Tamil Nadu

StateCommission

A/69/2016

M/s.Meenal Exports - Complainant(s)

Versus

M/s.Export Credit Guarantee Corporation of India Ltd, - Opp.Party(s)

Mr.D.Jawahar & T.A.Rajagopalan

29 Apr 2022

ORDER

IN THE TAMIL NADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI.

 

Present: Hon’ble Thiru Justice R.SUBBIAH       ... PRESIDENT

              Thiru.R.VENKATESAPERUMAL … MEMBER

 

F.A. Nos.69/16 & 167/2017

(Against the Order, dated 21.01.2016, passed in C.C. No.52/2011,

on the file of  the DCDRF, Chennai-South)

                                                    

                               Orders pronounced on:   29.04.2022

F.A. No.69/2016:-

M/s.Meenal Exports,

rep. by its Partner A.R.Ramaswamy,

No.47 F/3, Dr.Ramasamy Salai,

K.K. Nagar, Chennai 600 078.                                                                                                 …Appellant/Complainant

 

vs.

 

M/s.Export Credit Guarantee

     Corporation of India Ltd.,

rep. by its Managing Director,

Spencer Towers, VII Floor,

770A Anna Salai,

Chennai 600 002.                                                                                                                   …Respondent/Opp. Party

 

F.A. No.167/17:-

M/s.ECGC Ltd.

(formerly known as Export Credit Guarantee

     Corporation of India Ltd.,

Spencer Towers, VII Floor,

770A, Anna Salai,

Chennai 600 002.                                                                                                                 … Appellant/Opp. Party

    

vs.

 

M/s.Meenal Exports,

No.47 F/3, Dr.Ramasamy Salai,

K.K. Nagar, Chennai 600 078.                                                                                      … Respondent / Complainant

 

             For Appellant in FA.69/16

             & Respt. in FA.167/17     :  M/s.Jawahar

             For Appellant in FA.167/17

             & Respt. in FA.69/16       : M/s.Ramasubramaniam

                                                     & Associates.

 

These First Appeals came up for final hearing on 20.04.2022 and, after hearing the arguments of the counsels appearing for the parties and perusing the materials on record and having stood over for consideration till this day, this Commission passes the following:-

 

COMMON ORDER

 

R.Subbiah, J. – President.

 

             As against the Order, dated 21.01.2016, passed by the DCDRF, Chennai-South, in C.C. No.52 of 2011, the complainant/Firm has filed F.A. No.69 of 2016 on the grievance that the District Forum ought to have allowed their total claim instead of allowing the complaint in part, while the Opposite Party/Export Credit Guarantee Corporation, by filing F.A. No.167 of 2017, seeks to set aside the impugned order in partly allowing the complaint and consequently directing them to pay the complainant a sum of Rs.6,51,081/- with interest @ 9% p.a. from the date of complaint till the date of payment, besides a sum of Rs.5,000/- towards litigation charges.

 

             2.  Since both the appeals arise from the same impugned order and the issues involved therein are inter-connected, they are disposed of by this common order.

             For the sake of convenience, the parties shall be referred to in the course of this order, as per their respective rankings before the District Forum.

    

             3. In brief, the case of the complainant, as given in the complaint filed by them before the District Forum, is as follows:-

             The complainant/partnership firm, carrying on the business of exporting agarbathis, perfumes, cosmetics, etc. in small scale, had obtained Small Exporter’s Policy with the OP/Corporation vide Policy No.SEC-0070009078.  The complainant received a purchase Order, dated 01.11.2007, from M/s.Primmas Wholesale Emporium (in short PWE) SDN BHD, Malaysia, for the supply of agarbathis worth US$ 20,550 and subsequently, the said order was enhanced twice on 01.02.2008 and 05.02.2008 for US$ 30,550 & US$ 4900 respectively.  The complainant also obtained Credit Limit Approval with the OP on the buyer/PWE for Rs.12,50,000/- vide letter dated 03.12.2007.  The complainant exported the goods under two Bills of lading, dated 26.03.2008 & 02.05.2008.  Both the said bills were purchased by the complainant through their Bankers/Indian Bank, Ashok Nagar Branch.  The complainant was hoping that those bills would be honoured in the ordinary course of commercial transactions.   The returns for the shipments were filed by the complainant to the OP within the prescribed period in Form No.203 and also Form No.205 for payments delayed beyond 30 days from the due date, for which, the OP replied stating, inter alia, that the claim form could be submitted within a period of 2 years from the original due date in prescribed form, vide letter dated 13.06.2008. While so, vide letter, dated 10.06.2008, the buyer/PWE had informed their Bankers CIMB Bank Berhad, Malaysia, that they did not purchase the bills raised on them and advised the said Banker to return the documents to the complainant.  Having been conveyed of the said development through his Banker, the complainant requested PWE to clear the bills but they refused by citing financial constraints, whereupon, he immediately contacted the OP for further course of action.  While so, the complainant received an offer letter, dated 21.06.2008, from M/s. Jes Global (M) SDN BHD,  offering to clear the goods of the two bills and the said letter was immediately brought to the attention of the OP, vide letter dated 23.06.2008.  In the meantime, the complainant was able to realize a sum of Rs.1,85,515/- from PWE which factum was duly intimated to the OP.   While so, for the purpose of submitting the claim form within the prescribed period, by letter, dated 14.07.2008, the complainant requested the OP to send the claim form, however, despite reminders, the OP did not choose to furnish them with the claim form.  It turned out that M/s.Jes Global also failed to clear the bills which prompted the complainant to personally visit Malaysia for ascertaining the exact position of the export made. After obtaining authorization letters from the Bankers under intimation to the OP,  the complainant visited Malaysia, where, at the Port, a new buyer  M/s.ElectroPay, Malaysia, came forward to see the condition of the goods before accepting the same.  However, it came to surface then that, even during May, 2008, PWE had cleared the goods under the invoice without making payment.  The complainant had been consulting the OP regarding realization of bills and he was told that he could make a claim as a last resort.   By letter, dated 30.12.2019, the OP had requested the complainant to meet their representatives with regard to the default committed by PWE, by specifically stating that the guarantee cover is live and protected.  Accordingly, the complainant met the representatives and gave another letter dated 06.01.2010, requesting for the claim form despite the fact that, vide letter dated 14.07.2008, claim form was already requested.  The OP sent a claim form along with a covering letter, dated 19.01.2010, stating that the same has to be filed within one year from the due date, though in the earlier letter, dated 13.06.2008, the OP had stated that the claim form could be submitted within two years from the original due date.  The complainant submitted the claim form along with a covering letter dated 10.02.2010 detailing the entire efforts undertaken by them to realize the payment from the buyers.  All queries raised by the OP were clarified by the complainant, however, by letter, dated 25.02.2010, the OP rejected the claim of the complainant.  These sequence of events would show clear deficiency in service on the part of the OP, hence, the complainant sought the District Forum to direct the OP to settle the claim of the complainant for Rs.9,71,442/- along with interest @ 18% p.a. from the date of claim till the date of actual payment, Rs.5 lakh as compensation for the mental agony underwent by him due to deficiency in service committed by the OP and to pay the litigation expenses.

 

             4. The OP resisted the case of the complainant by filing a written version, wherein, among other things, it is stated thus:-

             Maintainability of the complaint itself is questioned since the complaint reveals that complicated questions of facts and law have been raised in connection with the sequence of events arising out of the complainant’s export shipments and the alleged non-realization of payments for the same; thus, the same cannot be decided by the consumer forum in the summary proceedings and it is proper for the complainant to approach only the civil court concerned. The OP is a Government of India Enterprise providing export credit insurance cover inter alia for exporters against risk of loss in export of goods and services arising out of insured perils as mentioned in the policy document and also offers insurance cover to Banks and Financial Institutions to facilitate easy availability of export finance to their exporter clients.  The complainant is holding a Small Exporter’s Policy bearing No.SEC 0070009078, dated 03.09.2007, that covered the shipments effected by the complainant for the period between 03.09.2007 and 31.08.2008 and the said policy was renewed for a period of one year from 01.09.2008 to 31.08.2009 with 5% no-claim bonus.  The complainant had approached the OP for credit limit on one of its buyers/PEW for a sum of Rs.12,50,000/- on ‘Documents against Payment Terms’ that means ‘goods and title passes to the buyer only upon full payment of the price to the exporter’ and the OP had also approved the same.     The present proceedings are connected to alleged non-payment of dues by the said buyer/PEW to the insured/exporter on two shipments, dated 26.03.2008 and 01.05.2008.  Both the shipments were made on “documents against payment basis” and the last date for submitting the claims being 03.05.2009 and 07.06.2009 respectively, the actual claim submission regarding both the shipments was done by the complainant only on 09.02.2010.                     In the monthly declaration of overdue payments received by the OP on 09.06.2008, shipment No.1 was disclosed as overdue for payment with the noting “goods delivery against payment” and “contacting party” indicating that the goods had  not   been   delivered   yet.  It   appears   that  the  bank   of  the  aforesaid Buyer in Malaysia, wrote to the Bank of the insured/complainant by letter, dated 13.06.2008, stating that the buyer had rejected the documents and refused to make payment for the same, thus, indicating that the goods had been rejected altogether.  Subsequently, in the monthly overdue statement received on 08.09.2008, the complainant disclosed that both the shipments and the entire payment were overdue.  Later, the complainant sought the OP’s approval to resell the goods by citing an offer made by M/s.Jes Global, an alternate buyer. As there was no reduction in the value, and the amount to be realized from the alternate party was also the same, it did not concern the OP anyway.  While so, again, the complainant approached them to approve re-sale of goods to one M/s.Electropay with 25% discount on the premise that dues were not realized from JES Global also and, by letter, dated 20.10.2008, the OP communicated their decision.  At the time of renewing the policy, vide letter, dated 26.08.2009, addressed by the complainant to the OP, it was claimed that it made a total recovery of Rs.5,25,485/- against the alleged overdue amount of Rs.11.85 lakh approximately and as such, the alleged loss was pegged at about Rs.6.5 lakh.  While so, in the claim form lodged only in February, 2010, the complainant stated that a sum of Rs.2,05,124/- alone had been realized and claimed a sum of Rs.9,71,442/- which is vastly different from the approximate loss mentioned as Rs.6.51 lakh in their own letter dated 26.08.2009. It is only after lodging the claim, the complainant chose to approach the Consulate General of Malaysia at Chennai stating that the goods had been cleared by the original buyer PWE on 25.04.2008 and 27.05.2008 without payment.  According to the complainant, he received such information only from Electropay who also could not pay for the goods on that ground.    Thus, by taking note of the multiple discrepancies and inconsistencies in the statements and claims made by the complainant, by letter, dated 25.02.2010, the OP ultimately rejected the claim lodged with them, by assigning a bunch of reasons after taking note of the fact that the claim was time-barred and that the loss on account of the shipping agent’s fraudulent removal of goods in favour of the buyer is not an insured risk under the policy.  Inasmuch as the OP acted within the framework of the terms and conditions governing the policy and claim, no deficiency of service or negligence can be attributed to them and hence, the complaint is liable to be dismissed with heavy costs.

 

       5. In order to prove the claim and counter-claim, the parties filed their respective proof affidavits and, while the complainant marked 49 documents as Exs.A1 to A49, 13 documents were marked by the OP as Exs.B1 to B13.  The District Forum, by relying upon Ex.B8/letter and by assuming that, in the said letter, the OP themselves had agreed that the balance due to the complainant was Rs.6,51,081/-, held that had the OP settled the said sum in time, the complainant would not have preferred the complaint, and ultimately allowed the complaint in part by directing the OP to pay the complainant a sum of Rs.6,51,081/- with interest @ 9% p.a. from 02.02.2011 till the date of payment and also to pay Rs.5,000/- towards litigation expenses.  Aggrieved thereby, the  appeal in F.A. No.167 of 2017 has been filed by the OP/Corporation.  The complainant has filed F.A. No.69 of 2016 on the ground that the District Forum committed an error in allowing the complaint only in part, rather, it ought to have allowed the complaint in its entirety.

 

             6. Heard the submissions advanced by the counsels for the parties and perused the materials available on record.

 

             7. By referring to the impugned order, in particular, the following lines at paragraph No.15 thereof,

             “….The Opposite Party themselves had agreed the balance amount due to the complainant Rs.6,51,089/- (Ex.B8).  Under Ex.B9 the Opposite Party had clearly given the detailed liability of the complainant by claiming 100% of the loss ie., Rs.9,71,442/-. …”

learned counsel for the OP submitted that the District Forum completely deviated itself from the material facts by erroneously misconstruing the documents for ultimately concluding that the OP has committed deficiency in service.  It is elaborated that Ex.B8 is not the letter of the OP, as construed by the District Forum, to agree or admit any balance amount due to the complainant, rather, it is a letter addressed by the complainant himself to the OP at the time of renewing the policy, wherein, it was claimed by the complainant that he had recovered a sum of Rs.5,25,485/- against the overdue amount of Rs.11,76,566/-, thereby, the alleged loss was arrived at by the complainant for a sum of Rs.6,51,081/-.  Similarly, Ex.B9 is not the liability details given by the OP, but, it was the claim form lodged by the complainant.   While so, the District Forum, by totally misconstruing those vital documents and by reversing the facts as if the OP had agreed their liability for a sum of Rs.6,51,081 and thus had committed deficiency in service by not paying the agreed amount to the complainant, proceeded on a complete wrong footing to hold against the OP and as such, the impugned order is rendered absolutely invalid in the eye of law, both factually and legally.

             It is the further case of the OP that fraud is not covered by the risks insured under the Policy and the said proposition is time and again emphasized by various decisions including the one rendered by the National Commission in Rane Apparels vs. Export Credit Guarantee Corporation (2004 (1) CPR 94).  By referring to Ex.A34, letter dated 23.02.2010, addressed by the complainant to the Consulate General of Malaysia (Trade Section), Chennai, Ex.A.43, letter dated 21.01.2011, of the complainant to the High Commission of India at Malaysia, and the petition under Ex.A44, dated 21.01.2011, addressed by him to the DGP, Tamil Nadu, learned counsel pointed out that, in all those communications/petition, the complainant consistently claimed that his goods were fraudulently cleared by the buyer concerned at Malaysia, thus, according to the complainant himself, it was an instance of fraud and hence, rightly, the OP repudiated the claim, inter alia, also for the reason that the loss on account of the shipping agent’s fraudulent removal of goods in favour of the buyer is not an insured risk under the policy.  Hence, inasmuch as the OP has throughout acted  within the framework of the terms and conditions contained in the policy, no fault can be attached to them and further, the impugned order, which completely suffers from factual errors and misreading of documents, is liable to be set aside.

             On the contrary, it is the case of the complainant that they had made two shipments meant to be purchased by the original buyer/PWE at Malaysia, who did not make payment, whereupon, M/s.Jes GLOBAL came forward to buy, however, the said transaction also failed and when the complainant attempted to sell the goods to the third buyer/Electropay, it was found that  both the shipments were already cleared by PWE through clearing agents/Ocean Track Logistics.   Hence, rightly, the complainant lodged the claim with the OP, however, by rejection letter, under Ex.A35, dated 25.02.2010, the claim was repudiated on wholly untenable reasons.  According to the complainant, although 5 reasons were assigned for rejection, none of them deals with any aspect of fraud, therefore, the contention now made before this Commission to defeat the just claim of the complainant by stating that fraud is not covered by the risks insured under the policy, is to be straight away repelled by accepting the plea of the complainant. Further, the actual amount due, that had been certified by the Banker of the complainant under Ex.A45  which is an official one as approved by the RBI, comes to Rs.9,71,442/-, however, the District Forum, in all fairness, ought to have ordered payment for the said entire amount and hence, on that score, the impugned order is liable for interference so as to award the entire claim amount in favour of the complainant, as mentioned above.

            

         8. But, even at the outset, it is but relevant to point out that the present case is replete of seriously disputed facts on the nature of transactions & dealings connected to the shipments, realization of dues/calculation of amounts, compliance of specific advice-cum-conditions, etc.  When it is the assertive stand of the OP that both the shipments were based on the terms ‘documents against payment’ that is said to mean ‘goods and title pass to the buyer only upon full payment of the price to the exporter’, the complainant has not whispered anything about the same.  Further, consequent to the information received by the OP on 09.06.2008 about overdue for Shipment No.1, through the communication under Ex.B4, dated 13.06.2008, among other things, the OP specifically advised the complainant to take steps for recovery through the Indian Consulate at Malaysia, if the goods were already parted with.  But, steps taken in that regard by the complainant, on the said clear advice, to find out as to whether the goods were then available, is not known. In that regard, it is to be pointed out at this juncture, even as per the averments at para No.15 in the complaint, the goods were already cleared by the PEW in May, 2008 itslef, while so, in terms of the above advice of the OP, dated 13.06.2008, if they had verified then and there about the availability of the goods under both the shipments and taken instant steps for recovery through the Indian Consul at Malaysia, such details would have been made very much available, but, it does not seem so.   Also, as to whether the complainant took any safeguard measure for shifting the goods to a bonded warehouse, as further advised by the OP so as to avoid any mishandling, is too not known.  Further, there is a serious dispute in respect of the amount realized by the complainant, for, in the letter under Ex.B8, dated 26.08.2009, that was addressed by the complainant to the OP seeking renewal of shipment policy, the recovery made by them is shown as Rs.5,25,485/- and the balance due/claimable amount as Rs.6,51,081/-; while, in the claim form, dated 10.02.2010, under Ex.B9, the claim is shown as Rs.9,71,442 that clearly contradicts with the calculation details given by the complainant in Ex.B8 letter.  Similarly, regarding the averment made by the complainant at paragraph No.12 of the complaint to the effect that he was able to realize an amount of Rs.1,85,515/- from the original buyer/PWE, it is the grievance of the OP that the complainant had not disclosed to them a single correspondence with PWE in his endeavour to realize the payment.  It is also the grievance of the OP that the complainant never shared with them any detail as to how the goods were fraudulently removed.   One more feature is that, according to the OP, by an agreement, dated 15.03.2011, the complainant had appointed M.A.H. International Corporation, a Debt Recovery Agent, to proceed against Jes Global and not PWE, who was the original buyer and was the cause of loss according to the complainant.  That being the complexity at all corners, to comprehensively decide those disputed facts and importantly on the point of fraud that is seriously debated by both sides – although it was not the sole ground for repudiation, only the civil court shall be the proper adjudicating authority where the parties can examine/cross examine witnesses and thus, adduce elaborate oral and documentary evidence and broadly canvass all the disputed facts and issues involved, which cannot be done in summary proceedings before the consumer forum. Pausing here, it must also be stated that the District Forum has completely misdirected itself by misconstruing the facts and documents, in particular Ex.B8, to ultimately hold that the OP had agreed on the balance due to the complainant, which is quite contrary to the facts and the materials placed.  Hence, the impugned order has no legal basis to stand and the same is liable to be set aside as nullity.

 

             9. Accordingly, F.A. No.69 of 2016 is dismissed by holding that, for proper adjudication, the matter can only be relegated to the civil court concerned where the parties can adduce elaborate oral and documentary evidence to substantiate their respective claims, and  F.A. No.167 of 2017 is allowed on the ground that the impugned order, dated 21.01.2016, passed by the DCDRF, Chennai-South, in C.C. No.52 of 2011, is rendered nullity for the reasons assigned, and the same is hereby set aside.

 

 

R.VENKATESAPERUMAL                                                                                                                         R.SUBBIAH, J.

MEMBER                                                                                                                                                       PRESIDENT.

 

ISM/TNSCDRC/Chennai/Orders/April/2022.