This is a perfect case to learn when a merchant exporter (who actually was to work as supplier to the exporter) got into trouble after taking Packing Credit. After taking packing credit the merchant exporter could neither pay packing credit back to bank nor could supply the material for the export because his factory was caught in fire after taking packing credit in which his cargo meant for export was burnt with all machinery and infrastructure of the factory.
When merchant exporter approached insurance company, he was refused to be paid by insurance company and thus his troubles got increased.
Propagandas that the insurance company adopted to deny the insurance claim are analyzed perfectly in this case.
Insurance company denied report of the first surveyor and appointed the second one.
Second surveyor’s report was also denied by insurance company.
And then third surveyor was appointed by insurance company. Insurance company disclaimed the findings of third surveyor and the fourth was appointed who got the game completely in favor of insurance company.
What the Honorable Apex courts have ruled on such “repeatedly and consequentially appointment of multiple surverys” is a must to understand element for any exporter or any businessmen to learn along with how to deal with such problems if happens in their business career.
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Detail Case Discussion
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Exporter (probably merchant exporter) / Complainant: Exporter Company who is also complainant was used to transact business of manufacturing of ready-made garments at its factory at Gurgaon, Haryana.
Agent (probably exporter who got L/C directly from importer): Complainant got an export order, through an agent, M/s. Sirdan Export, to manufacture 25,000 shirts. Subsequently, quantity of shirts was increased to 35,000 shirts through a fresh order of credit placed on M/s. Sirdan & same was again transferred to complainant / exporter company.
Complainant company obtained a credit facility in nature of “packing credit” from Canara Bank (OP-2) to the tune of Rs.50,00,000/-.
Stock of goods, i.e., raw material, WIP, finished goods /ready-made garments, etc, lying in factory stood hypothecated with canara bank / OP-2.
Bank got insured factory premises / building, plant & machinery as well as stocks lying therein with M/s. New India Assurance Co. Ltd. (OP1), under Fire & Allied Perils, loss of property, etc. Premium amount of Rs.21,200/- was paid by Canara Bank / OP-2 on behalf of the complainant co. Tot. IDV amt was Rs.85,00,000/-.
During the subsistence of said policy, the factory caught fire. Building, its electrical fittings, fixtures, plant, machinery & entire stock lying in factory was completely gutted & destroyed.
Complaint was lodged with the police.
First surveyor was appointed and then chain of surveyors were appointed by the insurance company.
1ST Surveyor:
M/s. R.N.Sharma & Co. submitted a report in Jul-Aug 2000 & assessed loss at Rs.75-80 lakhs which was not disbursed to complainant.
2ND Surveyor:
HO of OP1 (Insurance Company) appointed M/s. Sunil Vohra, as another Surveyor.
After that complainant company received letter from OP-1 / Insurance Company acknowledging that complainant company had supplied all the documents to Surveyors as per their record.
Surveyor Sunil vohra submitted their report in & assessed loss at Rs.54,94,000/-.
Still, the said amount was also withheld by insurance company. Despite various requests, amount was not paid to complainant.
As complainant couldn’t get compensation from insurance company, it had to dispose of all its machinery, debris & salvaged shirts & took loans from different persons & returned loan amount to OP2 / canara bank as part payment to outstanding amount.
Then, OP-1 / insurance company, vide many letters letters, demanded some more documents from complainant without any rhyme or reason, which again were supplied by complainant. But still denied the claim payment.
After that the third surveyor was appointed by the insurance company.
3RDSurveyor:
Vide letter, complainant was informed that another (third) Surveyor, M/s. ABM Engineers for re-working & investigation of claim of complainant was deputed.
Appointment of 3rd Surveyor was challenged by the complainant, however complainant fully co-operated.
OP-1 / insurance company offered amount of Rs.34-35 Lacs in full settlement, but complainant refused. Under these circumstances, complainant was again constrained to report illegal & manipulative conduct of Surveyor before Grievance Cell, HO of OP1 / insurance company, however, no action was taken.
A letter was sent to OP1 / insurance company requesting therein, to pay the claimed amount with interest @ 18% p.a., otherwise, legal action would be taken.
4TH Surveyor:
Thereafter, OP1 / insurance company appointed Sh. R.G.Verma (Fourth Surveyor), to conduct an investigation, who submitted report, observing that the complainant’s claim was a fraudulent one for below reasons:
§ Fabric supplier S.V.Traders is doubtful
§ Exporter’s connivance with M/s. S.V.Traders
§ About the L/C. Letter of Credit had some impossible conditions into it.
§ Doubtful integrity of Mr. Ajay Verma of M/s. Sirdan Exports
§ Reason to manipulate fire
Based on these facts, OP-1 / Insurance Company repudiated the claim completely.
Exporter sent a letter to OP-1 / Insurance company requesting therein, to pay claimed amount with interest @ 18% p.a., otherwise, legal action would be taken against it.
Under these circumstances, present complaint was filed with following prayers:-
PRAYER:
Direct OP.1 / insurance company to pay Rs.1,48,57,000 to complainant / Petitioner co.
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Grant interest @ 24% /annum from dt of filing of present complaint till realization of amount
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Award full costs of present proceedings
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Any other or further relief which this Hon’ble Court may deem fit & proper in the facts & circumstances of case may also be granted in favor of CT/petitioner & against OP.1.
LEGAL POINTS DISCUSSED DURING THE CASE
Ø Doubtful integrity of Mr. Ajay Verma of Sirdan Exports
Ø Doubtful fabric supplier named S.V.TRADERS
Ø No buyer (export order) with you
Ø Shipment ready b4 lc expiry. Why not done?
Ø Reason To Manipulate Fire: Respondents claimed that the complainant / exporter himself set his factory on fire. Intention behind manipulation of fire in his own factory is to grab insurance claim amount as
§ Exporter was not able to complete export order as exporter had no export order, L/C was fake, buyer was fake, no Shipping Bill, no Marine Policy …..
§ Exporter was not able to complete Packing Credit taken from canara bank.
§ Even if shirts sold in local market, price would be only few lacs; very less than packing credit borrowed.
§ Financial condition of exporter is very poor tempting him to set factory on fire to mature the insurance claim.
????? LEGAL QUESTION IN THE CASE ?????
Ø Can insurance company keep on asking documents after once accepting / saying that documents are complete?
Ø FIRE: Genuine or Manipulated?
Ø Criminal Allegations made on different parties to the case.
Findings of NC For 1ST Surveyor
Findings of NC For 2ND Surveyor
ORDER BY THE COURT
The case is more focused on common laws than civil laws. Old judgments are given more precedence in the case. Rather discussion of hardcore acts and their sections, the honorable court is more focusing on common sense and old judgements.