# NEW INDIA ASSURANCE CO. LTD v. MIS HIRA LAL RAMESH CHAND & ORS

- **Citation:** [2008] 9 S.C.R. 1198
- **Court:** Supreme Court of India
- **Decided:** 2008
- **Case number:** Civil Appeal No. 4306-4307 of 2003
- **Bench:** 8.N. Agrawal, P.P. Naolekar, R.V. Raveendran
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/new-india-assurance-co-ltd-v-mis-hira-lal-ramesh-chand-ors-24836
- **Pages:** 43

## Headnote

MARINE INSURANCE Acr, 1963:
c
ss.3 and 4 - Marine insurance - Consignments "covered against: All risks (ICC), war.and SRCC from consignor's
warehouse to consignee's warehouse" - Consignors telephonically informing insurer about non-realization of bills, and claiming value of consignments - Insurer repudiating claims -
D Complaints of consignors by National Consumer Disputes
Redressal Commission - Partly allowed - HELD: Failure of . '
buyer to make payment and take delivery is not a 'loss' of consignment covered by Insurance Policy-Absence of averment
or proof that consignments did not reach the destination or
E the goods were not taken delivery by the consignee - No
overment as to whether holders of the documents applied for
or attempted to take delivery of consignments to store the
same in a bonded warehouse or whether they were refused
delivery - Complainants have failed to plead and make out a
F case of loss of consignments during transit or within 60 days
of the consignment being discharged from the ship - Consequently, claims of complainants against insurer are liable to
be rejected - Order of National Commission set aside - Consumer Protection Act, 1986 - Deficiency in service - ConnoG tation of
Marine Insurance - 'Loss' of consignment - Connotation of
,
The complainants-respondent no. 1 in both the ap-
,
H
1198
.
I
NEW INDIAASSURANCE CO. LTD. v MIS HIRA
1199
LAL RAMESH CHAND
peals, who were engaged in the business of manufacA
ture and export of rugs and durries at Mirzapur, U.P., filed
two separate complaints against the appellant-Insurer
before the National Consumer Disputes Redressal Commission under the Consumer Protection Act, 1986. Their
case was that they, in pursuance of the orders placed by s
,
a buyer at Atlanta in USA, namely, Atlanta Rugs Inc., dispatched consignments of rugs and durries between
23.8.1994 and 4.7.1995. All the consignments were insured
with the appellant insurer and were "covered under: All
risks (1 CC), war and SRCC from consignor's warehouse c
to consignee's warehouse", and were entrusted to the
forwarding agent at Mumbai, namely, Overseas Container
Line Inc. (OCL) which was a Non-Vessel Owning Common Carrier (NVOCC) registered in USA; that the Bill of
,
Lading issued by 'OCL' in regard to each consignment 0
· showed the consignee as "unto order" and the buyer as
the party to be notified; that the complainants had a foreign Out Bill Purchase Account with their Bankers and,
therefore, endorsed the Bill of Lading in favour of the said
Bankers and the latter in turn endorsed the negotiable
copy of the Bill of Lading in favour of its foreign correE
spondent Bank (the collecting Bank). On 25.1.1996 the
collecting Bank informed the Bankers of the complainants that the drawee did not make the payment nor did it
obtain release of the documents of title; that thereafter
the complainants made efforts to contact the buyer and
F
the forwarding agent 'OCL', but they could not be located.
Ultimately, the complainants telephonically informed the
Insurer on 2.2.1996 about the non-realization of the Bills
and claimed value of the consignments. As the Insurer
did not settle the claims, the complainants filed petitions G
before the Commission on 25.2.1997, a'lleging that the
\ conduct of the Insurer in not settling the claim amounted
to deficiency in service. They claimed compensation from
the Insurer in regard to the value of the consignments
and other losses.
H
1200
SUPREME COURT REPORTS
[2008] 9 S.C.R.
. .._
A
The stand of Insurer was that the claims were not J
maintainable as none of the consignments were lost or
damaged in transit; that it had got the matter investigated
through the surveyors and the investigation report disclosed that the shipping agent OCL and the buyer were
B headed by a common President, namely, 'KC' who had
admitted to the surveyors that the consignments had all
been received by the buyer. There was thus no loss of
the consignments and, consequently, no deficiency in
service.
C
The

## Text

_Characters 0–39,587 of 88,621. This is a partial read: ask again with offset=39587 for what follows._

[2008] 9 S.C.R 1198
A
NEW INDIA ASSURANCE CO. LTD.
v
MIS HIRA LAL RAMESH CHAND & ORS.
(Civil Appeal No. 4306-4307 of 2003)
B
JUNE, 13, 2008
(8.N. AGRAWAL, P.P. NAOLEKAR AND R.V.
RAVEENDRAN, JJ]
MARINE INSURANCE Acr, 1963:
c
ss.3 and 4 - Marine insurance - Consignments "covered against: All risks (ICC), war.and SRCC from consignor's
warehouse to consignee's warehouse" - Consignors telephonically informing insurer about non-realization of bills, and claiming value of consignments - Insurer repudiating claims -
D Complaints of consignors by National Consumer Disputes
Redressal Commission - Partly allowed - HELD: Failure of . '
buyer to make payment and take delivery is not a 'loss' of consignment covered by Insurance Policy-Absence of averment
or proof that consignments did not reach the destination or
E the goods were not taken delivery by the consignee - No
overment as to whether holders of the documents applied for
or attempted to take delivery of consignments to store the
same in a bonded warehouse or whether they were refused
delivery - Complainants have failed to plead and make out a
F case of loss of consignments during transit or within 60 days
of the consignment being discharged from the ship - Consequently, claims of complainants against insurer are liable to
be rejected - Order of National Commission set aside - Consumer Protection Act, 1986 - Deficiency in service - ConnoG tation of
Marine Insurance - 'Loss' of consignment - Connotation of
,
The complainants-respondent no. 1 in both the ap-
,
H
1198
.
I
NEW INDIAASSURANCE CO. LTD. v MIS HIRA
1199
LAL RAMESH CHAND
peals, who were engaged in the business of manufacA
ture and export of rugs and durries at Mirzapur, U.P., filed
two separate complaints against the appellant-Insurer
before the National Consumer Disputes Redressal Commission under the Consumer Protection Act, 1986. Their
case was that they, in pursuance of the orders placed by s
,
a buyer at Atlanta in USA, namely, Atlanta Rugs Inc., dispatched consignments of rugs and durries between
23.8.1994 and 4.7.1995. All the consignments were insured
with the appellant insurer and were "covered under: All
risks (1 CC), war and SRCC from consignor's warehouse c
to consignee's warehouse", and were entrusted to the
forwarding agent at Mumbai, namely, Overseas Container
Line Inc. (OCL) which was a Non-Vessel Owning Common Carrier (NVOCC) registered in USA; that the Bill of
,
Lading issued by 'OCL' in regard to each consignment 0
· showed the consignee as "unto order" and the buyer as
the party to be notified; that the complainants had a foreign Out Bill Purchase Account with their Bankers and,
therefore, endorsed the Bill of Lading in favour of the said
Bankers and the latter in turn endorsed the negotiable
copy of the Bill of Lading in favour of its foreign correE
spondent Bank (the collecting Bank). On 25.1.1996 the
collecting Bank informed the Bankers of the complainants that the drawee did not make the payment nor did it
obtain release of the documents of title; that thereafter
the complainants made efforts to contact the buyer and
F
the forwarding agent 'OCL', but they could not be located.
Ultimately, the complainants telephonically informed the
Insurer on 2.2.1996 about the non-realization of the Bills
and claimed value of the consignments. As the Insurer
did not settle the claims, the complainants filed petitions G
before the Commission on 25.2.1997, a'lleging that the
\ conduct of the Insurer in not settling the claim amounted
to deficiency in service. They claimed compensation from
the Insurer in regard to the value of the consignments
and other losses.
H
1200
SUPREME COURT REPORTS
[2008] 9 S.C.R.
. .._
A
The stand of Insurer was that the claims were not J
maintainable as none of the consignments were lost or
damaged in transit; that it had got the matter investigated
through the surveyors and the investigation report disclosed that the shipping agent OCL and the buyer were
B headed by a common President, namely, 'KC' who had
admitted to the surveyors that the consignments had all
been received by the buyer. There was thus no loss of
the consignments and, consequently, no deficiency in
service.
C
The Commission held that the complainants had
valid marine insurance cargo policies which gave insurance cover against all risks of loss; that even if the buyer
had managed to receive the consignments by fraudulent
means without legitimate endorsement or transfer of the
D original documents of title which were in custody of the
collecting Bank, that amounted to loss of goods; that as
the consignee was shown as "unto order" in the bills of
lading, the complainants had lien and control over the
consignments and, consequently, property in goods did
E not pass to the buyer and in such circumstances delivery to buyer would still amount to loss of goods, and insurer was liable to indemnify the complainants and failure to do so was a deficiency in service. The Commission, accordingly, allowed both the complaints in part. AgF grieved, the Insurer filed the appeals.
The questions for consideration before the Court
were: "(i) What is the scope of the policies of insurance
issued by the Insurer to the insured; (ii) Whether the complainants had proved that there has been loss of consign-
•
G ments falling within the risks covered by the Marine insurance policies; and (iii) Whether the Commission was
•
justified in holding the insurer liable ?"
Allowing the appeals, the Court
H
HELD: 1.1 Section 4 of Marine Insurance Act, 1963
NEW INDIAASSURANCE CO. LTD. v MIS HIRA
1201
LAL RAMESH CHAND
makes it clear that a contract of 'marine insurance', as A
defined in s.3, may, by its express terms or by usage of
trade, be extended so as to protect the assured against
losses on inland waters or on any land risk which may be
incidental to any sea voyage. The provisions of the Act
are, therefore, subject to the terms of the policy of insurB
ance. [para 13.2] [1218-C & D]
1.2 In the instant case, in view of the insurance cover
extending 'warehouse to warehouse'; the consignments
are covered by insurance not only during the sea journey, but beyond, as stated in the policy. Therefore, it may C
not be correct to say that the insurance cover is available
only in regard to maritime perils. Having regard to section 4 of the Act and the terms of the policy undertaking
insurance cover against wider risks, the policy of insurance would cover the loss not only while goods are naviD
gating the sea but also any loss or damage during transit
from the time it leaves the consignor's warehouse till it
reaches the consignee's warehouse. The cover against
risks will however cease, as stipulated in clause (8) of Institute Cargo Clause (A), on the expiry of 60 days after E
discharge of the consignment from the vessel at the final
port of discharge, if the goods do not reach the
consignee's warehouse or place of storage for any reason within the said 60 days. [para 17] [1222-B,C & D]
Hulsbury's Law of England, 4th Edition, Vol.25 paras
F
216 and 218 - referred to.
1.3 There is a difference between marine insurance
policies which extend cover only against marine losses
or maritime perils and marine 'extra' insurance policies G
which extend cover against all risks from consignor's
warehouse to consignee's warehouse which include not
only the sea journey but also the land journey at either
end. [para 19] [1223-A & B]
Bihar Supply Syndicate v. Asiatic Navigation 1993 (2)
H
1202
SUPREME COURT REPORTS
(2008] 9 S.C.R.
A SCC 639; and Concord of India Insurance Co. vs. Ravi
Thokassaria ILR 1974 Kerala 649 - held inapplicable.
Peacock Plywood (P) Ltd. v Oriental Insurance Co. Ltd.
2006 (12) sec 673 - referred to.
B
2.1 Failure of the buyer to make payment and take
delivery is not a 'loss' of consignment which is covered
by the Insurance Policy. The complainant should make
out a case of actual 'loss' of the consignment covered by
the contract of insurance or non-delivery of the consignC ment that is refusal to meet a demand for delivery. [para
33] [1234-A & B]
2.2 A claimant insured in a marine insurance claim
has to plead and prove: (i) his position - whether he is the
assured or an assigneti; (ii) his insurable interest; {tii) the
D type or kind of the insurance policy and its relevant terms;
(iv) the duration of the cover; (v) the nature of risk/loss;
and (vi) the risk/loss is covered by the policy. In the absence of necessary averments and evidence to establish
a marine insurance claim, a claim against the insurer is
E liable to be rejected. [para 37] [1236-D,E & F]
2.3 It is no doubt true that the complainants had
booked the consignments showing the consignee as
'unto order' thereby indicating that the goods should be
delivered only to the holderlendorsee of the Bills of LadF
ing; that the original documents were not cleared/retired
by the buyer and were ultimately returned by the foreign
correspondent Bank to Punjab National Bank (Bankers
of complainants); and that the consignments were insured against all risks of loss and damage. But, the basic
G and fundamental averment and proof required in a case
of this nature is that the consignments had been lost or
damaged in transit or that when the holder of the documents applied for delivery, the goods were not delivered
on account of the same being irretrievably lost, that is,
H having been pilfered, stolen, lost or mis-delivered. But
NEW INDIAASSURANCE CO. LTD. v MIS HIRA
1203
LAL RAMESH CHAND
there is no such averment or evidence that the consignA
ments were lost or damaged. Nor is there any averment
that the holder of the documents of title applied for delivery of the consignments, and was denied or refused delivery on account of non- availability of the consignments
due to pilferage, loss or mis-delivery. When there is no B
allegation or proof of foreign corresponden~ Bank having applied for delivery and refusal of delivery, the complainants cannot maintain a claim against the insurer.
[para 32) [1233-F,G & H; 1234-A]
2.4 Admittedly, Overseas Containers was only a nonC
vessel owning common carrier (NVOCC) and not the actual shipping line. Necessarily, therefore, Overseas Containers had to entrust the consignment to an actual shipping line for transportation and the Master Bill of Lading
given by the shipping line would show the Overseas ConD
tainers as the consignee entitled to receive the delivery.
The very fact that the Master Bill of Lading is not given to
the consignors/complainants and the fact that the complainants did not demand for the same shows that they
did not intend to apply for delivery directly from the shipE
ping line that carried the consignments but only intended
that delivery should be from Overseas Containers which
had issued the Bill of lading. [para 34) [1234-E,F & G]
2.5 As the contract for carriage was between complainants and Overseas Containers and the Bills of· LadF
ing issued by the Overseas Container showed that the
consignments were deliverable to the order of the complainants, necessarily Overseas Containers were expected to take delivery of the consignment at Atlanta from
the shipping line which actually transported the consignG
ments and then deliver it to the holder of the documents
of title who seeks delivery. Overseas Containers were,
thus, entitled to take delivery from the shipping line which
transported the consignment and there was nothing collusive, clandestine or irregular about delivery of consignH
1204
SUPREME COURT REPORTS
[2008] 9 S.C.R.
A ments being taken by Overseas Containers from the shipping line, as it had entrusted the consignment to the shipping line for transportation. [para 34] [1234-G,H; 1235-A & BJ
2.6 The insurance cover was in regard to all risks
from consignor's warehouse to consignee's warehouse.
8 There is no dispute as to what is the consignor's warehouse as the complainant is clearly shown as the consignor. As regards the consignee's warehouse, if the consignee is treated as Atlanta Rugs Inc., on delivery to Atlanta Rugs Inc., the insurer is discharged of any liability
C for risks. If the consignee is shown as 'unto order', it does
not obviously refer to complainants' warehouse as admittedly the complainants were not having any warehouse in Atlanta (USA), nor were they the holders of the
documents. The 'consignee' at the relevant time could
D only be the collecting Bank in whose favour the documents had been endorsed. But it is not the case of the
complainant that the collecting Bank as the holder of the
documents of title sought delivery of the consignments
from the custom's warehouse or steam ship line or from
E Overseas Containers. [para 36] [1235-D,E,F & G]
2.7 Where there is no effort on the part of the 'consignee' to take delivery from the shipping line/customs
warehouse, the duration of insurance cover cannot be
infinite or indefinite. In such circumstances the risk cover
F would terminate on the expiry of 60 days after completion of discharge overside of the insured shipment from
the overseas vessel at the final port of discharge at Atlanta having regard to clause 8 of Institute Cargo clause.
[para 36] [1235-G & H; 1236-A & BJ
G
2.8 It is not the case of the complainant that within
that time (of 60 days), delivery was sought by the holder •
of the documents and that such delivery was refused. It
is also not the case of the complainants that the consignH ments were unauthorizedly delivered to Atlanta Rugs or
-· .
'
NEW INDIA ASSURANCE CO. LTD. v M/S HIRA
1205
LAL RAMESH CHAND
that such delivery was within 60 days of landing of the A
consignments at Atlanta. In the absence of any averment
or evidence as to when the consignments were discharged from the ship at Atlanta and an averment that
within 60 days of landing of the consignments at Atlanta
the holder sought delivery and delivery was refused, the B
question of the Insurer being made liable for non-delivery does not arise. After 60 days of the landing of a consignment even if the consignment is destroyed, lost or
mis-delivered, it is no concern of the Insurer. [para 36]
[1236-B,C & D]
C
2.9 Besides, the consignments were being continuously sent from August, 1994 to July, 1995 by the complainants without making any effort to ascertain the fate of the
earlier consignments. They merely gave the oral intimation
to the insurer that too on 2.2.1996. No claim was lodged D
with the insurer in writing. The allegation that orally a claim
for 'loss of goods' was made on 2.2.1996 cannot be true
as, according to complainants themselves, till that date they
had no knowledge that the consignments had been either
lost or wrongfully delivered. In fact the complainants have E
not produced even a single document making a claim on
the insurer on the ground that the goods had been lost or
not delivered. [para 38] [1236-G & H; 1237-A & B]
3.1 The complainants have failed to plead and make
out a case of loss in respect of each and every consignF
ment, either during transit or within 60 days of the consignments being discharged from the ship at Atlanta Port. They
merely proceed on the assumption that the Insurer is liable
when the documents are not retired by the buyer, which, to
say the least, is untenable. As there is no averment or proof G
that the consignor or the foreign correspondent Bank holding the documents of title or any person authorized by the
said Bank applied for delivery within 60 days of the goods
being discharged, and as there is no averment or proof that
the consignments were lost or wrongly delivered within the H
1206
SUPREME COURT REPORTS
[2008] 9 S.C.R.
A said period of 60 days, the liability and responsibility of the
insurer under the policy of insurance came to an end with
reference to each of those consignments. Consequently,
the claim of the complainants against the insurer is liable to
be rejected. [para 40] [1239-E,F,G & H]
B
3.2 The National Consumer Disputes Redressal Commission has referred to the delay of nine months on the
part of the Insurer in repudiating the claim after receiving
the surveyor's Report and the failure to furnish a copy of
the reports to the complainants, as deficiency in service.
C But, the fact that the complainants did not lodge any claim
in writing has been overlooked. At all events, they did not
produce any document to show the lodging of claim. It
was on a mere oral intimation on 2.2.1996, the investigation by surveyor was set in motion. Further, the contents
D of the report had already been notified to the complainants by the surveyor in the telexes dated 4.3.1996 and
1.4.1996. Therefore, the finding of deficiency in service
was not warranted. [para 41] [1240-A,B & C]
3.3 National Consumer Disputes Redressal CommisE sion did not address itself to the relevant issues. It disposed
of the matter without examining the terms of the policy and
obligations undertaken by the insurer. In fact, having regard to the nature of issues involved, this was more appropriately a matter for civil court. The order of the National
F Consumer Disputes Redressal Commission is set aside
and the claim petitions before the Commission stand dismissed. [para 31,37 and 43] [1233-C; 1236-F & G 1240-E]
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
G 4306-4307 of 2003
From the final Judgment and order dated 31.1.2003 of
the National Consumer Disputes Redressal Commission in
1
Original Pentition Nos. 45 & 49 of 1997
H
Raju Ramachandran, M.K. Dua, Kishofe Rawat, Debasis
NEW INDIAASSURANCE CO. LTD. v MIS HIRA
1207
LAL RAMESH CHAND [R. V. RAVEENGRAN, J. ]
Misra for the Appellant.
A
Nagendra Rai, Harish Chander and Viivek Krishna Tankha,
M.T. George, N. Ganpathy, Subramonium Prasad, lmtiaz
Ahmed, Naghma lmtaiz, Farukh Rashid, V.N. Raghupathy, J.R.
Midha, Pranab Kumar Mullick, S.K. Pattnaik and Anshul Raj
(for M/s. Equity Lex Associates) for the Respondents.
B
The Judgment of the Court was delivered by
R. V. RAVEENDRAN, J. These appeals under section 23 of
the Consumer Protection Act, 1986, are filed against the common
order dated 31.1.2003 passed by the National Consumer
DisC
putes Redressal Commission, New Delhi ('Commission' for short)
allowing in part OP No. 45 of 1997 and OP No. 49 of 1997. OP
No.45 of 1997 was filed by M/s Hira Lal Ramesh Chand and its
partner Rajender Kumar Jain (respondents 1 and 2 in CA No.4306/
2003). OP No.49of1997 was filed by Mis Ratan Chand Deep Chand
D
and its two partners (respondents 1 to 3 in CA No.4307/2003).
2. As the ranks of parties differ in the two appeals and as
some parties were given up before the Commission, for convenience, we will also refer to the parties as follows : New India
E
Assurance Co. Ltd., as 'Appellant' or 'Insurer'; Mis Hira Lal
Ramesh Chand and its partners (Respondents 1 & 2 in the first
matter) and M/s Ratan Chand Deep Chand and its partners (Respondents 1to3 in the second matter) as the 'complainants'; M/
s Niranjan Shipping Agency Pvt. Ltd., (third Respondent in the
first matter and fourth Respondent in the second matter) as
F
· Niranjan Shipping'; Punjab National Bank (fourth Respondent in
the first matter and fifth Responaent in the second matter), and
Bank o.f Baroda (sixth Respondent in the second matter) by their
names; Atlanta Rugs Inc. as the· Buyer'; and Overseas Container
Lines Inc. (the Non-Vessel Owning Common Carrier acting as G
shipping Agent) as 'NVOCC' or 'Overseas Container'.
3. The case of the complainants, in brief, is as follows :
Complainants are manufacturers of Rugs and Durries, carrying
on business at Mirzapur, UP. In pursuance of orders placed by H
1208
SUPREME COURT REPORTS
[2008] 9 S.C.R.
A Atlanta Rugs Inc., Atlanta (for short the 'buyer'), M/s. Hira Lal
Ramesh Chand dispatched 17 consignments of rugs and durries
of the value of US$ 4,06,096 between 15.3.1995 and 29.6.1995;
and M/s. Ratan Chand Deep Chand dispatched 38 consignments
of the value of US$ 8,87,973 between 23.8.1994 and 4.7.1995.
B The consignments were entrusted to M/s Overseas Container Line
Inc., a non- vessel owning shipping Agent represented by its Agent
Niranjant Shipping Agency (P) Ltd., for transhipment from Mumbai
to Atlanda (USA). The Bill of Lading issued by Overseas Container in regard to each of the consignment showed the consignee
c as "Unto order'' and party to be notified as "Atlanta Rugs Inc.". All
the consignments were insured by the consignors, with the New
India Assurance Co. Ltd. The original documents relating to the
consignments were forwarded by Niranjan Shipping to the Bankers of complainant- Punjab National Bank. The complainants obD tained credit facilities from Punjab National Bank by discounting
the Bills and endorsed the Bill of Lading in favour of the said Bank.
The said Bank, in turn, forwarded the original documents of title to
its agent Sun Trust Bank (earlier known as Trust Company Bank)
Atlanta, for collection, by endorsing the documents in their favour.
The buyer (Atlanta Rugs Inc.) did not make payment and obtain
E release of the documents of title. They therefore made efforts to
contact the buyer and the shipping Agent- Overseas Container.
They were also not able to locate them. Nor were they able to find
out the whereabouts of the consignments. Therefore they telephonically lodged an oral claim with the insurer on 2.2.1996 seeking
F payment of the value of the consignments. The insurer directed
them to get in touch with their Surveyor-cum-Claim Settlement
Agent atAtlanda -- M/s. Toplis and Hoarding Inc. They accordingly
requested the said Surveyor to inquire and investigate the matter
and issue necessary certificates. The surveyor submitted their reG ports to the Insurer, but failed to furnish copies thereof to the complainants. Their claim was not settled by the Insurer for more than a
year in spite of reminders. Such failure amounted to deficiency in
1
service and consequently the insurer became liable to pay the value
of the consignments and the other amounts claimed, as compenH sation.
<
..
NEW INDIA ASSURANCE CO. LTD. v M/S HIRA
1209
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]
4. The complainants sought a direction to the New India
A
Assurance Co. Ltd. (appellant) to pay the following amounts as
compensation :
Particulars
Claim in OA 45/
Claim in OA 49/
1997
1997
·--
Amount (in US ~l
Amount (in US~}
B
a) Insurance amount (unrealized
value of shipments)
406096
887973
b) Increase in cost of goods (10%)
40609
88797
c) Compensation for mental agony
100000
100000
d) Business loss for one year
58091
100000
e) Expenses for pursuing the claim
10000
10000
c
TOTAL
614796
1186770
f)
Interest at 24% p.a. with quarterly
108253
233072
rests on the unrealized value of
shipments from the date of claim
to date of complaint
D
g) Pendente lite and future interest at 24% p.a. from the date of complaint to
date of payment.
5. The Appellant - Insurer, the opposite party - Respondent in the two complaints, resisted the said claims. It contended
that the claim was not maintainable as none of the consignE
ments were lost or damaged in transit. According to them, the
investigation report of the surveyor disclosed that one Kumar
Chaudhary was the common President of Mis. Overseas Container Lines Inc. (the shipping Agent) and M/s. Atlanta Rugs Inc.
(the buyer) and that the said Kumar Chaudhary had admitted to
F
the surveyors that the consignments had all been received by
the buyer. If the buyer, having taken delivery of all the consignments, failed to pay the value of the consignments, such nonpayment of price by the buyer or non-realisation of the price by
the seller, will not be a maritime peril giving rise to a claim G
against the Insurer under a Marine Insurance Policy. When the
insured consignments had been delivered to the buyer, it cannot be said that there is a loss of the consignments. The claims
were repudiated on 4.3.1997. The reasons for repudiation were
furnished to the complainants by the Insurer as also by the surH
1210
SUPREME COURT REPORTS
[2008] 9 S.C.R.
A veyors. There was thus no deficiency in service. It was also
pointed out that when the goods are entrusted to a sea going
vessel, a master bill of lading is issued by the vessel/shipping
line showing the particulars of consignments and the names of
the consignees and the said Master Bill of Lading was not part of
B the documents of title. The failure on the part of the complainants
to take any action against the buyer and the manner in which the
transactions were conducted, gave room for doubt that there has
been a collusion between the complainants and the buyer to foist
false claims against the insurer. The Insurer also prayed that the
c detailed reasons for repudiation given in its letter dated 4.3.1997
be read as part of its written statement. The relevant portions of
the letter of repudiation are extracted below :
"The buyer had taken delivery of all the consignments but has not
paid your Company for the same. Non-payment of the price by the
D
buyer is not an insured peril under the captioned policies and
hence your claim falls beyond the scope and ambit of the policies
issued by our company. xxxx
Instead of taking up the matter with your buyer for the payment
of the price of the said consignments, you thought it fit to take
E
no action whatsoever against your buyer. xxxxxx
D)
You have failed and neglected to act with reasonable
dispatch as required by Clause 18 of the Institute cargo
clauses (A) to which the above polices were made subject
to. Clause 18 reads as under :
F
'It is a condition of this Insurance that the Assured
shall act with reasonable dispatch in all
circumstances within their control'.
G
The consignments were shipped from Bombay to Atlanta between
the months of August 1994 to July 1995. However, your company
has informed our company and our aforesaid Surveyors of the
alleged loss allegedly suffered by you only in the first' week of
February, 1996. As you have failed to act with reasonable
dispatch as required by the said policies, our company is not
liable to pay any amount under the captioned policies.
H
E)
As you are aware, it is a conditions of the policy that a
NEW INDIAASSURANCE CO. LTD. v MIS HIRA
1211
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]
certificate of loss/damage should be obtained from our A
Surveyors who are the company's agents at the Port of
discharge. It is an admitted position that no such
certificates has been obtained by your company. In view
of breach of the aforesaid condition our company is not
liable to pay any amount to your company under the
captioned policies.
B
G)
We have to state that under the aforesaid policies, we
had agreed to insure that consignment subject to Institute
Cargo Clause (A). Clause I of the said Institute Cargo
Clause (A) clearly stipulates as under:
c
'This insurance covers all risks of loss or damage
to the subject matter .... .'
As is pointed out by the surveyors, that the consignment under
the captioned policies have been received by the buyers. In
view thereof, there is no loss and/or damage to the subject 0
matter i.e. the said consignments entitling your company to
seek an indemnity from our company.
H)
I)
Records in our possession show that you kept on sending
consignments to your buyer without caring to ascertain if
the buyer was financially solvent and would make payment
in respect of the consignments shipped to you. In view
E
thereof, we have to state that the alleged loss is also
attributable to the aforesaid willful misconduct on the part
of your company under provisions of Institute Cargo
Clause (A) - clause 4.1 and section 55 of the Marine
Insurance Act, 193.
F
You will appreciate that our company has agreed to
indemnify you for the loss and/or damage suffered to the
consignment& during its journey from your company's
warehouse to the buyers warehouse due to the insured perils.
Financial insolvency and/or refusal of the buyer to pay for the G
price of the said consignments is not one of the perils insured
under the captioned policies and hence your company cannot
seek any indemnity under the captioned policies.
6. Initially, there were four common respondents in both
the complaints. The Divisional Office, Regional Office and Head
H
1212
SUPREME COURT REPORTS
[2008] 9 S.C.R.
A
Office of New India ~ssurance company Ltd. were respondents
1 to 3. Overseas Container Lines Inc., was the fourth Respondent. By order dated 10.11.2000, the Commission directed the
complainants to implead Mis Atlanta Rugs Inc. (Buyer), M/s
Niranjan Shipping Agency Pvt. Ltd. (Forwarding Agent of the
B
Complainants, as also the agent of Overseas Container Lines
Inc.), Punjab National Bank and Bank of Baroda (Bankers of
complainant), Sun Trust Bank, earlier known as Trust Company
Bank (the foreign correspondent Bank of Punjab National Bank)
as they were proper and necessary parties. Accordidngly, M/s
C Atlanta Rugs Inc., Niranjan Shipping Agency (P) Ltd., Punjab
National Bank and Sun Trust Bank, were impleaded as respondents 5 to 8 in OP no.45 of 1997. However, subsequently respondents 4, 5, and 8 were given up by the complainants as
service could not be effected and their names were deleted
0
from the array of parties and consequently, when the matter was
heard, the respondents in OP No.45/1997 were the insurer, M/
s Niranjan Shipping Agency (P) Ltd., and the Pubjab National
Bank. Similarly, the said four persons as also Bank of Baroda
were impleaded as respondents 5 to 9 in OP No.49 of 1997.
But later, the three respondents who could not be served were
E given up and deleted and at the time of hearing the respondents were the insurer, M/s Niranjan Shipping Agency (P) Ltd.,
Punjab National Bank and Bank of Baroda.
7. The parties did not lead any oral evidence nor mark any
F
document as exhibits, but produced some documents. The complainants and the insurer filed affidavits supporting the complaint and the written statement. On the basis of the pleadings,
affidavits, copies of documents produced and arguments, the
Commission decided the complaints by its common order dated
G 31.1.2003. The Commission held that the complainants held
valid marine insurance cargo policies which gave insurance cover
against all risks of loss. The bills of lading showed the consignee
as "Unto order" and they were endorsed in favour of Sun Trust
Bank. The original documents were not retired by the buyer and
were returned by Sun Trust Bank to Punjab National Bank. As
H
NEW INDIAASSURANCE CO. LTD. v MIS HIRA
1213
LAL RAMESH CHAND [R V RAVEENDRAN, J ]
delivery could be taken only after obtaining original bills of lading A
which were with the Sun Trust Bank and as the original documents had been returned, and as there was no evidence on record
about the fate of the shipments, the shipments should be covered under the term "loss" and insurer will have to indemnify the
complainants for such loss. Even if Atlanta Rugs Inc. had manB
aged to receive the consignments by fraudulent means without
legitimate endorsement or transfer of the original documents of
title which were in the custody of the Sun Trust Bank, that amounted
to loss of goods. As the consignee was shown as "Unto order" in
the bills of lading, the complainants had lien and control over the C
consignments and consequently, property in the goods did not
pass to the buyer and in such circumstances, delivery to Atlanta
Rugs Inc. would still amount to loss of goods. As the goods were
lost, the insurer was liable to indemnify the complainants for such
loss and failure to do so was a deficiency in service. It therefore D
allowed both the complaints in part.
8. In OP No.45/1997, the Commission directed the insurer to
indemnify the complainant - M/s. Hira Lal Ramesh Chand by paying
US$ 367311 (equivalent to Rs.1,32,78,293 at an exchange rate of
Rs.36.15 per US Dollar) with interest at 12% p.a. from the date of E
complaint till the date of payment, and pay the said amount to Punjab
National Bank so that the said Bank could adjust the said amount
against the amount due from the complainants. In OP No.49/1997
the Commission directed the insurer to indemnify the complainant -
M/s. Ratan Chand Deep Chand to an extent of Rs.30,00,000/-with
F
interest at 12% p.a. from the date of complaint to the date of payment, and pay the said amount equally to the complainants' Bankers, Punjab National Bank and Bank of Baroda, Mirzapur.
9. Feeling aggrieved the insurer has filed these two appeals. On the contentions raised, the following questions arise G
for our consideration in these appeals :
'·
(i)
What is the scope of the policies of insurance issued
by the Insurer to the insured?
(ii)
Whether the complainants had proved that there has H
1214
SUPREME COURT REPORTS
[2008] 9 S.C.R.
A
been loss of consignments falling within the risks
covered by the Marine insurance policies ?
(iii) Whether the Commission was justified in holding the
insurer liable ?
B
Re : Question (i)
10. M/s. Hira Lal Ratan Chand had taken two marine policies (cargo) which are in the nature of open covers, from the
Insurer. They are open cover Policy Nos.2142 11000 8745 dated
29.4.1994 (which was in force from 29.4.1994 to 28.4.1995)
C and No.2142 11000 9032 dated 19.5.1995 (which was in force
from 19.5.1995 to 18.5.1996) each with an assured limit of Rs.50
lakhs. The assured limit of Open Cover No.2142 11000 8745
was extended by another Rs.50 lacs with effect from 22.2.1995
and by another Rs.7 lacs with effect from 27.4.1995 the total
D assured amount being Rs.1.07 crore. The Open Cover constituted the contract under which the insurer agreed to issue separate Marine Insurance Certificates as and when the insured
made declarations of each shipment. The terms of the open
E
F
G
H
cover are extracted below (from Policy No.2142 11000 8745):
Subject matter Insured :
On consignment said to contain of Indian handmade knotted
woolen carpets/Durries packed in alkathene paper and double
new hessiar cloths dispatched vide Road/Rail/Approved Vessel
from warehouse Mirzapur to anywhere in world, from time to
time. Insured will declare each and every consignment within
15 days or dne month (as per insured) & dispatch with its value
packing marks etc. Total sum insured under this policy is Rs.SO
lakhs.
Risk covered: All risks 0.1525%; war and SRCC Rs.0.0275%. On
receipt of declarations, certificate of insurance will be issued for each
consignment. This policy will remain in force for one year i.e. 29 .4.1994
to 28.4.1995 unless previously exhausted by way of declaration. If no
declaration is received from the insured the minimum premium will be
retained by the company.
Special conditions & warranties
NEW INDIAASSURANCE CO. LTD. v M/S HIRA
1215
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]
Covered against : All risks (ICC), War & SRCC from consignor's A
warehouse to consignee's warehouse : Inland transit clause
(A) Institute cargo clause (A), Institute War Clause (Cargo),
Institute strike clause (Cargo) Lorry warranty as attached hereto.
The attached clauses and endorsements form part of this policy.
Survey and claims settlement :
In the event of loss or damage which may result in a claim
under this insurance immediate notice be given to carrier at
destination.
B
Certificate of loss/damage be obtained from our suNeyor, who c
are the company's agents at port of discharge in order that they
may examine the goods and issue a suNey report. Where the
company has no agent, the notice must be given to Lloyd's agents.
Payable as per declaration.
Similar were the terms of Open Cover No.2142 11000 D
9032 as also the Open Cover Policies issued to M/s. Ratan
Chand Deep Chand.
11. As and when the complainants entrusted the consignments to OCL, they made declarations and the Insurer issued E
Marine Insurance Certificates in respect of each consignment.
Each of these Marine Insurance Certificates specified the particulars of the consignment, and the value thereof and confirmed
that the consignment was "covered against: All risks (ICC), war
& SRCC from consignor's warehouse to consignee's wareF
house." The certificates required that in the event of loss or
damage which may involve a claim under the certificate, notice
of loss or damage should be given to its surveyors Mis. Toplis
& Harding Inc., Atlanta (USA).
12. Clause (1) of the Institute Cargo clause (A) forming G
part of the Insurance Policy stipulated that the insurance cov-
' ered all risks of loss of or damage to the subject matter insured
· (except as provided in clauses 4, 5, and 7 therein). Clause (1)
of the Inland Transit clause (A) stipulated that the insurance covered all risks or loss or damage to the subject matter insured
H
1216
SUPREME COURT REPORTS
[2008] 9 S.C.R.
A
(except as provided in clauses 2, 3 and 4 therein). Clause (1)
of the Institute War Clause (Cargo) stipulated that the insurance
covered loss or damage to subject matter insured caused by
war, civil war etc. (except as provided in clauses 3 and 4 therein).
Clause (1) of the Institute Strikes clause (cargo) stipulated that
B the insurance covered loss or damage to the subject matter
insured caused by strikes, lock outs etc. (except as provided in
clauses 3 and 4 therein). The duration of insurance cover is
specified in clause (8) of the Institute Cargo Clause (A), and
clause (5) of the Inland Transit Clause (A).
C
They are extracted below :
D
E
F
G
H
Clause (8) of Institute Cargo Clause (A)
Duration.
8.1 This insurance attaches from the time the goods leave the
warehouse or place of storage at the place named herein for
'
the commencement of the transit, continues during the ordinary
course of transit and terminates either
8.1.1 on delivery to the Consignee's or other final warehouse
or place of storage at the destination named herein,
8.1.2 on delivery to any other warehouse of place of storage,
whether prior to or at the destination named herein, which the
Assured elect to use either
8.1.2.1 for storage other than in the ordinary course of transit
or
8.1.2.2 for allocation or distribution,
or
8.1.3 on the expiry of 60 days after completion of discharge
overside of the goods hereby insured from the oversea vessel
at the final port of discharge,
whichever shall first occur.
Clause (5) of Inland Transit (Rail or Road) Clause (A)
Duration
t
. ,.
NEW INDIA ASSURANCE CO. LTD. v MIS HIRA
1217
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. j
"5.
This insurance attaches from the time the goods leave
the warehouse and/or the store at the place named in the
policy for the commencement of transit and continues
during the ordinary course of transit including customary
transhipment, if any,
(i)
until delivery to the final warehouse at the destination
named in the policy or
(ii)
in respect of transits by Rail only or Rail and Road until
expiry of 7 days after arrival of the railway wagon at the
final destination railway station or
(iii)
in respect of transits by Road only until expiry of 7 days
after arrival of the vehicle at the destination town named
in the policy whichever shall first occur."
Similar duration clauses are found Institute War Clause
(Cargo) and Institute Strike Clause (Cargo) .
13. The Marine Insurance Act, 1963 governs the law relating to marine insurance. Section 3 defines marine insurance
as under:
"3. Marine insurance defined.--A contract of marine insurance
A
B
c
D
is an agreement whereby the insurer undertakes to indemnify
E
the assured, in the manner and to the extent thereby agreed,
against marine losses, that is to say, the losses incidental to
marine adventure."
13.1) The term 'marine adventure' is defined in section
2(d). The term 'maritime peril' referred to in the definition of
F
'marine adventure' is defined in section 2(e).