CONSUMER DISPUTES REDRESSAL COMMISSION – X

GOVERNMENT OF N.C.T. OF DELHI

Udyog Sadan, C – 22 & 23, Institutional Area

(Behind Qutub Hotel)

New Delhi – 110016

Case No.96/2013

M/s Shorewala Global Industries

Private Limited, A company duly incorporated

Indian Companies Act, 1956, Having its registered office at:

9 Lancers Rod, B.D. Estate, Timarpur, Delhi-110054

Acting Through its, Authorised signatory: Sh. Atul Shorewala.

Also at:

SP-2-6, Riico Industrial Area

District Neemarana, Alwar Rajasthan                         …..COMPLAINANT

      Vs.

National Insurance Company Limited

A Government of India Undertaking

61 Aerodrome Road, Alwar-301001

Also At:

42, Community Centre

New Friends Colony

New Delhi-110065.                                                                      …..RESPONDENTS

                                                                                                                          Date of Institution-14.02.2013

                  Date of Order-26.07.2024

O R D E R

RITU GARODIA-MEMBER

1.  The complaint pertains to deficiency in service on part of OP in rejecting the insurance claim of the complainant.

2. The brief facts as stated in complaint: The complainant has been taking Marine Transit Insurance Policy from 2007 from OP.  The complainant purchased an Open Insurance Policy vide policy No.371000/21/44000000 for an insured amount of Rs.2.00 crores for the period commencing from 07.05.2011 till 06.05.2012.

3. The complainants were in the business of manufacturing towels and have received order from M/s ZAP Limited situated in United Kingdom.  The terms of sale were Free on Board, Mumbai.  The complainant was responsible for delivery of the goods till port of discharge that was JNPT (NSICT)/PIPAVA/MUNDRA.

4. The complainant, after manufacturing the said goods at its factory situated at RIICO Industrial Area, Neemrana, had dispatched the goods for export through road by availing services of one M/s Shiv Shyam Road Lines.  The goods were properly packed in 605 cartons and loaded in the container bearing No. ECMU 2078622-20 at the aforesaid factory of the complainant.  The said container was sealed vide seal no.046499 by the Excise/Customs Department and vide seal No.ANL-1033443 by the shipping line at the factory of the complainant itself and the necessary receipt to the said effect was also issued by the Excise Department on 28.05.2011.

5. The said goods were delivered by above said M/s Shiv Shyam Road Lines to carriage company namely M/s  Clearship Forwarders Pvt. Ltd. at ICD Tughlakabad for their further dispatch to port of discharge i.e. JNPT(NSICT) situated at Mumbai for their export to M/s ZAP Limited.

6. The said goods had reached Mumbai and were duly boarded on vessel namely OOCL SAN FRANCISCO/voy 7020.  The clearing and forwarding agent namely M/s Clearship Forwarders Pvt. Ltd. had issued Shipped on Board Certificate thereby certifying the container containing 605 cartons with the Excise/Customs seal no.046499 has been loaded on board and the vessel sailed on 04.06.2011.

7.  It is alleged that as per the customs rules, if the goods are loaded in a container at the factory of manufacturer and such container is sealed by the Excise & Customs Department at factory of such manufacturer, then Shipped on Board Certificate is issued without checking the goods unless the seal is found to be tampered or there is specific intelligence in which case permission of Deputy/Assistant Commissioner would be required before checking.

8. The said goods were dispatched on 04.06.2011 from Mumbai and had reached the port of discharge i.e. Southampton, UK, somewhere in the end of June, 2011.  In the first week of July, 2011, the concerned officials of M/s ZAP Limited informed the complainant that there is shortfall in the total quantity of goods received by them who vide their email dated 06.07.2011 gave a detailed list of goods/cartons not received by them.  As per the list provided by M/s ZAP Limited, there was shortfall of 356 cartons out of total 605 cartons dispatched by the complainant.  The value of such stolen goods in the said 356 cartons comes to Rs.12,53,890/-. 

9. As per the surveyor report submitted by the insurance company of M/s Zap Limited, the theft had taken place after loading of goods in the container and before loading of goods on vessel.  The basis of said finding, as mentioned by said surveyor, was that the thieves in India had replaced the door handle rivets of container with bespoke manufactured bolts which are glued and can be easily removed without disturbing the container seal.

10. The complainant had also lodged a complaint with the Police Station, Pul Prahlad Pur, about the theft of the goods.  FIR bearing No.179/2011 dated 08.07.2011 was registered.  It is alleged that the investigation conducted by the police officials corroborated the fact that the theft of goods had taken place in Delhi after the goods had reached Delhi but before the same were delivered at ICD Tuglakabad.  As per the investigation report of police, the truck driver Mr. Tassabar Ali with his two accomplices has stolen the goods at Delhi.  The police has also filed challan/charge sheet to said effect.

11. The complainant lodged its claim for the said theft of goods with the OP on 09.07.2011.

12. It is submitted that the respondent rejected the claim in  mechanical manner vide their email dated 15.07.2011 stating that since the terms of sale was FOB and a Shipped on Board Certificate had been issued by the carrier therefore the liability of the respondent came to an end once the goods were boarded on ship.

13. The complainant prays for settlement of claim of Rs.12,53,890/- alongwith interest @24% p.a. and Rs.5,00,000/- towards compensation.

14. OP in its reply has raised a preliminary objection on grounds of jurisdiction.  OP submits that the complainant company is situated at Alwar, Rajasthan, and the  policy  was issued from the same branch. All correspondence between the parties has taken place with the branch at Alwar, Rajasthan.  The registered office of OP is situated in Kolkata.  The address of the OP’s branch office at New Friends Colony mentioned by the complainant in this complaint does not have any records or correspondence regarding the said policy. 

15. OP submits that it has rejected the claim on the following grounds vide letter dated 29.11.2012 -

“The term of sale being on “FOB” basis and a clean “shipped on Board Certificate” for 605 packages being issued identical to invoice quantity and weight, our liability stood ceased once the consignment was boarded on ship.”

OP imputes that it is not liable once the consignment was boarded on the ship.OP relies on terms and conditions of the policies.OP prays for dismissal of the complaint.

16.  The complainant has filed its rejoinder.  It is submitted that the goods were stolen by the driver of the truck at Delhi and this court has sufficient jurisdiction to entertain this complaint.  The complainant further states that the goods were stolen much before they were loaded on board/vessel.  It is further submitted that the custom/excise seal affixed at the factory were found to be intact at the port.  Thus the container was never opened and rechecked.

17. Complainant has filed evidence by way of affidavit and exhibited the following documents:-

1. Copy of board resolution is exhibited as Exhibit CW1/1.
2. Copy of insurance cover is exhibited as Exhibit CW1/2.
3. Copy of purchase orders are exhibited as Exhibit CW1/3, CW1/4, CW1/5, CW1/6, CW/7 & CW1/8.
4. Copy of Invoice is exhibited as Exhibit CW1/9.
5. Copy of packing list is exhibited as Exhibit CW1/10.
6. Copy of receipt issued by custom department is exhibited as Exhibit CW1/11.
7. Copy of GR 568 is exhibited as Exhibit CW1/12.
8. Copy of shipped on board certificate is exhibited as Exhibit CW1/13.
9. Copy of model transport document is exhibited as Exhibit CW1/14.
10. Copy of relevant extracts of customs manual is exhibited as Exhibit CW1/15.
11. Copy of emails is exhibited as Exhibit CW1/16.
12. Copy of list of missing boxes is exhibited as Exhibit CW1/17.
13. Copy of email is exhibited as Exhibit CW1/18.
14. Copy of FIR is exhibited as Exhibit CW1/19.
15. Copy of charge sheet is exhibited as Exhibit CW1/20.
16. Copy of statement and relevant investigations is exhibited as Exhibit CW1/21.
17. Copy of email informing the respondent is exhibited as Exhibit CW1/22 & 23.
18. Copy of letter dated 29.11.012 is exhibited as Exhibit CW1/24.

18. OP has filed evidence by way of affidavit and exhibited the following documents:-
    1. Copy of letter dated 29.11.2012 is exhibited as EX-RW-1/1.

19. The parties have filed Final Form Report u/s 173 of CrPC by S.I. Mr. Sunil Kumar.  Parties have also filed judgement of Sh Himanshu Tanwar, MM-10, South-East District, Saket Courts, New Delhi. 

20. The Commission has considered the material and document on record. OP has raised a preliminary objection regarding jurisdiction.  The FIR dated 08.07.2011 shows the place of theft as Tuglakabad, New Delhi.  The said FIR is registered at P.S. Pul Prahladpur.  The said police Station in Tuglakabad is within the jurisdiction of this Commission and hence the cause of action occurred within the territorial jurisdiction of this Commission.

21. It is undisputed that an order was placed by M/s ZAP Limited with the complainants for delivery of towels  It is undisputed that the complainant has insurance policy with OP Company

22. Invoice bearing no. SGIPL-616/UK 2011-12 Dtd.20.05.2011 contains the following particulars:
23. : ZAP LIMITED CHARACTER HOUSE, DRUMHEAD ROAD, CHORLEY NORTH BUSINESS PARK, CHORLEY, LANCASHIRE PR6 7 DE, UNITED KINGDOM, TEL: 01257230044

Vessel/Flight No.OOCL SANFRANCISCO VOY, 7020

Place of receipt

by Pre-carrier:ICD, TKD (New Delhi)

Country of origin

of goods:                        INDIA

Country of final

• United Kingdom.

Port of Loading: JNPT (NSICT)/PIPVAVA/MUNDRA

Terms of Delivery

and Payment:PAYMENT: 30 DAYS, FOB JNPT, MUMBAI

Port of discharge:SOUTHAMPTON,U.K.

Final Destination:CHORLEY,U.K.

Marks and Nos.:            01 of 605 to 605 TO 605 ZAP LIMITED LANCASHIRE, U.K. MADE IN INDIA

Description of goods:HS CODE NO:63026000

SLNO: 98: TOILET LINEN AND KITCHEN LINEN OF TERY TOWELING SIMILAR TERRY FABRIC OF COTTON.

Quantity IN PCS.:13976

Amount FOB GBP:GBP 29, 237.84

TTL Net WT:4513.584 KGS

TTL Gross WT:5461.884 KGS

Container No.:ECMU-207862-2

Seal No.:046499

B/L No.:                       CFPU-1311100054

•                             05^th-June-2011

  IEC NO.:                     0503038571

  BIN:                            AABCT8271CFT001

CERC NO.:AABCT8271CXM001

23. The invoice dated 27.05.2011 by Shiv Shyam Road Lines indicates that a sealed container bearing No.ECMU-2078622-20, seal no. ANL/1033443 was being transported from Neemrana to ICD Tughalakabad. 

24. The certificate of Superintendent of Central Excise gave a report dated 28.05.2011 as follows:

Examination report for factory sealed packages/ containers of unit

  Name of the Unit: M/s Shorewala Globe Industries Pvt. Ltd.

  Factory address: SP 2-6 Riico Industrial Area Neemrana, District- Alwar Rajasthan.

 Date of Examination:   Blank

 Particulars of Manufactures Invoice No.: 88, Dated- 28.05.2011

 Particulars of Exporter Invoice No. SGIPL-616/UK 2011-12 dated 20-05-11   

 Total No. of Packages                     605 CRTN (13976 Pcs.)

Gross Wt. 5461.884 Kgs. Net Wt. 4513.584 Kgs.

 Name and address of the consignee abroad:      ZAP LIMITED   CHARACTER HOUSE, DRUMHEAD ROAD, CHORLEY NORTH  BUSINESS PARK, CHORLEY LANCASHIRE PR6 7DE UNITED KINGDOM.

          Central Excise/ Customs Seal No.    Central Excise Jaipur I

          Seal NO.                                           046499

          Container No.                                   2078622    

25. The consignment was shipped on board on 05.06.2011 as per the invoice by Clearship Forwarders Pvt. Ltd. The Shipped on Board contained the following particulars:  
    •       : SHOREWALA GLOBAL INDUSTRIES PVT.        LTD.
2635632121.                     :SGIPL-616/UK2011-12

INVOICE DATE                   :20.05.2011

CONTAINER NO.      :ECMU-2078622/20FT

CUSTOM SEAL                   :046499

270575.                            :605
10516.                              :NSICT PORT
10508.                              :SOUTHAMPTON, U.K.
263363042.                    :5461.884

26. An email was received from ZAP Limited which contains the insurance comments in U.K. which is as follows: 
27.  

As the terms of sale were FOB on these shipments, our assured’s interest for the goods attached once the goods pass the ships rail.Therefore, as the goods appear to have been stolen prior to loading on the vessel, the assured should continue to pursue their suppliers and/or their insurers in respect of both claims.”

27. A final Order dated 23.09,2023. was passed in the court of Sh. Himanshu Tanwar MM -10: South-East District: Saket Courts: New Delhi.

20.In the case at hand, prosecution through the testimonies of PWs tried to prove that criminal breach of trust has been committed by the accused Tassabar, as he was entrusted with 500 cartoons of printed towels in container bearing number GESU- 2012155 on 25.02.2011 and also with 605 cartons of printed towels in container bearing number ECMU- 2078622 on 27.05.2011 to be transported form the factory of complainant at Neemrana, Rajasthan to ICD, Tughlakabad, New Delhi and some of the abovesaid cartons have been dishonestly misappropriated or used or disposed of by the accused, as only 249 cartons out of 500 cartons of printed towels in contained bearing number GESU- 2012155 and 249 cartons out of 605 cartons of printed towels in container bearing number ECMU-2078622 were received by the consignee at United Kingdom.

22.Now, the question which arises in the mind of the court is that, if, before entrusting the above mentioned containers to the accused Tassabar, they were sealed by the excise officials and that when the said consignment reached the ICD Gate, the seals were found to be intact and perfect, then, how come some cartons were missing.

………

23.(i)Unfortunately, the said question had not been answered in the entire charge-sheet and further had remained unanswered after the examination of witnesses.  It is not the case of the prosecution that seals were broken and containers were again resealed, as the said proposition neither finds any mentioning in the charge-sheet nor in the examination of any witness.  Further, as discussed above, seals were found to be perfect.

(ii)Now, if this is the case, then how could it be said that accused Tassabar had dishonestly misappropriated or used or disposed of the missing cartons, when he was only entrusted with the custody of above mentioned containers from factory of complainant to ICD Tughladabad and seals which were put on the above mentioned containers at the starting point were found to be intact at receiving point.

28. Hon’ble National Commission in Oriental Insurance Co. Ltd. vs M/S. Ajanta International First Appeal No.435 of 2011 decided on 05.09.2016. has observed:

9.      The learned counsel for the appellant relied upon the decision of the Hon'ble Supreme Court in Contship Container Lines Ltd. Vs. D.K. Lall & Ors. II (2010) CPJ 12 (SC), in support of his contention that since the complainant did not have ownership / property in the goods at the time they were stolen during transit from Dar-E-Salaam to Lusaka, it had no locus-standi to maintain the complaint.  In D.K. Lall (supra), the respondent D.K. Lall Enterprises had obtained a Marine Cargo /Inland transit insurance policy in order to ensure certain goods it had exported to Spain.  One carton however, was not delivered to consignee.   The claim for the compensation having been denied by the shipping company as well as the insurer, the exporter filed a complaint before this Commission.  The complaint was resisted by the insurer on several grounds, including that the liability of the seller had come to an end as soon as the consignment was loaded on the ship leaving the exporter with no insurable interest in the consignment.  This Commission held that the policy was obtained on the representation that the transaction between the exporter and the purchaser was on CIF basis, whereas in fact, it was on FOB basis, which absolved the insurer of any liability for the failure of the insured to maintain utmost good faith, essential for a marine insurance policy.  It was noted that in the declaration sent to the insurer no details of the conditions of the shipment were mentioned.  It was also held by this Commission that the term of the policy did not cover the risk till delivery was made to the consignee.  This Commission, however, held that the carrier was deficient in rendering services to the complainant.

         It was contended on behalf of the insurer that the transaction between the exporter and the purchaser being on FOB basis, the exporter had no insurable interest in the goods once they were delivered to the carrier.  It was argued that in FOB transaction, the property in the goods stands transferred to the purchaser as soon as the goods are entrusted to the carrier and thereafter, it is only the purchaser who can sue the carrier or insurer if there be an insurance cover obtained by him for such goods.  It was also contended on behalf of the insurer that the shipper had not maintained utmost good faith since the insurance policy was taken on the representation that the goods were being discharged on CIF basis while in reality they were sent on FOB basis, which amounted to a material non-disclosure.  The difference between the FOB contracts and CIF contracts was explained by the Hon'ble Supreme Court in Para 21 of the Judgment which reads as under:

        "21.   Coming to the case at hand, the contract of sale was on FOB basis even when the contract of insurance proceeded on the basis that the transactions between the seller and the purchaser and meant to be covered by the policy would be on CIF basis.  The distinction between CIF (Cost Insurance and Freight) and FOB (Free on Board) contracts is well recognized in the commercial world. While in the case of CIF contract the seller in the absence of any special contact is bound to do certain things like making an invoice of the goods sold, shipping the goods at the port of shipment, procuring a contract of insurance under which the goods will be delivered at the destination, etc., in the case of FOB contracts the goods are delivered free on board the ship.  Once the seller has placed the goods safely on the board at his cost and thereby handed over the possession of the goods to the ship in terms of the Bill of Lading or other documents, the responsibility of the seller ceases and the delivery of the goods to the buyer is complete.  The goods are from that stage onwards at the risk of the buyer".

       The Hon'ble Apex Court, noticing the provisions contained in Section 7 of the Marine Insurance Act and Sections 23, 25, 26, 39, 46, 47 and 49 of Sale of Goods Act, observed that the delivery of the goods to a carrier is prima-facie deemed to be the delivery to the buyer and the lien available to an unpaid seller in terms of Section 46 and 47 of the Sale of Goods Act stands terminated in terms of Section 49 of the said Act, when the goods are delivered to a carrier for transmitting to the buyer without reserving the right of the disposal of the goods.  Noticing that the seller had in that case not reserved any right or lien qua the goods it was held that in the absence of any contractual stipulation between the parties, the lien of the unpaid sellers stood terminated upon the delivery to the carrier and from that stage the goods were held by the carrier at the risk of the buyer and the property in the goods stood vested in him.  It was held by the Hon'ble Supreme Court that this Commission was right in holding that the seller had no insurable interest in the goods, which absolved the insurance company of the liability to reimburse the loss, if any, arising from the mis-delivery of the goods.  

29. The perusal of invoice and certificate by Superintendent of Central Excise and ship on board certificate shows that the container no.ECMU-207862-2 bearing customer seal no.046499 containing 605 packages with identical weight was shipped Free on Board. 

30. The email received from ZAP limited indicates that theft have likely occurred in India following investigation by their surveyors.  However, no surveyor report or investigation report or denial by the insurance to ZAP limited has been placed on record. 

31. Moreover, the Order passed by the Ld.MM clearly observed that a suspicion has been created with respect to the loading of containers at the origin itself and that manipulated entries might have been done.  It was also observed that exactly 249 container went missing in each container in two containers sent to United Kingdom.

32. The complainant vide Order dated 22.05.2024 was asked about the claim and payment for the second theft. The complainant did not provide any answer to this query.

33. In the light of aforesaid discussion, the insured goods were shipped Free on Board.  Once the goods were delivered to the carried at the risk of the buyer i.e. ZAP limited, the property in the goods stand vested in the buyer and the seller, the complainant, has no insurable interest in the goods.  Thus, the insurance is absolved from the liability to reimburse the loss. Hence, there is no deficiency of service on part of OP in rejecting the claim of the complainant.  The complaint is dismissed with no order as to cost.

34. Order to be uploaded and file be consigned to record room.