Complainant by filing this complaint has submitted that complainant’s Cargo of 119 Cartoons consisting of Leather Ladies Bags and Wallets as per Invoice No.786/1508/2011-2012 dated 31.07.2011 was insured with the op and op covered ‘Risk of loss and damages to Cargo’ during transit on receipt of Insurance Premium and promised to indemnify loss to the complainant, if occurred during material period under terms and conditions of Marine Insurance Policy No.100900/21/11/4370000299 which was issued from the Kolkata office of the op on 22.08.2011 to the complainant.

          Fact remains the Cargo was dispatched from Kolkata to the consignee, M/s Leather Impression INC at New York by vessel “Saigon Express” under Voice No.1132, Bill of Lading No.MUMORL/110816 dated 22.08.2011 and the said vessel arrived at Port of discharge as on 10.09.2011.  At the port of discharge, M/s Leather Impression INC the consignee noticed damages to the Cargo therefore, vide its letter dated 10.10.2011 and lodged the claim upon the claim Adjuster, M/s Gold Star Global Logistics LIC and requested for survey.  The consignee informed to the Claim Adjuster of the op via agent, EWIG-III, Town Square Place,Suite-1412, Jersey City, NJ 07310 and said letter of the consignee dated 10.10.2011.

          Subsequently, M/s EIMC New York of 111 Town Square Place, Suite-1412, Jersey City, NJ 07310 conducted survey of the Cargo and submitted their report No.11-009501 dated 17.11.2011 along with separate damage particulars described in the damage sheet and the surveyor confirmed intrusion of water in Cargo and assessed the loss which comes to Rs.8,64,000/- in Indian Currency on the other hand observed on presumption that defects that are in fact the result of Cargo Sweat and not external water inclusion.

          The complainant strongly objected and disputed the observation of the surveyor of Cargo got damaged due to sweating was illegal and far from the reality and fact.  The surveyor admitted the intrusion of water in Cartons which was apparently visible as reflected in surveyor’s report but suspected that the damages was due to sweating which is not covered under the Marine Insurance Policy as such, the claim of the complainant was unlawfully and illegally repudiated by the op.

          The complainant vide his letter dated 23.11.2011 addressed to the op and justified his lawful and logic explanation that the damages was to the extent of 20% only entire shipment due to seepage of water in Cargo otherwise entire Cargo would have been damaged due to sweating as alleged.  But the Claim Adjuster of the op denied settling the claim under the Clause No.4.3 of the Policy condition reveals that the surveyor did not apply his judicial mind.  So, complainant requested for settlement of the claim was followed by the member of Adjuster and thereafter even then claim was turned down by the op’s letter on 18.04.2012 and 05.06.2012.

          Subsequently complainant through his Ld. Advocate Sri Sanjay Kumar Prasad served a notice dated 27.06.2013 upon the op requesting the op to settle the claim of the complainant amounting to Rs.8,64,000/- being the cost of damages Cargo within 15 days from the date of service of said Demand Notice but the op in spite of receipt of said Notice did not settle the claim of the complainant and though there is provision laid down in Marine Insurance Act where it is clearly stated that if the Insurance company so desire, may turn down the recommendation of the surveyor and may proceed for settlement of the case.

          Complainant further submitted that there was no place of presumption in the eye of law where other circumstantial evidence are available.  In the instant case, the surveyor admitted inclusion of water in Cartons but believed that water may not the reason of damages and stated that due to sweating inside the Cargo lead to damages which is not correct and there is no evidence of such observation of the surveyor.  On the other hand there is sufficient evidence on record available that water seeped into the Cargo which have been admitted by the surveyor.  Moreover, damage was caused only to 30% of total Cargo and complainant was very much shocked to get the reply of the op which turned down the claim of the complainant and in the circumstances, complainant has prayed for redressal and for compensation.

          On the contrary op by filing written statement submitted that no doubt complainant purchased Marine Insurance Certificate being policy No.100900/21/11/4370000299 starting from 11.02.2011 in respect of 119 cartons containing leather ladies bags and wallets as per Invoice No.786/1508/2011-12 dated 31.07.2011.  But as per special condition of the said policy, the policy valid for warehouse to warehouse but exclusion clause is Mildew, Mould and fungus in case of vessel journey.  Further it is submitted by the op that the surveyor clearly attributes the loss due to condensation inside the internal packing, the discolouration and light surface corrosions was from cargo sweat and not from external water entry and he has also reported that cargo sweat condensation water beads settling on the relatively cool surface of the metal hardware of the handbags is the cause of the discolouration and light surface corrosion.  The temperature gradient is caused by the change in ambient temperature of the air inside the cartons due to air trapped inside at time of loading when the temperature of the cargo is below the dew point of the air adjacent to it condensation forms on the cargo.  Metal goods liable to damage by cargo sweat condensation.  There should be protective plastic adhesive material installed on the surfaces of the metal hardware on the handbags since the leather is known to draw moisture from the surrounding air the sensitive metal hardware is at risk of being affected by cargo sweat conditions.  But no external water intrusion was detected. Accordingly as per clause 4.3 “any loss, damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject matter insured for the purpose of this clause 4.3 packing shall be deemed to include stowage in a container or lift van but only when such stowage is carried out prior to attachment of this insurance or by the assured or their servants.  4.4: speaks that loss damage or expense caused by inherent vice or nature of the subject matter insured”.  So, it was decided that the loss was not covered by the terms and conditions of the Marine transit policy since the cause of loss falls under the Exclusion of ICC ‘A’.

          In addition, the policy is subject to special condition, Exclusion Mildew, Mould and fungus in case of vessel journey and in view of the above, on behalf of National Insurance Co., the matter was decided and that was rejected.  Moreover it is submitted that all cartons of the shipment were loaded into a 40’ HC Steel shipping container from Swiss International, Calcutta, India and delivered to the Indian port of Mumbai.  The container is No.CMAU-4155129.  But no exceptions were noted on the BOL and the container was loaded into the freighter Saigon Express 1132 on July 31^st, 2011 and the Saigon Express docked in New York on 08.09.2011and the container was off loaded on 08.09.2011 and trucked to Salson Logistics, New York, NJ.  The container was loaded into the freight Saigon Express 1132 on 31.07.2011.  The 119 cartons were destined for leather impressions Orlando, FI, Gold Star Global Logistics accepted the shipment of 119 cartons and reportedly cartons were loose and not attached to a pallet.  But no exceptions were noted and Gold Star Global logistics trucked the shipment to Ecuamerica Orlando, FL on 19.09.2011 and the shipment was finally trucked by Ecuamerica to leather impression INC Orlando, FL on 22.09.2011.

          But fact remains that plastic strapping securing the external circumference of boxes on two dimensions, clear plastic covering sealed around all external surfaces of the cardboard boxes, plastic adhesive tape securing all corners and seams of the cardboard boxes and light weight cardboard dividers used to layer the leather goods, silica Gel packets dispersed throughout the layers of the leather goods and leather goods were secured in closed plastic bags with ventilation holes and all cartons were loose and not attached to any pallets when received from Ecuamerica, Orlando.

          But from the surveyor’s report it is clear that there was visible impact damage to 23 cardboard cartons and the cartons were split open at corners and exposed to the elements, with ripped open plastic sheathing.  There were visible water marks to 34 cardboard cartons and the cardboard showed that it had been wet even though the cartons were properly wrapped in plastic.  So there were visible water marks from water immersion on the exterior of the plastic sheathing on some of the cartons mentioned above.  The cartons were properly strapped and all edges were tightly taped close and each item is individually wrapped in a clear plastic wrapper that has ventilation holes punched into them.

          Though the surveyor found that wetting damages mold and mildew as the shipment was exposed to fresh water and/or severe dampness of atmosphere, discolouration due to cargo sweat not transit related.  From the report of the surveyor it is clear that the articles were in loose condition in the cartons and cartons had been badly beat-up from normal handling actions and during the inspection the surveyor found leather bags with wetting damages i.e. mold and mildew in the amount of $ 1,470.15 only however on 10.10.2011 the complainant notified us that upon unpacking and segregation, they have found and rejected bags due to discolouration of hardware worth of $10,766.45 and it is the cargo sweat condensation by air trapped inside at the time of loading.  The temperature gradient is caused by the change in ambient temperature of the air inside the cartons due to air trapped inside at the time of loading and when the temperature of the cargo is below the dew point of the air adjacent to it condensation forms on the cargo, the discoloration and light surface corrosion was from cargo sweat and not from external water entry and it is due to moisture and metal goods is liable to damage by cargo sweat condensation.  There should be protective plastic adhesive material installed on the surfaces of the metal hardware on the handbags, since the leather is known to draw moisture from the surrounding air the sensitive metal hardware is at risk of being affected by cargo sweat conditions.

          Further it is submitted that the policy is subject to special condition, “Exclusion Mildew, Mould and fungus in case of vessel journey”.  So, considering all the above fact and report of the surveyor the insurance company after applying all judicial mind, pros and cons repudiated the claim and the cost of loss approximately due to perils excluded under the policy.  So, repudiation is not illegal and for which the complainant’s claim should be dismissed and there is/was no deficient and negligent manner of service on the part of the ops.

                                                      Decision with reasons

          After thorough study of the complaint and the written version and also relying upon the arguments as advanced by the Ld. Lawyers of both the parties and particularly the vital fact that the repudiation was made by the Insurance Company on the basis of the surveyor report and after considering the entire argument and the material particularly the version of the complaint, we are confirmed that surveyor was appointed as per prayer of the consignee at New York.  But there was no official of the insurance company there and surveyor was appointed as per consignee’s request and practically surveyor after continuous inspection and surveyor came to a conclusion that cargo sweating condensation water beads settling on the relatively cool surface of the metal hardware of the handbags is the cause of the discoloration and light surface corrosion because moisture and moisture related damage is common with leather goods and by nature leather attracts moisture from the ambient air.  At the same time surveyor found that silica gel packets placed however settled inside the cargo to counter act and this is common occurrence.  Further the surveyor came to a conclusion that cargo sweating condensation by air trapped inside at the time of loading and the temperature of godown is caused by the change in ambient damage of the air inside the cargo due to air trapped inside at the time of loading and the surveyor is found no entry of external water and he has also opined that metal goods liable to damage by cargo sweat condensation.  But it was detected that there was no protective plastic adhesive material layered on the surfaces of the metal hardware on the handbags and since the leather is known to draw moisture from the surrounding air the sensitive metal hardware is at risk of being affected by cargo sweat condensation.  Moreover surveyor found that the said merchandise was in transit for over 30 days.  So, during that period discolorations and light surface corrosion was caused and it was not due to external water intrusion and the surveyor after considering several clauses of the Insurance Policy and the present situation of the articles including the ship cause to a conclusion that common and customary method of protecting the shipment should be attached with cartons to pallets and shrink wrap each pallet.  But that was not followed and it is also found from the said report that wrappers were opened.  Some wrappers were damaged for rough handling what caused when it was detected and there was visible impact of damage to 23 cardboard cartons.  But all those damages were caused in view of the surveyor due to non-compliance of the statutory protection to be taken by the insured at the time of shipment and for which the discolouration and light surface corrosion was caused and at the same time metal hardware of the handbags were suffered from discoloration and light surface corrosion.

          But everything was caused due to temperature gradient and cargo sweat condensation and considering the entire fact and surveyor’s report we find that surveyor decided the mater after applying all scientific theorization and also considering the nature of packing and handling of the same by the consignee and consignor etc and also not complying the provision of the Insurance Policy Clause also and no doubt that report is exhaustive and practically that surveyor was appointed at the request of the consignor and consignee and he was not appointed by the Insurance Company but as per contract in foreign countries the resignees, surveyor of the Insurance company are called by the consignor or consignee for determination of loss that surveyor had not been covered by Insurance Company in India but surveyor submitted report after final check up, inspection and also considering the weather matter and also visited the cargo including the ship.  So, insurance company relied upon that report and applied their judicial mind and board of officers of the Insurance Company decided the matter after considering the report of the Insurance Company and repudiated the claim.

          So, apparently we find that there is/are no negligence and deficiency on the part of the Insurance company because surveyor was not guided by the Insurance company but as per instruction of the insurance complainant, surveyor was appointed.

          But the Ld. Lawyer for the complainant submitted that decision of the surveryor is improper and same should be rejected by the insurance company.  But insurance company swallowed the report and repudiated the claim which is not at all correct.  But in this regard we have gathered from the surveyor’s report that surveyor applied not only his judicial mind but also the skill including the atmosphere and other matter during transit period of the ship for more that 1 month etc. and also considered that the item was leather goods and there are fixing of some metal goods which was not pasted with plastic cover for which metal goods were damaged due to cargo sweating condensation.  So, it is clear that protective plastic adhesive material were not used with metal hardware in the handbags and when that was not done by the consignor, it is known to all that leather is to draw moisture from the surrounding air as the sensitive metal hardware and there is risk always for affecting the leather goods due to non-protective metal goods fixed with that and it is common that metal hardware is affected up by cargo sweat condensation and as per Insurance Policy high value packages must be declared by the consignor but no such declaration was made by the consignor at the time of shipment of the same and packing of the same in the cargo. 

Another factor is that as per Insurance Policy the present damage comes under the exclusion clause and as because complainant did not take any such protective step and also did not properly sealed and packed and the same at the time of shifting to the cargo and all those damages were caused on transit and as per said exclusion clause the complainant is not entitled to get any relief and truth is that surveyor also did not allow the claim of the complainant on the ground that it was not due to any leakage of the ship water but it was due to Mildew, Mould and fungus in case of vessel journey and for which exclusion clause 4.3 is attracted in this case and loss or damage or expenses caused inherent such matter exclusion clause 4.4 and moreover in the policy it is specifically mentioned that exclusion clause Mildew, Mould and fungus in case of vessel journey and from the report of the surveyor it is proved that said damage was caused due to Mildew, Mould and fungus in case of vessel journey and surveyor has confirmed it. 

Now the question is whether the report of surveyor can be accepted in toto and whether the clause 4.3 and 4.4 are applicable in this case.  In this regard we have gone through the ruling reported in 1997 (I) CPR 22 (NC) and also 1997 (I) CPR 40 (NC) wherefrom we have gathered that it is settled principal of law that if insurer repudiates the claim in good faith after due application mind to all the matters consisting a claim, the act of insurer cannot be challenged or question as an act of deficiency in service and if there is no deficiency on the part of the op/Insurance company in that case the claim of the complainant in questioned cannot be considered by Consumer Forum.

Fact remains that in this case surveyor submitted a detailed report and determined the cause of damage which comes under the purview and exclusion clause 4.3 and 4.4 and also the exclusion clause Mildew, Mould and fungus in case of vessel journey.  So considering the entire fact and circumstances and also the report of the surveyor, we have gathered that there was fault on the part of the insured in despatching the goods in good condition and practically before despatching the leather goods fixing with metal item several precaution should be taken by the insured but that had not been done for which due to natural cause some damage were detected and two bags as example were produced by the complainant  and we have gathered that the leathers were not tonned leathers but it was raw leathers.  At the same time chain clips fixed with the chain was made of iron with silver paint but it was not protected by plastic adhesive and further the bags were not properly covered with such plastic bags after fixing of each bag and from the report of the surveyor it is found that it was not properly made in the carton cargo placing it on carton small in size but excess bags were placed into the cargo for which the cargo were broken and for which due to Mildew, Mould and fungus in case of vessel journey caused damages and it was corrosion and fungus related matter for which it can safely be said that the report of the surveyor was not unscientific rather it was scientific and fact remains that the consignee rejected the packets due to discoloration of hardware and other matter.

          Then it is clear that by nature leather attracts moisture from the ambient air and in the present case it was caused due to cargo sweating not for external water intrusion and for which no doubt surveyor’s report cannot be rejected.  At the same time it is proved that insurance company decided the claim of the complainant after applying their judicial mind and consideration and also considering the conduct of the insured in dispatching those articles and for not taking such proper step to protect the articles from Mildew, Mould and fungus in case of vessel journey etc. for which such discolouration were found.  But it was the fault of the complainant and as per insurance policy and exclusion clause complainant is not entitled to get any claim benefit.

No doubt Ld. Lawyer for the complainant submitted that the surveyor did not apply his mind and insurance company ought to have further reassessed the same.  But in this regard we want to say that the surveyor was appointed as per requirement of the consignee and consignor and no doubt he is a registered surveyor of the insurance company and there was no connection in between the consignee and surveyor.  So, the decision of the insurance company as we find is not at all improper but they took the decision by applying their mind and also relying upon the conditions of the policy including the surveyor’s report.  So, considering that fact we find that the decision as taken by the op/insurance company for repudiation of the claim is made on the basis of the materials collected in pursuant of the enquires made by the surveyor so there is no deficiency in service on the part of the op and insurance company repudiated the claim by applying their mind properly and for which we are convinced to hold that surveyor’s report were justified and there was no illegality in the said report and for the above reasons and also relying upon the above ruling we are convinced to hold that repudiation was legal and valid and at the same time there was no deficiency on the part of the op/insurance company and under any circumstances surveyor’s report cannot be treated as illegal for which the complainant is not entitled to get any relief when deficiency and negligence on the part of the op is not at all proved and when complainant has failed to search out any defects in respect o the surveyor’s report or the decision of the op.

Thus the complaint fails.

Hence, it is

                                                  ORDERED

That the complaint be and the same is dismissed on contest against the op with cost of Rs.10,000/- and complainant shall have to pay the said cost to the op.