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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
Mrs. Deepa Sharma, Presiding Member
National Insurance Co. Ltd. Through
Rajesh Kumar Dy. Manager —Petitioner
Versus
Biking Food Products (P) Ltd. —Respondent
Revision Petition No. 2431 of 2017
(Against the Order dated 17/04/2017 in Appeal No. 25/2014 of the State Commission Andhra Pradesh)
Decided on 31.7.2020
Counsel for the Parties:
For the Petitioner:Mr. K.K.Bhat, Advocate
For the Respondent:Mr. K.V.Rao, Advocate
IMPORTANT POINT
Insurable act has to be determined on the basis of benefit or loss likely to be suffered by a person by safe arrival of insurable property or loss due to its damage.
Headnote:
Consumer Protection Act, 1986 – Section 21 [Consumer Protection Act, 2019 – Section 51] – Marine Insurance Act, 1963 – Section 7 – Insurance – Marine Insurance Policy – total damage to the consignment in course of sea transit – Repudiation of claim on the ground that complainant had violated terms and conditions of policy – Claim allowed by State Commission in appeal – Under Act of 1963, insurable act has to be determined on the basis of benefit or loss likely to be suffered by a person by safe arrival of insurable property or loss due to its damage – In this case, respondent / complainant has duly stated that he was an unpaid seller and loss of goods on way to Mombasa where it was to be delivered to buyer certainly amounts to loss to him and it cannot be said that respondent / complainant did not have any insurable interest in goods – As per bill, seller retains insurable interest in goods till time of delivery and this fact was recognized by petitioner – Section 85 of Act allowed the person to rectify contract even after he is aware of loss – Contract was validly rectified in terms of Act – This fact was also acknowledged by petitioner since insurance policies contains description of Bill of Lading that respondent / complainant had retained insurable interest in goods which have been subject to maritime peril till its delivery to Mombasa – It is not a FOB contract where goods are delivered free on board and once goods are placed on board, responsibility of seller ceases and delivery of goods to the board is complete – Terms and conditions of Bill of Lading clearly shows that responsibility of respondent / complainant who is seller was to deliver goods at Mombasa port, Kenya and its liability did not cease simply on putting goods on ship – This Bill of Lading has been duly acknowledged by petitioner – Revision Petition dismissed.
Held: Under the Act, the insurable Act has to be determined on the basis of benefit or loss likely to be suffered by a person by safe arrival of insurable property or loss due to its damage. Apparently, in this case, the respondent / complainant has duly stated that he was an unpaid seller and, therefore, loss of the goods on way to Mombasa where it was to be delivered to the buyer certainly amounts to loss to him and, therefore, it cannot be said that respondent / complainant did not have any insurable interest in the goods.
The goods were sent by Bill of Lading having no. MSCUM5008646 and the policy issued by the petitioner also contains the said bill number. The policy, therefore was issued against the said Bill of Lading and this Bill of Lading clearly states that Port of Discharge is Mombasa, Kenya. From this bill, it is apparent that the seller retains the insurable interest in the goods till the time of delivery and this fact was recognized by the petitioner.
The argument of the petitioner that since contract was on C&F basis and the bill was issued on CIF basis, it is a concealment of fact and the invoices were issued on C&F basis. My attention has been brought to a letter addressed to the respondent / complainant by the buyer wherein the respondent / complainant was asked to obtain the policy on CIF basis. The argument is that C&F contract was then converted into CIF basis on payment of due premium by the buyer to the respondent / complainant. The invoices also shows that it was the duty of the respondent / complainant under the agreement to buy the necessary insurance policies and the goods to be delivered upto port Mombasa. The State Commission has rightly observed that Section 85 of the Act allowed the person to rectify the contract even after he is aware of the loss. The contract was thus validly rectified in terms of the Act. This fact was also acknowledged by the petitioner since the insurance policies contains the description of the Bill of Lading that respondent / complainant had retained the insurable interest in the goods which have been subject to maritime peril till its delivery to Mombasa. In the case of D.K.Lall and Others (supra), the Hon’ble Supreme Court has defined the distinction between the contract of sale on FOB basis and contract of sale on CIF basis. The Hon’ble Supreme Court has held as under:
31. “Coming to the case at hand, the contract of sale was on FOB basis even when the contract of insurance proceeded on the basis that the transactions between the seller and the purchaser and meant to be covered by the policy would be on CIF basis. The distinction between CIF (Cost Insurance and Freight) and FOB (Free on Board) contracts is well recognized in the commercial world. While in the case of CIF contract the seller in the absence of any special contract is bound to do certain things like making an invoice of the goods sold, shipping the goods at the port of shipment, procuring a contract of insurance under which the goods will be delivered at the destination etc., in the case of FOB contracts the goods are delivered free on board the ship. Once the seller has placed the goods safely on board at his cost and thereby handed over the possession of the goods to the ship in terms of the Bill of Lading or other documents, the responsibility of the seller ceases and the delivery of the goods to the buyer is complete. The goods are from that stage onwards at the risk of the buyer”
In the present case, it is the seller who under the contract did the thing like preparing the invoice, shipping the goods at the port of shipment, procuring a contract of insurance under which goods will be delivered at the destination. Therefore, it is not a FOB contract where the goods are delivered free on board and once the goods are placed on board, responsibility of the seller ceases and the delivery of the goods to the board is complete. The terms and conditions of the Bill of Lading clearly shows that responsibility of the respondent / complainant who is the seller was to deliver the goods at Mombasa port, Kenya and its liability did not cease simply on putting the goods on the ship. This Bill of Lading has been duly acknowledged by the petitioner since the noting to this fact has been made in the policy by hand.
In view of these facts and circumstances, I found no illegality or infirmity in the impunged order. The present revision petition has no merit and same is dismissed. (Paras 15, 17, 18, 19 and 20)
Result: Revision Petition dismissed.
ORDER
Mrs. Deepa Sharma, Presiding Member—The present revision petition under Section 21 (b) of the Consumer Protection Act, 1986 ( in short, ‘the Act’) has been filed by the petitioner challenging the order dated 17.04.2017 of the Telangana State Consumer Disputes Redressal Commission, Hyderabad ( in short, the State Commission) in Appeal No. 25 of 2014. The appeal was filed by the respondent ( hereinafter referred to as ‘complainant’) against the order of the District Forum dated 09.12.2013 dismissing his complaint no.1041 of 2011. The said appeal was allowed by the State Commission and order of District Forum was set aside vide impugned order.
2. The present revision has been filed by the insurance company challenging the impugned order on the ground that State Commission has committed illegality and perversity while allowing the complaint despite the fact that complainant had violated the terms and conditions of the policy. It is argued that the policy was obtained on the wrong premise i.e. on CIF basis for the subject consignment although the original contract of the complainant with its buyer was on C&F basis upto the destination. It is submitted that since the policy had been wrongly obtained by the complainant, concealing the fact that contract with the buyer was on C&F basis, complaint was rightly dismissed by the District Forum and the impugned order, therefore is liable to be set aside.
3. Counsel for the respondent / complainant, however, has stated that they had not concealed any material fact from the insurance company. It is submitted that initially contract was of C&F basis but later on buyer had converted into CIF basis and Bill of Lading was issued on that basis and that while issuing the insurance policy, the insurance company has issued the same in respect of the said Bill of Lading. It is submitted that all the facts were known to the insurance company and that repudiation, therefore, amount to deficiency in service and the impugned order does not suffer with any illegality or infirmity.
4. I have heard the arguments and perused the relevant record.
5. The brief facts of the case are that complainant had entered into a contract for export of biscuits. For that purpose, he obtained a Marine Insurance Policy having CIF value of US$ 22186.45 covering a consignment of 3636 cartons of biscuits from Hyderabad to South Sudan WAU by road and sea covering all risk by remitting an amount of Rs.715/- towards premium on 19.07.2010. The consignment was loaded in the vessel on 07.08.2010 at JNPT Port, Mumbai but after travelling 3 nautical miles, it collided with another vessel ‘Khalija’ in the Indian Arabian sea and sank resulting in total damage to the consignment. The insurance company was duly informed and the surveyor and loss assessors were approached by the insurance company. The complainant filed a monetary claim for the loss with the agent of Mediterranean Shipping Co., Mumbai, but it was rejected with an advice to claim the same from the other vessel Khalija-3. Claim submitted with the insurance company was rejected solely on the ground that terms of invoices were different from terms of the policy and the buyer alone could claim the proceeds of the contract. Therefore, buyer / importer and the complainant mutually agreed to amend the C&F contract to CIF contract as per the insurance policy and, thereafter, submitted its claim but that was also denied. Complaint to the statutory authorities by the complainant were also rejected and then the claim was filed.
6. The petitioner had filed their written version. The plea taken was that liability of the insurance company had ceased as soon as the goods / consignment were placed safely on board, the vessel and, thereafter, there remains no insurable interest of the complainant in those goods.
7. Parties led their evidences before the District Forum. The District Forum, however, dismissed the complaint. Before the State Commission, the plea taken by the respondent / compla
