Holding

Failure of the buyer to make payment and take delivery does not constitute a loss under the marine insurance policy, and the complainants failed to prove loss or non‑delivery within the policy period, so the insurer is not liable.

Summary

The complainants, exporters of rugs, insured multiple consignments shipped from India to the United States under "warehouse‑to‑warehouse" marine policies covering all risks. The buyer failed to pay and the original documents of title were not presented, leading the exporters to claim loss of the consignments before the National Consumer Disputes Redressal Commission, which awarded them compensation. The insurer contended that no loss occurred because the goods were delivered to the buyer and that the claim was not within the scope of the policy. The Supreme Court examined the terms of the marine insurance policy, the Marine Insurance Act, 1963, and the requirement to prove an actual loss or non‑delivery within the 60‑day post‑discharge period. It found that the complainants did not plead or evidence any loss, pilferage, or refusal of delivery, nor did they show that the insurer’s liability period had been triggered. Consequently, the Court held that the insurer was not liable and set aside the Commission’s order. The appeals were allowed and the complaints were dismissed.

Issues considered

The scope of the "warehouse‑to‑warehouse" marine insurance policies issued by the insurer.
Whether the complainants proved loss of consignments or non‑delivery within the risks covered by the policies.
Whether the National Consumer Disputes Redressal Commission was justified in holding the insurer liable for deficiency in service.

Legislation cited

Consumer Protection Act, 1986s. 23
Marine Insurance Act, 1963s. 3, s. 4, s. 57

Subjects

marine insuranceloss of consignmentnon‑deliverywarehouse‑to‑warehouse coverageConsumer Protection Actdeficiency in serviceinsurance claim repudiationall risks policyMarine Insurance Act

Judgment

[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)

JUNE, 13, 2008
B
(8.N. AGRAWAL, P.P. NAOLEKAR AND R.V.
RAVEENDRAN, JJ]

MARINE INSURANCE Acr, 1963:
c ss.3 and 4 - Marine insurance - Consignments "cov-
ered against: All risks (ICC), war.and SRCC from consignor's
warehouse to consignee's warehouse" - Consignors telephoni-
cally informing insurer about non-realization of bills, and claim-
ing 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 con-
signment 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 - Conse-
quently, claims of complainants against insurer are liable to
be rejected - Order of National Commission set aside - Con-
sumer Protection Act, 1986 - Deficiency in service - Conno-
tation of
G
Marine Insurance - 'Loss' of consignment - Connota-
tion of ,
The complainants-respondent no. 1 in
, both the ap-
H 1198
NEW INDIAASSURANCE CO. LTD. v MIS HIRA 1199
LAL RAMESH CHAND

peals, who were engaged in the business of manufac- A
.
I
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 Com-
mission 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., dis-
patched 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 Com-
mon 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 for-
eign 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 corre- E
spondent Bank (the collecting Bank). On 25.1.1996 the
collecting Bank informed the Bankers of the complain-
ants 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 dis-
closed 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 insur-
ance 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 deliv-
ery to buyer would still amount to loss of goods, and in-
surer was liable to indemnify the complainants and fail-
ure to do so was a deficiency in service. The Commis-
sion, accordingly, allowed both the complaints in part. Ag-
F 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 com-
plainants had proved that there has been loss of consign-
G ments falling within the risks covered by the Marine in-
surance 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 insur- B
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 jour-
ney, 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 sec-
tion 4 of the Act and the terms of the policy undertaking
insurance cover against wider risks, the policy of insur-
ance would cover the loss not only while goods are navi- D
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 In-
stitute 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 rea-
son 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 consign-
C 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 ab-
sence 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 Lad-
F 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 in-
sured 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 docu-
ments 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 consign- A
ments were lost or damaged. Nor is there any averment
that the holder of the documents of title applied for deliv-
ery of the consignments, and was denied or refused de-
livery 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 hav-
ing applied for delivery and refusal of delivery, the com-
plainants cannot maintain a claim against the insurer.
[para 32) [1233-F,G & H; 1234-A]
2.4 Admittedly, Overseas Containers was only a non- C
vessel owning common carrier (NVOCC) and not the ac-
tual shipping line. Necessarily, therefore, Overseas Con-
tainers had to entrust the consignment to an actual ship-
ping line for transportation and the Master Bill of Lading
given by the shipping line would show the Overseas Con- D
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 com-
plainants did not demand for the same shows that they
did not intend to apply for delivery directly from the ship- E
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 com-
plainants and Overseas Containers and the Bills of· Lad- F
ing issued by the Overseas Container showed that the
consignments were deliverable to the order of the com-
plainants, necessarily Overseas Containers were ex-
pected to take delivery of the consignment at Atlanta from
the shipping line which actually transported the consign- G
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 col-
lusive, clandestine or irregular about delivery of consign- H
1204 SUPREME COURT REPORTS [2008] 9 S.C.R.

A ments being taken by Overseas Containers from the ship-
ping line, as it had entrusted the consignment to the ship-
ping 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 ware-
house as the complainant is clearly shown as the con-
signor. As regards the consignee's warehouse, if the con-
signee is treated as Atlanta Rugs Inc., on delivery to At-
lanta 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 ad-
mittedly the complainants were not having any ware-
house 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 docu-
ments 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 'con-
signee' 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 comple-
tion of discharge overside of the insured shipment from
the overseas vessel at the final port of discharge at At-
lanta 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 consign-
H 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 dis-
charged 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-deliv-
ery does not arise. After 60 days of the landing of a con-
signment 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 continu-
-·.
ously sent from August, 1994 to July, 1995 by the complain-
ants 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 consign- F
ment, either during transit or within 60 days of the consign-
ments 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 hold-
ing 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 Com-
mission 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 investiga-
tion by surveyor was set in motion. Further, the contents
D of the report had already been notified to the complain-
ants 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 Commis-
E 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 re-
gard to the nature of issues involved, this was more ap-
propriately 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 dis-
missed. [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
Raju Ramachandran, M.K. Dua, Kishofe Rawat, Debasis
H
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 Dis- C
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 con-
venience, 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 (Re-
spondents 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 Con-
tainer 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 Bank-
ers of complainant- Punjab National Bank. The complainants ob-
D 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 telephoni-
cally 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 re-
G ports to the Insurer, but failed to furnish copies thereof to the com-
plainants. 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 compen-
H 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 - Respon-
dent in the two complaints, resisted the said claims. It contended
that the claim was not maintainable as none of the consign- E
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 Con-
tainer 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 consign-
ments, failed to pay the value of the consignments, such non-
payment 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 can-
not 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 sur- H
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'.
The consignments were shipped from Bombay to Atlanta between
the months of August 1994 to July 1995. However, your company
G 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:

'This insurance covers all risks of loss or damage
c
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) 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
I) 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 Respon-
dent. 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 respon-
dents 5 to 8 in OP no.45 of 1997. However, subsequently re-
spondents 4, 5, and 8 were given up by the complainants as
service could not be effected and their names were deleted
from the array of parties and consequently, when the matter was
0
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 respon-
dents 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 com-
plainants and the insurer filed affidavits supporting the com-
plaint 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 docu-
ments had been returned, and as there was no evidence on record
about the fate of the shipments, the shipments should be cov-
ered under the term "loss" and insurer will have to indemnify the
complainants for such loss. Even if Atlanta Rugs Inc. had man- B
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 pay-
ment, and pay the said amount equally to the complainants' Bank-
ers, Punjab National Bank and Bank of Baroda, Mirzapur.
9. Feeling aggrieved the insurer has filed these two ap-
peals. 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 poli-
cies (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 consti-
tuted the contract under which the insurer agreed to issue sepa-
rate Marine Insurance Certificates as and when the insured
made declarations of each shipment. The terms of the open
cover are extracted below (from Policy No.2142 11000 8745):
E 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
F 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
G 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.

H 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 : B
In the event of loss or damage which may result in a claim
under this insurance immediate notice be given to carrier at
destination.

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 consign-
ments 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 par-
ticulars 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 ware- F
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 cov-
ered 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 :
Clause (8) of Institute Cargo Clause (A)

Duration.

8.1 This insurance attaches from the time the goods leave the
D 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,
E
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
F
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
G at the final port of discharge,
whichever shall first occur.
Clause (5) of Inland Transit (Rail or Road) Clause (A)

Duration
H
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 A
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 B
t 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 c
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) .
D
13. The Marine Insurance Act, 1963 governs the law relat-
ing to marine insurance. Section 3 defines marine insurance
as under:

"3. Marine insurance defined.--A contract of marine insurance
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). The said two defi-
nitions are extracted below :

(d) "marine adventure" includes any adventure where -

(i) any insurable property is exposed to maritime perils; G
(ii) the earnings or acquisition of any freight, passage money,
commission, profit or other pecuniary benefit, or the
security for any advances, loans, or disbursements is
endangered by the exposure or insurable property to
maritime perils; H
•
1218 SUPREME COURT REPORTS [2008] 9 S.C.R.
\

A (iii) any liability to a third party may be incurred by the owner
of, or other persons interested in or responsible for,
insurable property by reason of maritime perils;
(e) "maritime perils" means the perils consequent on, or
incidental to, the navigation of the sea, that is to say,
B perils of the seas, fire, war perils, pirates, rovers, thieves,
captures, seizures, restraints and detainments of princes
and people, jf:!ttisons, barratry and any other perils which
}
-
are either of the like kind or may be designated by the
policy;"

c 13.2) Section 4 makes it clear that a contract of marine
insurance 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 Marine Insurance Act are therefore
'
D subject to the terms of the policy of insurance.
13.3) Section 57 provides that where the subject matter
insured is destroyed, or so damaged as to cease to be a thing
•
of the kind insured, or where the assured is irretrievably de-
prived thereof, there is an actual total loss.
E
14. Marine Insurance is a contract whereby the insurer un-
dertakes to indemnify the assured in the manner and to the ex-
tent thereby agreed, against marine losses, that is to say losses
incident to marine adventure. The instrument in which the con-
tract of marine insurance is generally embodied is called a
F policy. The thing or property insured is called the subject matter
'
of insurance and the assured's interest in that subject matter is
called his insurable interest. That which is insured against is
the loss arising from maritime perils and casualties, and these
are called the perils insured against or the losses covered by
G the policy. When the insurer's liability commences under the
contract, the policy is said to attach; or in other words, the risk
is said to attach or to begin to run from that time. A marine in-
surance cover applies ~o the shipment and if the shipment
reaches the destination, in a safe and sound condition, no claim
H can arise against the insurer. A contract of marine insurance
NEW INDIA ASSURANCE CO. LTD. v M/S HIRA 1219
t'
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]

may, however, by its express terms or by trade usage, be extended A
so as to protect the assured against losses on inland waters or
against any land risk which may be incidental to a sea voyage.
(Vide sections 3 & 4 of Marine Insurance Act, 1963 and Hulsbury's
Law of England, 4th Edition, Vol.25 paras 216 and 218).
15. The insurers offer different types of insurance cover. B
There are three standard types of Institute Cargo Clauses (and
Inland Transit Clauses) denoted as A, B, and C, providing in-
surance cover of varying extents. Institute Cargo Clause (C)
provides the basic minimum cover as enumerated. Institute
Cargo Clause (B) offers a cover against wider range of enu- c
merated risks. The Insurer will also cover certain 'extraneous
risks' like theft, pilferage and/or non-delivery in addition to the
risks covered by Institute Cargo Clause (B) on payment of ex-
tra premium. While Institute Cargo Clause (C) and (B) specify
and enumerate the risks covered, Institute Cargo Clause (A) D
which offers the widest cover, does not specify or enumerate
the risks covered. Institute Cargo Clause (A) provides insur-
ance cover against all risks of loss and damage to the subject
matter insured except those excluded by clauses (4) to (7)
thereof which are extracted below : E
114_ In no case shall this insurance cover

4.1 loss damage or expenses attributable to wilful misconduct
of the Assured

4.2 ordinary leakage, ordinary loss in weight or volume, or F
ordinary wear and tear of the subject matter insured

4.3 loss damage or expense caused by insufficiency or
unsuitability of packing or preparation of the subject-matter
insured (for the purpose of this Clause 4.3 "packing" shall
be deemed to include stowage in a container or lift-van but G
only when such stowage is carried out prior to attachment
of this insurance or by the Assured or their servant)
\
4.4 loss damage of expense caused by inherent vice or nature
of the subject matter insured

4.5 loss damage or expense proximately caused by delay, H
1220 SUPREME COURT REPORTS (2008] 9 S.C.R.

A even though the delay be caused by a insured against
(except expenses payable under Clause 2 above)
4.6 loss damage of expense arising from insolvency or
financial default of the owners, managers, charterers of
operators of the vessel
B 4.7 loss, damage or expense arising from use of any weapon
of war employing atomic or nuclear fission and/or fusion
or other like reaction of radioactive force or matter

5. 5.1 In no case shall this insurance cover loss, damage or
expense arising from unseaworthiness of vessel or craft.
c
Unfitness of vessel craft conveyance container or liftvan for the
safe carriage of the subject-matter insured.

Where the Assured or their servants are privy to such
unseaworthiness or unfitness, at the time the subject-matter
insured is loaded therein,
D
5.2 The Underwriters waive any breach of the implied
warranties of seaworthiness of the ship and fitness of the
ship to carry the subject-matter insured to destination,
unless the Assured or their servants are privy to such
unseaworthiness or fitness.
E
6. In no case shall this insuration cover loss, damage or
expense caused by
r
'
•
6.1 war, civil war, revolution, rebellion, insurrection, or civil
strife arising therefrom, or any hostile act by or against
F a belligerent power
6.2 capture, seizure arrest, restraint or detainment (piracy
excepted), and the consequences thereof or any attempt
thereat
6.3 derelict mines, torpedoes, bombs or other derelict
G weapons of war

7. In no case shall this insurance cover loss, damage or
expense
7.1 caused by strikers, locked-out workmen, or person taking
H part in labour disturbances, riots or civil commotions
NEW INDIA ASSURANCE CO. LTD. v MIS HIRA 1221
I"
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]

7.2 resulting from strikes, lock-outs, labour disturbances, riots A
or civil commotions
7.3 caused by any terrorist or any person acting from a political
motive."
The exclusions under clauses (6) and (7) get deleted when
B
Institute War Clause (Cargo) and Institute Strikes Clause (cargo)
are included. Exclusion under sub-clause (1) of clause (5) virtually
gets deleted by sub-clause (2) of clause (5). As a result, an insur-
ance policy with ICC(A), ITC(A) and SRCC, providing cover against
"all risks" of loss or damage to the insured consignment from
consignor's warehouse to consignee's warehouse, provides a very c
wide coverage. All risks except those mentioned in clause (4) of
Institute Cargo Clause (A) are covered. Theft, pilferage or non-
delivery of the consignment are therefore risks covered by an in-
surance policy with ICC(A) and ITC(A). If the insured goods are
not delivered by the shipping company or shipping Agent, who D
issued the Bill of Lading to the assured, due to theft, pilferage, loss
or non-availability, occurring within the duration of insurance cover,
the insurer will be liable under the policy of insurance.
16. Having regard to clause (8) of Institute Cargo clause
E
(A) relating to duration, the insurance cover attaches from the

- time the goods leave the warehouse of the assured and termi-
nates either on delivery at the consignee's final warehouse or
store at the destination named in the policy (or on delivery to any
other warehouse or place of storage, which the assured elects to
use) or on the expiry of 60 days after completion of discharge of
F
the goods from the vessel at the final 'port of discharge. The in-
surance cover commences when.the consignment leaves the
warehouse or place of storage at the place named in the policy
for commencement of transit and the cover continues during transit
and continues until the consignment reaches the final destination G
specified in the policy as the consignee's warehouse. Where the
consignment is temporarily stored on arrival at an interim desti-
nation (as for example on the dock, or in the shipping lines' ware-
house or in the custom warehouse, pending onward journey to
the consignee's warehouse mentioned as final destination in the H
1222 SUPREME COURT REPORTS [2008] 9 S.C.R.

A policy), the cover would remain only for a period of 60 days from
the discharge of the consignments from the ship irrespective of
whether consignment is put on onward journey to the consignee's
warehouse/storage place, or not.
17. In view of the insurance cover extending 'warehouse
8 to warehouse' the consignments are covered by insurance not
only during the sea journey, but beyond as stated in the policy.
Therefore the contention of the insurer that the insurance cover
is available only in regard to maritime perils that is perils relat-
ing to or incidental to the navigation of the sea may not be cor-
e rect. Having regard to section 4 of the Marine Insurance 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 or navigating the sea but also any loss or dam-
age during transit from the time it leaves the consignor's ware-
D house till it reaches the consignee's warehouse. The cover
against risks will however cease on the expiry of 60 days after
discharge of the consignment from the vessel at the final port of
discharge, ifthe goods do not reach the consignee's warehouse
or place of storage for any reason within the said 60 days.
E 18. The learned counsel for the Appellant relied on two de-
cisions, the first being a decision of this Court in Bihar Supply
Syndicate v. Asiatic Navigation [1993 (2) SCC 639] and the
second being a decision of the Kerala High Court in Concord of
India Insurance Co. vs. Ravi Thokassaria [ILR 1974 Kerala 649].
-
F In Bihar Supply Syndicate, this Court was concerned with a
marine voyage policy with Institute Cargo clause (FPA) covering
"warehouse to warehouse". This Court held that the expression
'warehouse to warehouse' in the policy merely denotes the time
during which the policy would remain in force and cannot be in-
G terpreted as covering each and every risk. This Court held that
under a typical marine voyage policy with Institute Cargo Clauses
(FPA), in the absence of loss due to perils of the sea, the insur-
ance company was not liable, and the onus was on the plaintiff to
prove as a fact that the cargo was lost due to the perils of the
H sea. In Concord of India Insurance Co., the Kerala High Court
NEW INDIA ASSURANCE CO. LTD. v MIS HIRA 1223
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]
r
considering marine risk policy, held that non-delivery may be a A
good ground against the shipping company, but not against the
insurance company as non-delivery was not a maritime peril.
19. There is a difference between marine insurance policies
which extend cover only against marine losses or maritime perils
(as enumerated) and marine 'extra' insurance policies which ex- B
tend 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. The decision in Concord of
India Insurance Co. (supra) of the Kerala High Court and the deci-
sion of this Court in Bihar Supply Syndicate (supra) relate to ma- c
rine insurance policies and not to mixed sea/land risks policies or
to marine 'extra' insurance policies. They are not of assistance
while considering the scope of a policy covering all risks including
ICC(A), ITC(A), IWC(Cargo), ISC (Cargo). In fact in Peacock Ply-
wood (P) Ltd. v. Oriental Insurance Co. Ltd. [2006 (12) SCC 673], D
this Court held that where the policy contained a wider term of risk
coverage, the decision in Bihar Supply Syndicate (supra) will not
apply. In Peacock Plywood, the extended warranty clause in the
insurance policy specifically extended the coverage to include the
risks of theft, pilferage and non-delivery. In view of it, this Court held E
that a claim by way of constructive total loss on account of a ship
being stranded on sea on account of its unseaworthiness was main-
tainable, although the goods themselves were not damaged. In that
case when the ship carrying the goods got stranded at a port due to
its unseaworthiness, the assured took steps to recover the value of F
the cargo with a view to minimize its total loss due to non delivery,
but found that the cost of recovering and getting the cargo back to
the destination port would be more than the value of the goods. There-
fore the assured effected sale of the insured goods at the port where
ship was stranded. Insurer was found liable to pay the insured value
G
of the goods (less the amount actually recovered by such sale).
Re : Questions (ii) and (iii) : .
\
20. The complainants were manufacturers and exporters

• of carpets and durries, having their principal place of business
H
1224 SUPREME COURT REPORTS [2008] 9 S.C.R.

A and manufacturing unit at Mirzapur. They allege that M/s Atlanta
Rugs Inc. based at Atlanta (USA) placed orders on them for
supply of rugs/durries. The orders are not placed on record.
The complainants allege that they sent several shipments of
Rugs/durries to Atlanta (USA) for the buyer. The two complaints
B relate to 17 consignments sent by M/s. Hira Lal Ramesh Chand
and 38 consignments sent by Mis. Ratan Chand Deep Chand,
for which they did not receive payment. The common proce-
dure adopted for supply is set out below.

20.1) The complainants handed over the consignment with
C an invoice made out in the name of Atlanta Rugs Inc., to their
Forwarding Agent at Mumbai, namely, M/s Niranjan Shipping
Agency Pvt. Ltd. The said Niranjan Shipping was also the ship-
ping agent of Overseas Container Lines Inc., which was a Non
Vessel Owning Common Carrier registered in USA. Niranjan
D Shipping as Forwarding Agent of the complainant entrusted the
goods to Overseas Container Line Inc. (also represented by
Niranjan Shipping as Shipping Agent) for transhipment from
Mumbai to Atlanta. Overseas Container Line Inc., represented
by Niranjan Shipping issued a Bill of lading in regard to each
E consignment. The Bill of lading showed the complainant as the
consignor and mentioned "unto order" in the consignee column.
Atlanta Rugs Inc. was shown as the buyer who should be noti-
fied by the collecting Bank. Overseas Container Line Inc. (rep-
resented by Niranjan Shipping) in turn entrusted the consign-
F ment to a shipping line which actually carried the consignment
and the Shipping Line would issue a Master Bill .of Manifest
also known as Master Bill of Lading, showing the details of all
consignments loaded in the container for being carried from
the load port to the foreign destination port.
G 20.2) In regard to each consignment, M/s Niranjan Ship-
ping as Custom House Agent issued a ·Shipping Bill for Export
of Goods under Claim for Duty Drawback' showing the com-
plainant as the Exporter and Atlanta Rugs Inc. as the Consignee,
giving the particulars of the consignment and its value as also
H the name of carrier (vessel). The said Shipping Bill contained
NEW INDIAASSURANCE CO. LTD. v MIS HIRA 1225
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]

an endorsement certified by the Customs Officer giving the A
particulars of the vessel and date of sailing.
20.3) The original documents of title comprising (i) the Bill of
Lading issued by Overseas Container, represented by Niranjan
Shipping as Agent, (ii) the invoice issued by complainants, (iii) the
packing list and (iv) the shipping bill issued by Niranjan Shipping 8
-{ for claiming duty drawback, were sent by Niranjan Shipping to the
Complainant's Bankers - Punjab National Bank. The copy of the
Master Bill of Lading issued by the shipping line/ship was not in-
cluded by Niranjan Shipping as part of the documents of title.
c
20.4) The complainant had a foreign Out Bill Purchase
Account with Punjab National Bank. The Bank used to purchase/
discount the bills, and the Bill of Lading (Negotiable copy) was
endorsed by the complainant in favour of Punjab National Bank
or its order. The Punjab National Bank in turn endorsed the
0
Negotiable copy of Bill of Lading in favour of its foreign corre-
spondent Bank namely Trust Company Bank, Atlanta (subse-
quently known as Sun Trust Bank) and forwarded the documents
of title to the said Trust Company Bank for collection. The for-
eign correspondent Bank would intimate the buyer about the E
receipt of the documents. On the buyer making payment of the
Invoice amount, the foreign Bank would endorse the documents
in favour of the buyer to enable the buyer to take delivery of the
consignment. If the buyer did not make payment and retire docu-
ments within 90 days, the foreign correspondent Bank would
return the documents to the Punjab National Bank. F
20.5) The complainant would make a declaration under
the marine insurance open cover issued by the appellant Insur-
ance Company, in respect of each consignment as and when
entrusted for shipment, for which the appellant would issue a G
Marine Insurance Certificate.
21. OP No.45/1997 filed by M/s. Hira Lal Ramesh Chand
related to 17 consignments of the total value of US$ 406,096.
According to complainant, 12 consignments were covered by
Marine Insurance Certificates issued under marine open policy H
1226 SUPREME
\
COURT REPORTS [2008] 9 S.C.R.

A cover No.2142 11000 8745 and 5 consignments were covered '
by certificates issued under Marine open Policy Cover No.2142
11000 9032. The seventeen invoices were made between
9.3.1995 and 13.6.1995 and corresponding Bills of Lading were
dated between 15.3.1995 to 29.6.1995.
B 22. OP No.49/1997 filed by M/s. Ratan Chand Deep Chand
related to 38 consignments of the total value of US$ 8,87,973.
According to complainants, 33 consignments were covered by
Marine Insurance Certificates issued under Marine Open Cover
Policy No.2142 11000 8749 (validity period 4.5.1994 to
C 3.5.1995), two consignments were covered by certificates is-
sued under Marine Open Policy Cover No.2142 11000 9038
(validity period 23.5.1995 to 22.5.1996) and three consignments
were covered by specific policies No.2142 11000 8868, 2142
11000 8869 and 2142 11000 8870. The invoices in regard to
D these 38 consignments were made between 28. 7 .1994 to
25.6.1995 and corresponding Bills of Lading were dated be-
tween 23.8.1994 to 4. 7.1995. According to the complainants,
the original insured value of the two marine open cover policies
was Rs.20 lakhs and Rs.10 lakhs, but on account of extra en-
E dorsements in respect of the open covers the extent of cover in
respect of the two open covers stood increased to
Rs.3,70,00,000 and Rs.90,00,000, and the three specific poli-
cies were for Rs.4,06,300, Rs.2,91,000 and Rs.2,81,700 in all
Rs.4,69,79,000/-. It is contended that the value of 38 consign-
F ments which was US$ 887973 (equivalent to Indian
Rs.3,21,00,224/-) was well within the insurance cover amount
and the commission erred in taking the total extent of cover as
only Rs.30 lakhs. The complainants (respondents 1 to 3 in CA
4307/2003) have therefore filed cross-objections seeking in-
G crease in the amount awarded for Rs.30 lakhs to
Rs.3,21,00,224/-. Be that as it may.
23. When the consignments were entrusted to Overseas
Container, the complainants were not aware of its address, as
the Bill of Lading did not indicate· any address. On their request,
H Niranjan Shipping provided the address of Overseas Container
NEW INDIA ASSURANCE CO. LTD. v MIS HIRA 1227
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. )

on 8.8.1995. The complainants claim to have written the follow- A
ing letter on 8.8.1995 to the Overseas Container Lines Inc.
(NVOCC):
"We have to transfer our goods to other buyers in USA. We
have to convey the position of our cargoes to them and ask our B
bankers to transfer the documents in their name. For this reason
we need the current position of our all the cargoes.

Please let us know the position of our cargoes carried by you
which had been booked with you for onward sea journey through
forwarding agent Mis Niranjan Shipping Agency Pvt. Ltd., C
Bombay.

Please treat the matter most urgent."

There was no reply in spite of a reminderdated 9.11.1995.
24. The complainants claim to have instructed their Bankers D
(Punjab National Bank) on 15.8.1995 to store the consignments sent
to Atlanta in a Bonded Warehouse duly insured. But apparently nei-
ther Punjab National Bank nor its Foreign Correspondent Bank took
any steps in the matter nor complied with the instructions.
25. On 25.1.1996, the foreign collecting Bank informed E
the Punjab National Bank and complainants by telex message
as follows:
"We have contacted the drawee on several occasions and on
each occasion they promised to make payment but as of date
they have not make good on their promises. We have exhausted F
all efforts to obtain payment and do not wish to continue our
fruitless efforts in pursuing these transaction. Please instruct
us to turn the documents over to your agent for them to pursue
as we do not offer the services you are requesting us to do and
our policy is to return document after we exhausted efforts to G
collect payment and also not to hold documents over 90 days.

If we do not receive your instructions to forward documents to your
agent are returned them yourself by latest February 10, 1999.
All documents will be returned to you and we will close our files
on these transactions. It not our practice to investigate H
1228 SUPREME COURT REPORTS [2008) 9 S.C.R.

'
A how the goods was released nor to obtain any warehouse
merchandise. We can assure you that we did not issue any
form of guarantee to the drawee nor release any of documents
to them. Please remit our charges of US $ 3930, presenting our
collection charges of US $ 85 each, US $ 5 each postage,
cable charges US $ 50 and courier US $ 195."
B
(emphasis supplied)

26. Thereafter, the complainants telephonically informed
the insurer on 2.2.1996 about the non-realization of the Bills
and claimed the value of the consignments. The insurer in-
c structed the complainants to get in touch with their Surveyor
and Claim settlement Agent -- Mis Toplis & Harding Inc., At-
lanta, to investigate into the matter and give their report/certifi-
cate. Accordingly, the complainant sent a letter on 6.2.1996 to
the said Surveyor requesting for an inquiry and investigation in
D regard to the consignments. In that letter the complainant stated: -\

"In the above reference, we have to bring your kind attention
that we failed to trace out the consignment as per details
enclosed. We made the correspondence through our Bankers
in India, that foreign Bank (Trust Company Bank now known as
E Sun Trust Bank) to whom the documents were endorsed and
sent for collection of payments. Now foreign Bank has confirmed
that the original documents are with them. We presumed that
the following consignments are either lost or shipping company
has done some fraud with our consignments with them."

F (Emphasis supplied)

The complainant also sent reminder dated 19.2.1996 to
the Surveyor. The Surveyor sent a Fax reply dated 4.3.1996 to
the complainant stating that the various shipments had been
delivered to and/or picked up by its customer - Atlanta Rugs
G Inc., with probable collusion from Overseas Container Line Inc.,
as Mr. Kumar Chaudhry was the President of both companies.
In its letter dated 20.3.1996 to the Surveyor, the complainant
acknowledged the information that the goods had been deliv-
'
ered by Overseas Container Line Inc., to someone other than
H Sun Trust Bank (who was holding the documents) and stated
NEW INDIAASSURANCE CO. LTD. v M/S HIRA 1229
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]
/
that such act on the part of Overseas Container Line Inc. in re- A
leasing the goods has resulted in loss to them. The complain-
ants therefore sought the following information from the surveyor:
(a) The basis for the surveyor's finding that the Trust
Company Bank was not the consignee.
B
(b) Name and description of the person who actually
took the delivery of the consignments.

(c) The particulars of documents on the basis of which
releases were made by the custom services.
c
(d) Name and description of the authority giving delivery/
release.

The surveyor sent a telex dated 1.4.1996 to the complain-
ant reiterating that its inquiry revealed that the President of Over-
seas Container Lines Inc. and President of M/s Atlanta Rugs D
Inc. was one and the same person namely Kumar Chaudhary
and answered the four queries as follows:
(a) In the steamship line bill of lading (Master Bill of
lading) Overseas Container Lines lnc. was probably E
named/shown as the Consignee.
(b) Mis Atlanta Rugs Inc. was apparently the person who
actually took the delivery with the help of Overseas
Container Lines Inc. which was named as the
Consignee on the steamship line bill of lading. F
(c) As the complainant had not furnished the details of
the customhouse broker who cleared the goods
through US Customs, the answer could be provided
by Kumar Chaudhary.
G
(d) The release was probably by steamship line/custom
warehouse.
The surveyor also suggested that the complainant should
contact'S.K. Verma of Mis Niranjan Shipping as he was the
signatory of the bills of lading issued by Overseas Container H
1230 SUPREME COURT REPORTS [2008] 9 S.C.R.

~

A Lines Inc. and as his role in the matter was not clear. The sur-
veyor also informed the complainant as the Marine Insurance
cover applied to shipments and as the shipments had reached
the destination and were delivered without loss or damage, as
per the insurance contract, the claim was not maintainable.
B 27. The complainants also contacted the Federal Meritime
Commission, Washington, seeking their help to ascertain
whether their consignments were lying at port or had been re-
leased and if lying at the port under whose custody they were
lying or if they were released, when and to whom they had been
c released and under what conditions. The Federal Meritime Com-
mission sent a reply dated 1.3.1996 to the complainant stating
that it had been unable to locate either Overseas Container Lines
Inc. or Atlanta Rugs Inc and advising the complainant to seek
legal advice. The Commission also informed the complainant
D that Overseas Container Lines Inc. as a Non-vessel operating
common carrier (NVOCC) had maintained a bond for US$ 50000
and if any judgment is rendered, against it, the complainant could
present a copy to Inter-Cargo Insurance Co., Illinois who were
the insurer of Overseas Container Lines Inc. for payment.
E 28. Thereafter the complainant wrote a letter dated
6.5.1996 to Overseas Container Line Inc., stating as follows :
"It is really strange that all our communications that is letters
dated 8.8.1995 and 9.11.1995 have been un-replied. We are '
not able to contact you on phone and fax. We have to come
F that all the goods have been released to you. How and
why you have done causing this huge lose to us. We will file a
claim against you in proper forum at your entire risks."
(emphasis supplied)
G 29. The insurer informed .the complainant that they were
awaiting the report from the Surveyor M/s. Toplis & Harding Inc.
and as soon as they receive the report, they will attend to the
claims. The surveyor sent two reports dated 27 .6.1996 in respect
,
of the consignments of the two complaints. The relevant portions
H of the said report which are identical are extracted below :
NEW INDIA ASSURANCE CO. LTD. v M/S HIRA 1231
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]
/

" .... We noted that the original bills of lading on hand at Sun A
Trust Bank were issued by Overseas Container Line Inc. which
were the NVOCC involved in arranging of the various shipments
at origin. The authorized signatory of the Overseas Container
Line Inc. ocean bill of lading was a Mr. S. K. Verma of Niranjan
Shipping Agency Pvt. Ltd. We advised all concerned parties to
contact Mr. Verma for further information but we did not receive B
confirmation if this was carried out."

Master Bills of lading should have been issued by the steamship
line but none were in Sun Trust Bank's possession. We noted
that the Overseas Container Line Inc. bills of lading were
consigned to the order of Trust Company Bank with the notified c
party as Atlanta Rugs Inc. At no time, have we been shown the
master bills of lading issued by the steamship line.

Mr. Chang at Sun Trust Bank stated that he met Mr. Kumar
Chaudhary, President of Atlanta Rugs Inc., on a number of occasions
,' and he stated that to his knowledge Mr. Chaudhary was going D
through financial difficulties in both his personal and business life.

On February 23, 1996, we attended at the premises of Atlanta
Rugs, Inc., and initially met with a person by the name of Rajesh
Sharie, who said he was a new employee and could not assist
our investigations. However, during our visit, Mr. Chaudhary E
arrived and was willing to speak with us but not to issue a
signed statement.

Mr. Chaudhary understood the reason for the shipper's concern
and stated unequivocally that he had received all the shipments
and that very few pieces remained although he would not allow us
F
to inspect his storage facility. He also did not give specifics as to
how the cargo was cleared into his possession. He referred us to
an attorney in Atlanta, Georgia, a Marshall Siegel. However, later
Mr. Siegel informed us that he had only recently been contacted
by Mr. Chaudhary and had not been retained by him as counsel.

During this time, we were contacted by another shipper, insured G
through a different underwriter, who also informed us that their
' shipments had not been paid for. We had been given a customs
house clearing agents name in Atlanta - C.H. Powell and
Company and we contacted their import manager, Mr. Wick. Mr.
Wick informed us that he had acted as Atlanta Rugs, Inc. agent H
1232 SUPREME COURT REPORTS [2008] 9 S.C.R.

A in 1994 and still had $40000 of fees outstanding. We requested
particulars details of the steamship lines involved and he
volunteered that Neptune Orient Line was one of the carriers.
Mr. Wick stated that on the NOL bill of lading the consignee and
notify party were listed as Overseas Container Lines.

B This confirmed our earlier suspicion that probably Overseas
Container Lines were using the steamship line master bill of
lading to obtain and clear the shipments.

We later became ;:iware that Mr. Kumar Chaudhary is the
registered President of Overseas Container Lines, Inc. We
contacted Bureau of Enforcement at the Federal Maritime
c·
Commission (FMC) and we discussed that Overseas Container
Lines address is registered at the same location as Atlanta
Rugs, Inc. They also have a $50000 bond with intercargo at
Schaumberg, lllinoise since 1993. They could not act as a
Custom House Broker to clear the goods through US Customs
D as they would need to post a much larger bond with FMC. '
Ratan Chand Deep Chand did not furnish us with details of
their customs house brol<er, although we did request this
information on a number of occasions.

In May 1996 we received a request from Punjab National Bank
E stating that they had purchased the 'Bills' pertaining to the
shipments and that the claim amount should be remitted directly
to themselves (see enclosed· correspondence).

At this time, we believe that Atlanta Rugs, Inc, has been dissolved
and that Mr. Chaudhary is operating a different company. Based
upon all the available information, at this present time, it would
F
appear that all shipments were picked up by Atlanta Rugs, Inc.
who used fraudulent methods to obtain the shipments without
payment through the bank. We believe that the invo 1vement of
the steamship lines will be necessary to prevent further acts and
to obtain more information on the stolen shipments. We are
G issuing our report to document all the facts as known at his
present time and it is our intention to issue an addendum should
our further involvement be necessary. Please note that we do t
not comprehend, and have received no explanation as to why
the shipments were continually being sent even when the shipper
was not receiving any proceeds."
H
NEW INDIAASSURANCE CO. LTD. v M/S HIRA 1233
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]

30. The copies of the reports were not furnished to com- A
plain ants. As the Insurer did not settle their claim, the complain-
ants filed complaints (OP Nos.45 and 49/1997) before the Com-
mission on 25.2.1997 alleging that the conduct of the Insurer in
J not settling the claim amounted to a deficiency in service and
consequently, claiming compensation from the Insurer in regard B
_
1
to the value of the consignments and other losses (as detailed
in para 3 above). The Insurer sent letters of repudiation dated
4.3.1997 to complainants giving reasons for repudiation, rel-
evant portions of which have been extracted above.

31. We have considered the detailed submissions made C
by learned counsel. We have also considered the material that
was placed before the Commission. We find on a careful con-
sideration that the Commission has not addressed itself to the
relevant issues. It is no doubt true that the complainants had
,· booked the consignments showing the consignee as 'unto or- D
der' thereby indicating that the goods covered by the Bills of lad-
ing should be delivered only to the holder/endorsee of the Bills of
Lading. There is also no doubt that the original documents were
not cleared/retired by the buyer 'Atlanta Rugs Inc.' and that the
original documents were ultimately returned by the foreign corre- E
spondent Bank to Punjab National Bank and they are lying with
Punjab National Bank. There is also no doubt that the consign-
ments were insured against all risks of loss and damage.
32. The basic and fundamental averment and proof re-
quired in a case of this nature is that the consignments had F
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 having
been pilfered, stolen, lost or misdelivered. But there is no such
averment or evidence that the consignments were lost or dam- G.
aged. Nor is there any averment that the holder of the docu-
' men ts of title applied for delivery of the consignments, and was
denied or refused delivery on account of non- availability of the
consignments either due to pilferage, loss or misdelivery. When
there is no allegation or proof of Sun Trust Bank having applied H
1234 SUPREME COURT REPORTS [2008] 9 S.C.R.

A for delivery and refusal of delivery, it is inconceivable how the
complainants can maintain a claim against the insurer.
33. Failure of the buyer to make payment and take deliv-
ery is not a 'loss' of consignment which is covered by the Insur-
.B ance Policy. The complainant should make out a case of actual
\
'loss' of the consignment covered by the contract of insurance
r·
or non-delivery of the consignment, that is refusal to meet a
demand for delivery. The question is whether the complainants
have proved such loss or non-delivery. The case of the com-
plainant as put forth in the complaint and reiterated in the affi-
C davit is that they have dispatched the consignment to Atlanta,
that the consignment.> we're insured against all risks; that the
buyer did not retire the documents by making payment; that they
do not know what happens to the consignments and that there-
fore the Insurer ought to have paid them the value of the con-
D signment and failure to do so amounted to deficiency in service
as contemplated under the Consumer Protection Act, 1986. We
are afraid that these are not allegations or proof of loss or non-
delivery sufficient to foist any liability on the insurer.

34. Another question that arises for consideration is who
E was responsible for transshipment and delivery. Admittedly
Overseas Containers was only a non-vessel owning common
carrier (NVOCC) and not the actual shipping line. Necessarily
therefore Overseas Container had to entrust the consignment
to an actual shipping line for transportation and the Master Bill
F of Lading given by the shipping line would show the Overseas
Containers 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 ap-
G ply for delivery directly from the shipping line that carried the
consignments but only intended that delivery should be from
Overseas Containers which had issued the Bill of lading. As
the contract for carriage was between complainants and Over-
seas Containers and as the Bills of Lading issued by the Over-
H seas Container showed that the consignments were deliver-
NEW INDIA ASSURANCE CO. LTD. v M/S HIRA 1235
LAL RAMESH CHAND [R. V. RAVEENDRAN, J ]
/

able to the order of the complainants, necessarily Overseas A
Containers were expected to take delivery of the consignment
at Atlanta from the shipping line which actually transported the
consignments and then deliver it to the holder of the documents
of title who seeks delivery. If that is so, the Overseas Containers
were entitled to take delivery from the shipping line which trans- B
_., ported the consignment and there was nothing collusive, clan-
destine or irregular about delivery of consignments being taken
by Overseas Containers from the shipping line, as it had en-
trusted the consignment to the shipping line for transportation.

35. There is no averment or proof that the consignments c
did not reach the destination namely the Port at Atlanta or that
the goods were not taken delivery by the Overseas Containers.
There is no averment as to whether the holders of the docu-
ments namely the Sun Trust Bank applied for delivery or at-
1 tempted to take delivery of the consignment and store them in D
a bonded warehouse and whether they were refused delivery
within the insurance cover period.
36. The insurance cover was in regard to all risks from
consignor's warehouse to consignee's warehouse. There is no
dispute as to what 1s the consignor's warehouse as the com- E
plainant is clearly shown as the consignor. The difticulty arises
about the consignee's warehouse. If the consig11ee is treated
as Atlanta Rugs Inc , on delivery to Atlanta Rugs Inc , the insurer
is discharged of any liability for risks. If the consignee is shown
as· unto order' whose warehouse is to be treated as consignee's F
warehouse? It does not obviously refer to complainants' ware-
house as admittedly the complainants were not having any ware-
house in Atlanta (USA), nor were they the holders of the docu-
ments. The ·consignee' at the relevant time could only be the
Sun Trust Bank in whose favour the documents had been en- r'·-
dorsed. But it is not the case of the complainant that Sun Trust
'I' Bank as the holder of the documents of title sought delivery '.Jf
the consignments from the custom's warehouse or steJm ship
line or from Overseas Containers Where there 1::, nc e:;ort 011
the part of the consignee' to t3kP r:!e'1very ;;orn ·h':: ~h1op1 ·.g ri
1236 SUPREME COURT REPORTS [2008] 9 S.CR

A line/customs warehouse, the duration of insurance cover can-
not be infinite or indefinite. In such circumstances the risk cover
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
B clause 8 of Institute Cargo clause. It is not the case of the com-
plainant that within that time (of 60 days), delivery was sought
by the holder of the documents and that such delivery was re-
fused. It is also not the case of the complainants that the con-
signments were unauthorizedly delivered to Atlanta Rugs or that
c such delivery was within 60 days of the landing of the consign-
ments 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 the landing of
the consignments at Atlanta the holder sought delivery and de-
D livery was refused, the question of the Insurer being made Ii- .,
able for non delivery does not arise. After 60 days of the land- '"
ing of a consignment even if the consignment is destroyed, lost
or misdelivered, it is no concern of the Insurer.
37. It should be noted that a claimant insured in a marine
E insurance claim has to plead and prove the following (i) his posi-
tion - whether he is the assured or an assignee; (ii) his insurable
interest; (iii) the 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 neces-
F sary averments and evidence to establish a marine insurance
claim, a claim against the insurer is liable to be rejected. It is unfor-
tunate that the Commission disposed of the matter without exam-
ining the terms of the policy and obligations undertaken by the in-
surer. In fact, having regard to the nature of issues involved, this
G was more appropriately a matter for civil court. Be that as it may.
38. Another significant aspect is that the consignments were
being continuously sent from August, 1994 to July, 1995 by Mis.
Ratan Chand Deep Chand and from March to June, 1995 by M/
s. Hira Lal Ramesh Chand without making any effort to ascertain
H the fate of the earlier consignments. Even when they learnt none
NEW INDIA ASSURANCE CO. LTD. v M/S HIRA 1237
LAL RAMESH CHAND [R V RAVEENDRAN, J. ]

of the documents relating. to the consignments had been retired· A
by the buyer, they merely gave the oral intimation to the insurer
that too on 2.2.1996 about the non-retirement of the documents.
No claim was lodged with the insurer in writing. The allegation
that orally a claim for' loss of goods' was made on 2.2.1996 can-
not be true as according to complainants themselves till that date B
they had no knowledge that the consignments had been either
lost or wrongfully delivered. In fact the complainant have not pro-
duced even a single document making a claim on the insurer on
'the ground that the goods had been lost or not delivered.

39. The complaints, affidavits and the documents are also C
significantly silent about the following aspects :

(i) The particulars of the ships by which the
consignments were transported and the dates on
which the ships sailed, and whether any loss or D
damage was caused to any of the consignments while
in transit [Though the Xerox copies ofthe ·Shipping
Bills for export of goods under claim for dutY drawback'
give the name of ship and date of sailing, they are not
authenticated or supported by the evidence of the
persons who prepared those shipping Bills or the E
Customs officers who certified them].

(ii) If the consignments were not damaged or lost in
transit, when did the ships discharge the
consignments in Atlanta Port; on such discharge F
whether the consignments were with the shipping
line or were shifted to a customs warehouse; or
whether they were immediately delivered to
Overseas Containers and if so when.
(iii) In their rejoinder, the complainants stated that by G
letter dated 15.8.1995 they asked their Bankers to
take delivery of the consignments and store them in
a bonded warehouse duly insured. This assumes
that the consignments had arrived safely and soundly
at Atlanta Port. The Sun Trust Bank was holding the H
1238 SUPREME COURT REPORTS [2008] 9 S.C.R

A original documents at that time. There is no averment
as to i:vhether they complied with the said instructions
and took delivery of the consignment and place them
in a warehouse in its control. If they did not do so, the
reasons ought to have been given.
B (iv) Nothing is said as to whether the Bank holding the
documents of title apply for delivery by producing
them. The complainants did not obviously apply. If no
one ever applied or sought delivery and if there was
no refusal, there is no question of loss or the question
c of liability on the part of the Insurer.
(v) There is no averment as to whether the complainants
or the holders of documents of title ever complained
or reported loss of the consignment, or about any
wrong delivery or misdelivery to any one, in writing.
D
(vi) The consignments were entrusted to Niranjan
Shipping, who was acting as the forwarding agent of
complainants as also the agent of a non- vessel
owning shipping agent (NVOCC) namely Overseas
E container. The Bills of Lading were issued by a
NVOCC. In those circumstances the reason as to
why the complainants did not demand for the supply
of the copies of the Master Bills of Lading issued by
the shipping line/vessel which actually transported
F the consignments. is not disclosed. The failure of
complainantsto pursue the matter with NiranJan
Shipping to whom they had delivered the
consignments, is also strange.
(vii) None of the Bills of lading issued by the Overseas
G Container Lines Inc., contains their address. The
complainants did not care to seek their address.
even though it would not have been possible to take .,
delivery without knowing the address. The
complainants did not also care to enquire with
H Niranjan Shipping, about the absence of address in
NEW INDIAASSURANCE CO. LTD. v M/S HIRA 1239
LAL RAMESH CHAND [R. V. RAVEENDRAN, J. ]

the Bills of Lading. It was only long after all the A
consignments were dispatched, when the documents
were not retired by the buyer, the complainants woke
up and requested Niranjan Shipping to furnish the
address of the Overseas Container and Niranjan
Shipping provided the address by communication B
dated 8.8.1995. This strange behaviour is not
explained. This indicates either willful negligence or
willful misconduct by way of collusion.
(viii) In regard to all the consignments, Niranjan Shipping
had issued shipping bills for export of goods under C
claim for duty drawback' showing the complainant
as the exporter and the Atlanta Rugs Inc. as the
consignee. If the Bills of lading showed the consignee
as "unto order" (that is the endorsee of the documents
of title) and if the property in the goods had not D
passed by the buyer (Atlanta Rugs Inc.), then the
reason why the complainant did not protest against
the issue of such shipping bill showing Atlanta Rugs
Inc. as the consignee, is riot stated.
40. The complainants have failed to plead and make out a E
case of loss, in respect of each and every consignment, either
during transit or within 60 days of the consignments being dis-
charged from the ship at Atlanta Port. They merely proceed the
assumption that the Insurer is liable when the documents are
not retired by the buyer, which, to say the least, is untenable.As F
there is no averment or proof that the consignor or the foreign
correspondent Bank holding the documents of title or any per-
son authorized by the said Bank applied for delivery within 60
days of the goods being discharged, and as there is no aver-
ment or proof that the consignments were lost or wrongly de Iiv- G
ered within the said period of 60 days, the liability and respon-
sibility 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. H
1240 SUPREME COURT REPORTS [2008] 9 S. C.R.

A 41. The 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. But
what is overlooked is that the complainants did not lodge any
B claim in writing. At all events, they did not produce any docu-
ment showing the lodging of claim. It was on a mere oral intima-
tion on 2.2.1996, the inyestigation by surveyor was set in mo-
tion. Further the contents of the report had already been noti-
fied to the complainants by the surveyor in the telexes dated
C 4.3.1996 and 1.4.1996. Therefore, the finding of deficiency in
service was not warranted.
42. In this view of the matter, it is unnecessary to consider
the counter claim of the respondents 1 to 3 in CA No.4307 of
2003. Nor is it necessary to consider whether such counter claim
D is maintainable in an appeal under section 23 of the Consumer
Protection Act, 1996.
43. In view of the foregoing, the appeals are allowed and
· the order of the Nationa' Consumer Redressal Commission is
set aside and OP No.45/1997 and 49/1997 before the Com-
E mission stand dismissed. Parties to bear their respective costs.
RP. Appeals allowed.

F

G

H