1. Heard Mr. Vishal Singhal, Advocate, for the complainant and Mr. Anup Mathur & Mr. Sameer Shrivastava, Advocate, for the opposite party.
2. Raja Gems has filed above complaint, for directing the opposite party to pay (i) Rs.55048518.05 with interest @15% per annum from date of loss till the date of payment, as the insurance claim; and (ii) any other relief, which is deemed fit and proper in the facts and circumstances of the case.
3. The complainant stated that Raja Gems was a Proprietorship Firm and carries on business of export and import of precious stones and jewellery under a valid License No.IEC No.139005757. The complainant manufactures gold and diamond studded gold jewellery and silver jewellery with natural semi-precious stones. The complainant buys rough or brute diamonds in abroad and imports in India to cut and polish and the finished diamonds and studded in jewellery are re-sold. The complainant used to sell its manufactured jewellery to retail stores or display its samples, worth few lacs for this purpose in trade fairs in California, New York and Belgium. While conducting the business, the complainant firm used to keep the goods at secured premises and the transport is undertaken by armoured carriers (such as Brink’s) between India and California or New York. Value of such imports goods may vary depending on quantity, quality, terms of sale and other factors between rupees three to five crores and therefore, the complainant required insurance coverage of general nature, in respect of its goods during course of the business. In these circumstances, the complainant firm wrote a letter to Mr. Vivek Saxena, Administrative Officer, United India Insurance Company Limited, Jaipur (the Insurer) on 07.06.1999, for its need of insurance policy for coverage of general nature, where the firm carries on its business. The Insurer, after due deliberations and discussions with its Head Office at Chennai, Regional Office at Jaipur, Technical Department and Miscellaneous Department issued Special Contingency Insurance Policy for the period of 28.01.2000 to 27.01.2001, on declaration basis, for the sum insured of Rs.50000000/-: Manufacturing Gold & Diamond Studded Gold Jewellery, & Natural Semi Precious Stones in silver jewellery sent abroad to USA as display samples for export at exhibitions & to retail jewellery stores to procure orders for factory in India & or on rough diamonds bought in U.S.A. and Belgium to be imported to India to Factory. Rs.10000000/-: On during transit Raw Stones purchased for import to India for business purposes by a highly reputed courier by the name of “Brinks” or equally reputed under armed escort. Above policy was renewed for a further period of 28.01.2001 to 27.01.2002. The complainant hired a safe and premises/space for storage of goods, after buying the goods until goods are imported to India, through a rental agreement dated 01.12.2001 with B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. on a monthly rent of 300 dollars, payable in advance. The complainant bought (i) Polished Emeralds 992 carats @US$ 579= US$ 5744 and (ii) rough diamonds 1327 carats @US$ 851= US$1129277 (total value US $1135021, vide Invoice No.19 dated 13.12.2001 from B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. and kept this parcel in premises and vault of B & B Import taken on lease. The complainant informed the Insurer about above purchase through mail on 13.12.2001, with request to increase transit cover of the policy from Rs. one crore to Rs. Five crores. When the complainant did not receive any information from the Insurer, in respect of increasing the transit cover for long period despite telephonic reminders, the representative of the complainant approached the Branch Office of the Insurer at Jodhpur on 15.01.2002 and made inquiry about increase of the transit cover, who was informed from the Branch Office that no such mail dated 13.12.2001 was received in the office. The representative of the complainant then gave another copy of the letter dated 13.12.2001, which was duly received in the Branch Office at Jodhpur on 15.01.2002. The Insurer after taking into consideration of all the facts and circumstances of the case and particularly the letter dated 13.12.2001, renewed the policy and issued Policy No.140504/46/01/00637 for a period of 28.01.2002 to 27.01.2003 on same terms and conditions for same coverage. Unfortunately an armed robbery occurred on 04.02.2002, in the premises of B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. and the goods purchased by the complainant vide Invoice No.19 dated 13.12.2001, total value of US$ 1135021 and kept there, was also looted. On the information of B & B Imports, San Francisco Police registered Case No.020151752 but the police could not trace the robbers/looted goods and closed the case. The complainant informed the Insurer about aforesaid robbery by overseas mail letter dated 05.02.2002. The said letter in original was handed over to the Senior Manager, Branch Office of the Insurer at Jodhpur on 19.02.2002. B.B. Import also filed Case No.C 02-2813-SI in the Federal District Court of San Francisco County State of California, in which, the Insurer was also impleaded as the defendant. In spite of service of the summon, the Insurer did not appear and the Court passed ex-parte order dated 11.03.2003 directing the Insurer to pay US$ 10000000 as punitive damages and vide judgment dated 18.11.2002 awarded a sum of US$ 1135021 as principal with interest thereon at the applicable rate in favour of the complainant against the Insurer. However, on the application of the Insurer above orders were recalled later on. The complainant was directed to provide insurance coverage on these gems immediately. Payment of the purchase gems was agreed to be made within 90 days from the date of purchase as is reflected in the purchase bill as the “Terms of Payment”. A request was made to the Insurer in above notice that the Insurer or its local agent, if any, should contact B & B Imports immediately to advise whether the Insurer intends to pay the insured sum proceeds forthwith or not. Similar notice was served by lawyers of B & B Imports on the complainant. The complainant wrote a letter dated 06.04.2002 (received on 16.04.2002) to the Insurer stating therein that a collection notice has been served on the complainant by the lawyers of B & B Imports, who are creditors of the complainant in San Francisco, regarding unpaid Invoice. However, the Insurer, vide letter dated 09.04.2003 repudiated the claim of the complainant. Then this complaint was filed on 08.04.2004, alleging deficiency in service on the part of the OPs.
4. United India Insurance Company Limited (the Insurer) filed its written reply on 17.08.2005 and contested the complaint. The Insurer denied (i) Hiring of a safe and premises/space for storage of goods by the complainant, after buying the goods till its import to India, through a rental agreement dated 01.12.2001 with B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. and payment of advance monthly rent of 300 dollars. (ii) The complainant informed about purchase of (a) Polished Emeralds 992 carats @US$ 579= US$ 5744 and (b) rough diamonds 1327 carats @US$ 851= US$1129277 (total value US $1135021, vide Invoice No.19 dated 13.12.2001 from B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. and kept this parcel in premises and vault of B & B Import. (iii) The complainant ever requested for increase of the insurance coverage for transit of above goods and sought for information about extra premium for that purpose. (iv) Incident of an armed robbery occurred on 04.02.2002, in the premises of B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. and the goods purchased by the complainant vide Invoice No.19 dated 13.12.2001, total value of US$ 1135021 which kept there, was also looted. (v) The complainant informed the Insurer about aforesaid robbery by overseas mail letter dated 05.02.2002. The Insurer stated that admittedly the complainant did not make any payment of the purchase through Invoice No.19 dated 13.12.2001 to B & B Imports. The complainant informed the Insurer about alleged robbery dated 04.02.2002, for the first time on 19.02.2002. As the complainant took 15 days time, in informing the Insurer about the robbery, it creates a grave doubt that the goods of the complainant worth US$ 1135021 was looted. Ex-parte order of Federal District Court of San Francisco, County State of California, dated 11.03.2003, imposing punitive damages against the Insurer, has been set aside vide order dated 30.09.2003 and no reliance can be placed on it. The insurance claim is payable in terms of policy but there is breach of the terms and conditions of the policy. After considering entire facts, the Insurer, vide letter dated 09.04.2003, repudiated the claim of the complainant. Under the terms of the policy, the complainant was required to inform about purchase of the goods immediately and keep the goods in certified vaults in foreign country. Both the conditions have been breached by the complainant. The complainant has failed to prove the incident of robbery in the premises of B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. on 04.02.2002, the affected premises had proper security as required in terms of the policy and the complainant had insurable interest in alleged looted goods. Mr. Bupender Bhandari, the proprietor of B. B. Imports admitted that the premises 210, Post Street Suite 1005 had no proper security. There is no deficiency in service on the part of the OP. The complainant availed the services of the Insurer for commercial purpose and is not a ‘consumer’. The complaint has no merit and is liable to be dismissed.
5. The complainant filed Rejoinder Reply, Affidavit of Evidence, Additional Affidavits of Evidence of Puran Mehta and documentary evidence. The opposite party filed Affidavit of Evidence of Satish Sharma, Deputy Manager and documentary evidence. Both the parties filed their written synopsis.
6. We have considered the arguments of the counsel for the parties and examined the record. The Insurer renewed the earlier policy on the proposal of the complainant dated 22.01.2002 and Special Contingency Insurance Policy No.140504/46/01/00637 for a period of 28.01.2002 to 27.01.2003, on declaration basis, for the sum insured of Rs.50000000/- was issued on: “Manufacturing Gold & Diamond Studded Gold Jewellery, & Natural Semi Precious Stones in silver jewellery sent abroad to USA as display samples for export at exhibitions & to retail jewellery stores to procure orders for factory in India & or on rough diamond/ polished and rough precious colour stones bought in U.S.A. and Belgium to be imported to India to Factory”.
Relevant conditions of the policy applicable on purchase in U.S.A. and Belgium are (2) All sales and purchases abroad would be immediately intimates in writing. (7) The Insured may lease or rent their own premises in California or New York when on business abroad provided such arrangement to keep stones & jewellery have secured & certified valvets installed.
7. The complainant stated that it bought (i) Polished Emeralds 992 carats @US$ 579= US$ 5744 and (ii) rough diamonds 1327 carats @US$ 851= US$1129277 (total value US $1135021, vide Invoice No.19 dated 13.12.2001 from B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. and kept this parcel in premises and vault of B & B Import taken on lease. The complainant informed the Insurer about above purchase through mail on 13.12.2001, with request to increase transit cover of the policy from Rs. one crore to Rs. Five crores. When the complainant did not receive any information from the Insurer, in respect of increasing the transit cover for long period despite telephonic reminders, the representative of the complainant approached the Branch Office of the Insurer at Jodhpur on 15.01.2002 and made inquiry about increase of the transit cover, who was informed from the Branch Office that no such mail dated 13.12.2001 was received in the office. The representative of the complainant then gave another copy of the letter dated 13.12.2001, which was duly received in the Branch Office at Jodhpur on 15.01.2002. Unfortunately an armed robbery occurred on 04.02.2002, in the premises of B & B Imports, 210, Post Street Suite 1005, San Francisco, California, U.S.A. and the goods purchased by the complainant vide Invoice No.19 dated 13.12.2001, total value of US$ 1135021 and kept there, was also looted. On the information of B & B Imports, San Francisco Police registered Case No.020151752 but the police could not trace the robbers/looted goods and closed the case. The complainant informed the Insurer about aforesaid robbery by overseas mail letter dated 05.02.2002.
8. The Insurer denied information of purchase of diamonds through mail dated 13.12.2001 and information of robbery in the premises of B.B. Imports through mail dated 05.02.2002. The complainant has not filed any proof of mails sent to the Insurer as alleged dated 13.12.2001 and 05.02.2002. However, in repudiation letter dated 09.04.2003, the Insurer admitted receipt of copy of the letter dated 13.12.2001 on 15.01.2002 in the branch office Jodhpur and information incident of robbery dated 04.02.2002 on 19.02.2002. Although the complainant informed the purchase of the diamonds at least on 15.01.2002 i.e. before robbery on 04.02.2002 but there information of robbery was given after 15 days of the incident. In the letter dated 13.12.2001, the complainant had requested for enhancement of insurance coverage for transit but Proposal Form for renewal of the policy was filed on 22.01.2002, in which, no such request for enhancement of insurance coverage was made. As per the terms of the policy, the complainant had to keep stones & jewellery in a secured & certified vaults installed in the rented premises. In this respect relevant part of Police Investigation Report of the police in San Francisco is quoted below:-
“S/Unknown then told Bhandari, “open this other safe”. Bhandari said that he knew the combination of the safe but told S/unknown that he could not remember the combination”. S/unknown became upset, put the gun muzzle to Bhandari’s right temporal area and said “I will blow your head off, if you do not open this”. Bhandari said that he got very scared, tried to open the safe but made a mistake twice. After the second attempt, S/unknown said “do you want to get killed?” Realizing that S/unknown might carry out his threat, opened the safe and again handed over S/unknown two parcels, one parcel contained rough diamonds worth $ 1129000 and the other contained one parcel of Colombian Emeralds worth $ 5744 dollars. S/unknown again laced the parcels into his outer jacket pockets. ……..
Bhandari told me that S/unknown did not touch anything inside the office. He does not have a surveillance camera. I checked with the tenant in #1012 to see if the camera that they have above their door and which faces the hallway was operable but it does not record. There are no camera inside the lobby of the building. There is usually a security officer inside the front lobby. However, they does not start their shift until 1200 hours. Unit 5J5 with Insp. Morimoto #1912 and Unit 5J24 with Insp. Danker arrived to scene and took over the investigation.”
9. The complainant has filed a letter of California Security Alarms dated 21.11.2001 (Annexure-13) as a certificate of installation and maintenance intrusion and panic alarm system in the building “210 Post Street #1005”. But Mr. B. Bhandari admitted before the police during investigation and the police also actually verified that there was no surveillance camera in the building and no security personal was on duty at the time of incident. Information of robbery was given after 15 days of the incident. As such the repudiation of the claim on the ground that there was breach of warranty that “goods be kept in secured and certified vaults’ and there was unreasonable delay in information of loss, does not suffer from any illegality. Supreme Court in Suraj Mal Ram Niwas Oild Mill Pvt. Ltd. Vs. United India Insurance Company Limited, (2010) 10 SCC 567 and Rajankumar & Bros. (Impex) v. Oriental Insurance Co. Ltd., (2020) 4 SCC 364, held that a warranty imposes certain obligations on the insured, and Section 35(3) makes it amply clear that a warranty needs to be complied with, regardless of whether or not its non-compliance materially affects the risk involved in carrying the shipment. As a corollary, when a warranty is not complied with i.e. there is a breach of warranty, the insurer is discharged from liability from the date of such breach, by virtue of Section 35(3). At the outset, therefore, it is important to note that the scheme of the 1963 Act is clear inasmuch as the automatic consequence of a breach of warranty is discharge of the insurer's liability. Such discharge of liability does not require any express conduct or representation from the insurer.
ORDER
In view of the aforesaid discussion, the complaint is dismissed.
