2010(2) CPR 305 (SC)
SUPREME COURT OF INDIA
Markandey Katju and T.S. Thakur, JJ.
Contship Container Lines Ltd. — Appellant
versus
D.K. Lall & Ors. — Respondents
Civil Appeal No. 3245 of 2005
Decided on : 16-03-2010

IMPORTANT POINT
The principle that insurance is a contract founded on good faith is of vintage value.

Headnote:(i) Consumer Protection Act,1986- Section 2(1)(g)-Deficiency in service - Liability of the Insurance Company -Appeals against order passed by the National Commission,whereby it dismissed the complaint filed by the respondent proprietor of M/s Lall Enterprises against respondent-National Insurance Company Ltd. while granting relief in part to the complainant against Contship Container Lines Ltd., the shipping company to whom the consignment in question was entrusted for delivery to the consignee in Barcelona, Spain- National Commission in the instant case,recorded a clear finding that the insurance cover obtained by the exporter envisaged goods being despatched on CIF basis whereas the goods were, in fact, sent on FOB basis-This was a material departure which breached the duty of utmost good faith cast upon the exporter towards insurance company- If the proposal for insurance had disclosed that the goods will be sent on FOB basis, question whether the supplier had any insurable interest in goods and if he had what premium the company would charge for the same may have assumed importance- Duty to make a complete disclosure not having been observed by the exporter, National Commission was justified in holding that the insurance company stood absolved of its liability under the contract and in dismissing the petition qua the said company. (Para 27)

       (ii) Consumer Protection Act,1986-Section 2(1)(g)-Deficiency in service- Liability of the carrier -Appeals against order passed by the National Commission, whereby it dismissed the complaint filed by the respondent proprietor of M/s Lall Enterprises against respondent-National Insurance Company Ltd. while granting relief in part to the complainant against Contship Container Lines Ltd., the shipping company to whom the consignment in question was entrusted for delivery to the consignee in Barcelona, Spain- Held National Commission on appreciation of the material on record come to conclusion that consignment meant to be delivered to Pindikas was misdelivered and what was offered to Pindikas did not actually contain miniature paintings meant for said consignee- That finding was, justified on material on record from which it was evident that out of 122 cartons 121 cartons were delivered to M/s Natural Selection International while the only remaining carton when checked in the presence of the General Counsulate of India was found to contain steel furniture items- The inference,therefore, was that carton containing miniature paintings had been misdelivered by the carrier who ought to have taken care to deliver the same to the consignee concerned- National Commission had rightly rejected the contention that the carton was not properly marked making it difficult for the shipping company to separate the same from other cartons which were meant for M/s Natural Selection International- No reason to interfere with the findings of the National Commission. (Para 28)

        (iii) Consumer Protection Act,1986- Section 2(1)(g)- Clause 17 of the Bill of Lading and Article IV Rule 5 of The Indian Carriage of Goods by Sea Act, 1925 -Deficiency in service –Compensation- Whether the National Commission was justified in awarding rupee equivalent of US$ 1800 to the shipper by way of compensation- There were two errors which were evident in the order by the National Commission in that regard- National Commission instead of going by the number of packages entered in the Bill of Lading gone by the packages mentioned in the packing list-The Bill of Lading was the only document on the basis of which compensation could be determined against the carrier in terms of the provisions of The Indian Carriage of Goods by Sea Act, 1925 and the Schedule thereto.- No dispute that 122 cartons despatched by shipper were consolidated in a container, nor was it disputed that there was only one package indicated in the Bill of Lading concerning the consignment meant for Pindikas-National Commission could not go beyond the Bill of Lading and award compensation on the basis of the packing list which may have mentioned several packages consolidated in one bigger package, delivery whereof was acknowledged in the Bill of Lading- Commission ought to have taken number of packages to be only one as mentioned in the Bill of Lading-Again Commission appeared to have gone by unamended provisions of Rule 5 in which the amount of compensation was stipulated to be US$ 100 per package- After the amendment to the Schedule in the year 1992 by Act 28 of 1993 the amount of compensation was to be paid in terms of Special Drawing Rights-Shipper would be entitled to compensation of 666.67 Special Drawing Rights per package or two Special Drawing Rights per kilogram according to gross weight of goods lost or damaged whichever was higher- The single package meant for Pindikas weighed 200 kgs-The amount of compensation payable by reference to weight of the package would come to 400 Special Drawing Rights- The amount of compensation, actually payable would, however, be 666.67 Special Drawing Rights being higher of two amounts. (Paras 28 to 32)

       Facts of the Case :

        Present Appeals have been filed against order passed by the National Commission, whereby it dismissed the complaint filed by the respondent proprietor of M/s Lall Enterprises against respondent-National Insurance Company Ltd. while granting relief in part to the complainant against Contship Container Lines Ltd., the shipping company to whom the consignment in question was entrusted for delivery to the consignee in Barcelona, Spain.

       Findings of the Court :

        National Commission in the instant case,recorded a clear finding that the insurance cover obtained by the exporter envisaged goods being despatched on CIF basis whereas the goods were, in fact, sent on FOB basis.This was a material departure which breached the duty of utmost good faith cast upon the exporter towards insurance company. If the proposal for insurance had disclosed that the goods will be sent on FOB basis, question whether the supplier had any insurable interest in goods and if he had what premium the company would charge for the same may have assumed importance. Duty to make a complete disclosure not having been observed by the exporter, National Commission was justified in holding that the insurance company stood absolved of its liability under the contract and in dismissing the petition qua the said company.Again, National Commission on appreciation of the material on record came to conclusion that consignment meant to be delivered to Pindikas was misdelivered and what was offered to Pindikas did not actually contain miniature paintings meant for said consignee. That finding was, justified on material on record from which it was evident that out of 122 cartons 121 cartons were delivered to M/s Natural Selection International while the only remaining carton when checked in the presence of the General Counsulate of India was found to contain steel furniture items. The inference, therefore, was that carton containing miniature paintings had been misdelivered by the carrier who ought to have taken care to deliver the same to the consignee concerned. National Commission had rightly rejected the contention that the carton was not properly marked making it difficult for the shipping company to separate the same from other cartons which were meant for M/s Natural Selection International. No reason was fund to interfere with said findings of the National Commission. However order passed by National Commission modified to the extent that the amount of compensation payable to shipper was reduced to the rupee equivalent of 666.67 Special Drawing Rights only in the facts and circumstances of case.