DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II

Udyog Sadan, C-22 & 23, Qutub Institutional Area

(Behind Qutub Hotel), New Delhi- 110016

Case No.170/2022

M/s Global Exports

JG-15, Block JG

Khirki Extension

Malviya Nagar

New Delhi-110017.                                                      .…Complainant

                                                 VERSUS

M/s ECGC Ltd.

Delhi Small and Medium Exporter Branch

NBCC Place, South Tower

4^th Floor, Pragati Vihar

Bhishma Pitamaha Marg

New Delhi-110003.     

M/s ECGC Ltd.

5^th Floor, 241/242

Backbay Reclamation

Nariman Point

Mumbai-400021.                                                         ….Opposite Party

Coram:

Ms. Monika A Srivastava, President

Ms. Kiran Kaushal, Member

Present:    Adv. Ashish Parashar along with Adv. Abhishek Yadav for complainant.

Present:    Adv. Babita Kushwaha proxy for Adv. Anindiya Deka for OP.

ORDER

Date of Institution:17.06.2022

Date of Order       : 08.07.2024

President: Ms. Monika A Srivastava

The complainant has filed the present complaint seeking direction to OP to settle claim of Rs.67,39,976/- being 95% of the total loss of Rs.70,94,712/- and compensation of Rs.5,00,000/- with interest.  OP is Government owned export credit provider which provides export credit insurance support to Indian exporters known as M/s ECGC Ltd.

1. It is stated by the complainant that on 05.12.2016 complainant availed the services of the OP by submitting a policy proposal form No.121 for purchase of Small Exporters Policy in the name of the complainant to cover the risk of export which has been undertaken by the complainant.
2. Pursuant to the said proposal, a letter was issued by OP dated 16.12.2016 describing terms and conditions for Small Exporter Policy being Policy No.0110013374 w.e.f 05.12.2016 till 31.12.2017 providing 95% coverage with maximum liability of OP limited to Rs.80 lakhs.  Copy of the letter dated 16.12.2016 along with the policy is annexed as annexure C-1. Complainant duly fulfilled all the terms and conditions regularly as stipulated in the policy terms and conditions.
3. Complainant availed credit limit from the OP as he was expecting certain orders from a new buyer named M/s M.J Wholesales USA, Inc. based in California, USA (hereinafter referred to as buyer). Complainant submitted Form No.144 on 05.12.2016 pursuant to which OP approved the credit limit of the said buyer to the extent of Rs.70 lakhs to be applicable for shipments made on or after 13.12.2016. Copy of Form on. 144 and letter approving credit limit are annexed as annexure C-2 (colly).

4. It is stated that the complainant made its first shipment of 54 cartons of leather goods to the said buyer under invoice No.02 dated 20.12.2016 for US $24840 vide shipping bill dated 22.12.2016 for which the payment was duly received and BRC was issued on 25.04.2017. It is further stated that two more orders were placed by the buyer vide letter dated 24.03.2017 for ‘leather wallets buffed quality’.  The terms of payments for said orders were 60 days DA from the date of Bill of Lading.  Copy of purchase orders received from buyer are annexure C-3.
5. It is further stated that pursuant to the orders received, complainant made two shipments and the documents pertaining to the consignment were sent to buyer’s bank, Wells Fargo Bank, 2500 S Grove Avenue, Ontario, CA 91761 USA through complainant’s banker State Bank of India on 12.06.2017. Copy of invoice, Bill of Lading and proof of forwarding of documents by SBI to buyer’s bank on 12.06.2017 are annexed as annexure C-4 (colly).
6. It is stated as per clause 8(a) of the policy document, the insured is required to make a declaration of shipments made during the previous month in the prescribed form which the complainant complied on 14.06.2017.  Copy of the monthly declaration form dated 14.06.2017 is annexed as annexure C-5.
7. It is further stated that goods were duly delivered to the buyer on 24.07.2017 and the buyer acknowledged the receipt to their satisfaction vide email dated 12.08.2017. Copy of the buyer’s mail dated 12.08.2017 is annexed as annexure C-6.
8. It is further stated that as per the terms of the payment due date for payment was 29.07.2017 being 60 days from the date of shipment i.e. 30.05.2017.  It is stated that complainant made several requests to the buyer for release of payment however, failed to get any response. Copy of email dated 25.08.2017, 08.09.2017, 11.09.2017 and 13.10.2017 are annexed as annexure C-7 (colly).
9. It is further stated that in compliance of policy terms and conditions complainant duly submitted monthly declaration to the OP on 24.08.2017 in Form No.205 declaring the details of the buyer from whom payment has been delayed beyond 30 days from the due date.  Copy of Form No.205 dated 24.08.2017 is annexed as annexure C-8.
10. It is stated that as a result of reporting of default of the buyer by the complainant, the OP cancelled the approved credit limit of the buyer M/s M.J. Wholesale USA Inc. with immediate effect vide letter dated 28.08.2017.  The OP vide another letter of the same date, asked the complainant to ascertain the reason for non-payment of shipment value by getting the bill noted and protested through notary and also suggested the complainant to initiate steps for recovery through certain debt collecting agencies, one being M/s M.A.H. International Corporation, and through Indian Consulate abroad i.e. Embassy of India.  Copies of letter dated 28.08.2017 are annexed as annexure C-9 (colly).
11. It is stated that in furtherance to directions of OP, the complainant wrote a letter dated 11.09.2017 to Embassy of India at Washington, USA requesting the Embassy to aid the complainant in recovering the dues from the buyer for which the complainant duly submitted all the relevant records.  Copy of the letter dated 11.09.2017 is annexed as annexure C-10.
12. It is further stated that the complainant duly communicated all the actions undertaken by them as per OP’s letter dated 28.08.2017 vide letter dated 18.09.2017.  Copy of the letter dated 18.09.2017 is annexed as annexure C-14.
13. Complainant further stated that in order to recovery the legitimate dues of the complainant from the OP in terms of the subject Policy, the complainant submitted Claim Form on 12.10.2017 giving all details with respect to the buyer and shipments.  The total claim requested by the complainant amounted to Rs. 67,39,976/- being 95% of the total loss i.e. Rs.70,94,712/-.  Copy of the Claim Form submitted under cover letter dated 06.10.2017 is annexed as annexure C-15. The complainant duly supplied all the documents as requested by the OP in furtherance of the said claim which is evident from complainant’s letter dated 22.02.2018 annexed as annexure C-16.
14. Despite submission of all documents and full co-operation from the complainant, OP-1 rejected claim of the complainant vide their letter dated 15.05.2018. The same is annexed as annexure C-17. 
15. Complainant has stated that vide his, letter dated 18.06.2018 complainant duly explained/answered all the discrepancies referred to in rejection letter of OP-1 and annexed all the documents in support of the same however, without appreciating the facts and circumstances in proper perspective, OP-1 vide letter dated 15.10.2018 again rejected the claim of the complainant on vague grounds like purchase order not provided in original, authenticity of the bills of exchange not established, date of delivery of goods not provided, etc. copy of letter dated 18.06.2018 and 15.10.2018 are annexed as annexures C-18 & C-19.
16. It is further stated that in the meantime, the complainant received an email dated 19.09.2018 wherein M/s M.A.H. International Corporation informed the complainant regarding extension of validity of Debt Collection Services Agreement for an additional period of six months i.e. till March 2018, on account of pending efforts and positive chances of reaching a favourable result.  Copy of email dated 19.09.2018 received from M/s M.A.H. International Corporation is annexed as annexure C-20.
17. It is stated that the complainant replied to rejection letter of OP-1 dated 15.10.2018 vide their letter dated 13.11.2018 duly explaining the ensuing circumstances supported with all the relevant documents however failed to receive any response.  Copy of letter dated 13.11.2018 is annexed as annexure C-21.
18. It is stated that as per the instructions mentioned in rejection letter dated 15.10.2018, complainant duly submitted his claim before the Appellate Authority i.e. Executive Director, ECGC Ltd., Nariman Point, Mumbai-400021 on 19.07.2019 which is annexed herewith as Annexure C-22.  However, to complainant’s utter shock and dismay, the said claim was also rejected by the Appellate Authority vide their letter dated 18.09.2019. Copy of letter dated 18.09.2019 is annexed as annexure C-23.
19. It is further stated that M.A.H. International Corporation closed the case of the complainant and informed the same to the complainant vide letter dated 09.08.2019 citing the reason that the debtor i.e. M/s M.J. Wholesales USA Inc. is not getting payments from the ultimate buyers to whom goods were sold for which reason no recovery could be made from the said debtor.  Copy of email dated 09.08.2019 received from M/s M.A.H. International Corporation is annexed as annexure C-24.
20. It is further stated that the complainant again vide letter dated 14.10.2019, explained all the relevant circumstances in details to learned Appellate Authority of the OP duly giving explanations to all the rejections raised by the Appellate Authority however, all efforts of the complainant went in vain as the complainant failed to receive any positive response.  Copy of letter dated 14.10.2019 is annexed as annexure C-25 and copy of response received vide letter dated 12.05.2020 annexed as annexure C-26.
21. It is stated that hoping to get a favourable response, the complainant made a representation dated 10.08.2020 before OP-2 on the observation made by the Appellate Authority in letter dated 12.05.2020, copy of which is annexed as annexure C-27.  The said representation also failed to see the light of the day and was rejected vide letter dated 02.12.2021. The same is annexed as annexure C-28.
22. It is stated that the reasons cited by the OP for rejection of complainant’s claim are in violation or breach of any of the conditions mentioned in the policy document issued by the OP.  The reasons cited by OP were merely technical and completely beyond the control of the complainant. The only reasons cited by the OP for rejection of the complainant’s claim are mere technical like different email IDs mentioned in purchase order and confirmation email, different in font size and style, slight different in signature of the buyer, etc. which in complainant’s respectful submission is completely arbitrary and whimsical.
23. It is further stated that the complainant is not covered under any of the exclusions enlisted in the Policy document under Clause (2). The said clause clarifies that the complainant is not excluded from making the claim with respect to the buyer M/s M.J. Wholesale USA Inc. and is duly covered under the Policy entitling him to make the subject claim and recover the amount due.
24. It is stated that the complainant has taken all reasonable care to minimize the loss, duly notified M/s ECGC Ltd. in writing of occurrence of default within 30 days of default, and duly provided all the documents required by the OP with regard to the shipments from time to time.  Complainant respectfully submits that he has duly fulfilled all the obligations cast upon them to claim the benefit of insurance and therefore, denial of claim on ground mere technical and vague, is patently arbitrary and perverse.
25. It is further stated that in the matter of Om Prakash Vs. Reliance General Insurance (2017) 9 SCC 724  it has been held that claims should not be rejected mechanically on technical grounds. The question of denial of claim of insurance on grounds of delay and other technical grounds was considered in great detail in National Insurance Co. Ltd. Vs. Sandeep, (P & H), 2017 (a) RCR (Civil) 621. Reference is also made to Gurmel Singh Vs. Branch Manager, National Insurance Co. Ltd. CA No. 4071/2022.
26. In their reply, OP has stated that it issues policy  to cover the risk of the exporters in case of non-payment of dues by the importers/overseas buyers subject to strict adherence to the terms and conditions of the policy  as required under clauses 28 and 29 of the policy. 
27. It is stated that the Purchase Order by the complainant was not obtained in accordance with the prevailing practices.  The Order was not placed on the letterhead of the buyer nor was the rubber stamp of the buyer’s company affixed on the Order copy.  Further there was no mail from the buyer confirming the alleged order. 
28. It is further stated that the registered email address of the buyer as per the order copy is “mdnisar747@gmail.com” whereas buyer has confirmed the delivery of goods from another email address “mjwholesale39@yahoo.com”.  The said email is only correspondence with the buyer and differs from the one mentioned in the Bill of Lading and Purchase Order.  It is stated there exists discrepancies in the email addresses of the buyer and further as per the report of the debt collection agency on the buyer, there is no email address found for the buyer on any website. 
29. It is stated that OP was not a party to the emails mentioned above and the authenticity of any communication exchanged between the complainant and the buyer via emails is not known to the OP.  It is stated that OP vide its letter dated 28.08.2017 rightly cancelled the approved credit limit on the buyer as the result of reporting of default of the buyer and further advice the complainant not to make any further shipments to the concerned buyer till the earlier payment is realized. Complainant was further asked to ascertain the reasons for non-payment by getting the bill noted and protested and further suggested the complainant to initiate steps for recovery of its shipment value through debt recollecting agency and through Embassy of India.
30. It is further stated that vide swift message dated 10.10.2017 complainant had called the original bill of the exchange on their own without getting the bills noted and protested for non-payment.  It is stated that the original unpaid bill of exchange did not bear the stamp either of the Overseas Bank or of the Bank. It is stated that the noting the protesting of bills were to be done in a time bound manner at the behest of holder of the bill (Well Fargo Bank as holder in due course) and at the material point of time i.e. immediately after bill becomes overdue.  It is stated that in this case noting and protesting have not been done at the material point of time nor by the holder in due course.  The authenticity of bill of exchange cannot be established in absence of original bills of exchange bearing due stamp and signature of the Overseas Bank and buyer.
31. It is stated that the export material was shipped from Ludhiana while policy was obtained with an address in Delhi which is a residential address without any commercial presence worthy of export transaction.  It is further stated that OP being insurance company has to consider the authenticity of all claims and documents in detail so that there is no scope of fraud by any of its policy holder or exporter in regard to any claim. The document submitted by the complainant were defective and suffered from procedural lapses.
32. It is further stated as per clause 7 (a) (ii) of the policy the insured is required to institute legal action against the buyer from the Court of competent jurisdiction. However, in this case, the complainant has not taken any legal action against the debtor i.e. the buyer.
33. It is further stated that claim of the complainant was examined by Appellate Authority and thereafter rejected vide its letter dated 18.09.2019 as certain discrepancies found on the documents submitted by the complainant raising reasonable doubts on the transaction between the complainant and the buyer.
34. It is stated that the failure of the debtor to make payment to the complainant cannot raise liability on the OP to honour the claim of the complainant.  Further, the debt collection agency was willing to continue negotiation in this matter in order to recover the dues from the debtor/buyer. 
35. It is denied by the OP that the rejection of the claim is completely arbitrary and whimsical.
36. It its rejoinder, complainant has denied the averments made by the OP in their reply.  It is stated that complainant availed credit limit for the buyer i.e. M/s M.J. Wholesales USA after due consideration of which the OP approved the credit limit for the said buyer of Rs.70,00,000/-. Therefore it cannot be said that the OP was not aware of the placement of order from the new buyer M/s M.J. Wholesale USA. 
37. It is further stated on the point ‘whether the order was placed on the letter head of the buyer or rubber stamp of buyer’s company was affixed that the order was placed on the letter head of the buyer’ is established from annexure C-3.  Annexure C-6 is the email from the buyer dated 12.08.2017 confirming receipts of the goods. 
38. As far as email IDs are concerned it is stated by the complainant that any person/firm/company may have multiple email IDs and it is no ground to deny claim of the complainant that goods were not delivered to the said buyer.  It is stated that Mohd. Nissar was the contact person for the buyer whose email ID is mentioned on the letter head of the company and his name was duly mentioned in the email received from “mjwholesale39@yahoo.com”   confirming receipt of goods which clearly establishes that both the emails IDs belong to same person/company. It is further stated that there is no supporting documents by the OP regarding report of the debt collection agency claiming that there was no such email address found for the buyer on any website. 
39. It is stated that complainant got the bill of exchange noted and protested by a notary in California, USA who noted the same on 06.02.2018 on response received from buyer on 15.01.2018 who refused payment due to shortage of funds and this was done as soon as per the advice of OP to the complainant vide their letter dated 28.08.2017 and as the buyer’s bank i.e. Wells Fargo Bank was not cooperating for the same. 
40. It is stated that complainant has undertaken all the actions as per the OP vide their letter dated 28.08.2017 and submitted all the required documents following the instructions of the OP. It is stated that the discrepancies in the documents are technical in nature on which claim could not have been rejected as has been held by the Hon’ble Supreme Court Om Prakash Vs. Reliance General Insurance (2017) 9 SCC 724 and Gurmel Singh Vs. Branch Manager, National Insurance Co. Ltd. CA No. 4071/2022 and National Insurance Co. Ltd. Vs. Sandeep, (P & H), 2017 (a) RCR (Civil) 621
41. It is further stated that the whole and sole object of the OP is to insure the exporters in the event of non-payment for any shipment by the buyers for the exports made and the OP cannot turn around to say that it would not honour claim of the complainant in such case. It is well established by the Landing Certificates issued by M/s Globelink WW India Pvt. Ltd. that the shipment was delivered on 24.07.2017.  M/s M.A.H. International Corporation has also not disputed that the goods were not at all delivered to the buyer and has been constantly making efforts to recover the disputed amount. It is further stated that goods were purchased by Ludhiana and if they were brought to Delhi and shipped it would have been waste of time and money and efforts.

42. Both the parties have filed their respective evidence affidavits as well as written arguments.  This Commission has gone through the entire material on record and have heard the oral arguments of the parties.  The objection raised by the OP that the purchase order by the complainant was not obtained in accordance with the prevailing practices cannot be upheld as the purchase order was provided to the OP and after verification of the said purchase order, OP had insured the complainant for a sum of Rs.70,00,000/- for this particular buyer i.e. M/s M.J. Wholesale USA. OP cannot be allowed to blow cotton hot and cold i.e. after once verifying the authenticity of the purchase order amount turn around to say that the purchase order was not obtained validly. 

The next objection raised by the OP that the policy was obtained with a residential address without any commercial presence also can not been upheld as it is the same address provided by the complainant at the time of seeking insurance from the OP.  In case the OP was not satisfied of the commercial presence of the complainant then it ought to have declined the insurance at that very time and should not have been provided the insurance cover of Rs.70,00,000/-. 

The other objection raised by the OP that the material was shipped from Ludhiana does not hold any water as the OP has not been able to place anything on record to state that material had to be shipped from specific place and the violation of this term would cause the claim to be rejected. 

Further, it is possible that a person or a company may have different emails IDs and this ought not to be a ground for rejection of the claim.  It is also seen that as per direction of OP, complainant had approached Embassy of India at USA as well as M.A.H. International Corporation for collection of debt however, no report has been placed on record to prove that the buyer i.e. M/s M.J. Wholesale USA does not exist or it was a fraudulent transaction, which is the main reason why the OP has rejected the claim of the complainant.  It is also not clear to this Commission as to why the OP would deny the very purpose for which it was constituted and for which the complainant has paid a premium to it. 

This Commission is of the view that OP has been deficient in its services in not providing insurance amount to the complainant and therefore directs the OP to provide the insured amount of Rs.67,39,976/- being 95% of the total loss of Rs.70,94,712/-  within three months from the date of pronouncement of the order along with the interest @5% per annum failing which OP would be liable to pay interest @7% per annum till the time it is paid.

  Copy of the order be given to the parties as per rules. File be consigned to the record room. Order be uploaded on the website.