Onus To Prove That The Insurance Claim Is Payable Under The Policy Is On The Insured And Not The Insurer: NCDRC

Contentions of the Complainant

The complainant, a private garment manufacturing and exporting company registered under the Indian Companies Act, 1956, entered into a contractual agreement with M/s. Fitzroy Sales Inc. USA, for the export of garments. The complainant, therefore, secured a Marine Cargo Open Policy-All from Cholamandalam MS General Insurance Company Ltd/insurer for a sum of Rs.150 crores, with coverage extending until the vendor took physical possession of the goods at the point of delivery, a warehouse in New Jersey, USA. Following purchase orders, the complainant exported garments from Chennai to New York, where they were safely unloaded and stored in a bonded warehouse. Unfortunately, a severe storm named "Hurricane Sandy" struck North America, causing significant damage to the garments worth US$ 166620.19 due to water exposure at the warehouse. The complainant promptly informed the insurer and submitted an insurance claim. The insurer appointed International Surveyors & Adjusters (USA) to assess the loss, confirming damage to approximately 20000 garments due to water. However, when the complainant inquired about the claim settlement, the insurer cited "Free on Board" terms and stated that liability would not engage as the damage occurred during storage. Despite multiple legal notices from the complainant, the insurer did not respond. In response, the complainant has filed a review petition seeking relief, requesting the insurer to pay US$ 166620.19 for the damaged goods, along with 18% annual interest from the claim date to the actual payment date. Additionally, the complainant sought Rs. 1,00,00,000 as compensation for business loss, along with the costs of the legal proceedings.

Contentions of the Opposite Party

The insurer argued that the complainant delivered garments to an overseas buyer under the "Free On Board" basis, and the goods were safely delivered to Seaport New York. However, they sustained damage in a warehouse during the Hurricane Sandy storm. According to the insurer, the ownership of the garments had already passed to the buyer before the damage occurred, and the complainant no longer had insurable interest. Referring to Section 8(2) of the Marine Insurance Act, 1963, the insurer stated that the complainant couldn't acquire interest after being aware of the loss. The insurer claimed non-liability for reimbursement. The complainant had requested an additional 30 days of coverage, but the insurer argued that it only applies when goods are awaiting shipment at the exporter's country's loading port. The Institute Cargo Clauses applied to the insurance based on the "Free on Board" basis chosen by the complainant for export. M/s. W.K. Webster (Overseas) Ltd., the insurer's claim settling agent, supported the insurer's stance that they were not liable for the complainant's loss. The surveyor, M/s. International Surveyors & Adjuster (USA), noted that the complainant did not respond to the inventory given, and neither the complainant nor M/s. Empire Warehousing and Distribution Inc. cooperated with the surveyor. The insurer claimed there was no deficiency in service when rejecting the claim.

Observations by the Commission

The commission cited the ruling in New India Assurance Company Limited Vs. Hiralal Rameshchand (2008) wherein the court held that it is the fundamental duty of the complainant to make averment and prove that the insurance claim is payable under the insurance policy. Furthermore, it was held that the term “warehouse to warehouse,” as mentioned in the Marine Insurance Policy is such that the liability of the Insurance terminates as soon as the goods are delivered to the warehouse as per invoices. The commission observed that a similar view has been the Court in Key Floopy vs. New India Assurance Co. Ltd.2006. Therefore, it was observed that the Commission has not committed any error in the original petition in holding that the insurance was terminated as soon as the goods were delivered to the warehouse as mentioned in the invoice, and the judgment does not suffer from any error either in fact or in law and does not want review.

Consequently, the commission rejected the review petition.