MOHAN M.SHANTANAGOUDAR,J. - (1.) This appeal arises out of judgement of the National Consumer Disputes Redressal Commission ('NCDRC') dated 12.11.2013, dismissing the consumer complaint filed by the Appellant herein.
(2.) The timeline of events giving rise to the present appeal is as follows: The Appellant is a partnership firm in the business of importexport of various commodities, including steel coils. The Respondent insurance company issued a Marine Cargo Cover Note (hereinafter 'Cover Note') dated 14.5.2010 for a sum of 12,63,712.50 US Dollars, covering voyage from any port in China to Mumbai Port. It was stated in the aforesaid Cover Note that a policy document would be issued once the Appellant furnished the requisite particulars of the vessel in which the cargo was being carried. Accordingly, the Appellant forwarded the particulars of 'KhalijiaIII', the vessel in which the cargo was to be carried (hereinafter 'subject vessel'), to the Respondent, vide letter dated 26.5.2010. It was stated in this letter that the subject vessel was built in March 1985, and its "class" was specified as 'I.R.S.'. The Appellant's case is that it had communicated the aforementioned details regarding the subject vessel to the Respondent, as well as the Respondent's insurance broker, as per the documents presented by the Overseas Seller. 2.1 Thereafter, Hangzhou Cogeneration (Hong Kong) Co. Ltd. (hereinafter 'Overseas Seller'), through its agent M/s Kirtanlal and Sons, shipped 80 prime hot rolled steel coils weighing 2000 Metric Tonnes on board the subject vessel from Caofeidian Port, China to the Appellant, for discharge at Mumbai Port. The subject vessel was carrying on board consignments of prime hot rolled steel coils of seven other importers who had also imported them from the same Overseas Seller. Subsequently, the Respondent's brokers issued a single voyage policy dated 2.7.2010 (hereinafter 'Marine Insurance Policy') to the Appellant. It is undisputed that the Marine Insurance Policy covered all risks as per the Institute Cargo Clauses (A), Institute War Clause, and Institute Strike Clause. 2.2 The subject vessel reached Mumbai port on 6.7.2010 and was allotted a berth on 14.7.2010 for discharge of the cargo. However, on account of failure of the vessel's crane during discharge, further discharge could not take place, and the subject vessel was removed from the allotted berth by an order of the port authorities. Subsequently, on 19.7.2010, the Appellant came to know that the subject vessel had run aground on the midnight of 18.7.2010. Thus, by letter dated 20.7.2010, the Appellant informed the Respondent that there was a possibility of them claiming under the Marine Insurance Policy. 2.3 Thereafter, the shipowners engaged the services of M/S. Smit Singapore Private Ltd. ('Salvors') for the purpose of recovering the cargo. The shipowners also appointed M/s Richard Hogg Lindley as the General Average Adjustor ('GAA'). The GAA sent an email dated 27.7.2010 to both the Appellant and the Respondent, stating that the situation had given rise to a "General Average". The concept of General Average, in maritime law, refers to a loss mitigation measure whereby all those who are interested in a marine adventure make pro rata contributions towards the losses sustained or expenditure incurred in time of peril for the common good of all parties. Kyraki Nouassia, The Principle of Indemnity in Marine Insurance Contracts: A Comparative Approach (Springer, 2007) 161. For instance, if a ship runs aground, as in the present case, the shipowners and the cargo interests are mutually liable for reimbursing the losses arising from such an event. If there is a contract of marine insurance in respect of the voyage, the insurer will be liable for reimbursing the amount on behalf of the assured cargo owner. Accordingly, the Appellant requested its insurer i.e. the Respondent, to issue a General Average Guarantee in 'Form B', as required by the GAA. The Respondent consequently issued a guarantee dated 3.8.2010, agreeing to pay the GAA on behalf of the Appellant, for contribution towards the General Average, as well as towards other special charges. These documents were submitted by the Appellant to the GAA. 2.4 After the receipt of the General Average Guarantee, the GAA requested the Appellant to pay a separate salvage security of 25 per cent of the 'Cost, Insurance, and Freight' ('C.I.F.') value of their cargo, which amounted to 256,880 US dollars. Hence, by letter dated 5.8.2010, the Appellant requested the Respondent to issue the salvage security. The Appellant contends that the Respondent did not issue the separate salvage security as required, resulting in the withholding of the release of the Appellant's consignment at Mumbai port, and exposing it to heavy demurrage and likelihood of further damages. In addition to not issuing the salvage security, the Respondent, by letter dated 20.8.2010, informed the Appellant that they were withdrawing the General Average Guarantee, 'Form B' issued by them earlier in respect of the Appellant's consignment on the subject vessel, on account of noncompliance with the 'Institute Classification Clause' ('ICC') in the Marine Insurance Policy. 2.5 Unfortunately for the Appellant, on 7.8.2010 there was a collision between the subject vessel and a navy vessel in the waters near Mumbai Port. On 13.8.2010, the Salvors claimed a maritime lien on the cargo. Further, the Salvors initiated arbitration proceedings against the Appellant and the shipowners. During the course of the aforesaid arbitration proceedings, the Salvors obtained interim orders from the Hon'ble High Court of Mumbai, restraining the Appellant from removing their consignment from Mumbai Port. Ultimately, vide order dated 24.8.2010, the High Court directed that the Appellant would be allowed to take its consignment on furnishing security in the form of a bank guarantee in the sum of Rs. 14 crores. The Appellant furnished the security as directed and took delivery of the consignment from the Mumbai Port Trust on 3.9.2010. On 2.12.2011, the Arbitrator passed an award against the Appellant and other cargo owners, finding them liable for reimbursing the costs incurred by the Salvors. 2.6 The Appellant, by letter dated 2.2.2012, requested the Respondent to settle the losses incurred by it, and also forwarded a copy of the aforementioned arbitration award dated 2.12.2011. A legal notice was also sent on 21.6.2012, followed by a reminder on 4.7.2012, but these went unanswered. Hence, the Appellant filed a consumer complaint before the NCDRC against the Respondent, asking for compensation on account of the losses incurred, for deficiency in service, and for the legal and other incidental expenses. 2.7 The Respondent did not file a written statement before the NCDRC, and its request for consideration of written arguments was rejected. However, counsel for the Respondent was allowed to make oral submissions on the questions of law involved in the case. The NCDRC found that the Appellant had failed to prove that the subject vessel was in compliance with the ICC stated in the Marine Insurance Policy. It noted a communication dated 9.8.2010, in which the Respondent's claim settling agent in London had informed the Respondent that the subject vessel was classed with Lloyd's Register of Shipping until 10.10.2007, after which Lloyd's had withdrawn the aforesaid classification, and that the subject vessel appeared to be outside the scope of the ICC. The NCDRC further found that the subject vessel had been more than 25 years old on the date of loss i.e. when it ran aground on 18.7.2010, and the Appellant had not produced any document showing that the subject vessel was classed as 'I.R.S.' Hence, the complaint was dismissed.
(3.) Heard learned counsel for both parties. 3.1 Learned counsel for the Appellant submitted that the 'I.R.S.' classification was granted to the subject vessel by the 'International Register of Shipping', which is an independent classification society. Further, that after the issuance of the Cover Note, the Appellant had provided all particulars regarding the subject vessel, and expressly asked the Respondent whether the subject vessel was acceptable. It was argued that had the Respondent indicated at the time of the issuance of the Marine Insurance Policy that the classification was not acceptable; the Appellant could have paid an extra premium to purchase the policy. This is as per the terms of Clause 6 of the Cover Note, which reads thus: "6 For coverage of shipments by sea: the vessel shall conform to the current Institute Classification Clause; otherwise the cover shall be subject to additional steamer extra premium such as coverage, under tonnage, non classification and non approval extra at underwriter's discretion." Learned counsel also referred to the Institute Marine Cargo Clause (A) ('Cargo Clause') within the Marine Insurance Policy, which provides for waiver of any breach of implied warranties of seaworthiness of the subject vessel. He argued that under the terms of the Cargo Clause, the Respondent would have the right to not indemnify the Appellant only if the Appellant or its servants were privy to such unseaworthiness. It was argued that the Appellant was merely a cargoimporter, and not the vessel owner, and had communicated all the particulars of the vessel as provided to it by the Overseas Seller. Therefore, the Appellant could not be said to have been privy to the unseaworthiness, if any, of the subject vessel. Lastly, it was contended that indemnification by the Respondent could not be dependent on the amount of loss caused to the insured or on the nature of accident that caused the loss. It was argued that that once the Respondent provided the General Average Guarantee, it was estopped from claiming that the Respondent had breached the ICC. 3.2 On the other hand, learned counsel for the Respondent argued that there was a clear breach of the ICC, inasmuch as the Appellant had failed to disclose that the classification granted to the subject vessel by Lloyd's Register of Shipping had been withdrawn on 10.10.2007. So far as the I.R.S. classification is concerned, it was submitted that 'I.R.S.' referred to Indian Register of Shipping, and not International Register of Shipping, as claimed by the Appellant. Furthermore, it was contended that although the Appellant claimed to possess a certificate proving the 'I.R.S.' classification of the subject vessel, it had neither submitted the said certificate to the Respondent, nor produced the same before the NCDRC. In response to the Appellant's argument that the Respondent was estopped from claiming breach of the ICC by its conduct in providing the General Average Guarantee, it was submitted that at the time when such Guarantee was sought for by the Appellant, the priority of all parties involved was to ensure mitigation of losses by saving as much of the cargo as possible. It was only after the collision of the subject vessel on 07.08.2010 that the Respondent began investigating into the seaworthiness of the vessel, and found out that it was not a classed vessel at the time of issuance of the Marine Insurance Policy. Therefore, it was submitted that the Respondent would not be estopped from claiming breach of the ICC merely because it had, in good faith, provided the General Average Guarantee so as to mitigate the Appellant's losses. ;