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PUNJAB STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, CHANDIGARH
Hon’ble Mr. Justice A.L. Bahri, President &
Mr. Jasbir Singh, Member
SEHGAL KNITWEARS IMPORTERS EXPORTERS—Complainant
versus
UNITED INDIA INSURANCE COMPANY LIMITED & ORS.—Opposite Parties
Original Complaint No. 48 of 1997—Decided on 23.12.1998
Counsel for the Parties :
For the Complainant :Mr. Yogesh Putney, Advocate.
For the Opposite Party No. 2 :Mr. D.P. Gupta, Advocate.
An insurance company cannot repudiate a claim on grounds that were not raised at the time of issuing the insurance certificate.
Headnote:
INSURANCE - REPUDIATION OF CLAIM - ILLEGALITY AND ARBITRARINESS - COVERAGE OF RISK - INTERPRETATION OF POLICY TERMS - ASSESSMENT OF LOSS - DELAY IN TAKING DELIVERY - INTEREST ON COMPENSATION - CONSUMER PROTECTION ACT, 1986.
Fact of the Case:
The complainant, a registered partnership firm engaged in the import and export of hosiery items, had taken an insurance policy from the opposite party, an insurance company, to cover the risk of goods supplied to foreign buyers. A consignment of wool blended blankets was sent to a foreign buyer in Russia, but 35 cartons of the blankets were found missing upon arrival. The complainant lodged a claim with the insurance company, but the claim was repudiated on various grounds, including that the risk of transit by ship was not covered by the policy, the wool blended blankets were not covered under the policy, and there was a delay in taking delivery of the goods.
Finding of the Court:
The court held that the repudiation of the claim by the insurance company was illegal and arbitrary. The court found that the insurance company had issued an insurance certificate for the consignment, which meant that the risk of the goods was covered. The court also found that the insurance company had not raised any objections regarding the coverage of the goods or the risk of transit by ship at the time of issuing the insurance certificate. The court further held that the delay in taking delivery of the goods was not a valid ground for repudiation of the claim, as the complainant had provided sufficient evidence to explain the delay.
Issues: 1. Whether the repudiation of the claim by the insurance company was illegal and arbitrary? 2. How much compensation, if any, the complainant is entitled to from the insurance company?
Ratio Decidendi: The court held that the insurance company was estopped from raising objections regarding the coverage of the goods or the risk of transit by ship, as it had issued an insurance certificate for the consignment. The court also held that the delay in taking delivery of the goods was not a valid ground for repudiation of the claim, as the complainant had provided sufficient evidence to explain the delay.
Final Decision: The court allowed the complaint and directed the insurance company to pay a sum of Rs. 7,81,120/- with 12% per annum interest thereon with effect from the date three months after lodging of the claim till payment along with Rs. 10,000/- as costs of litigation.
Mr. Justice A.L. Bahri, President—Though the complaint was filed against four of the opposite parties, however notice of the complaint was issued to opposite party No. 2, United India Insurance Company, Branch Office, Ludhiana. Opposite party No. 1 was also shown as the Insurance Company aforesaid with registered office at Madras. Opposite parties Nds. 3 and 4 were the foreign buyer and the shipping agency. No relief was claimed against opposite parties Nos. 3 and 4 in the complaint. In the original complaint compensation calculated in US dollar for the loss suffered was claimed, the complainant was thus called upon to file amended complaint giving equivalent amount in Indian currency. It was done.
2. M/s. Sehgal Knitwears Importers & Exporters of Ludhiana, a registered partnership firm filed the complaint through Mukesh Sehgal, its partner. They are doing the business of imports and exports of hosiery items and to cover the risk of goods supplied to foreign buyers, they had taken an insurance policy in the sum of Rs. one crore from the opposite party, the aforesaid Insurance Company on November 22, 1993 (Annexure C-l). Under the policy goods to be sent from Ludhiana to any place in the world were covered. On March, 14,1994,126 cartons of wool blended blankets were to be supplied to opposite party No. 3, M/s. Asha International, Ukrane (Russia), as per Contract No. 01 / AA/94, Invoice No. SK/254/94 dated July 2, 1994 was issued in the name of opposite party No. 3 for 126 cartons valuing 38000 US $ (copy of the invoice Annexure C-2). Copy of the list of the articles despatched by the aforesaid cartons is Annexure C-3. The consignment was sent to Bombay for shipment to Russia through Trade Wing Carrier of India (Transporter) vide GR No, 099102 dated July 2,1994 for onward delivery to M/s. Greatway Transport Company (Clearing Agent at Bombay). The goods did not reach Bombay in time and the ship left the Port without such goods. The same were unloaded at Bombay and kept in the warehouse of the Transporter-Dynamic Warehousing Corporation, in village Bhiwandi, Bombay. Ultimately the goods were sent to Ukrane by ship from Bombay. A sum of Rs. 5,752/- was paid to the Clearing Agent and Rs. 22,514/- as octroi before the taking the consignment from the warehouse on November 11,1994. The goods were consigned by ship vide Bill of Lading No. BOM/KEV/004 dated 19.11.1994 issued by Ukranian Danumbe Shipping Company (Vide Annexure C-4). The buyer was informed accordingly. Ordinarily the consignment was to reach there in December, however it actually reached on March 28, 1995 and that too without original seal. The Customs Authorities informed opposite party No. 3 about the shortage and certificate was issued in this respect (copy Annexure C-4/A) by Customs Authorities. The container was found short of 35 cartons of wool blended blankets. Thus shipping Company was informed about the shortage and further requested to settle the claim vide letter dated April 1,1995 (Annexure C-5). A reminder was issued on May 20, 1995 (Annexure C-6). The complainant was informed about the shortage on telephone and the same was brought to the notice of opposite party No. 2, the Insurance Company with the request to depute the Surveyor but to no effect. The survey was conducted by Insurance Company of Ukrane and vide report Annexure C-7 loss to the tune of US $ 19352.28 was assessed. The shipping company was informed. The total shortage of 35 cartons and 91 cartons was found to be 829 pieces, as confirmed by Chamber of Commerce and Industries, Ukrane vide letter dated June 19, 1995 (Annexure C-8). Thus total loss of the complainant was stated to be 19352.28 US $. 125 US $ were paid to Chamber of Commerce and Industries. The Insurance Company was called upon to settle the claim, vide letter dated June 19, 1995 (Annexure C-9). The delivery was taken by the foreign buyer-opposite party No. 3 on June 7, 1995 in order to avoid further demurrage charges. Thereafter
