001369 dt.7.12.2011 issued by the 1^st opposite party. The policy is valid for a period of one year from 00 hours on 9.12.2011 to midnight of 8.12.2012.  During the period of insurance cover, the complainant has sold to M/s. Makali Egg Center, Canning, Railway Maidan, (P.O.: Canning Town, Dist: South 24 Paraganas, West Bengal) valuing Rs.6,25,535/- vide Invoice No.2/3, dated 20.5.2012 and dispatched the consignment consisting of 2,31,840 eggs packed in 1104 boxes from Dwarapudi (Andhra Pradesh) to Canning, Railway Maidan, (P.O.: Canning Town, Dist: South 24 Paraganas, West Bengal by Lorry No.AP05-TU-8145. The lorry carrying the consignment met with an accident during en’route transit on National Highway # 6 near Village Babua, under Kolaghat P.S. limits: Dist: East Medinipur, West Bengal on 22.5.2012 at about 21-00 hours and the consignment got damaged.  In the accident, a total number of 318 boxes (cartons) containing 66780 eggs got totally damaged. As case was registered on 25.5.2012 by Kolaghat Police.  The complainant informed the same to the 1^st opposite party, who in turn appointed surveyor, who assessed the loss of Rs.1,80,182/-. The complainant sent claim form along with documents on 6.8.2012 to the 1^st opposite party. The 1^st opposite party rejected the claim on 4.9.2012 stating that the complainant has no insurable interest and since the complainant has violated the terms and conditions of the policy, their company is not liable and hence, the claim was repudiated. Hence, the complaint.

3.         The 1^st opposite party filed its written version and the same was adopted by the opposite parties 2 & 3. The opposite parties denied all the allegations made by the complainant and the complaint is not maintainable either in law of on facts.  The allegation that the complainant is a private limited company, registered under the Companies Act, 1956 etc. are hereby denied.  The premium payable on the sum insured is based on the CIF value of the consignment is not correct. The 1^st opposite party submits that the goods in transit from anywhere in India to anywhere in India – including the goods and transit to local areas are covered under the insurance policy. The 1^st opposite party submits that the complainant has paid the requisite premium as per the prescribed tariff.  As per the terms and conditions of “Marine Cargo Insurance Policy”, the complainant has to give a declaration regarding the goods in transit. Accordingly, the complainant as declared that it has dispatched eggs worth Rs.6,25,535/- under invoice number 2/3 dt.20.5.2012 from Dwarapudi to Canning, Railway Maidan, by the vehicle bearing registration No.AP 05 TU 8145. The 1^st opposite party submits that the invoice, basing on which the complainant made the declaration mentioned above, contains a specific condition that “our responsibility ceases soon after the lorry leaves our godown”. Thus, the consignor/insured/complainant specifically mentioned in the invoice that it has no responsibility for safe delivery of the goods consigned. It is specifically stated that the responsibility of the consignor/insured/complainant, ceases the movement the common carrier leaves the Godown of the consignor/insured/complainant. The 1^st opposite party states that in view of the specific stipulation in the invoice, the complainant has no right, title or interest in the goods sold by it and sent to the consignee through a common carrier. Thus, the complainant has no insurable interest in the goods consigned and consequently its claim is not maintainable.  The complainant/insured consignor did not charge any transit insurance in the invoice. The 1^st opposite party states that under the Marine Cargo Policy issued by it in favour of the complainant, the consignments sent under CIF (Cost Insurance and Freight) alone are covered. Under CIF contracts, the consignor/insured/complainant quotes in the invoice “COST, INSURANCE and FREIGHT”. The seller/consignor is required to arrange insurance for the CIF value of the goods for the transit point – point of from seller’s warehouse to the warehouse of the buyer. In the invoice mentioned above, the complainant did not mention the cost of the insurance, but only mentioned the cost of the goods (eggs) and the cost of the freight. Hence, the invoice is not CIF sale contract. The invoice mentioned above, under CIF contract, the obligations and responsibilities of the seller ceases after the goods have been loaded and the responsibility of arranging insurance during transit shall be that of the buyer. The complainant specifically mentioned that its responsibility ceases the movement the goods leave it’s Godown. Thus, the invoice mentioned above is C & F contract. As explained above, the insurance policy obtained by the complainant is only in respect of CIF contracts, but not for C & F contracts. This opposite party states that since the consignment mentioned above is not covered under the Marine Cargo policy obtained by the complainant, it for valid reasons repudiated the claim of the complainant. The complainant has to declare all its sales. However, contrary to this condition, the complainant did not declare all the sales.  The 1^st opposite paarty further states that for the two reasons namely      (i) the complainant has no insurable interest under the three Marine Cargo Declarations since they are C & F contracts and as only CIF contracts are covered under the Marine Insurance Policy and (ii) that the complainant violated the mandatory condition that it should declare all its sales is not complied with, the 1^st opposite party validly repudiated the claim of the complainant. As per the terms and conditions of the insurance policy, the complainant has to declare all the invoices dispatched by it including the sales/invoices to local area. However, contrary to this requirement, the complainant did not declare all the transaction – sales.  Hence, there is no deficiency of service on the part of the opposite parties and the complaint is liable to be dismissed with costs.   

4.         The proof affidavit filed on behalf of the complainant and Exs.A1 to A14 have been marked on behalf of the complainant. The proof affidavit filed on behalf of the opposite parties and Exs.B1 to B3 have been marked on behalf of the opposite parties. The complainant filed written arguments.

5.         Heard both sides.

6.         Points raised for consideration are:

 

1. Whether there is any deficiency in service on the part of the opposite parties?

            2. Whether the complainant is entitled for the reliefs asked for?

            3. To what relief?

         

         

7.  POINT Nos.1 & 2:  The admitted facts in this case are that the complainant obtained a policy (CIF + 10% extra) bearing No.151100521/11//02/00000084 from the 1^st opposite party for a sum of Rs.2,00,00,000/- vide Ex.A1 and paid Rs.46,413/- towards premium for which they gave a receipt vide Ex.A2. The said policy is valid for a period of one year 00 hours on 09.12.2011 to midnight of 08.12.2012. The said policy covers all the risks against loss, damage, liability or expenses during the course of transit. It is also covers goods in transit from anywhere in India to anywhere in India. The complainant has sold eggs worth about Rs.6,25,535/- to M/s. Makali Egg Center, Canning, Railway Maidan, (P.O.: Canning Town, Dist: South 24 Paraganas, West Bengal) vide Ex.A3 and also filed freight letter in which he paid an advance of Rs.10,000/- vide Ex.A4. The complainant also filed the way bill vide Ex.A5. The complainant dispatched the consignment consisting of 2,31,840 eggs securely packed in 1104 boxes from Dwarapudi, Andhra Pradesh to M/s. Makali Egg Center, Canning, Railway Maidan, (P.O.: Canning Town, Dist: South 24 Paraganas, West Bengal), while carrying the above said consignment, the lorry met with an accident on National high way # 6, near village Babua under Kolaghat P.S. Limits, district East Medinipur, West Bengal on 22.5.2012 at about 21-00 hours. The complainant informed the 1^st opposite party that the total number of 318 boxes containing 66,780 eggs got totally damaged. A case was registered 17/12 dt.25.5.2012 by Kolaghat P.S. vide Ex.A7. The 1^st opposite party appointed a Surveyor by name Mr. K.S. Ray, who gave his report and assessed the loss as Rs.1,80,182/-. The surveyor also gave a receipt for the requisite fee for an amount of Rs.7,814/-. The complainant filed total claim bill vide Ex.A6. The complainant filed the vehicle certificate of registration vide Ex.A8 and also filed the copy of the National permit vide Ex.A9. The Surveyor filed his report along with a letter and receipt vide Exs.A10, A11, A12 and A13.      After receipt of the above said documents, the 1^st opposite party repudiated the claim vide Ex.A14. 

            The opposite parties admitted that the complainant obtained policy and also they filed the copy of the policy vide Ex.B1. The 1^st opposite party wrote a letter to the complainant with regard to their claim vide Ex.B2. The complainant wrote a letter to the 1^st opposite party vide Ex.B3.

            The main contention of the complainant is that the 1^st opposite party wrongly repudiated the claim even after submission of all the required documents. The 1^st opposite party also appointed a surveyor and the surveyor surveyed the accident spot and estimated the loss which was incurred by the complainant. They also contended that the complainant is an unpaid seller and there is no other insurance cover on the consignment and also contended that he borrowed huge amount of money from various institutions to do his business and paid huge amount of interest. Due to the negligent acts of the opposite parties, this complainant incurred huge loss. The complainant further contended that the 1^st opposite party repudiated the clam unlawfully, illegally which amounts to gross deficiency in service.

            The main contention of the opposite parties is that the invoice basing on which the complainant made the declaration i.e. “our responsibility ceases soon after the lorry leaves our Godown”.  The consignor mentioned the same in the invoice that it has no responsibility for safe delivery of the goods consigned. In view of the specific stipulation in the invoice, the complainant has no right, title or interest in the goods sold by it and sent to the consignee through a common carrier. Thus, the complainant has no insurable interest. The complainant did not charge any transit insurance in the invoice. The complainant obtained Marine Cargo Policy and the consignment was sent under CIF (Cost Insurance and Freight) alone are covered. Here, in this case, in the invoice, it is clearly mentioned that the responsibility of the seller ceases after the goods have been sent during the course of transit which shows C&F contract. They also contended that the complainant has to declare all its sales for obtaining the risk under the policy. The complainant gave evasive replies to this opposite party and therefore, this opposite party repudiated the claim and also contended that there is no deficiency in service on their part and they are not liable to pay any damages or costs to the complainant.    

            After perusing the material on record, we observed that the complainant took a Marine Cargo Open policy for Rs.2,00,00,000/- and also paid the premium vide Ex.A2. The said policy is a CIF policy plus 10% extra. As soon as the accident occurred, the complainant informed the 1^st opposite party and the 1^st opposite party appointed a surveyor. The said accident was registered and seized the vehicle vide Ex.A7. The main contention of the opposite party is that the complainant mentioned in his invoice that “our responsibility ceases soon after the lorry is our godown”, which means the complainant has no responsibility for safe delivery of the goods consigned. It is specifically mentioned that he has no right, title or interest in the goods sold by it and sent to the consignee through a common carrier. Thus, the complainant has no insurable interest and also categorically stated that CIF contract means Cost Insurance and Freight, but in the invoice, they have not mentioned the cost of the insurance, but only mentioned the cost of goods and cost of freight. They also contended that the complainant did not declare all the sales for obtaining the risk under the policy. This opposite party wrote a letter to the complainant vide Ex.B2, but the complainant gave evasive replies. The complainant violated the mandatory condition that to declare all its sales was not complied by the complainant.

The complainant contended that a printed standard form of invoice that “our responsibility ceases soon after the lorry leaves the godown” cannot be said to be such a fundamental breach that the insured should in all events, be denied indemnification. It is an agreement to sale entered between the seller and buyer was a CIF contract and the same is mentioned on the invoice i.e. Ex.A3. It is also mentioned the policy number on the top of the invoice by the complainant.

The complainant relied on a Supreme Court judgment i.e. B.V. Nagaraju Vs. Oriental Insurance Co. Ltd., Divisional Office, Hassan (1996) 4 SCC 647 at page No.650, in this, it is stated that if the contract is vague, the benefit should be passed on to the insured. The opposite party cannot repudiate the claim, where there is no breach of terms of the policy, because insurance is a matter of contract between the insurer and insured.   The complainant also contended that the opposite parties repudiated the claim on the ground that the complainant has no insurable interest which amounts to deficiency in service.

The complainant also relied on the Marine Insurance Act, 1963 and mentioned the definition of insurable interest u/s 7.

The complainant relied on the citation of Apex court in the matter of Contship Container Ltd., Vs. D.K. Lall & Ors (Civil Appeal No.3245 of 2005) on 16 March, 2010. In this case, they interpreted the expression of insurable interest. It is also stated that an unpaid seller is having legally recognized rights of (i) lien and (ii) stoppage of goods in transit as per the provisions of Sale of Goods Act, 1930. So, basing on these, the complainant submitted that he is an unpaid seller and is in position of a valid insurance policy and having an insurable interest in the goods in the transit.

The complainant also referring the provisions of sale of goods Act, 1930 and explained under section 19 of Act, which says that in a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred and that for the purpose of ascertaining the intention of the parties regard shall be had to (i) the terms of contract, (ii) the conduct of the parties, (iii) the circumstances of the case. He also relied with regard to unpaid seller’s right as per sale of goods act u/s 46 and 47 deal with unpaid seller’s rights and lien and inter alia provided that unpaid seller shall subject to the provisions of the act of any law for the time being in force, have a lien on the goods for the price while he is in position of them and that the seller can retain the position of the goods until payment or tender of the price. The complainant contended that the opposite party in their repudiation letter (Ex.A14) stated that the insured shall declare all the sales and purchases which are moved through the Lorries, but they have not given the details of their sales and this amounts to violation of specific terms and conditions of the policy.

The complainant contended that the 1^st opposite party has not given any terms and conditions to them along with Ex.A1. To that extent he relied on Supreme Court citation wherein the General Assurance Society Limited Vs. Chandumull Jain and another: 1966(3) SCR 500 has expressed that “In a contract of insurance, there is requirement of uberrima fides, i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem i.e. against the company in case of ambiguity or doubt”.

The Complainant also relied on United India Insurance Company Ltd., Vs. Puspalaya Printers: 2004 (3) SC 649 that “if there is any ambiguity or a term is capable of two possible interpretations, the one beneficial to the insured should be accepted consistent with the purpose for which the policy is taken, namely to cover the risk on the happening of certain event”.

The complainant also contended that the opposite parties appointed a surveyor and he filed his report vide Ex.A13. In that report, he clearly mentioned all the details and also mentioned the total effected quantity and also gave summary of the loss.

The opposite parties argued and filed the material with regard to Insurable Interest of the insured. They relied and filed the instances of insurable interest u/s 9 to 16 of Marine Insurance Act, 1963.

They also relied on Sale of Goods Act u/s 19, in which “property passes when intended to pass:

 (1) where there is a contract for the sale of specific or ascertained goods the property

  in them is transferred to the buyer at such time as the parties to the contract intended

  to be transferred.

(2) for the purpose of ascertaining the intention of the parties regard shall be had to

 the terms of the contract, the conduct of the parties and the circumstances of the case.           (3) Unless a different intention appears, the rules contained in section 22 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.

Section 26 Risk prima facie passes with property: Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer, but when the property there in is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been made or not:

Provided that, where delivery has been delayed through the fault of either buyer or seller the goods are at the risk of the party in faults as regards any loss which might not have occurred, but for such fault.

Provided also that nothing in this section shall affect the duties or liabilities of either seller or the buyer as a bailee of the goods of the other property.

The opposite party also relied u/s 46, 47 and 49 of Sale of goods Act, in this it is clearly mentioned the rights of unpaid seller and the seller’s lien and termination of the lien.    

As per our observation, the citations filed by the complainant are very much applicable to the present case on hand and we also gone through the material filed by the opposite party with regard to insurable interest and some of the sections of the sale of goods Act. The main contention of the complainant that they have not received Ex.B1, they only received the Ex.A1 without any terms and conditions. As per the terms and conditions, the complainant informed the 1^st opposite party immediately and they appointed a Surveyor/Loss Assessor and he filed the report vide Ex.A13. The case was registered vide Ex.A7 that the Lorry was dashed with one Cylindrical gas tanker, which was running just in front of the complainant’s truck and due to sudden break of the tanker with an unknown reason, the truck running just behind the gas tanker compelled to collide on the back side of metal buffer of the gas tanker with heavy jerk. Due to that, in fact heavy damage was occurred and the driver was injured due to the accident. The complainant also filed a waybill vide Ex.A5. The main contention of the opposite party is that the complainant is not declaring all its sales which is contrary to the terms and conditions, but after perusing the terms and conditions, it is no where mentioned that the complainant has to give all the details of the sales which were transported through lorries. In their terms and conditions, it is mentioned that Inspection of records: “the company and/or its agents will have the privilege at any time during the business hours to inspect assured records of dispatches made within the terms of the open policy”.  Basing on this condition, it is no where mentioned that the complainant has to declare all its sales, but it is the duty of the opposite parties to verify with the records of the complainant as per the terms and conditions of the policy. 

It is clearly mentioned on the face of the policy that the complainant took CIF plus   10 per cent extra, which means costs, insurance and freight. After perusing the Ex.A3 and A4, it is clearly mentioned that the value of the goods, packing charges and Lorry advance i.e. freight charges. They also mentioned on top of the invoice the marine policy number. In our opinion, it is not necessary that when the complainant has taken a consolidated policy for a value of Rs.2,00,00,000/- and mentioning the policy number on the face of the invoice. Mere printing on the invoice i.e. “our responsibility ceases soon after the lorry leaves the godown” the opposite party cannot say that the complainant is not having the insurable interest and to evade their responsibility in paying the claim amount and moreover there is no dispute between the consignor or the consignee with regard to the goods sent by the complainant. The surveyor who was appointed by the opposite parties gave a detailed report with regard to the loss of the goods damaged due to accident. In his report, he has not written anything adverse with regard to the accident and also the damaged goods. Therefore, we opined that it is just and necessary to rely on the report filed by the Surveyor and the opposite parties are liable to pay the claim, which was assessed by their own surveyor i.e. total quantity = 318 cartons X 210 pieces, which is valued as per the invoice amounts to Rs.1,64,279/-. The opposite parties have to pay the value of the total assessed quantity mentioned in the report and also to pay interest and costs.        

8.   POINT No.3:  In the result, the complaint is allowed in part, directing the opposite parties to pay the claim amount of Rs.1,64,279/- with interest @ 8% p.a. from the date of repudiation i.e. 04.09.2012 till realization to the complainant. We further direct the opposite parties to pay Rs.2,000/- towards the costs of the complaint to the complainant. Time for compliance is two months from the date of this order.  

Typed to dictation, corrected and pronounced by us in open Forum, on this the 22^nd day of February, 2016.

                 

                      Sd/-xxx                                                                                    Sd/-xxx

              MEMBER                                                                              PRESIDENT(FAC)       

 

 

APPENDIX OF EVIDENCE

WITNESSES EXAMINED

 

FOR COMPLAINANT: None.                                         FOR OPPOSITE PARTIES: None.

 

DOCUMENTS MARKED

 

FOR COMPLAINANT:

 

 

Ex.A1     dt/7.10.2011             Marine Insurance Policy bearing No.151100/21/11/02/

            00000084.

Ex.A2     dt/7.10.2011             Original Premium Receipt No.151100/81/11/0000001369 for

Rs.43,570/-.

Ex.A3     dt/20.5.2012             Invoice No.2/3, M/s. Makali Egg Center, Canning, Railway

Maidan, P.O: Canning Town, Dist: South 24 Paaraganas, West Bengal valued Rs.6,25,535/-. 

Ex.A4     dt/20.5.2012             Freight Letter bearing No.47 in favour of M/s. Makali Egg

            Center.

Ex.A5     dt/20.5.2012             Way Bill No.47 in Form-10.

Ex.A6     dt/6.8.2012               Marine Insurance Claim made by the complainant claiming a

           sum of Rs.1,87,996/- including Surveyor’s fee of Rs.7,814/-.

Ex.A7     dt/25.5.2012             A case was registered 17/12 by Kolaghat P.S.

Ex.A8     dt/7.10.2009             Vehicle documents of Lorry bearing Registration No.AP05-

            TU-8145.

Ex.A9     dt/12.10.2011           Transport Permit No.NP/AP/5/102011/23805 valid up to

             7.10.2012.

Ex.A10  dt/4.6.2012               Spot inspection and loss assessment report issued by Mr. S.K.

Ray, Insurance Surveyor and Loss assessor declaring the total loss of 318 boxes (cartons) containing 66,780 eggs.

Ex.A11  dt/4.6.2012               Insurance Surveyor’s Bill No.SR:BB/1/6/12 for Rs.7,814/-.

Ex.A12  dt/7.6.2012               Insurance Surveyor’s Receipt against Bill No.SR:BB/1/6/12 for

           Rs.7,814/-.

Ex.A13  dt/4.6.2012               Survey and Loss Assessment Report No:SM/1:6/12.

Ex.A14  dt/4.9.2012               Letter issued by the 1^st opposite party rejecting the claim and

            repudiating their liability.

 

FOR OPPOSITE PARTIES:-

 

Ex.B1     dt/                             True copy of the insurance policy issued by the 1^st opposite party in

            favour of the complainant.

Ex.B2     dt/16.8.2012             Letter addressed by the 1^st opposite party to the complainant.

Ex.B3     dt/27.8.2012             Reply given by the complainant to the 1^st opposite party.

 

 

                 Sd/-xxx                                                                                            Sd/-xxx

              MEMBER                                                                              PRESIDENT(FAC)