Coverage ends when goods reach destination

Videocon Industries, the flagship company of Videocon Group, had a glass division factory at Chavaj in Bharuch, for making colour televisions. The company placed a purchase order with Caterpillar Motoren Gmbh in Germany for Caterpillar diesel engine generator sets and accessories. The consignment was packed in 24 containers and despatched by ship from Hamburg Seaport in France to Indira Seaport in Mumbai, from where it was to be transported by road to Chavaj.

The consignments were insured with Oriental Insurance under a Marine Cargo Policy for ~80 crore, for which a premium of ~4,53,001, including service tax, was paid. The limit of coverage per transit was limited to ~8 crore. Later, on payment of additional premium, an endorsement was passed to extend the coverage to ~100 crore.

When the driver was shunting the trailer for unloading the generator set, one of the wheels went over a slope, which resulted in tilting of the trailer on one side, causing the generator to slip and fall to the ground. The damage to the generator was communicated to the insurer, and a claim was lodged for ~12 crore.

The spot surveyor asked the insured to straighten the toppled generator so that he could assess the external damage. But the insured did not act on this request. So, the loss was tentatively assessed at ~7 crore to cover the cost of replacement of the damaged parts.

The manufacturer quoted the repair cost as ~322.82 lakh. On informing the surveyor and production of the repair bills, the surveyor recalculated the loss as ~257.76 lakh.

The final surveyor raised doubts about the genuineness of the claim, as the trailer reached on February 20, 2004, but unloading was delayed for three days and done on February 23, 2004. Also, doubt was raised regarding the “damage certificate” issued by the transporter as there was no evidence of damage caused in transit since the driver of the trailer was absconding. Significantly, the insured's engineer in charge stated that the generator had been received in sound condition but had fallen while being shifted to the generator room for installation. The insurer did not settle the claim on the ground that coverage had ceased when the transit was completed upon reaching the destination, and there was no liability for the loss which subsequently occurred while shifting it for installation in the generator room.

The insured obtained the opinion of the surveyor, which stated that coverage under the transit policy applied till the final place of installation, so the claim would be payable. On the strength of this opinion, the insured filed a consumer complaint before the National Commission. This was contested by the insurer. The National Commission observed there was no loss or damage during transit from France to Chavaj, where it was delivered on February 20, 2004, in proper condition. It noted that the loss had occurred subsequently on February 23, 2004, due to mishandling by the agency appointed by Videocon to shift the generator to the generator room. The Commission concluded that coverage under the policy had ended when transit was completed upon the consignment reaching its destination. It concluded that the subsequent shifting of the generator would not fall within the scope of the marine and transit insurance policy.

Accordingly, by its order of September 23, 2021, delivered by Justice Ram Surat Ram Maurya, the National Commission upheld the repudiation of the claim and dismissed the complaint.

Individual proprietors and small entrepreneurs importing goods should bear in mind that the same principle will apply if they are involved in a similar dispute.

According to the National Commission, shifting of the generator after completion of transit does not fall within the scope of the marine and transit policy