Case: National Insurance Co. Ltd Vs. Sky Gems

the consignee, M/s. Emdico (London) Limited, for the original Policies of Insurance together with all correspondence exchanged with the postal authorities concerning their liability, and also a clarification as to whether they had remitted full payment of the value of the missing merchandise to the Indian suppliers. In another letter dated 20th June, 1991, M/s. W.K. Webster & Co. offered to settle the claim as soon as they received the necessary documentation from India and also mentioned that they shall present the same to the Bank in order to obtain the required funds against the Letter of Credit, which was available to them for payment of claims. The consignee, Emdico (London) Limited, sent a reply to M/s. W.K. Webster & Co. on 8th April, 1991 and the last paragraph of their letter reads as follows: "As regards the question whether we have remitted full payment of the value of the missing merchandise to our Indian suppliers, the answer is that we havent done so and we suggest that the settlement may be concluded direct with Sky Gems in India, however, if you will feel it is more convenient for you to deal with us as the consignees of the goods, we shall be happy to do so. One way or the other it doesnt seem to make much difference." 5. From the above correspondence, it is evident that the consignee, Emdico (London) Limited, did not pay the value of the missing merchandise to the respondent. There is no evidence to show that the necessary documents were endorsed in favour of the consignee and that they were transferred to them. These facts will show that the title to the goods in question had not passed to the consignee, M/s. Emdico (India) Limited and the respondent continued to be the owner having insurable interest over the goods. 6. The learned senior counsel for the respondent contended that the good were sent on CIF contract and the moment the goods were consigned, the title would pass to the consignee. We do not find much force in this contention. It is true that the goods are ascertained, but even then the title would pass based on the contract between the parties. The rights and liabilities of the parties in a CIF contract have been described by Lord Porter in Comptoir d Achat vs. Luis de Ridder; The Julia (1949) A.C. 293 at 309, which is quoted in the Book Schmitthoffs Export Trade - The Law and Practice of International Trade by Leo D Arcy, Carole Murray and Barbara Cleave [10th Edition], at page 29, and read as follows: "The obligations imposed on a seller under a c.i.f. contract are well known, and in the ordinary case, include the tender of a bill of lading covering the goods contracted to be sold and no others, coupled with an insurance policy in the normal form and accompanied by an invoice which shows the price and, as in this case, usually contains a deduction of the freight which the buyer pays before delivery at the port of discharge. Against tender of these documents the purchaser must pay the price. In such a case the property may pass either on shipment or on tender, the risk generally passes on shipment or as from shipment, but possession does not pass until the documents which represent the goods are handed over in exchange for the price. In the result, the buyer, after receipt of the documents, can claim against the ship for breach of the contract of carriage and against the underwriters of any loss covered by the policy. The strict form of c.i.f. contract may, however, be modified. A provision that a delivery order may be substituted for a bill of lading or a certificate of insurance for a policy would not, I think, make the contract be concluded on something other than c.i.f. terms." (Emphasis supplied) 7. From the above passage, it is clear that the right of the buyer to claim policy amount would arise when he obtained title to the property and he must produce the documents of transfer. Here, the buyer was not in possession of any such documents of title. The letter written by the consignee, M/s. Emdico (London) Limited on 8th April, 1991 clearly shows that they had not paid the value of the missing merchandise and had suggested to M/s. W.B. Webster & Co. that the claim may be settled with the respondent-Sky Gems in India. The consignee could not produce any documents concerning their title to the goods before M/s W.K. Webster & Company and this evidently shows that the title had not passed to the consignee at London. The insurable interest over the goods continued to be with the respondent. Under such circumstances, the respondent is not entitled to receive the payment in Pounds Sterling. 8. The respondent has paid the insurance premium in India currency and continued to have title over the goods as it never passed to the consignee. Had the title passed to the consignee, and if they had preferred the claim, the insurance amount would have been payable in London in Pound Sterling. The National Commission did not notice these points and directed the appellant to pay the amount in Pound Sterling mainly on the ground that the policies issued by them stated that the insurance amount was payable at London. 9. Having regard to the facts and circumstances of the case, we do not think that the appellant is liable to pay the insurance amount in Pounds Sterling. We set aside the direction of the National Commission to pay the amount in Pounds Sterling and hold that the respondent is entitled to get Rs. 28,30,000 with interest @ 18% from the date on which it preferred the claim petition before the appellant, till payment. The respondent is also entitled to receive Rs. 20,000 towards costs ordered by the National Commission.10. The Order passed by National Commission shall stand modified to the extent indicated above. 11.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]5. From the above correspondence, it is evident that the consignee, Emdico (London) Limited, did not pay the value of the missing merchandise to the respondent. There is no evidence to show that the necessary documents were endorsed in favour of the consignee and that they were transferred to them. These facts will show that the title to the goods in question had not passed to the consignee, M/s. Emdico (India) Limited and the respondent continued to be the owner having insurable interest over the goods.From the above passage, it is clear that the right of the buyer to claim policy amount would arise when he obtained title to the property and he must produce the documents of transfer. Here, the buyer was not in possession of any such documents of title. The letter written by the consignee, M/s. Emdico (London) Limited on 8th April, 1991 clearly shows that they had not paid the value of the missing merchandise and had suggested to M/s. W.B. Webster & Co. that the claim may be settled with the respondent-Sky Gems in India. The consignee could not produce any documents concerning their title to the goods before M/s W.K. Webster & Company and this evidently shows that the title had not passed to the consignee at London. The insurable interest over the goods continued to be with the respondent. Under such circumstances, the respondent is not entitled to receive the payment in Poundsdo not think that the appellant is liable to pay the insurance amount in Pounds Sterling. We set aside the direction of the National Commission to pay the amount in Pounds Sterling and hold that the respondent is entitled to get Rs. 28,30,000 with interest @ 18% from the date on which it preferred the claim petition before the appellant, till payment. The respondent is also entitled to receive Rs. 20,000 towards costs ordered by the National Commission.