Judicial Analysis Court Copy Headnote Facts Arguments Court observation

TAMIL NADU STATE CONSUMER
DISPUTES REDRESSAL COMMISSION, MADRAS
Hon’ble Thiru Justice S.A. Kader, President; Thiru R.N. Manickam &
Dr. Tmt. Ramani Mathuranayagam, Members
K.M. PONNAPPAN & ANR.—Complainants
versus
NEW INDIA ASSURANCE CO. LTD. & ORS.—Opp. Parties
O.P. No. 552 of 1992—Decided on 29.6.1994

Counsel for the Parties :
For the Complainants :Tr. F.B. Benjamin George, Advocate.
For the Opp. Parties :Tr. K.S. Narasimhan, Tr. R. Sivaprakasam, Tr. V. Aravamudan & Tr. R.G. Rajan, Advocates.

The failure of the complainant to take legal action against the carrier within one year as required by Article III Rule 6 paragraph 3 of the Carriage of Goods by Sea Act and to preserve its rights against the carrier as required by Condition 11 of the marine insurance policy resulted in the forfeiture of its right to claim compensation from the insurer.

Headnote:
CONSUMER PROTECTION ACT - SECTION 17, 12 - CARRIAGE OF GOODS BY SEA ACT - ARTICLE III RULE 6 PARAGRAPH 3 - MARINE INSURANCE POLICY - CONDITION 11 - SHORT DELIVERY OF GOODS - LIABILITY OF CARRIER AND INSURER - DUTY OF ASSURED TO MINIMISE LOSSES AND PRESERVE RIGHTS AGAINST THIRD PARTIES - FAILURE TO TAKE ACTION AGAINST CARRIER - FORFEITURE OF RIGHT TO INDEMNITY.
Fact of the Case:

The complainant purchased 102 logs of timber from the second opposite party and entrusted them to the third opposite party carrier for transportation by sea to Madras. The consignment was insured with the first opposite party. Upon arrival at Madras, only 82 logs were delivered, resulting in a shortage of 20 logs. The complainant claimed compensation from the insurer, who denied liability.
Finding of the Court:

The court found that the carrier was liable for the short delivery but that the complainant had forfeited its right to claim compensation against the carrier by failing to take legal action within one year as required by Article III Rule 6 paragraph 3 of the Carriage of Goods by Sea Act. The court also found that the complainant had failed to preserve its rights against the carrier as required by Condition 11 of the marine insurance policy, which resulted in the insurer being deprived of its right of indemnity against the carrier.
Issues: 1. Whether the complainant had forfeited its right to claim compensation against the carrier by failing to take legal action within one year as required by Article III Rule 6 paragraph 3 of the Carriage of Goods by Sea Act? 2. Whether the complainant had failed to preserve its rights against the carrier as required by Condition 11 of the marine insurance policy?
Ratio Decidendi: 1. The court held that the complainant had forfeited its right to claim compensation against the carrier by failing to take legal action within one year as required by Article III Rule 6 paragraph 3 of the Carriage of Goods by Sea Act. The court relied on the decision of the Supreme Court in East and West Steamship Company v. S.K. Ramalingam Chettiar, which held that Clause 3 of paragraph 6 of Art. 111 in the schedule to the Carriage of Goods by Sea Act of 1925 provides for the extinction of the right to compensation and is not merely a rule of limitation. 2. The court held that the complainant had failed to preserve its rights against the carrier as required by Condition 11 of the marine insurance policy. The court relied on the decision of the Madras High Court in E.I.D. Parry India Limited v. Far Eastern Marine Transport Co. Ltd., which held that the assured is under an obligation not to deal with any claim he possesses, or will possess, against a third party in such a manner as to prejudice the insurer’s rights of subrogation in relation to it.
Final Decision: The complaint was dismissed.

ORDER

Mr. Justice S.A. Kader, President—This is a complaint under Section 17 read with Section 12 of the Consumer Protection Act.

2. The complainants are carrying on business in timber. They purchased 102 pieces of logs of timbers from the second opposite party M/s Andaman and Nicobar Islands Forests and Plantation Development Corporation Limited under Invoice No. T/91-92/10 dated 12.7.91 for a sum of Rs. 3,12,565.10. The said consignment was entrusted to the third opposite party carrier at Port Mayabunder on 11.7.91 to be transported and delivered at Madras to the complainant under a clean bill of lading dated 19.7.91. The consignment was insured with the opposite party under Marine Policy (Cargo) dated 11.7.91 for a sum of Rs. 15,12,500/-. The consignment was carried in M.V. Diglipur and discharged at the Port of Madras on 30.7.91. The complainant cleared the consignment through their agent but out of 102 pieces of timber, only 82 pieces were delivered resulting in a shortage of 20 logs of Timber. The value of the short delivered timber logs of Rs. 1,38,865.30. The 4th opposite party Port Trust of Madras confirmed the short delivery by its certificate dated 26.10.91. The complainant lodged the claim with the third opposite party which rejected the claim by letter dated 26.11.91. The complainant preferred a claim with the first opposite party insurer. But it was refuted by letter dated 6.1.92. The first opposite party again refuted the claim dated 13.5.92. The complainant has therefore filed this complaint seeking compensation against O.P.I in the sum of Rs. 1,52,751.80 towards the value of the short delivered consignment, Rs. 13,886.50 towards the loss of profit with interest, Rs. 50,000/- towards mental pain and agony and costs of Rs. 5,000/-. The opposite parties 2 to 4 have been impleaded as formal parties to establish the fact of short delivery and consequence the loss. But no relief is claimed against them.

3. The first opposite party resisted the claim, Inter-alia it is contended that no relief has been claimed against the carrier who was responsible for the safe carriage and delivery and by this conduct the complainants have forfeited the right of indemnity against this opposite party

4. The second opposite party which has sold the consignment to the complainant filed a formal counter stating that as per specifications 102 logs were entrusted to the third opposite party carrier and obtained Mate’s receipts dated 11.7.91 acknowledging the receipt of 102 timber logs. It is also averred that only after making physical verification, the third opposite party carrier has issued the clean bill of lading. There was no default on the part of this opposite party.

5. The third opposite party carrier in its counter contended mat the claim got extinguished against that party as no action filed against it within one year from the date of sailing of the vessel as per the provisions of the contract of carriage and as per Article IV Rule 5 of the Carriage of Goods by Sea Act. It was also contended by this opposite party that the consignment was landed at Port at Madras in full without any shortage.

6. The fourth opposite party is the Port Trust of Madras. It contended that the complainant’s clearing agent cleared only 82 logs of timber on 23.8.91 as against the manifested quantity of 102 logs bearing the mark ‘LT’ in blue-paint. The remaining 20 logs were not handed under mark ‘LT’ in blue paint. How ever 23 logs of timber were found to be lying uncleared and they were landed with different marks other than LT in blue paint. These 23 logs were subsequently cleared by M/s. South India Corporation Limited after filing a supplementary manifest through customs. It is contended by this opposite party that the responsibility for short delivery is solely that of the carrier.

7. Exhs. A1 to A37 and B1 to B52 are marked by consent. Proof affidavits are filed. No oral evidence has been let in.

8. The preliminary point which arises for consideration is

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