Full Judgment Text
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PETITIONER:
NEW INDIA ASSURANCE COMPANY LTD.
Vs.
RESPONDENT:
SHRI G.N. SAINANI
DATE OF JUDGMENT: 09/07/1997
BENCH:
K. RAMASWAMY, D. P. WADHWA
ACT:
HEADNOTE:
JUDGMENT:
J U D G M E N T
D.P. Wadhwa. J.
Leave granted.
This appeal is directed against the order of the
National Consumer Disoutes redressal Commission dismissing
the appeal of the appellant and confirming the order of the
Maharashtra State Commission by which order the State
commission had allowed the Complaint of the respondent filed
under sections 17/16 of the Consumer protection Act, 1986
(for short ’the Act’) . In fact there were two complaints
before the State Commission: in one complaint the claim of
the complainant against the appellant was settled for
Rs.5.54,841,23 and the second for Rs. 9,99,500/-. The
complaint was also awarded costs of Rs.500/- in each of the
two complaints.
In this judgment, the appellant M/s. New India
Assurance Company Ltd. is described as ’insurer’. the
respondent as complainant or assigned and M/s Ajanta Paper
and Several products Ltd. as the consignee or assured’.
The complainant is an assigned of two insurance
policies taken out by M/s Ajanta paper and General products
Ltd., from the appellant being the insurer. One policy was
to insure 244 bales computer wastes computer prints out
valued at Rs. 5,87,000/- and the second was for 170 bales
computer waste computer print out valued at Rs. 4,04,000/-
to cover the risk from the port of onward to Bombay. The
pointed were taken out on February 27,1984. by letter dated
April 12, 1984 the consignee informed the insurer, the
appellant herein that at had been given to understand that
due to strike in Indian ports the vessel s.s IRISH MAPLE’
which was bringing the goods, had been diverted to Muscat
and the Cargo had been discharged there. The consignee,
therefore, requested the insurer to cover the risk
accordingly. The insurer replied by its letter dated May
4,1984 . it informed the consignee that the consignments in
question were required to re-shipped from Muscat to Bombay
within 60 days; time from the date the same were discharged
at Muscat and that falling which there would be no liability
of any claim covered under the two policies in question.
The consignees again wrote to the insurer on May 21,1984
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informing it that the consignment had not been brought to
Bombay by the steamer company and same was still lying at
Muscat and further that consignee was arranging to bring the
cargo from Muscat in order to avoid further delay, and
damage and also to minimise financial losses. The consignee
also stated in this letter that by doing to it was holding
the insurer and therefore, the additional expenditure such
as freight from Muscat to Bombay, warehousing charge at
Muscat and other incidental expenses that might be levied by
the steamer Company shall be on account of the insurer. it,
therefore, requested the insurer to endorse the certificate
for covering the risk for forced transshipment from Muscat
to Bombay. By letter dated May 24, 1984 the insurer repeated
what was written in its letter of May 4, 1984. It had
informed the consignee that it was consignee’s
responsibility to arrange for the re-shipment of the
consignment to Bombay within the specified time-limit and
that insurer would not be responsible for any loss or damage
resulting from non-cooperation of the statement agent of the
consignee in arranging re-shipment of Cargo to Bombay. The
Consignee was specifically told that under no circumstances
insurer was liable for additional expenses incurred by the
consigned by way of extra freight. warehousing etc. in the
process of re-shipment of the cargo from Muscat to Bombay.
Again on June 2, 1992 the consigned wrote to the insurer
informing it that arrangement was being made to bring the
cargo as early as possible. the insurer was, however.
requested to extend the validity of the Certificate. While
itself agreeing to pay necessary charges for the same. Again
on June 8, 1984. the consignee informed the insured that the
shipping company had agreed to bring the cargo and that the
subject consignment was being loaded per M.V. MICHEL ‘C’
which was expected at Bombay port shortly. It may be noted
that earlier the consignment was being brought by s.s.
’IRISH MAPLE’ which had off-loaded the consignment at
muscat. The insurer acknowledged the letter of June 2, 1984
of the consignee but at the same time the request of the
consigned for extension of the time beyond 60 days was not
granted. The consignee was informed that on the expiry of 60
days time limit from the date of discharge at the port of
Muscat. the risk under the policy in question would cease.
The consignee, being the insured. preferred a claim for
Rs. 1,74,708,52 and for Rs. 3,99,007,52 on account of short
handing of the consignment under transshipment and obtained
the short handing certificates issued by the Bombay port
Trust docks of Bombay. The claim was, therefore, on account
of shortage of goods.
It would appear from the letter dated July 25, 1989 of
the insurer to M/s. national consultants (proprietor Mr.
G.N. Sainani, the complainant) that the policies had been
assigned by the consigned in favour of M/S National
Consultants. By this letter the insurer acknowledged letter
dated July 18,1989 of the assignee. The insurer in this
letter informed the assigned as under:
"1) The vessel carrying g the
insured consignments had diverted
its course, and the consignments
wore discharged at Muscat, for
onward carriage to Bombay. Our
Marine insurance cover had ceased
at this stage. Moreover no
extension of insurance cover was
obtained by you.
ii) Insured consignments were
discharged at Bombay ex Michalle
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‘C’ on 30.7.84 where as claims on
ocean carriers were lodged on
16.7.85/17.7.85 respectively, i.e.
about a year after discharging of
the consignments. Further more no
extension of time-limit was
obtained from them to safeguard
our rights of recoveries. Our
recoveries therefore are lost. as
claims against carriers have now
become time barred/suit barred.
Owing to the above
irregularities/lapses, it will be
appreciated that we have no
liabilities to meat towards the
above subject claims."
On July 23,1992 the assignee instituted two complaints
before the Consumer Disputes Redressal Commission.
Maharashtra State, Bombay against the insurer alleging
deficiency while rendering the service. The state Commission
considered the question if by not extending the insurance
cover during re-shipment and repudiating the insurance claim
constituted deficiency in service by the insurer. By the
order dated October 29, 1994 it held against the insurer.
The appeal of the insurer was dismissed by the national
Consumer Disputes Redressal Commission by the order dated
September 30,1996.
All this narration of events was necessary to
understand the issues involved into the appeal. it is
submitted by Mr. Midha, learned counsel for the appellant
that the complaint was barred by limitation; that the
complainant was not a consumer within the meaning of the Act
and under clause 9 of the Policy the appellant was absolved
from claim as the policy had lapsed.
Before insertion of Section 24A in the Act with effect
from June 18,1993 the Act did not prescribe any period of
limitation for filing a complaint. It was, however, not
disputed that early to this the consumer commissions have
been applying the limitation act 1963 to find out if a
complaint was barred by limitation or not. Since at the time
when the complaint in the present case was filed Section 24A
was not there, we, therefore, fall back from the provisions
of the limitation Act. Article 44 of Schedule to the
Limitation Act, in relevant part. is as under:
------------------------------------------------------------
Description of suit Period Time from which period
of Limitation begins to run
------------------------------------------------------------
44. (b) On a policy Three years The date of the occurrence
of insurance when the causing the loss. or where
sum insured is payable the claim on the policy is
after proof of the loss denied either partly or
has been given to or wholly, the date of such
received given to or denial".
received by the insurers.
------------------------------------------------------------
It would appear that the complaint was filed on the
basis that claim on he policy was denied wholly by the
insurer which was by letter dated July 25, 1989 of the
insurer. The cause of action, therefore, arose on the date
of denial or repudiation of the policy by the insurer. The
question does arise as to when the claim on the policy
should have been lodged. it appears the claim on the policy
should be lodged within a reasonable time. As to what is
reasonable time would depend on the facts and circumstances
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of each case. Since on the basis of the record we are
handicapped to know as to when the claim was lodged. we
would, therefore, treat the date, July 25, 1989, when the
time for the purpose of limitation had begun to run . As
noted above this is the date when the insurer repudiated the
claim on the policy. From this angle. therefore, the
complaint filed by the assignee on July 23, 1992 is within
the period of limitation. It is, however, a different matter
when the insurer raises the defence that it had earlier
informed the insured that the policy had ceased to be
operative in terms para 9 of the policy. As far as the
insured is concerned he can file the complaint with in three
years of the date of occurrence causing loss or from the
date when the claim on the policy is denied by the insurer.
Far him time for lodging the complaint would not start
running while the goods are still in transit as he can claim
the policy to be valid till he lodges the complaint.
The relevant portion of the policy would be paras 8,9,
and 11 of the policy which are reproduced as under:
"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 Consignees
or other final warehouse or place
of storage at the destination named
herein
8.1.2 on delivery to any other
warehouse or 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 the
final port of discharge.
which shall first occur.
8.2 If, after discharge overside
from the oversea vessel at the
final port of discharge, but prior
to termination of this insurance.
the goods are to be forwarded to a
destination other than that to
which they are insured hereunder,
this insurance, whilst remaining
subject to termination as provided
for above, shall not extend beyond
the commencement of transit to such
other destination.
8.3 This insurance shall remain in
force (subject to termination as
provided for above and to the
provisions for Clause 9 below)
during delay beyond the control of
the Assured, any deviation. forced
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discharge, reshipment or
transshipment and during any
variation of the adventure arising
from the exercise of a liberty
granted to shipowners or charterers
granted to shipowners or charterers
under the contract of
affreightment.
9. If owing to circumstances beyond
the control of the Assured either
the contract of carriage is
terminated at a port or place other
than the destination named therein
or the transit is otherwise
terminated before delivery of the
goods as provided for in Clause B
above, then this insurance shall
also terminate unless prompt notice
is given to the Under writers and
continuation of cover is requested
when the insurance shall remain in
force, subject to an additional
premium if required by the
Underwriters. either
9.1 until the goods are sold and
delivered at such port or place.
or, unless otherwise specially
agreed, until the expiry of 60 days
after arrival of the goods hereby
insured at such port or place,
whichever shall first occur.
or
9.2 If the goods are forwarded with
in the said period of 60 days (or
any agreed extension thereof) to
the destination named herein or to
any other destination. Until
terminated in accordance with the
provisions of Clause 8 above.
11.1 In order to recover under this
insurance the Assured must have an
insurable interest in the subject-
matter insured at the time of the
loss.
11.2 Subject to 11.1 above, the
Assured shall be entitled to
recover for insured loss occurring
during the period covered by this
insurance, notwithstanding that the
loss occurred before the contract
of insurance was concluded, unless
the Assured were aware of the loss
and the Underwriters were not."
Para 8 above states as to when insurance policy would
start and upto what stage it would terminate. Under sub-para
8.3 which is subject to clause 9 the insurance remains in
force during the delay beyond the control of the assured.
But then under para 9 the insurance terminates if owing to
the circumstances beyond the control; of the assured as
mentioned therein unless prompt notice is given and
continuation of cover is requested. In that case insurance
shall remain in force subject to an additional premium if
required (1) within 60 days of the arrival of the goods at
such port or place other than that named in the policy or
until those goods are sold whichever shall occur first
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unless otherwise specially agreed or (2) if the goods are
forwarded within the period of 60 days to the destination
named in the policy or within any further extension if
agreed to. Since the extension of the period was not agreed
to by the insurer the goods had to be forwarded or
transshipped from Muscat to Bombay within 60 days of the
discharge of the goods there. If these goods are not
transshipped within 60 days to the destination as agreed to
then clause 8 will not remain in operation. In the present
case, there is no evidence that goods were transshipped
within 60 days of their discharge at Muscat. That being so
the policy would lapse in terms of the agreement between the
parties. However. it was submitted by Mr. Mudnaney, learned
counsel for the respondent, that the policy was governed by
the English law and would remain in force till the goods
reached their destination. He referred to para 19 of the
policy which provided that the insurance was subject to
English law and practice. We were, however, not told as to
under which provision of English law the policy would remain
in force in spite of its various clauses and the terms of
agreement between the parties. Reference was drawn to
Section 51 of the Marine Insurance Act. 1963 providing for
an excuse for deviation or delay. This section and its
relevant part is as under:
"5.1 Excuse for deviation or delay.
(1) Deviation or delay in
prosecuting the voyage contemplated
prosecuting the voyage contemplated
by the policy is excused -
(a)---------------------
(b) where caused by circumstances
beyond the control of the master
and his employer: or
(c)---------------
(d)------------------
(e)------------------
(f)-------------------
(g)-------------------
(2) When the cause excusing the
deviation or delay ceases to
operate. the ship must resume her
course. and prosecute her voyage,
with reasonable despatch."
To our mind the section would appear to apply when the
ship in which the goods were originally being carried
resumed her voyage and not to situation where the goods are
discharged and then these are carried to the part of
destination in another ship. We have not been shown any
provision of law or practice or term of the policy under
which the insurer was sound to extend the policy beyond the
period of 60 days as per para 9 of the policy. The appellant
is right therefore, in its contention that it is abolished
from any claim under the policy in view of para 9 above and
it could not, therefore, be said that there was any
deficiency in service to come within the purview of the Act.
Under para 11 in order to prefer a claim under the
policy the insured must have an insurable interest in the
subject-matter insured at the time of loss. Assuming the
policy as valid and para 9 did not apply the insured could
prefer the claim under the policy for the loss. But that is
not the case here. The policy has been assigned in favour of
the complainant. Marine Insurance Act provides for
assignment of policy. Sections 52 and 53 are relevant. these
are reproduced as under:
"52 When and how policy is
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assignable -(1) A Marine policy may
be transferred by assignment unless
it contains terms expressly
prohibiting assignment. It may be
assigned either before or after
loss.
(2) Where a marine policy has been
assigned so as to pass the
beneficial interest in such polity,
the assignee of the policy is
entitled to sue thereon in his own
name as the defendant is entitled
to make any defence arising out of
the contract which he would have
been entitled to make if the suit
had been brought in the name of the
person by or on behalf of whom the
policy was effected.
(3) A marine policy may be assigned
by endorsement thereon or in other
customary manner.
53. Assured who has no interest
cannot assign. where the assured
has parted with or lost his
interest in the subject matter
insured, and has not, before or at
the time of so doing expressly or
impliedly agreed to assign the
policy any subsequent assignment of
the policy is in operative.
Provided that nothing in this
section affects the assignment of a
policy after loss."
No doubt the policy can be assigned either before or
after the loss But then the assignee must have insurable
interest in the subject matter as provided in para 11.1 of
the policy.
The provisions of the Marine Insurance Act and terms of
the policy have to be read in the context of definition of
"consumer" as contained in clause (d) of Section 2 of the
Act. The relevant part of this clause is as under:
"(d) ’consumer means any person
who,-
(i) -------------------------------
------------------
(ii) hires or avails of any
services for a consideration which
has been paid or promised or partly
paid and partly promised, or under
any system of deferred payment and
includes any beneficiary of such
services other than the person who
hires or avails of the service for
consideration paid or promised, or
partly paid and partly promised, or
under any system of deferred
payment, when such services are
availed of with the approval of the
first mentioned person:"
The question that arises is if the assignee in the
facts and circumstances of the present case could be said to
be beneficiary so as to stake his claim under the policy. if
we see the definition of "service" as provided under the Act
it means and includes the provision of facilities in
connection with the insurance as well. The complaint under
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the Act in the present case has to show that the service
hired or availed of or agreed to be hired or availed of by
the complainant suffers from deficiency in any respect. The
complainant, of course, means a consumer and as we have seen
above includes any beneficiary. "Deficiency" has been
defined in clause (g) of section 2 of the Act as Under:
"(g) deficiency" means any fault,
imperfection, shortcoming or
inadequacy in the quality, nature
and manner of performance which is
required to be maintained by or
under any law for the time being in
force or has been undertaken to be
performed by a person in pursuance
of a contract or otherwise in
relation to any service."
The interest of the insured must exist in the case of
marine insurance at the time of loss and the assured must
have some relation to or concern in, the subject of the
insurance. The service which the insurer offers is with
reference to the goods and the insurable interest has to be
in respect of the goods. To put it in other words, insurable
interest in property would be such interest as shall make
the loss of the property to cause pecuniary damage to the
assured. To come under the scope of the word "consumer" as
defined in the Act it should be possible for the assured to
assign his insurable interest in the goods subject matter
of the policy for the assignee as a consumer to enjoy;; the
benefit of the policy with reference to the goods which are
insured. What has been assigned in the present case is the
amount of loss suffered by the assured on account of short
handing of the goods, meaning thereby that right to recover
the loss is assigned to the assignee and not that any
service is to be rendered under the policy by the insurer
with reference to the goods. We are loading at the whole
thing from the point of the consumer under the Act with
reference to certain relevant provisions of the Marine
Insurance Act. Unless the assignee has some insurable
interest in the property subject matter of the insurance the
time the policy terminates he cannot be beneficiary of any
service required to be rendered by the insurer under the
policy. Admittedly it was much after the goods had reached
the port of destination and appropriated that the policy was
transferred by the insured to the complainant to recover the
amount of loss suffered by the assured. Thus, what is
assigned is in effect a mere right to sue for the loss on
account of short handing of the goods. It is difficult to
see as to how it could be said that the respondent, that is
the assignee. is the beneficiary of any service under the
policy. He may, however, have right to recover the loss from
the insurer by filing a suit in a civil court but certainly
to seek remedy under the Act he must be a consumer. If the
policy had been assigned during the course of its validity
and before the goods were appropriated after their arrival
at the port of destination, it could perhaps be said that
the assignee had beneficial interest therein but not
otherwise. By not extending the policy beyond a particular
period. that is 60 days the insurer acted within the terms
of the contract of insurance and on that account it could
not be said that there was deficiency in service to be
provided by the insurer under the policy.
It is not necessary for us to examine in depth various
provisions of the Marine Insurance Act as in the Present
case we are primarily concerned with the provisions of the
consumer protection act. The Policy in question is though
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designated as Marine Insurance policy but we think it is
more a question of interpretation of relevant clauses of the
policy. The Act is not a general law for all remedies. it is
for the protection of the consumer as defined in the Act. To
succeed in the present case the complainant must show that
he is a consumer and that there has been deficiency in
service by the insurer. This he has been unable to show. He,
therefore, could not maintain complaint under the Act.
We do not think that the National commission has taken
the correct view of the matter. Accordingly, the appeal is
allowed. the orders of the National Commission and State
Commission are set aside and complaints of the respondents
dismissed. We, however, direct that the parties bear their
own costs.