The failure of the insurer to properly notify the insured of exclusions from coverage constituted a deficiency in service, entitling the insured to full claim recovery.

M/s. Eastman Exports Global Clothing Pvt. Ltd., (hereinafter referred to as the ‘Complainant’), a registered Company under the Companies Act , 1956, is the largest knitwear Manufacturer and Exporter from India.From the year 2008 the Complainant has been taking Insurance Policy, namely, Multi Buyer Exposure Policy (hereinafter referred to as “the Policy”) from the ECGC Ltd., Opposite Parties (hereinafter referred to as “ECGC”).The Policy was issued for the first time in September, 2008, wherein the Maximum Liability was ₹100.00 Crores and was valid for a period of one year from 01.09.2008 to 31.08.2009.The Policy was renewed every year by ECGC, with the same terms and conditions and with the same Maximum Liability of ₹100.00 Crores.The Policy covered the risk of non-payment from all Insured Buyers and as per definition of Insured Buyers in the Policy, all the Buyers of the Complainant were Insured Buyers, unless specifically excluded from the purview of the cover under the Policy.Under the Policy, the Complainant was to be indemnified by ECGC to the extent of loss of the Complainant or loss limit provided by ECGC, whichever was lower, on each Insured Buyer in case of non-payment by Insured Buyers owing to the following Risks Insured:

INSURED RISKS

Commercial Risks (Buyer Risks)

Protracted Default

Contract Repudiation

Political Risks (Country Risks)

Contract Frustration

Contract Cancellation

Import Restriction

Shipment Diversion

On 28.08.2017, the Complainant submitted proposal for renewal of the Policy on premium amount of ₹1,74,65,624/- and processing fee of ₹12,711.86, which was to be paid by the Complainant on monthly instalment basis.On 28.12.2017 the Policy was renewed by ECGC for the period from 01.09.2017 to 31.08.2018 with the Covering Letter, Policy Bond etc. Before that, as required in the renewal proposal, a List of Current Buyers was provided by the Complainant to ECGC.The Aggregate Loss Limit (ALL) mentioned in the Covering Letter was ₹100.00 Crores and Loss Limit was stated to be 10% of Aggregate Loss Limit (ALL). The Covering Letter issued by ECGC, inter alia, stated the Insured Buyers, which included M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and M/s KMART HOLDING CORPORATION, having address at United States. The Covering Letter further stated that the coverage was not available for those Buyers, whose names were included in the Defaulter Buyers List.However, no Definition or otherwise Explanation of the Defaulter Buyers List was provided in the Policy issued to the Complainant.

Likewise, on 24.08.2018 another proposal was submitted by the Complainant for renewal of the Policy.On premium amount of ₹1,68,58,128/- as also processing fee of ₹12,711.86 to be paid by the Complainant on monthly instalment basis, on 11.11.2018 ECGC renewed the Policy, covering the period from 01.09.2018 to 31.08.2019, wherein the Aggregate Loss Limit (ALL) and Loss Limit was stated to be ₹100.00 Crores and 10% of Aggregate Loss Limit (ALL) respectively.

During the validity period of the Policy renewed from time to time, the Complainant made exports of ₹9,84,99,894.07 to M/s SEARS, ROEBUCK & CO T/S SEARS HOMETOWN STORE and of ₹16,65,19,308.70 to M/s KMART HOLDING CORPORATION between 29.05.2018 and 09.10.2018.Though the said two Insured Buyers were not Defaulters but due to Insolvency of these two Insured Buyers the payment of the exports made to them was not received by the Complainant, necessitating the Complainant to lodge a Claim with ECGC.

On receipt of a communication dated 16.10.2018 from the said Insured Buyers that they have filed for Bankruptcy with the United States Bankruptcy Court for the Southern District of New York on 15.10.2018 (Annexure IV), on 20.10.2018 the Complainant filed a Pre-Petition Claim of US $ 3943102.96 with the said United States