Order: (By Hon’ble Mr. Justice V. P. Patel, President)
1. The complainant has filed present complaint u/s 17 of the Consumer Protection Act, 1986 (herein after referred as “The Act” or “Act”) alleging therein deficiency in service on the part of the opponent insurer and prayed for relief as under:
“(1). To pass an order to pay Rs.7217468/- (i.e. Insurance Value Rs. 7655258/- less Salvage sold Rs. 437790/- plus cost. It is humble prayed to order Rs.7217468/- with interest @ 18 % from the date of submission of survey report to this opponent insurance Co.
(2). To pass an order for Rs. 100000/- as a compensation for the mental agony and harassment, since due to loss of my goods, I incurred heavy financial loss.(3). To pass an order for cost of Rs.50000/-”
2. Heard Ld. Advocate Mr. A J Mazgaonkar for the complainant and Ld. Advocate Mr. Darshhil Parikh, for Mr. V P Nanavaty adv for the opponent insurer.
Facts of complaint:
3. The complainant company is manufacturer of different products and therefore regularly importing starch from the overseas suppliers. To avoid loss occasioned by sea perils, it had purchased insurance policy known as “Marine Cargo Policy” having open coverage facility with Marine Insurance ICC (A), war and SRCC clauses for the period from 17/11/2009 to 16/11/2010. The complainant avers that it is usual practice of the company it declares all details pertaining to import consignment to the opponent insurer and submits all relevant documents even before the voyage starts from the port of departure. The complainant states that in the instant case, the value coverage was declared for Rs. 7655258/- for the consignment of TAPIOCA STARCH under the policy no. 141500/21/2010/87/0015. The complainant states that aforesaid declaration was made on 30/4/2010 but it reached to opponent insurer on 6/5/2010 at about 2.30 pm. According to said declaration, the goods were imported on FOB (Free on Board) basis and consignment was to be uploaded on board from Thai Port of Manila (Philippines) and was to reach India at Mundra Port, Bhachau (Kutch) containing therein 437.79 MT of Tapioca Starch. The insurer had agreed for CIF + 10 % basis value of the Cargo which comes to Indian Rs. 7655258/-.
4. The complainant also states that along with declaration, Pre- inspection report was also submitted and insurer had never asked for any more documents in this regard. The complainant states that the consignment dispatched from Manila, reached to Mundra on 29/6/2010 through TRANSWORLD and complainant accepted delivery at Mundra and first container reached to complainant factory on 2/7/2010. On opening the container, it came to knowledge of the complainant that Cargo was in damaged condition. The complainant states that opponent insurer was informed who deputed surveyor M/s. G P Dave & Sons. The surveyor visited on 3/7/2010 and by that time four containers have been arrived. The surveyor took the inspection and found that cargo was packed in HDPE bags. Since other 16 containers were at Mundra Port, those containers were opened and inspected at Mundra by SGS (I) Ltd with G P Dave & Sons on 6th and 7th July 2010 which revealed that seals were intact whereas as per complainant contents of Cargo have been damaged/replaced.
5. The complainant alleged that inspection was completed on 7th July and all documents were submitted to surveyor on demand, survey work was over by October 2010 but report was submitted in February 2011. It is the case of the complainant that thereafter neither surveyor nor opponent insurer approached the complainant company to settle the claim or even for clearance of salvage. When six months had passed, the complainant reminded the opponent insurer for the same. The complainant alleges that the surveyor had instructed complainant to retain the salvage until final settlement is made but to avoid delay in settlement, an offer was made by the insured for salvage retention. The complainant alleges that it has suffered loss to the extent of Rs. 8200000/- in this incident but the opponent insurer did not care to respond it. The complainant then gave notice on 27/5/2011 to the opponent insurer and called upon to settle claim and to clear salvage. The complainant alleges further that as there was no reply from the insurer and since salvage was deteriorating and consuming big space for storage, it was sold out @ Rs.1000/- MT. and realized Rs.437790/.
6. The complainant alleges that its legitimate claim was neither settled for about 11 months nor responded despite having surveyor’s report in hand for about five months and thus opponent insurer acted contrary to IRDA regulations and also indulged in Unfair Trade Practice. The record shows that after issuance of notice from this commission, complainant moved an application dated 15/11/2011 to amend complaint since opponent insurer had sent letter of repudiation dated 29/6/2011. The application was allowed vide order dated 21/2/2012 and complainant was directed to produce on record amended copy of complaint which was submitted on 30/3/2012 (Exh.11) and taken on record.
7. It is the case of complainant that the opponent insurer had repudiated claim without giving any cogent reasons for the same. It was alleged that the opponent insurer had issued “All Risk” policy for the consignment from Thai to Mundra Port. The complainant has alleged that in past also complainant have passed through many such transactions but in this case notes made by the surveyor were without any concrete base. The complainant states that when cargo was loaded after inspection and when it reached to complainants’ premises, it was found damaged/replaced and therefore arrived at conclusion that damage or pilferage might have taken place between Thai to Mundra and such peril is covered in policy. The complainant alleges that report of M/s. Precise International Surveyors was accepted by the opponent insurer before commencement of voyage and now cannot turn the table by asking proof for the same.
Defense of Opposite Party
8. The opponent insurer had filed reply which is at page 37 (Exh: 12) contending therein that complaint is not maintainable since the signatory of complaint has no authority (Locus standi) to sign any such documents. The opponent insurer states that Marine Cargo Open Policy of Insurance was issued pursuant to proposal form dated 12/11/2009 and policy was commenced from 17/11/2009. Although the intention to import Rose Brand TAPIOCA STARCH from Thai to Mundra was communicated vide letter dated 30/4/2010 but it was received on 6/5/2010 at insurer’s office, however there was no name of seller/exporter mentioned therein and also without any pre-inspection report. The opponent company did not dispute that coverage certificate had been issued for the sum insured of 7469550/ on 19/05/2010. It is categorically denied that opponent has accepted the report of M/s. Precise International Surveyors before commencement of voyage and also called upon the complainant to put strict proof thereof. It is also further denied that M/s. Precise International was appointed by the opponent company at any point of time. The opponent contended that the claim intimation was received through Email wherein it was reported that subject cargo was found in replaced condition on 2/7/2010 and therefore they suffered loss of entire cargo. The opponent had deputed surveyor on receipt of intimation and M/s. G P Dave & Sons carried out inspection at Ahmedabad and M/s. SGS India Private Limited carried out inspection at Mundra with M/s. G P Dave & Sons. The report of SGS India Pvt Limited specifically states that “the above sample does not meet the requirement as per IS 1319:1983 (Reaff.2001) edible tapioca Starch”. The insurer had contended that there is breach of principle of “UTMOST GOODFAITH”
9. The opponent insurer also contended that initially it was informed through email that cargo has been received in “replaced” condition whereas subsequently it states that Cargo received in “damaged” condition. The Insurer contended that had it been the case, the insured ought to have acted as a prudent insured, as if un-insured and would have taken steps to recover damages from the seller/exporter because seller had dispatched material which was never opted for import by the complainant. The insurer states that during inspection, seals applied to containers were found “intact” not only by the surveyors but also by the custom authorities and there were no signs of tampering / force applied thereon. From this, the surveyor had come to the conclusion that “the cause of loss was due to switching of good virgin material by some kind of inferior grade of starch”. The insurer also contended that insured failed to produce any cogent evidence as to where, when and how switching of cargo can took place during transit from loading Port Manila to Mundra particularly when the entire area of transshipment remains under tight security. It is stated by the insurer that despite given adequate opportunities to explain the chain of events and switching of cargo, the insured failed to prove it with any concrete proof for the same.
10. The Insurer states that since the complainant insured had long relationship with the insurer, the company had taken all care to see that customer should not walk away from the company because of any wrong decision. The insurer states that despite the fact that no such pre-inspection report was ever given to it, even then, just to satisfy, exercise have been made to ascertain as to whether any such inspection, in fact, has been carried out or not before dispatch of cargo or not. The surveyor G P Dave & Sons, at first instance, had sent email to M/s. Precisioninternational@gmail.com and asked for certain details but no response received from the said surveyor. The surveyor there after sent Registered Post Letter to the address of the said surveyor and surprisingly, it has come back with endorsement “Unclaimed”. Thus, the insurer company has taken all care to verify the genuineness of claim by the insured and when found sufficient evidence to conclude that “switching /replacement of Cargo might have taken place at the point of beginning” repudiated the claim of the insured. Thus the decision taken at the insurer’s end is quite justifiable and it cannot be termed as “Deficiency in Service” by any stretch of imagination. The insurer therefore prayed for dismissal of complaint.
11. Initially, when the complaint was registered before this Commission, it was registered in the name of SANTOSH STARCH PRODUCTS. However, subsequently an application was moved to amend name of complainant in cause title which was granted on 17/10/2014. Therefore name has been changed now as SANSTAR BIOPOLYMERS LIMITED. Necessary amendments have been carried out in the cause title and amended complaint has been produced at page 107.
Evidence on record:
12. The complainant has filed rejoinder affidavit (page 114, Exh.14) reiterating the facts stated in original complaint. From the complainant side, evidence affidavit of Mr. Gautam Chowdhary (page 128, Exh: 18) and one Leena Nainani (page 118) were filed in support of complaint and also produced insurance cover note, Report of G P Dave & Sons, report of SGS India Pvt Ltd, Certificate of quarantine clearance issued by Bureau of Quarantine, Philippines, Copy of certificate of origin, copy of certificate issued by Custom Superintendent, copy of invoice for salvage selling, Certificate issued by Precision International. From the opponent side interrogatory questions were served upon to witnesses of the complainant and replies thereof are on record at page 139 and page 144 respectively. On 16/6/2021 complainant had submitted pursis to declare closing of evidence.
13. The opposite party had submitted certificate of Marine Cargo insurance dated 19/5/2010 (together with terms and conditions of policy), copy of letter of intimation dated 2/7/2010 (page 57), Copy of claim form submitted by insured (page 58 & 59), Copy of report of surveyor M/s. G P Dave & Sons dt. 9/2/2011(with annex.), Affidavit of Manager of Insurance company (Page 154) and Mr. P A Dave, Ex- partner of G P Dave & Sons, who conducted survey in this case (Page 150 Exh: 20).
14. The record shows following facts are admitted and do not call for any further proof.
[i]. Complainant had paid consideration and hired services of indemnification from the opponent insurer so as to put the complainant as “Consumer”.
[ii]. Complainant had Open Cargo Marine Policy with opponent insurer and declaration was made for import of goods from Manila to Mundra.
[iii]. Complainant’s insured Cargo arrived at Mundra on 29/6/2010 and four containers reached to complainant’s premises on 2/7/2010.
[iv]. The intimation of loss was sent to insurer on 2/7/2010.
[v]. When surveyor examined containers, seals were found intact. Even other containers were inspected at Mundra, and there also seals were found intact.
[vi]. The value of Cargo declared was US$144470.70 (FOB) and insurer agreed for CIF + 10 % as value.
15. In the facts and circumstances of this case following issues are to be adjudicated to grant relief under the Act.
[a]. Whether complainant proves that the goods loaded on board from Manila, Philippines were in fact inspected before shipment and the same was certified to meet with requirement of edible TAPIOCA starch as desired by the complainant insured
[b]. Whether complainant proves that loss claimed under the policy was on account of damaged /replaced cargo during transit so as to cause loss to insured
[c]. Whether complainant proves that repudiation of insurance claim was unjustified or arbitrary in nature and therefore insurer is liable for deficiency in service
[d]. what order Our findings:
[a]. Negative [b]. Negative [c]. Negative
[d]. As per final order.
Reasons: Since issues [a] to [c] are interconnected, it is discussed simultaneously.
16. It is the case of the complainant that after loading of cargo from Philippines when it reached to India, materials under the supply have been replaced/damaged. On the another hand insurer company states that since the materials arrived at Ahmedabad and also in Mundra, containers were found in “sealed” conditions and therefore there is no possibility of “replacement” during transit and it is possible that supplier might not have supplied correct goods at the beginning. Thus, the basic controversy as to whether goods supplied were of the same quality which ordered by the complainant insured and in fact it got damaged /replaced during transit. To ascertain the correct position all documents pertaining to pre-shipment are of great importance. It is interesting to note that copy of the order form (pro-forma invoice no. 8993 of 11/3/2010) issued by the complainant to exporter is not produced on record and therefore it is not possible at this stage to say whether goods supplied by exporter were as per order given by the complainant insured. It is the case of the complainant that the goods purchased from Palm View Trade vide invoice dated 29/4/2010 and for the shipment of the said goods declaration dated 30/4/2010 was submitted to opponent. However insurer says that although Marine Cargo Open cover declaration was dated 30/4/2010 but it was received on 6/5/2010 around 2.30 pm. Now copy of this declaration is produced by the complainant at page 7 which bears stamp of opponent insurer with date, signature and time of receipt and which confirms that declaration was submitted on 6/5/2010. Interestingly, this declaration also does not bear any information as to bill of lading number, vessel through which goods will be shipped. Therefore it is difficult to ascertain on which date journey has been commenced and if journey have started prior to that whether risk had been undertaken by insurer or not. To establish that goods supplied / uploaded in cargo was as per order, a certificate stated to have been issued by Precision International surveyors’ Corporation (page 21) placed on record. This certificate shows that it was issued at the request of Palm View Trade (exporter in this case) on 8th May 2010 have following quality results:
Starch: 85.00 %, Moisture: 11.80 %, ASH: 0.2%, SO2: 8ppm, Whiteness: 90.05%, P-H: 5, Viscosity: 703 BU and Packing 50KgPP/PE bags.
It is nowhere stated in the said certificate that at what place inspection of these sample materials have been carried out. In this document the date of loading is shown as 6/5/2010 but date of reporting is shown as 9th May 2010. A note below the details regarding containers have given is important which reads as under.
“*Results of analysis as per sample received will be kept only for 1 month from the date received”.
This also speaks lot about intention of making specific note.
Even if presume for the sake of argument that date of loading correctly recorded but it does not inspire confidence because inspection and loading on the same date is not possible because before cargo uploading, so many other formalities have to be completed.
17. Secondly, loading date is also not matching with the date mentioned by the Bureau of Quarantine, Department of health,Philippines, who also had issued certificate for compliance of sanitary standard (page 24) wherein the date of loading is mentioned as 12th May 2010! Now this certificate was issued on 17th May 2010. Meaning thereby, the vessel have not started journey till then. A certificate (page
71) dated 19/3/2010 issued by Quality Control Department of Exporter (i.e. Palm View Trade) regarding quality analysis which contains the same value as described by Precision International at page 21 and more surprising is both these certificates have been signed by a person named Ms. Melissa! Admittedly, consigned goods is a food stuff product and therefore it is not easy to digest that it maintains same value even after 45 days despite transportation, loading, unloading etc activities.
18. It is also suspicious because the complainant has pleaded in paragraph 3 of complaint as under:
“we have submitted declaration and pre-inspection report to opponent insurance co. Opponent insurance co has not demanded any documents from us, so the consignment was dispatched from Manila, Philippines through sea to Mundra Port, Gujarat.”
If it is believed even for the sake of argument that “Precision” has inspected goods as stated by complainant then question arises that how the complainant was able to submit the said report to insurer on 6th May when the report itself was prepared on 9th May 2010 Mr. Gautam Chaudhary, witness for the complainant replied to interrogatories as under:
“Q. Is it correct that you have not produced on record any document, which would show that you have forwarded or provided the pre- inspection report to the opponent insurance company before the claim was intimated
Ans: Yes, we are submitting various papers in due course and not keeping inward copy, but no record is filed by the insurance company also as to show that they did not receive the report and they were requesting the same.Q. Is it correct that you have not produced on record any document, which would show that the opponent insurance company had received the pre-inspection report before the claim was intimated
Ans: Yes, we are submitting various papers in due course and not keeping inward copy but no record is filed by the insurance company also as to show that they did not receive the report and they were requesting the same.
Q. Is it correct that you have not given any notice of loss or damage to the seller of the goods as you had received goods of inferior quality
Ans: Yes, as the cargo was insured and the goods are inspected by the Bureau of Quarantine and are exported only after proper verification of the shipment. Moreover the goods were also inspected by Precision International.”
From the above answers, it can be easily inferred that complainant has no concrete proof to establish that pre-inspection report has been supplied to insurer. Therefore, in absence of any such corroborative proof, it cannot be held that material had undergone “pre-inspection” and it was, in fact, standard as per order. It is therefore not acceptable that it was within the knowledge of insurer as it claimed by the complainant. After amendment in complaint, the complainant also changed the version and stated that report was submitted to insurer “as per opponent instruction”. The complainant also stated that opponent has accepted the report of M/s. Precise International surveyors before commencement of voyage but there is nothing on record to show that any such report was ever submitted to insurer. This version of the complainant cannot be accepted as there is no proof that insurer was given report prior to loss.
19. There is one more reason for not believing complainant’s this statement because it does not get support from the verification exercise done by surveyor. Surveyor M/s. G P Dave & Sons to verify the correctness of the “pre-inspection” story, sent email and registered post to said “Precision International” at the address mentioned in the said certificate. However, surveyor had then reported that neither email was replied nor registered article was accepted (article received back with endorsement “unclaimed”). This leads us to believe that as such there may not be any “pre-inspection” as claimed by the complainant. Thus, if the complainant fails to establish that goods were inspected at the port of loading, we are unable to accept that quality of goods was standard even at the stage of loading in cargo. We are also unable to accept that cause of loss explained by surveyor in his report can be said arbitrary or unjustified in nature. Similarly reasons shown in the letter of repudiation cannot be said unjustified or arbitrary by the insurer so as to make it liable under the Consumer Protection Act, 1986. There are series of rulings by the NCDRC and Hon’ble Supreme Court that merely because the claim has been repudiated it cannot be said deficiency in service. In Ravneetsingh Bagga vs KLM Royal Dutch Airlines the Hon’ble Supreme Court (1999-3-CPJ-28(SC)) has observed as under:
“The deficiency in service cannot be alleged without attributing fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be performed by a person in pursuance of a contract otherwise in relation to any service. The burden of proving the deficiency in service is upon the person who alleges it. The complainant has, on facts, been found to have not established any willful fault, imperfection, shortcoming, or inadequacy in the service of the respondent. The deficiency in service has to be distinguished from the tortuous act of the respondent. In the absence of deficiency in service the aggrieved person may have a remedy under the common law to file suit for damages but cannot insist for grant of relief under the Act for the alleged acts of commission and omission attributable to the respondent which otherwise do not amount to deficiency in service. In case of bonafide disputes no willful fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance in the service can be informed. If on facts it is found that the person or authority rendering service had taken all precautions and considered all relevant facts and circumstances in the course of the transaction and that their action or the final decision was in good faith, it cannot be said that there had been any deficiency in service. If the action of the respondent is found to be in good faith, there is no deficiency in service entitling the aggrieved person to claim relief under the Act. The rendering of deficient service has to be considered and decided in each case according to the facts of that case for which no hard and fast rule can be laid down. Inefficeincy, lack of due care, absence of bonafide, rashness, haste or omission and the like may be the factors to ascertain the deficiency in rendering the services.”
20. Unless the complainant establishes through concrete evidence that goods under consignment was standard and as per order of the complainant even at the port of loading, insurer cannot be held guilty of deficiency in service coupled with negligence in not settling the claim, only on the basis of complainant’s allegation of damaged/ replaced cargo. At this point of time, Mr. Mazgaonkar drew our attention to clause 8.8.1 and submits that once the goods left the seller’s place, risk is covered under the policy. The said clause is “transit clause” reads as under:
“subject to clause 11 below, this insurance attaches from the time the subject matter insured is first moved in the warehouse or at the place of storage (at the place named in the contract of insurance) for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit, continues during the ordinary course of transit….”
We are unable to accept this submission simply because the insurance company has assumed risk on CIF + 10 % basis which means the goods exported on FOB prices and therefore risk starts only after the goods loaded on vessel. Now there is nothing on record to show the quality of goods that was loaded on board. Obviously heavy burden lies on the complainant to establish that the goods was of standard quality, when uploaded on board, then only the liability of damaged/replaced goods can be checked against the insurer. The entire record shows that there was no evidence except the certificate of “Precision International” to which we cannot accept as genuine for the reasons stated herein above. Additionally, the complainant has not given notice to seller for supplying inferior quality of goods, which also raises doubts.
21. The complainant’s few other actions are also not giving us confidence that what complainant says is truth. When it was within the knowledge of the complainant that goods received are of inferior quality, even then they shown willingness to retain salvage @ 10000/- MT. Subsequently, when it came to know that surveyor has not considered claim as genuine, they sold it out at Rs.1000/- MT. to others. Although invoice produced on record shows name of buyer but no more details regarding this buyer is furnished. When notice was issued and insurer was called upon to decide about salvage, without waiting for adequate time, they sold it out. Secondly, complainant issued notice for settlement of claim and immediately thereafter registered complaint before this Commission. Considering all these aspect, we are of the opinion that the facts stated in the complaint cannot be accepted as gospel truth. As such, complainant should come with concrete evidence that goods supplied from Manila were of standard quality when uploaded on board and only then allegation as to damaged/replaced cargo during the transit can be considered so as to make the insurer liable under the contract of insurance despite the fact that “seals were found intact” keeping in mind possibilities of skillful pilferage during transit.
22. The complainant has also claimed deficiency due to delay in settlement of claim and also vehemently argued by Mr. Mazgaonkar that insurer has not followed the guideline of the IRDA for settlement of claim within 30 days from the date of survey report. It is true that claim intimation was given on 2nd July 2010 and claim was repudiated only after filing of complaint in June 2011. It is to be remembered that surveyor has been appointed immediately and inspection of containers were carried out within a week thereafter. The surveyor has submitted his report in February 2011. In this report, there are sufficient proof for the actions taken by the surveyor for process of assessment of loss and causes of loss verification. The surveyor has sent letters to overseas surveyors (who stated to have issued certificate) and tried his level best to ascertain truth in the matter. Considering all these we are not inclined to say that delay has been caused intentionally. Merely because it has taken some more time to decide admissibility of claim, it cannot be said that services rendered by the opponent insurer is deficient in any manner.
23. We are not satisfied to accept the facts stated by the complainant for want of concrete and corroborative proof that the goods uploaded was standard and there was pre-inspection by competent authority to certify the same. We do not want to scrutiny into other allegations as to pilferage/replaced/damaged cargo during transit and rejects all these allegations at the threshold. The authorities/judgments cited by either party in this case are of little relevance because facts of those cases are distinguishable from the facts in the present case. In the result, the complaint fails and we pass following
ORDER
A) The complaint no. 37 of 2011 is hereby dismissed.
B) There shall be no order as to cost.
C) Registry is directed to send certified copy of this judgment to the parties free of charge.
24. Pronounced in the open court on 12th July, 2022.
