Per Shri Bhaskar B. Yogi, Hon’ble President.
The complainant has filed this complaint u/s 12 of the Consumer Protection Act, 1986 against the Insurance Company for not allowing its insurance claim.
The brief facts of the complaint is as under:-
1. The complainant is a manufacturer and exporter of non basmati rice having its manufacturing unit at Gondia. The office of the opposite party has issued the insurance policy at Gondia. The complainant received order from his Overseas buyer Roop International Abidjan for supply of Indian IR-64 Parboiled Non Basmati Rice, 5200 bags packet in 50 kg weighing 260 MTS with specification as agreed between them. As per mutually agreed terms with his Overseas buyer the complainant/Exporter agree to get export consignment inspected from Geo-Chem Laboratories Private Limited, who is an international independent inspection and testing company an ISO 9001:2015 certified company having its office at Mumbai, for Quality Assurance certifying weight quality and Packing for satisfaction that consignment ready for export comply with specification as per contract as detailed above. That the opposite party has undertaken to indemnify the insured for the actual loss suffered by him as a result of the even insured against. The principle that a contract of insurance is a contract of indemnity leads the insured to be interested in the preservation of the thing insured and desire for the happening of the event insured against become remote. Availing of insurance policies for indemnifying the loss which may be suffered by the insured it is for protection and not for making any profit.
2. As per mutually agreed terms with his Overseas buyer in the first week of May 2017, made communication with the opposite party is showing her willingness to Hire Services for insurance cover for her export consignment which is likely to be exported in pursuance of the aforesaid contract. The opposite party communicated to complainant about Marine Cargo Single Voyage (Sea) Policy insurance cover provided by them for sum assured Rs. 72 lacs at a premium of Rs. 8281/-. The complainant has accordingly paid the premium on 17th May, 2017 and policy bearing No. 181200/21/2018/5 dated 17th May, 2017 was generated and therefore complainant is consumer of the insurance company under the Consumer Protection Act.
3. As per mutually agreed terms with the Overseas buyer, the complainant/exporter applied with the United Arab Shipping Agency Company (I) Private Limited for supply of 10 containers for exporting the consignment as per contract. The said shipping agency company on 26th May, 2017 issued Global Bill of Lading for combined transport shipment Bill bearing No.INNAG006027. Geo-The Chem Laboratories inspection and testing company in its certificate bearing no. 466494 A dated 15th June, 2017 and Reference No. NGP/JB/17-18/00304 certified the quality of export consignment to be satisfactory. The exported consignment reach the destination on 15th July, 2017 and unstuffing operation was carried out between 15 th July, 2017 to 19th July, 2017 the consignments had reached in damage condition as per information provided by Overseas buyer of the complainant and therefore complainant had an Email communication on 17th July 2017 at 3.16 PM with the Opposite Party No. 2 communicating him that the container reached Abidjan and the rice in a damage condition. The complainant requested him to arrange the survey at Abidjan immediately and do the remaining formalities. The Overseas Laura Mullen on behalf of W. K. Webster & Company Limited made survey of consignment and submitted its report to the Opposite Parties on 7th September, 2017 through e-mail as per report submitted by the said Agency. It is revealed that cause of loss is a result of high humidity causing condensation in the containers during voyage. The assessment of damages furnished by the email is as under:-
Assessment of damage:
The 392 mouldy bags cannot be sold as they are on local market Our survey confirms in order to permit a quick sale of the damaged cargo parties agreed to 70% depreciation
Say Corresponding damage of:
392 bags X 250 Kg X 70% = Total Damage 13720 kg of rice
Valued at Rs.2740 (prevailing market price of rice) Rs.3,75,928/-
4. The Opposite Party No. 1 by its letter dated 18th October 2017 communicated to the complainant about repudiation of claim based on Survey Report and finding that “there was condensation despite the presence of dry bags also according to bill of lading and the moisture content in bags are 14%, the final survey M/s. CEM, Abden arranged by W. K. Webster & Company Limited assessed the loss at Abidjan at 18th July, 2017 final Survey have noted the cause of loss occur due to high humidity and condensation in the container during the sea voyage. we are sorry to inform, the competent authority has disowned the liability without prejudice for the cause of loss being un-insured Perils under the policy”. As per complainant these reasons are not sufficient for repudiation of claim and therefore there is a Deficiency in Service of the opposite party.
The complainant has calculated the total damage to the tune of Rs. 4,01,728/ -including interest @15 % on total damage. The complainant has made the sale transaction with the Overseas buyer at the rate and is accordingly filed the copy of the sale invoice in support of its claim. The complainant has filed the present complaint being the claim of the complainant was repudiated on whimsical ground, no proper reason assigned for repudiation of claim, the policy cover containing risk details contains description of commodity at Sr. No. 1 as Indian IR- 64 Parboiled Rice containing broken 5% max. length 6 mm min. Moisture 14% maximum and D.D. 2%. Therefore the reason assigned for repudiation of claim on the ground that the cause of loss being un-insured perils under the policy is not sustainable and therefore there is a deficiency in the services of the opposite party.
5. After service of notice upon the opposite party, they have filed their written version along with the documents and denied the liability on the ground that repudiation of claim is based on survey report and finding that there was condensation despite the presence of dry bags also according to bill of lading the moisture content in bags was 14% the final survey M/s. CEM, Abden arranged by W. K. Webster & Company Limited assessed the loss at Abidjan at 18th July, 2017 final Survey have noted the cause of loss occur due to high humidity and condensation in the container during the sea voyage and they have denied the claim of the complainant. The opposite party have specifically provided in their conversion that the present complaint is not maintainable in law and is liable to be dismissed with cost, the complaint cannot be filed in the trade name as filed in the present case and survyer has noted the cause of loss occur due to high humidity and condensation in the container during the sea voyage as a cause of loss which falls under clause 4 within the policy exclusions, therefore, based on the survey report and their finding the loss does not covered under the policy and same was already conveyed to the insured vide letter dated 18th October 2017, there is no substance in the complaint and is liable to be dismissed with cost.
6. Both parties have filed their respective pleadings and supporting affidavits along with the supporting documents and judgements after hearing the Ld. Advocates on behalf of the Complainant and the Opposite party, we are passing the present judgement on the basis of the above documents and judgement referred by the parties with reasoans and finding as under:-.
REASOANS AND FINDINGS:
7. Whether complaint is a consumer? -Yes
The complaint is filed in the name of M/s. Swastik Rice Mills through its proprietor Usha Devi Wife of Mahesh Kumar Agarwal from the name it can be gathered that it is not a company as required under the Companies Act 1956 or Companies Act, 2013 but a proprietorship firm carrying on business by it's proprietor Usha Devi for her livelihood.
The Opposite Party has not taken strong defence reagrding the same we are not mentioning the details of the judgments filed by complainaint which are based upon Hon’ble National Commission judgment in case of Harsolia Motors Vs. National Insurance Company Limited {I (2005) CPJ 27 (NC)} holding “that the policy is taken for reimbrusment or for indmnity for the loss which may be suffred due to various perils. There is no question of trading or carrying on commerce in insurance policies by the insured. May be that insurance coveagre is taken for commercial activity carried out by the insured”.
Therefore, the complainant is a consumer as defined under the Consumer Protection Act 1986.
8. Whether the Repudiation of Insurance claim by the Opposite Party is proper? - NO
The opposite party has not denied the insurance policy and the validity of the insurance period, it covers the complainant’s exported consignment. The consignment of the complainant has been tested by the Appropratite testing authority as required for export by Geo-Chem Laboratories Private Limited, who is an International independent inspection and testing company who has issued the certificate of weight, quality and packing details vide its report dated 15th June, 2017. It has been certified by the testing agency about the quality which mentions as –
“lot wise samples Drawn during inspection were tested in an in-house laboratory and average results obtained are as under :-
“Cargo is sound merchantable condition and free from any off smell Qualities having neither bad smell nor bad odour, goods are free from dead and alive weevils at the time of stuffing in two containers Parameters and result :- moisture 13. 60%, damage or disclosure 1%, broken 4.50 percent, length 6.20 percent, after inspection sampling weighing the goods / bags were loaded into containers the goods tuffed into the following address under our supervision.”
Further, it was mentioned in their “Inspection: Prior to stuffing the empty containers were inspected by us for cleanliness, our observations are as under:-
Empty containers are in sound, neat and clean conditions, no holes, no rust, no defective frames, empty containers inside platforms, roof, walls in clean and dry condition without any typical smell marked and oil stains, inside container no sharp edges and damages in triplex walls.
our certificate is based on inspection carried out at the time and place of stuffing of container prior shipment. No responsibility can be described to assumed by us for any deviation, qulitative or quantitative arising out of inherent vice of the product and/ or effects loss occurring in transit including sweating of cargo.”
9. As the container reaches at Abidjan the rice in damage condition therefore the complainant has immediately contacted the opposite party for appointing survey as soon as possible and accordingly, the opposite party has appointed one W. K. Webster company for assessing the loss and accordingly Laura Mullen has replied by their email dated 7th September 2017 mentioning that upon arrival of our local surveyor a batch of bags of rice is stored in the warehouse shown to him which is said to have an stuffed from 10 containers, a total of 392 mouldy bags of rice stowed on Pallets and was segregated in the warehouse. Traces of mouldiness were clearly visible on the rice bags. our surveyor randomly picked rougly 75 bags and found caked as well as mouldy rice inside. Rice was found to be not to touch in some bags with bad odour.
Cause of loss “has been noted in the final report that the loss is as a result of high humidity causing condensation in the containers during the Voyage. Our surveyor confirms despite the presence of dry lag the moisture content according to the bill of lading was 14%.”
Recoverability: “Based on the above information we believe your liablity has not been established in this instance and you have a ground for repudiating this claim. Seeing as this consignment was shipped on FCL/FCL terms under the shippers, load, stow and count basis it was your assured responsibility to ensure the consignment it was loaded, stowed and sealed in seaworthy condition to withstand all the rigours of transit.”
Based upon the report of of W. K. Webster and CEM, the opposite party citing the reason that humidity and condensation in the containers during the sea voyage, they are unable to process the claim and cause of loss being an un-insured perils under the policy regretful of not considering complainant’s claim vide it's letter dated 18th October 2017.
10. Both the parties admitted that the insurance policy was issued for the Institute Cargo Clauses(A) (ICC-A) which is related to risk covered clauses and exclusions it seems that the opposite party has repudiated the claim of the complainant on the basis of exclusion clauses
4.4 and 5.5.1 which reads as under
“loss damage or expense caused by inherent vice, nature of subject matter insured”, and
“unseaworthiness of vessel of craft unfitness of vessel or craft for the safe carriage of the subject matter insured, where the assured are privy to such unseaworthiness or unfitness, at the time of subject matter ensure that is loaded there in”.
From the arguments of the opposite party it is clear that they repudiated the claim on the basis of exclusion clause 4.4 - inherent vice for that purpose the Advocate of the complainant has relied upon the judgement of the Hon’ble National Commission wherein, In the case of National Insurance Company Limited Versus M/s. SNJ Trade Links Private Limited FA / 720 / 2018 decided on 29th June 2018 discussed with the meaning of the word “inherent vice” which is quoted for ready reference as under:-
"16 Coming to the merits of the Insurance claim, it is seen that the repudiation has been done under exclusion clause 4.4 of the policy. This clause relates to inherent vice and nature of substance. In the present matter, the wheat flour was exported and that was the subject matter. Whatever are the qualities of wheat flour are known to everybody including the officials and agent of the Insurance Company. If insurance was allowed by the Insurance Company, then the question of inherent vice or nature of substance cannot be raised subsequently because the Insurance Company fully knew the nature of the substance insured. The surveyor has clearly stated that damage occurred due to condensation of moisture inside the containers and as such this is not excluded under the policy because this is ICC(A) policy which covers all the risks. Thus, in my view exclusion clause 4.4 of the policy is not attracted in the present case.”
(emphasis supplied)
Similarly in the present complaint in hand, the original policy cover note produced by the Opposite party in its Risk details coulmn speciically noted the discription of the insured commodity - “Indian IR-64 …………….Mositure 14%...........”
Thus it is clear that the Opposite Party has issued the Insurance policy after noting the details of moisture contained in it and when damaged is claim they are avioding the cliam by stated that due to moisture condensation takes place and loss is not insured peril.
11. In our view, the aforesaid contention has no substance because of the specific terms and conditions mentioned in the insurance policy issued to the assured. It covers risk from warehouse to warehouse and is a comprehensive insurance policy with addition of Institute Cargo Clause-A as quoted above. The Institute Cargo Clause-A, inter alia, provides a specific underwriting that the insurance covers all risks of loss or damage to the subject matter insured except as provided in Clauses 4, 5, 6, and 7. These terms nowhere provide that it would not cover the loss or damage because of condensation due to humidity. Thus, the policy being extensive and comprehensive to cover all risks of loss or damage to the subject matter insured, it cannot be held that it would cover only sea perils.
12. For the reasons stated hereinabove, the repudiation of the claim, in our opinion was not justified and the complainant is entitled to the amount assessed at the prevailing rate of Rs. 2740 for 392 bags of 50 kgs after depriciation @70% as calculated in para 14 by the complainant being fairly mentioned the facts and allowed deprication on Affidavit. The opposite party had not denied the rate.
The complaint is disposed of with the following directions:
(i) The opposite party shall pay the principal amount of Rs.3,75,928/- to the complainant, along with simple interest @ 9% per annum with effect from six months from the date of lodgment of the claim till the date of payment.
(ii) In the facts and circumstances of the case there shall be no order as to cost.
(iii) The payment in terms of this order shall be made within three months from today
(iv) One set of the complaint compilation be retained and rest of the sets be returned to the complainant.
(v) Copies of the order be furnished to the parties free of cost
