KERALA STATE CONSUMER DISPUTES REDRESSAL
COMMISSION VAZHUTHACADU THIRUVANANTHAPURAM
OP.NO. 16/2000
JUDGMENT DATED:3-12-2010
PRESENT
SHRI.M.V. VISWANATHAN : JUDICIAL MEMBER
M. Akbar Sheriff, S/o Muhammed,
Proprietor, M/s Shrimpex International, : COMPLAINANT
Darusalam, Neerkunnam.P.O,
Alappuzha-5.
(By Adv.Sri.George Cheriyan)
Vs.
M/s Export Credit Guarantee-
Corporation of India Ltd, : OPPOSITE PARTY
HDFC, Building, Ravipuram,
MG Road, Kochi-682 015.
(By Adv.Sri.V.M.Kurian)
JUDGMENT
SHRI. M.V. VISWANATHAN : JUDICIAL MEMBER
Complaint filed under sec.17 of the Consumer Protection Act, 1986.
2. The case of the complainant is as follows:-
Complainant is doing business of export of Frozen Sea Foods. Opposite party is a Government of India Enterprise underwriting credit risk on export transaction on payment of prescribed premium. Complainant had taken the insurance policy viz. Shipments (Comprehensive Risks) Policy (SC) of the opposite party. The policy was for Rs.1.crore for the period from 26/7/1995 to 31/7/1997. On 15/10/1995, the complainant exported 23,000 Kgs of whole cleaned squid valued at Rs.22,54,532/- to M/s Clodia-Frigo, SBA, Italy, under valid letter of credit. The documents were negotiated through M/s Canara Bank, Overseas branch, Ernakulam. The said buyer did not accept the consignment. So, the complainant found out an alternate buyer for the goods, M/s Ruskim Sea Foods Ltd., U.K and they agreed to buy the said goods. The opposite party has given the status report of M/s Ruskim Sea Foods Ltd., U.K. The opposite party has also given clearance for sale of goods to M/s Ruskim Sea Foods Ltd., U.K vide the letter dated:25/1/1996. With the clearance and approval of the opposite party the goods were re-directed to Lisbon in Portugal. The goods were accepted and taken delivery by M/s Ruskim Sea Foods. But no payment was received by the complainant. Due to the persistent efforts of the complainant the foreign buyer, M/s Ruskim Sea Foods Ltd, U.K. paid Rs.4,68,700/- on 20/9/1996. The balance of Rs.17,85,832/- is due from the buyer M/s Ruskim Sea Foods Ltd, UK. Inspite of the repeated efforts the complainant could not realize the balance amount. The complainant also approached the opposite party to avail, the benefits envisaged under the insurance policy. As per the policy condition a sum of Rs.16,07,249/- with interest being 90% of the invoice value is due from the opposite party as the insurance claim. Complainant furnished all necessary papers and documents to get the insurance claim. The opposite party by its letter dated:18/3/1998 repudiated the insurance claim preferred by the complainant. The reasons stated for repudiation are not at all material. The delay in payment of additional premium will not affect insurance transaction. The opposite party has already accepted the additional premium paid by the complainant. The alleged discrepancies or lacunae are not at all material so as to repudiate the claim preferred by the complainant. There was no bonafide lapse or negligence on the part of the complainant. The complainant has already cleared the entire amount with interest due to Canara bank amounting to Rs.28,37,494/-. Complainant has even sought the assistance of the High Commission of India at London to realize the amount from the buyer. There is deficiency of service on the part of the opposite party in repudiating the insurance claim. Thus, the complainant has claimed a total of Rs.20.lakhs towards the loss and damages suffered by the complainant on account of deficiency of service on the part of the opposite party.
3. The opposite party filed written version contending as follows:-
The complaint is not maintainable either in law or on facts. There is no deficiency or defect in the service of the opposite party. The opposite party issued the shipments (Comprehensive Risks) policy to the complainant with a maximum liability of one crore for the period from 26/7/1995 to 31/7/1997. The policy was issued based on the proposal of the exporter and the declarations therein form part of the policy. As per the terms of the policy, the liability of opposite party will be limited to 90% of the loss subject to the credit limit approved by the opposite party corporation in respect of each buyer on application made by the exporter. The complainant is bound to follow the terms and conditions of the policy strictly. Condition Nos.28 and 29 stipulate the effect of failure to comply with the terms and conditions of the policy. Clauses 8(a), 8(b), 10 and 19(a) of the policy are also very much relevant as far as the present case is concerned. The complainant failed to declare all the shipments required to be declared in terms of clause 8(a) of the policy and to pay premium in terms of clause 10 of the policy. The complainant has also failed to submit declarations of over due payments as required by clause 8(b) of the policy. The complainant was requested to pay the additional premium of Rs.13,527/-. But the said additional premium was paid with a delay of 15 months. The declaration of default was also made with a delay of 17 months. Due to the aforesaid defaults on the part of the complainant, the claim preferred by the complainant cannot be allowed. The opposite party is justified in repudiating the insurance claim preferred by the complainant. The opposite party has no liability to indemnify the complainant. Thus, the opposite party prayed for dismissal of the complaint with costs.
4. The points that arise for consideration are:-
1. Whether there was any deficiency of service on the part of the opposite party in repudiating the claim preferred by the complainant?
2. Whether the contention of the opposite party that the complainant failed to follow the directions and conditions of the policy can be accepted?
3. Whether the opposite party, ECGC Ltd., can be justified in repudiating the insurance claim vide repudiation letter dated:18/3/1998?
4. What order as to reliefs and costs?
5. Evidence in this case consists of the oral testimony of the complainant as PW1 and Exts.A1 to A9 and that of the testimony of DW1, the branch manager of ECGC Ltd, Ernakulam and Exts.B1 to B8.
6. We heard the learned counsel for the complainant and that of the opposite party. They also submitted argument notes in support of their oral submissions.
7. Points 1 to 3:-
Complainant is an exporter doing business of export of Frozen Sea Foods. Opposite party/M/s Export Credit Guarantee Corporation of India Ltd. has undertaken the risk on export transactions. Thereby the opposite party issued shipments (Comprehensive Risks) policy (sc) covering the risk for Rs.1.crore. The aforesaid policy was issued infavour of the complainant for the period from 26/7/1995 to 31/7/1997. Ext.A1 is the aforesaid shipments (comprehensive risks) policy (sc) issued by the opposite party.
8. The complainant exported whole cleaned squid valued at Rs.22,54,532/- to M/s Clodia - Frigo SBA, Italy. The aforesaid foreign buyer failed to accept the consignment. Thereafter, the complainant found out an alternate buyer for the said consignment. M/s Ruskim Sea Food Ltd, U.K was the alternate buyer who agreed to buy the said consignment. The opposite party had also issued a status report approving the credit worthiness of the foreign buyer, M/s Ruskim Sea Foods Ltd., UK. Ext.A2 is the receipt dated:7/12/1995 issued by the opposite party towards the status enquiry fee of Rs.300/-. It is admitted by the opposite party that the credit worthiness of M/s Ruskim Sea Foods Ltd, UK was approved and that the opposite party issued A3 approval approving the foreign buyer M/s Ruskim Sea Foods Ltd, Marine HO, Stafford PK 15, Telford, PK 15, Telford, Shropshire. The agreed limit was fixed at Rs.24.lakhs. The period for payment was stipulated as 90 days from the date of shipmant. A3 is dated:7/12/1995. Thus, the export of the consignment to the foreign buyer M/s Ruskin Sea Foods Ltd, U.K was approved by the opposite party.
9. Ext.A4 is the letter dated:25/1/1996 issued by the opposite party ECGC of India Limited to the complainant M/S Shrimpex International, Cochin allowing the application submitted by the complainant for resale of goods to the alternative buyer M/s Ruskin Sea Foods Ltd, U.K for shipmant of the consignment valued at Rs.22,54,532/- with the 30 days on DA. It is also specified in A4 letter that the opposite party corporation covers would start only after the buyer accepts the relative bill of exchange and the said permission or approval was issued on the terms and conditions of the policy issued in favour of the complainant. It was also requested to pay additional premium of Rs.13,527/-. It is made specifically clear that the opposite party corporation’s, liability if any, shall be subject to the terms and conditions of the policy issued to the complainant.
10. The complainant as PW1 has admitted the fact that the shipment of the consignment to M/s Ruskim Sea Foods Ltd, UK was effected on 23/1/1996 and that terms of payment was 90 days DA. It is further deposed by PW1 that the due date for payment was 15/3/1996. There is no dispute that the complainant exported the shipment Frozen Sea Foods worth Rs.22,54,532/- to the foreign buyer M/s Ruskim Sea Foods Ltd, UK.
11. It is the case of the complainant that the foreign buyer M/s Ruskim Sea Foods Ltd, UK failed to honour the bill for export of the consignment worth Rs.22,54,532/-. It is the definite case of the complainant that on 20/9/1996 the foreign buyer M/s Ruskim Sea Foods Ltd, UK paid Rs.4,68,700/- and a balance of Rs.17,85,832/- is due from the said buyer M/s Ruskim Sea Foods Ltd, UK. As per clause 13 of A1 policy the liability of the opposite party insurance corporation is limited to 90% of the loss payable. S0, 90% of Rs.17,85,832/- would come to Rs.16,07,249/-. The complainant claimed the aforesaid sum of Rs.16,07,249/- from the opposite party on the strength of A1 shipments (comprehensive risks) policy (sc).
12. Admittedly, the complainant preferred the claim for Rs.16,07,249/- by letter dated:11/3/1998 with the claim form and the connected papers. The aforesaid claim preferred on 11/3/1998 was repudiated by the opposite party corporation vide Ext.A8 repudiation letter dated:18/3/1998. The reasons or grounds stated for repudiation of the insurance claim are:-
1. Additional premium of Rs.13,527/- has been remitted only on 31/3/1997 with a delay of 15 months and occurrence of default.
2. The default has been reported late by 17 months.
3. The claim has been lodged with a delay of 23 months.
13. It is true that after acceptance of the aforesaid repudiation letter, the complainant had also issued a lawyer notice demanding the insurance claim under Ext.A1 policy. The opposite party corporation issued reply to those letters and the lawyer notice. They reiterated their stand that there was violation of the policy conditions and so the claim cannot be entertained. Hence, the present complaint.
14. The Branch Manager of the opposite party was examined as DW1. He justified the action of the opposite party in repudiating the insurance claim because of violation of the policy conditions.
15. The material aspect for consideration is the reason or ground stated for repudiation of the insurance claim. Admittedly, the complainant received A4 letter dated:25/1/2006. As per the said letter the complainant was given the permission and approval to export the consignment to the buyer M/s Ruskim Sea Foods Ltd, UK and the shipment value was fixed at Rs.22.54.532/-. It would also show that the opposite party corporation undertook the liability on the terms and conditions of the policy issued to the complainant. Ext.A1 is the policy issued by the opposite party corporation to the complainant. As per A4 letter, the complainant was requested to pay additional premium of Rs.13,527/-. The definite case of the opposite party is that the aforesaid additional premium was remitted only on 31/3/1997 with a delay of 15 months. The aforesaid contention of the opposite party corporation has not been disputed or challenged by PW1. On the other hand, PW1 pretended ignorance about payment of the additional premium of Rs.13,527/-. So, the case of the opposite party that there occurred delay of 15 months in remitting the additional premium of Rs.13,527/- is to be upheld.
16. The opposite party in A4 repudiation letter categorically stated that the additional premium was remitted on 31/3/1997. The request for payment of the additional premium was made on 25/1/1996 vide A4 letter. PW1 has categorically admitted the fact that the value of the consignment became due on 15/3/1996. It can be seen that the additional premium was remitted only after the default in making payment by the foreign buyer, M/s Ruskim Sea Foods Ltd, UK. This circumstance would give an indication that the complainant was not prepared to pay additional premium and he remitted the additional premium only when it is found that the buyer M/s Ruskim Sea Foods Ltd, U K is not going to pay the shipment value of Rs.22,54,532/-. It is categorically admitted by the complainant in his written complaint that the buyer M/s Ruskim Sea Foods Ltd, UK is not going to pay the balance amount of Rs.17,85,832/-. It is only after the default the complainant remitted the additional premium of Rs.13,527/-. This circumstance would strengthen the case of the opposite party that the additional premium was remitted only after occurrence of default.
17. Clause 10 of A1 policy stipulates the liability of the insured exporter to pay additional premium with respect to the shipments. The opposite party corporation demanded additional premium of Rs.13,527/- to cover the risk with respect to the export of the consignment to M/s Ruskim Sea Foods Ltd, UK having the shipment value of Rs.22,54,532/-. There is no case for the complainant that the additional premium requested by the opposite party was not reasonable or proper. There is also no dispute regarding the additional premium claimed by the opposite party. Caluse 10 of A1 policy would also make it clear that the additional premium has to be remitted while submitting the relevant declaration of shipmants as per clause 8 (a) of the policy. Thus, it can be seen that the complainant failed to follow the conditions of the policy regarding payment of additional premium. In the absence of premium there cannot be any contract of insurance. In the present case on hand the complainant being the insured failed to follow clause 10 of the policy condition with respect to payment of additional premium.
18. Clause 19 of A1 policy deals with exclusion of liability. The aforesaid clause 19 would make it mandatory on the part of the insured/exporter to submit declarations regarding shipmants as stipulated under clause 8(a) of the policy and to pay the premium in terms of the clause 10 of the policy.
19. Clause 19 (b) of A1 policy would make it mandatory on the part of the exporter (insured) to submit declarations of over due payments as required by clause 8 (b) of the policy.
20. Clause 8(a) and (b) of the A1 policy deals with the filing of declarations by the exporter (insured). As per clause 8 (a) the exporter is bound to submit declaration of shipments on or before 15th day of each calendar month. It is also stipulated that the insured was bound to deliver to the corporation the declarations, in the form prescribed by the corporation, of all shipments made by the insured during the previous month and that if no shipment has been made during a month, a ‘Nil’ declaration shall be submitted.
21. The opposite party has got a case that the complainant failed to comply with the provisions of clause 8(a) of the policy conditions. The complainant has no case that he filed the declarations regarding the shipments as stipulated in clause 8(a) of the policy. The complainant as PW1 has not stated anything about submissions of shipmant declarations as stipulated in clause 8 (a) of the policy. So, it can be seen that there occurred failure on the part of the complainant/insured to submit the declarations as stipulated under clause 8(a) of A1 policy.
22. Clause 8(b) of A1 policy prescribes submission of declaration regarding overdue payments. In the present case on hand, the payment became due by 15/3/1996. Thus, after 15/3/1996 the payment due from M/s Ruskim Sea Foods Ltd, UK became over due. The complainant/insured was bound to submit the declaration regarding over due payments as prescribed under clause 8(b) of A1 policy. There is nothing on record to show that the complainant submitted the declaration of over due payments as prescribed in clause 8 (b) of A1 policy. The complainant as PW1 has no case that he submitted the declaration of overdue payments as stipulated under clause 8(b) of the policy.
23. The opposite party inA8 repudiation letter categorically stated that there occurred default in submitting the declaration regarding overdue payment. It is also stated that the said default has been reported late by 17 months. The aforesaid ground urged by the opposite party in A8 repudiation letter has not been denied or disputed by the complainant. Thus, it can be concluded that there occurred default in giving the declaration regarding overdue payments as stipulated under clause 8 (b) of A1 policy. The case of the opposite party corporation that the default has been reported late by 17 months is to be accepted.
24. The opposite party has also got a case that the claim has been lodged with a delay of 23 months. Admittedly, the complainant preferred the claim on 11/3/1998. The payment became due on 15/3/1996. The part payment was effected by the buyer M/s Ruskim Sea Foods Ltd, UK on 20/9/1996 by making a payment of Rs.4,68,700/-. But the claim has been preferred within the period of limitation. There is nothing in A1 policy stipulating the period for preferring the claim. So, the mere delay of 23 months in preferring the claim cannot be taken as a ground to repudiate the insurance claim preferred by the complainant.
25. Clause 19 of A1 policy deals with exclusion of liability. A reading of clause 19 (a) and (b) would make it clear that the opposite party corporation is at liberty to deny their liability under the policy if there occurred failure to comply the provisions of clause 8(a) and 8(b) of the policy. It is established in this case that the complainant/insured failed to follow the provisions of clause 8(a) and 8(b) of the policy. If that be so, the opposite party corporation can very well deny their liability under A1 policy. So, the issuance of A8 repudiation letter denying the liability is justified by clause 19 of A1 policy. Therefore the repudiation of the claim by the opposite party corporation can be justified.
26. Clause 28 stipulates observance of the conditions of the policy. The aforesaid clause would make it clear that due performance and observance of each term and condition contained in the policy shall be a condition precedent to any liability of the corporation. It would also make it clear that the insured can enforce the liability under the policy only if it is shown that the terms and conditions in the policy are complied with. So, the aforesaid clause 28 of A1 policy would also come to the rescue of the opposite party corporation in defending the insurance claim preferred by the complainant.
27. Clause 29 of A1 policy deals with the failure to comply with the conditions of the policy. It is stipulated that the conditions of the policy can be waived and the said waiver should be in writing. But as far as the present case is concerned there is nothing on record to show that the opposite party corporation has waived performance or observance of any of the conditions incorporated in A1 policy. Thus, in all respects the opposite party corporation can be justified in repudiating the insurance claim preferred by the complainant.
28. There can be no doubt that the parties to A1 policy of insurance are governed by the terms and conditions of the policy. The parties to the contract of insurance are bound by the terms and conditions thereunder. In the present case on hand, the materials on record would show that the complainant/insured failed to follow the terms and conditions of the policy especially; the condition regarding filing of declarations regarding overdue payments and shipmants as stipulated under clause 8(a) and 8(b) of A1 policy. It is also established in this case that the complainant/insured had also failed in remitting the additional premium as stipulated under clause 10 of A1 policy. The mere acceptance of the insurance premium or retaining of the insurance premium cannot be taken as a ground to hold observance of the liability or duty by the insured to pay the insurance premium within the stipulated time. But in the present case on hand, there occurred long delay of 15 months in making the payment of the additional premium as stipulated under clause 10 of A1 policy. Further the allegation of the complainant that there were no material discrepancies or lacunae on the part of the complainant/insured cannot be accepted as such. It is pertinent to note at this juncture that the terms and conditions of the contract of insurance as stipulated in the policy are to be followed. The violation of the terms and conditions or the failure to perform or observe the terms and conditions would make the insurer (opposite party corporation) not liable to indemnify the insured. Clause 28 of A1 policy would make it crystal clear that due performance and observance of each term and condition of the policy shall be a condition precedent to any liability of the opposite party corporation. It would also show that if there occurred any failure to follow the terms and conditions of the policy, the insured cannot be permitted to enforce the same against the corporation. Thus, it can be held that there was no deficiency of service on the part of the opposite party corporation in repudiating the insurance claim preferred by the complainant/insured. Hence these points are answered against the complainant.
29. Point No.4:-
See the decreetal portion.
In the result, the complaint is dismissed. In the facts and circumstances of the case, the parties are directed to suffer their respective costs.
M.V. VISWANATHAN : JUDICIAL MEMBER
VL.
APPENDIX
COMPLAINANT’S EXHIBITS
Ext.A1 :The shipments (Comprehensive risks) policy (Sc) No.SCR:95:61714 issued to complainant by opposite party.dtd.31/7/1995.
Ext.A2 :Receipt dated:07/12/1995 for Rs.300/- issued by opposite party.
Ext.A3 :Letter dated:23/01/1996 issued by opposite party.
Ext.A4 : Letter dated:25/01/1996 issued by opposite party.
Ext.A5 :Copy of Fax message dated:19/2/1997 from M/s Ruskim Sea Foods Ltd., UK.
Ext.A6 : Letter dated:26/08/97 issued by complainant.
Ext.A7 :Letter dated:27/11/1997 issued from the office of the High Commission of India, London.
Ext.A8 : Letter dated:18/3/1998 issued by opposite party.
Ext.A9 : Lawyer notice dated:27/7/1999 caused to be issued by the complainant.
COMPLAINANT’S WITNESS
PW1 : Akbar Shariff (Complainant)
OPPOSITE PARTY’S EXHIBITS
Ext.B1 :Lr.No.SI-34/98-99 dtd:29/09/98 sent by Shrimpex International to the opposite party.
Ext.B2 :Lr.No.CHN/CL9800008/98 dtd:5.11.1998 sent by opposite party to M/s Shrimpex International.
Ext.B3 :Lr.dtd:29/1/99 sent by M/s Shrimpex International to the opposite party.
Ext.B4 :Lr.No.CHN/CL9800008/98 dtd:15.03.1999 sent by opposite party to M/s Shrimpex International.
Ext.B5 :Reply Lr.No.CHN/LEG/99 dtd:29/07/99 sent by opposite party to Sri.George Cherian, Advocate.
Ext.B5(a) :Postal receipt and reply notice dtd:29/7/99.
Ext.B5(b) : Acknowledgement card of Ext.B5.
Ext.B6 :Credit approval letter dtd:23/1/96 issued by the opposite party to the complainant.
Ext.B7 :Letter dated:25/1/96 issued y the Opposite party to the complainant giving approval of the resale of goods.
Ext.B88 :Claim repudiation letter datd:18/3/98 issued by opposite party to the complainant.
OPPOSITE PARTY’S WITNESS
DW1 : R.Punniakot, The Branch Manager, ECGC Ltd.
M.V. VISWANATHAN : JUDICIAL MEMBER
VL.
