RAMA ASSOCIATES LIMITED Vs. ORIENTAL INSURANCE COMPANY LIMITED

JUDGEMENT

(1.) COMPLAINT was filed alleging that the complainant is engaged in the business of import and export of various items. It got an order of export of 30,000 M.Ts. (plus or minus 10%) of rice from M/s. Legend Commodities Inc. Geneva, Switzerland. Contract was on F.O.B. basis. Payment was to be released after loading of the cargo by the complainant. To facilitate payment, the foreign buyer had opened Letter of Credit through their banker. Complainant received nomination of ship M.V. Platinum Kris from the foreign buyer for carrying the cargo. Quantity of 2891 M. Tons was loaded in the ship by the complainant for which Bill of Lading No. PK/KKD/95/1 dated 5.11.1995 was issued. On loading of further quantity of 2500 M. Tons Bill of Lading No. PK/KKD/95/2 dated 9.11.1995 was issued. Complainant presented the documents for payment of this total quantity of 5391 M. Tons through its banker. In the meantime, quantity of 10163.30 M. Tons was loaded for which Bill of Lading PK/KKD/95/3 dated 15.12.1995 was issued. It was alleged that the Letter of Credit furnished for purpose of payment expired on 30.11.1995. Complainant made repeated requests to the said foreign buyer to extend the validity of the Letter of Credit but the buyer did not extend it nor did it make the payment. Apprehending some mischief on the part of buyer, the complainant filed suit with an application praying to restrain the ship M.V. Platinum Kris from leaving the port of Kakinada with cargo till the payment was received before the Andhra Pradesh High Court and the High Court passed an order of injunction on 18.12.1995 restraining the ship not to leave the port without permission. On 3.1.1996, the complainant approached the Oriental Insurance Company -opposite party for issuing a suitable All Risk policy. The Insurance Company issued cover Note No. 617033 dated 4.1.1996 for the period from 4.1.1996 to 3.3.1996 covering All Risks" to the complainant. On 12.2.1996, an intimation was given to the Port Officer, Kakinada that the ship M.V. Platinum Kris had sailed out on 11.2.1996 without obtaining port clearance. On receiving this intimation, the complainant lodged the claim under the policy vide letter dated 13.2.1996 on the opposite party who repudiated it by the letter dated 14.2.1996. Complainant who was unable to locate the ship, appointed M/s. Haridas H.O. and Partners based in Singapore and this firm established contact with the ship owners who after great persuasion offered to deliver the cargo at any port other than an Indian port provided the complainant pays a sum of US $ 8,60,000 equivalent to Rs. 2,96,70,000. Complainant had no choice but to accept the offer to minimize the loss. Cargo was unloaded at Bunder Imam Khomaini port. Cargo was thereafter sold to M/s. Nord Sawa Gen Trading Est, Dubai, UAE at a price much lower than the value of the cargo. Insurance policy was issued by the opposite party only on receipt of notice got issued through an Advocate on 16.5.1997 by the complainant. Opposite party appointed M/s. J.B. Boda Surveyors (P) Ltd., Mumbai for the purpose of assessment of loss. Despite repeated requests, the opposite party failed to pay Rs. 4,22,94,263 being the amount of loss suffered on account of retrieval expenses, etc. to the complainant. Attributing deficiency in service, it was prayed that the opposite party -Insurance Company be directed to pay said amount of Rs. 4,22,94,263 with interest @ 18% p.a. from 11.2.1996 and Rs. 2.00 lakhs towards compensation for harassment as also cost.

(2.) DETAILS of aforesaid amount of Rs. 4,22,94,263 have been set out in the letter (copy at page 44) sent by the complainant to the Insurance Company thus:

(3.) OPPOSITE party contested the complaint by filing written version. It was alleged that by the letter dated 3.1.1996 the complainant asked the opposite party -Insurance Company to grant a suitable cover as per the description given in Annexure -I. Insurance Company issued a cover note on 4.1.1996 followed by a policy. In the letter dated 3.1.1996, the complainant did not disclose about the pending litigation or the injunction orders passed by the Andhra Pradesh High Court. It was pleaded that the alleged loss did not fall within the scope and ambit of the insurance cover sought by the complainant and granted by the opposite party. In the letter dated 24.10.1997 and other letters the complainant admitted that no loss had occurred on storage of rice whilst lying and/or stored in the vessel M.V. Platinum Kris harboured in Indian waters (Mid -stream) at Kakinada Port. Sailing out of the ship constitutes violation of the restraint order dated 18.12.1995 and 30.12.1995 passed by the Andhra Pradesh High Court in civil suit No. 11 of 1995 filed by the complainant. This violation can not be termed as theft as alleged. It was further alleged that after the vessel escaped, the complainant secretly entered into an agreement dated 6.3.1996 with the ship owner and the buyer and dispose of the cargo without information/ permission of the opposite party and without giving opposite party any opportunity to get the loss surveyed and the complainant, thus, lost all its rights to claim any amount from the opposite party. The opposite party deputed M/s. J.B. Boda Surveyors Ltd. to assess the loss, if any, and in its report dated 7.4.1998 the surveyor opined that the complainant s claim does not come under the purview of the insured peril with exclusions thereof. Insurance contract was void/voidable on ground of concealment of material facts by the complainant. It was denied that there is any deficiency in service on the part of Insurance Company and it was liable to pay the amount claimed.