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PETITIONER: NEW INDIA ASSURANCE COMPANY LTD.

       Vs.

RESPONDENT: SHRI G.N. SAINANI

DATE OF JUDGMENT:       09/07/1997

BENCH: K. RAMASWAMY, D. P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T D.P. Wadhwa. J.      Leave granted.      This appeal  is  directed  against  the  order  of  the National Consumer  Disoutes redressal  Commission dismissing the appeal  of the appellant and confirming the order of the Maharashtra  State  Commission  by  which  order  the  State commission had allowed the Complaint of the respondent filed under sections  17/16 of  the Consumer  protection Act, 1986 (for short  ’the Act’)  . In  fact there were two complaints before the  State Commission:  in one complaint the claim of the  complainant  against  the  appellant  was  settled  for Rs.5.54,841,23  and  the  second  for  Rs.  9,99,500/-.  The complaint was  also awarded costs of Rs.500/- in each of the two complaints.      In  this   judgment,  the   appellant  M/s.  New  India Assurance  Company  Ltd.  is  described  as  ’insurer’.  the respondent as  complainant or  assigned and M/s Ajanta Paper and Several products Ltd. as the consignee or assured’.      The  complainant   is  an  assigned  of  two  insurance policies taken  out by M/s Ajanta paper and General products Ltd., from  the appellant  being the insurer. One policy was to insure  244 bales  computer wastes  computer  prints  out valued at  Rs. 5,87,000/-  and the  second was for 170 bales computer waste  computer print  out valued at Rs. 4,04,000/- to cover  the risk  from the  port of  onward to Bombay. The pointed were  taken out on February 27,1984. by letter dated April 12,  1984 the  consignee  informed  the  insurer,  the appellant herein  that at  had been given to understand that due to  strike in  Indian ports  the vessel s.s IRISH MAPLE’ which was  bringing the  goods, had  been diverted to Muscat and the  Cargo had  been discharged  there.  The  consignee, therefore,  requested   the  insurer   to  cover   the  risk accordingly. The  insurer replied  by its  letter dated  May 4,1984 . it informed the consignee  that the consignments in question were  required to  re-shipped from Muscat to Bombay within 60  days; time from the date the same were discharged at Muscat and that falling which there would be no liability of any  claim covered  under the  two  policies in question. The consignees   again  wrote to  the insurer on May 21,1984

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informing it  that the  consignment had  not been brought to Bombay by  the steamer  company and  same was still lying at Muscat and further that consignee was arranging to bring the cargo from  Muscat in  order to  avoid  further  delay,  and damage and  also to minimise financial losses. The consignee also stated  in this  letter that by doing to it was holding the insurer  and therefore,  the additional expenditure such as freight   from  Muscat to  Bombay, warehousing  charge at Muscat and other incidental expenses that might be levied by the steamer  Company shall be on account of the insurer. it, therefore, requested  the insurer to endorse the certificate for covering  the risk  for forced transshipment from Muscat to Bombay. By letter dated May 24, 1984 the insurer repeated what was  written in  its letter  of May  4,  1984.  It  had informed   the    consignee   that    it   was   consignee’s responsibility  to   arrange  for  the  re-shipment  of  the consignment to  Bombay within  the specified  time-limit and that insurer would not be responsible for any loss or damage resulting from non-cooperation of the statement agent of the consignee in  arranging re-shipment  of Cargo to Bombay. The Consignee was  specifically told that under no circumstances insurer was  liable for  additional expenses incurred by the consigned by  way of  extra freight. warehousing etc. in the process of  re-shipment of  the cargo from Muscat to Bombay. Again on  June 2,  1992 the  consigned wrote  to the insurer informing it  that arrangement  was being  made to bring the cargo as  early  as  possible.  the  insurer  was,  however. requested to  extend the  validity of the Certificate. While itself agreeing to pay necessary charges for the same. Again on June 8, 1984. the consignee informed the insured that the shipping company  had agreed to bring the cargo and that the subject consignment  was being  loaded per  M.V. MICHEL  ‘C’ which was  expected at  Bombay port shortly. It may be noted that earlier  the consignment  was  being  brought  by  s.s. ’IRISH  MAPLE’  which  had  off-loaded  the  consignment  at muscat. The  insurer acknowledged the letter of June 2, 1984 of the  consignee but  at the  same time  the request of the consigned for  extension of  the time beyond 60 days was not granted. The consignee was informed that on the expiry of 60 days time  limit from  the date  of discharge at the port of Muscat. the risk under the policy in question would cease.      The consignee, being the insured. preferred a claim for Rs. 1,74,708,52  and for Rs. 3,99,007,52 on account of short handing of  the consignment under transshipment and obtained the short  handing certificates  issued by  the Bombay  port Trust docks  of Bombay. The claim was, therefore, on account of              shortage              of              goods.      It would  appear from the letter dated July 25, 1989 of the insurer  to M/s.  national consultants  (proprietor  Mr. G.N. Sainani,  the complainant)  that the  policies had been assigned  by   the  consigned  in  favour  of  M/S  National Consultants. By  this letter the insurer acknowledged letter dated July  18,1989 of  the assignee.  The insurer  in  this letter informed the assigned as under:      "1)  The   vessel  carrying  g  the      insured consignments  had  diverted      its course,  and  the  consignments      wore  discharged   at  Muscat,  for      onward  carriage   to  Bombay.  Our      Marine insurance  cover had  ceased      at   this    stage.   Moreover   no      extension of  insurance  cover  was      obtained by you.      ii)   Insured   consignments   were      discharged at  Bombay  ex  Michalle

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    ‘C’ on  30.7.84 where  as claims on      ocean  carriers   were  lodged   on      16.7.85/17.7.85  respectively, i.e.      about a  year after  discharging of      the consignments.  Further more  no      extension   of    time-limit    was      obtained  from  them  to  safeguard      our  rights   of  recoveries.   Our      recoveries therefore  are lost.  as      claims against  carriers  have  now      become time barred/suit barred.           Owing     to     the     above      irregularities/lapses, it  will  be      appreciated   that   we   have   no      liabilities  to  meat  towards  the      above subject claims."      On July  23,1992 the assignee instituted two complaints before   the   Consumer   Disputes   Redressal   Commission. Maharashtra  State,  Bombay  against  the  insurer  alleging deficiency while rendering the service. The state Commission considered the  question if  by not  extending the insurance cover during re-shipment and repudiating the insurance claim constituted deficiency  in service  by the  insurer. By  the order dated  October 29,  1994 it  held against the insurer. The appeal  of the  insurer was  dismissed by  the  national Consumer Disputes  Redressal Commission  by the  order dated September 30,1996.      All  this   narration  of   events  was   necessary  to understand the  issues  involved  into  the  appeal.  it  is submitted by  Mr. Midha,  learned counsel  for the appellant that the  complaint  was  barred  by  limitation;  that  the complainant was not a consumer within the meaning of the Act and under  clause 9 of the Policy the appellant was absolved from claim as the policy had lapsed.      Before insertion  of Section 24A in the Act with effect from June  18,1993 the  Act did  not prescribe any period of limitation for  filing a  complaint. It  was,  however,  not disputed that  early to  this the  consumer commissions have been applying  the limitation  act 1963  to find  out  if  a complaint was barred by limitation or not. Since at the time when the complaint in the present case was filed Section 24A was not  there, we, therefore, fall back from the provisions of the  limitation  Act.  Article  44  of  Schedule  to  the Limitation Act, in relevant part. is as under: ------------------------------------------------------------ Description  of suit   Period      Time from which period                      of Limitation begins to run ------------------------------------------------------------ 44. (b) On a policy  Three years  The date of the occurrence of insurance when the             causing the loss. or where sum insured is payable            the claim on the policy is after proof  of the  loss            denied either partly or has been  given to  or              wholly, the date of such received given to or              denial". received by the insurers. ------------------------------------------------------------      It would  appear that  the complaint  was filed  on the basis that  claim on  he policy  was denied  wholly  by  the insurer which  was by  letter dated  July 25,  1989  of  the insurer. The  cause of  action, therefore, arose on the date of denial  or repudiation  of the policy by the insurer. The question does  arise as  to when  the claim  on  the  policy should have  been lodged. it appears the claim on the policy should be  lodged within  a reasonable  time. As  to what is reasonable time  would depend on the facts and circumstances

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of each  case. Since  on the  basis of  the  record  we  are handicapped to  know as  to when  the claim  was lodged.  we would, therefore,  treat the  date, July  25, 1989, when the time for  the purpose  of limitation  had begun  to run . As noted above this is the date when the insurer repudiated the claim  on  the  policy.  From  this  angle.  therefore,  the complaint filed  by the  assignee on July 23, 1992 is within the period of limitation. It is, however, a different matter when the  insurer raises  the defence  that it  had  earlier informed the  insured that  the  policy  had  ceased  to  be operative in  terms para  9 of  the policy.  As far  as  the insured is concerned he can file the complaint with in three years of  the date  of occurrence  causing loss  or from the date when  the claim on the policy is denied by the insurer. Far him  time for  lodging the  complaint  would  not  start running while the goods are still in transit as he can claim the policy to be valid till he lodges the complaint.      The relevant  portion of the policy would be paras 8,9, and 11 of the policy which are reproduced as under:      "8.1 This  insurance attaches  from      the  time   the  goods   leave  the      warehouse or  place of  storage  at      the  place  named  herein  for  the      commencement   of    the   transit,      continues   during   the   ordinary      course of  transit  and  terminates      either      8.1.1 on delivery to the Consignees      or other  final warehouse  or place      of storage at the destination named      herein      8.1.2  on  delivery  to  any  other      warehouse  or   place  of  storage,      whether  prior   to   or   at   the      destination named herein, which the      Assured elect to use either      8.1.2.1 for  storage other  than in      the ordinary course of transit or      8.1.2.2    for     allocation    or      distribution      or      8.1.3 on  the  expiry  of  60  days      after   completion   of   discharge      overside  of   the   goods   hereby      insured from the oversea vessel the      final port of discharge.      which shall first occur.      8.2 If,  after  discharge  overside      from  the  oversea  vessel  at  the      final port  of discharge, but prior      to termination  of this  insurance.      the goods  are to be forwarded to a      destination  other   than  that  to      which they  are insured  hereunder,      this  insurance,  whilst  remaining      subject to  termination as provided      for above,  shall not extend beyond      the commencement of transit to such      other destination.      8.3 This  insurance shall remain in      force (subject  to  termination  as      provided  for   above  and  to  the      provisions  for   Clause  9  below)      during delay  beyond the control of      the Assured,  any deviation. forced

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    discharge,      reshipment       or      transshipment   and    during   any      variation of  the adventure arising      from  the  exercise  of  a  liberty      granted to shipowners or charterers      granted to shipowners or charterers      under     the      contract      of      affreightment.      9. If owing to circumstances beyond      the control  of the  Assured either      the   contract   of   carriage   is      terminated at a port or place other      than the  destination named therein      or   the   transit   is   otherwise      terminated before  delivery of  the      goods as  provided for  in Clause B      above, then  this  insurance  shall      also terminate unless prompt notice      is given  to the  Under writers and      continuation of  cover is requested      when the  insurance shall remain in      force,  subject  to  an  additional      premium   if    required   by   the      Underwriters. either      9.1 until  the goods  are sold  and      delivered at  such port  or  place.      or,  unless   otherwise   specially      agreed, until the expiry of 60 days      after arrival  of the  goods hereby      insured  at  such  port  or  place,      whichever shall first occur.      or      9.2 If the goods are forwarded with      in the  said period  of 60 days (or      any agreed  extension  thereof)  to      the destination  named herein or to      any   other    destination.   Until      terminated in  accordance with  the      provisions of Clause 8 above.      11.1 In order to recover under this      insurance the  Assured must have an      insurable interest  in the subject-      matter insured  at the  time of the      loss.      11.2 Subject  to  11.1  above,  the      Assured  shall   be   entitled   to      recover for  insured loss occurring      during the  period covered  by this      insurance, notwithstanding that the      loss occurred  before the  contract      of insurance  was concluded, unless      the Assured  were aware of the loss      and the Underwriters were not."      Para 8  above states  as to when insurance policy would start and upto what stage it would terminate. Under sub-para 8.3 which  is subject  to clause  9 the insurance remains in force during  the delay  beyond the  control of the assured. But then  under para  9 the insurance terminates if owing to the circumstances  beyond the  control; of  the  assured  as mentioned  therein   unless  prompt   notice  is  given  and continuation of  cover is  requested. In that case insurance shall remain  in force  subject to  an additional premium if required (1)  within 60  days of the arrival of the goods at such port  or place  other than  that named in the policy or until those  goods are  sold  whichever  shall  occur  first

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unless otherwise  specially agreed  or (2)  if the goods are forwarded within  the period  of 60  days to the destination named in  the policy  or within  any  further  extension  if agreed to.  Since the extension of the period was not agreed to  by  the  insurer  the  goods  had  to  be  forwarded  or transshipped from  Muscat to  Bombay within  60 days  of the discharge of  the  goods  there.  If  these  goods  are  not transshipped within  60 days to the destination as agreed to then clause  8 will  not remain in operation. In the present case, there  is no  evidence that  goods  were  transshipped within 60  days of  their discharge at Muscat. That being so the policy would lapse in terms of the agreement between the parties. However.  it was submitted by Mr. Mudnaney, learned counsel for  the respondent, that the policy was governed by the English  law and  would remain  in force  till the goods reached their  destination. He  referred to  para 19  of the policy which  provided that  the insurance  was  subject  to English law  and practice.  We were, however, not told as to under which provision of English law the policy would remain in force  in spite  of its  various clauses and the terms of agreement  between  the  parties.  Reference  was  drawn  to Section 51  of the  Marine Insurance Act. 1963 providing for an excuse  for deviation  or delay.  This  section  and  its relevant part is as under:      "5.1 Excuse for deviation or delay.      (1)   Deviation    or   delay    in      prosecuting the voyage contemplated      prosecuting the voyage contemplated      by the policy is excused -      (a)---------------------      (b) where  caused by  circumstances      beyond the  control of  the  master      and his employer: or      (c)---------------      (d)------------------      (e)------------------      (f)-------------------      (g)-------------------      (2) When  the  cause  excusing  the      deviation  or   delay   ceases   to      operate. the  ship must  resume her      course. and  prosecute her  voyage,      with reasonable despatch."      To our  mind the section would appear to apply when the ship in  which  the  goods  were  originally  being  carried resumed her  voyage and not to situation where the goods are discharged and  then  these  are  carried  to  the  part  of destination in  another ship.  We have  not been  shown  any provision of  law or  practice or  term of  the policy under which the  insurer was sound to extend the policy beyond the period of 60 days as per para 9 of the policy. The appellant is right  therefore, in  its contention that it is abolished from any  claim under the policy in view of para 9 above and it  could  not,  therefore,  be  said  that  there  was  any deficiency in service to come within the purview of the Act.      Under para  11 in  order to  prefer a  claim under  the policy the  insured must  have an  insurable interest in the subject-matter insured  at the  time of  loss. Assuming  the policy as  valid and  para 9 did not apply the insured could prefer the  claim under the policy for the loss. But that is not the case here. The policy has been assigned in favour of the  complainant.   Marine  Insurance   Act   provides   for assignment of policy. Sections 52 and 53 are relevant. these are reproduced as under:      "52     When  and   how  policy  is

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    assignable -(1) A Marine policy may      be transferred by assignment unless      it   contains    terms    expressly      prohibiting assignment.  It may  be      assigned  either  before  or  after      loss.      (2) Where  a marine policy has been      assigned  so   as   to   pass   the      beneficial interest in such polity,      the  assignee   of  the  policy  is      entitled to  sue thereon in his own      name as  the defendant  is entitled      to make  any defence arising out of      the contract  which he  would  have      been entitled  to make  if the suit      had been brought in the name of the      person by  or on behalf of whom the      policy was effected.      (3) A marine policy may be assigned      by endorsement  thereon or in other      customary manner.      53. Assured  who  has  no  interest      cannot assign.  where  the  assured      has  parted   with  or   lost   his      interest  in   the  subject  matter      insured, and  has not, before or at      the time  of so  doing expressly or      impliedly  agreed   to  assign  the      policy any subsequent assignment of      the policy is in operative.      Provided  that   nothing  in   this      section affects the assignment of a      policy after loss."      No doubt  the policy  can be  assigned either before or after the  loss But  then the  assignee must  have insurable interest in  the subject  matter as provided in para 11.1 of the policy.      The provisions of the Marine Insurance Act and terms of the policy  have to  be read in the context of definition of "consumer" as  contained in  clause (d)  of Section 2 of the Act. The relevant part of this clause is as under:      "(d) ’consumer   means  any  person      who,-      (i) -------------------------------      ------------------      (ii)  hires   or  avails   of   any      services for  a consideration which      has been paid or promised or partly      paid and  partly promised, or under      any system  of deferred payment and      includes any  beneficiary  of  such      services other  than the person who      hires or  avails of the service for      consideration paid  or promised, or      partly paid and partly promised, or      under  any   system   of   deferred      payment,  when  such  services  are      availed of with the approval of the      first mentioned person:"      The question  that arises  is if  the assignee  in  the facts and circumstances of the present case could be said to be beneficiary so as to stake his claim under the policy. if we see the definition of "service" as provided under the Act it  means  and  includes  the  provision  of  facilities  in connection with  the insurance  as well. The complaint under

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the Act  in the  present case  has to  show that the service hired or  availed of or agreed to  be hired or availed of by the complainant  suffers from deficiency in any respect. The complainant, of course, means a consumer and as we have seen above  includes   any  beneficiary.  "Deficiency"  has  been defined in clause (g) of section 2 of the Act as Under:      "(g) deficiency"  means any  fault,      imperfection,    shortcoming     or      inadequacy in  the quality,  nature      and manner  of performance which is      required to  be  maintained  by  or      under any law for the time being in      force or  has been undertaken to be      performed by  a person in pursuance      of  a   contract  or  otherwise  in      relation to any service."      The interest  of the  insured must exist in the case of marine insurance  at the  time of  loss and the assured must have some  relation to  or concern  in, the  subject of  the insurance. The  service which  the insurer  offers  is  with reference to  the goods and the insurable interest has to be in respect of the goods. To put it in other words, insurable interest in  property would  be such  interest as shall make the loss  of the  property to  cause pecuniary damage to the assured. To  come under  the scope of the word "consumer" as defined in  the Act it should be possible for the assured to assign his   insurable  interest in the goods subject matter of the  policy for the assignee as a consumer to enjoy;; the benefit of  the policy with reference to the goods which are insured. What  has been  assigned in the present case is the amount of  loss suffered  by the assured on account of short handing of  the goods, meaning thereby that right to recover the loss  is assigned  to the  assignee  and  not  that  any service is  to be  rendered under  the policy by the insurer with reference  to the  goods. We  are loading  at the whole thing from  the point  of the  consumer under  the Act  with reference to  certain  relevant  provisions  of  the  Marine Insurance  Act.  Unless  the  assignee  has  some  insurable interest in the property subject matter of the insurance the time the  policy  terminates he cannot be beneficiary of any service required  to be  rendered by  the insurer  under the policy. Admittedly  it was  much after the goods had reached the port of destination and appropriated that the policy was transferred by the insured to the complainant to recover the amount of  loss suffered  by  the  assured.  Thus,  what  is assigned is  in effect  a mere  right to sue for the loss on account of  short handing  of the  goods. It is difficult to see as  to how it could be said that the respondent, that is the assignee.  is the  beneficiary of  any service under the policy. He may, however, have right to recover the loss from the insurer  by filing a suit in a civil court but certainly to seek  remedy under  the Act he must be a consumer. If the policy had  been assigned  during the course of its validity and before  the goods  were appropriated after their arrival at the  port of  destination, it  could perhaps be said that the  assignee   had  beneficial  interest  therein  but  not otherwise. By  not extending  the policy beyond a particular period. that  is 60  days the insurer acted within the terms of the  contract of  insurance and  on that account it could not be  said that  there was  deficiency in  service  to  be provided by the insurer under the policy.      It is  not necessary for us to examine in depth various provisions of  the Marine  Insurance Act  as in  the Present case we  are primarily  concerned with the provisions of the consumer protection  act. The  Policy in  question is though

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designated as  Marine Insurance  policy but  we think  it is more a question of interpretation of relevant clauses of the policy. The Act is not a general law for all remedies. it is for the protection of the consumer as defined in the Act. To succeed in  the present  case the complainant must show that he is  a consumer  and that  there has  been  deficiency  in service by the insurer. This he has been unable to show. He, therefore, could not maintain complaint under the Act.      We do  not think that the National commission has taken the correct  view of  the matter. Accordingly, the appeal is allowed. the  orders of  the National  Commission and  State Commission are  set aside  and complaints of the respondents dismissed. We,  however, direct  that the parties bear their own costs.