Unichem Laboratories Ltd., Mr. S. … vs New India Assurance Co. Ltd., Mr. … on 28 August, 2006

National Consumer Disputes Redressal
Unichem Laboratories Ltd., Mr. S. … vs New India Assurance Co. Ltd., Mr. … on 28 August, 2006












Unichem Laboratories Ltd. 


C-31 & 32, Industrial Area, 


Meerut Road, Ghaziabad-201003  Complainant 








1. New India Assurance Co. Ltd.  


 39, Navyug
Market, Ghaziabad-201 001 




2. Patel Roadways Limited 


 95, New Arya


Road, Ghaziabad-201 003  Opposite Parties 


















For the Complainant : Mr.
S. Raghawan, Advocate with 


 Mr. Nikhlesh R. , Adbvocate 




For the Opposite Party
No.1 : Mr. Kishore Rawat, Advocate 


For the Opposite Party
No.2 : Mr.
Ranjeet Kumar, Advocate 



  28th August, 2006



 O R D E R




The main question involved in this case
is : in case of loss of insured goods or merchandise
whether the Insurance Company is bound to reimburse on the basis of the cost of
production or on the basis of sale price
or by taking into account cost of
production plus profit.


In our view, in the case of unvalued policy, the
Insurance Company is required to reimburse on the basis of cost of production
of the goods or merchandise and not on the basis of sale price of the goods or
cost of production plus loss of profit.




M/s.Unichem Laboratories Ltd., Complainant herein, has filed
this Original Petition contending that due to fire goods worth Rs.23 lakhs were destroyed during
transit in the godown (at Gaziabad) of
carrier, M/s. Patel Roadways Ltd. (Opposite Party No.2), on 23.3.1993. It is contended that the Complainant has
taken an All India Marine Insurance (Cargo) Special Declaration Policy for
the period between 1.11.1992 and 31.10.1993. It was an open Marine Insurance
policy for a sum of Rs.8 crores. It is their say that on 24.2.1993, Akin
Laboratories, Hyderabad, at the instance
of the Complainant (Ghaziabad Unit), despatched a consignment of 209 C.Boxes
containing 49,820 jars of Unienzyme tablets worth
Rs.23,23,064/- as per two transfer
invoices (Rs.12,35,493/- and Rs.10,88,111/-) through M/s. Patel Roadways
Ltd. The consignment was booked upto Ghaziabad as the destination/delivery point, since the Complainants office and
godown are in Ghaziabad city and that the Carriers godown is also situated in Ghaziabad. It is stated that the goods reached at the
Carriers godown on 4.3.1993, as per the information received by the
complainant. Thereafter,
an incident of fire took place at the godown of the Carrier on
23.3.1993 and the consignment was completely destroyed and the complainant was informed


The Complainant made enquiries with the Carrier. From the Carrier, they came to know that the Carrier had
also taken an insurance policy from the National Insurance Co. Ltd. for the
goods lying in its godown. For the loss
suffered by the Carrier, survey was carried out and loss and damage was
assessed. Yet, the claim made by the
Complainant was not settled by the Carrier.


In the meantime, the Complainant also informed
the Opposite Party M/s. New India Assurance Co. Ltd. (hereinafter
referred to as the Insurance Company) from whom it
has taken Insurance coverage.

The Insurance Company appointed M./s. Agrawal & Sons , New
Delhi as surveyors and information was also sent to the Carrier with
a request to cooperate. The Complainant claimed Rs.23,23,604/-. The
Surveyors after completing the survey, submitted their report on 27th July, 1993. Thereafter, the insurer sought information about the payment of
freight of Rs.8,820/- . The information
sought was submitted, but the claim was not settled by the Carrier.


is also stated that
the Complainant requested the Carrier to make good the loss by
letters dated 12th
June, 1993, 27th August, 1994, 21st May, 1996, 25th
May, 1996 and 27th March, 1997.


Subsequently, the Insurance Company deputed Lt. Col. Khairat
Lal Sharma, Surveyor, Loss Assessor & Investigator. Again, the Surveyor sought
additional information. As the
claim was not settled, hence this complaint against the Insurance Company as
well as the Carrier claiming a sum of Rs.23,23,604/-
with interest @ 18% and costs of
Rs.50,000/- was filed on 31st March, 1997. However,
the prayer is made that
the Insurance Company be directed to pay the amount as stated and no specific
prayer is made against the Carrier.


is not disputed that the Complainant had sent the raw material for
manufacturing of Unienzyme & MPS tablets to Akin Laboratories (P) Ltd, Hyderabad. After the tablets were manufactured, they were sent though the Carrier, Opposite
Party No.2 vide two
Invoice Nos. R142 dt. 24.2.93 and R143 dt. 24.2.93 wherein there is a note to the following



10,47, 283.60. APPROX. COST OF TOTAL


both the invoices labour charges are mentioned as Rs.46,357.50
and Rs.40,827.50.


the claim made by the Complainant, the Insurance Company has produced on record
survey report dated 27.7.1993 of Agarwal &
Sons. While assessing the loss,
Surveyors have discussed the same in detail
and have observed as under:


The tablets
were manufactured by M/s. Akin Laboratories (P) Ltd. on job work basis. The raw material and packing material was
supplied by the insured. The invoices
indicate the labour charges and also the total value of the invoice. The excise duty is included in the
invoice. The declaration to the sales
tax authorities as is evident from the Form 31 is the total Invoice value. The carrier has also given a Non Delivery
Certificate for the total consignment.
Based on these facts the Insured claimed as under:

a) Value of Invoice
No.R142 Rs.12,35,493.40

b) Value of Invoice
No.R143 Rs.10,88,111.10


c) Sub Total Rs.23,23,604.50

d) Less: Salvage NIL


e) Total Amount claimed Rs.23,23,604.50



Note: (i) We have observed that the limit per sending as per
the insurance policy is Rs.20,00,000/-.


(ii) We observed from the Invoices that Invoices consist of two parts
namely (a) manufacturing and labour charges (b) approximate cost of raw
material and packing material and total of the two has been described as cost of total consignment.


Similarly in
G.P.I. issued by AKIN laboratories Private Limited, the assessable value of the
consignments has been taken as Rs.19,81,840/-
on which excise duty amounting to Rs.3,41,867.40 is stated to have been paid. Total comes to Rs.23,23,707/-.


During our
discussions we requested the insured to clarify the words Approximate cost of
Raw Material. As the same is supplied
by the Insured, we wanted to have correct position as this invoice was not a
Sale Invoice but a stock transfer invoice only. Moreover, on checking the
declarations for Raw Material despatch we found only one entry for Rs.5,14,467/- (Despatch date 28.11.92). The policy does not mention basis of
valuation and as per Marine Insurance Act, the Insured can claim on the
basis of actual cost whereas the Transfer Invoice has been made on the basis of Insureds own
sale price as clarified by the Insured during discussions.


After our
clarifications that the actual cost of Raw Material + manufacturing and labour
charges + Both way freight and all other expenses including excise
duty paid can be the only maximum liability, the
insured has now given the total basis of cost (copy enclosed). Insured has included interest of Rs.41,694/- and Administrative overheads of Rs.35,557/-. Since the Interest as well as Administrative
overheads are included based on actual working it can be taken as part of cost.
Therefore, the Assessment of loss works out as follows:


of Raw material Rs.4,34,430.00

Cost of packaging material Rs.1,00,138.00

Manufacturing charges

For both Invoices Rs. 87,185.00


duty paid Rs.3,41,765.00

cost Rs. 4,226.00

cost Rs,

of Administrative overhead Rs. 35,557.00

Freight Rs.


( Hyderabad to Ghaziabad)


Freight Rs. 20,334.00

( Ghaziabad to Hyderabad)





Note: In case of total loss freight paid is not
payable but insured has paid it as transporters insisted at the time of taking
of non-delivery certificate.


In our opinion
although the insured has a right to make the agreed value basis which may be
the Transfer Invoice (Sale Price), but in the absence of any basis of
valuation, in our opinion, only cost including all expenses
should be the basis for claim settlement as per Marine Insurance
Act. Hence, our assessment is for Rs.10,74,149/- and the same has been calculated as per insureds own records.


Survey Report, the loss assessed by the Insurance Company was not paid.


Hence, during the pendency of the
complaint, by an interim order dated 1.12.2005, we have directed the Insurance
Company to pay the admitted amount of Rs.8,05,611/- as per the assessment made
by the surveyor with interest at the rate of 9%
per annum from 1.12.1997 till 31.12.2005. Admittedly, the said amount is
paid by the insurance Company to the Complainant.




Counsel Mr.Raghavan, appearing on behalf of the
Complainant submitted that the Complainant is required to be reimbursed by a
sum of Rs.23,23,604/- on the basis of the transfer
invoices. It is his submission that in preparing the medicine research and
development costs as well as the goodwill is required to be added or taken into
account. On that basis, transfer invoices are prepared which would be the
approximate value of the consignment. He has also referred to Section 29 of the
Marine Insurance Act, 1963 (hereinafter referred to as the M.I. Act) which
provides for valued policy.


As against this, learned Counsel for the Insurance
Company submitted that the Insurance Company is required to reimburse loss
suffered by the insured. He referred to Section 18(3) of the M.I.Act, which provides that in case of insurance on goods
or merchandise, the insurable value is the prime cost of the property insured,
plus the expenses of and incidental to shipping and the charges of insurance
upon the whole. He pointed out that in
the present case the insurance policy is not a valued policy.




our view, there is no substance in the contention of the learned Counsel for
the Complainant that the policy taken by the Complainant was a valued
policy. Section 29 of the M.I.Act provides that a policy may be either valued or
unvalued; a valued policy is a policy which specifies the agreed value of the
subject matter insured; and, in case of valued policy, in the absence of fraud,
the value fixed by the policy is, the sum as is agreed between the insurer and
the assured. In the present case, there
is nothing on record to establish that the policy taken by the Complainant is
valued policy. There is no agreed
valuation by the
insured and the insurer.

It is an Open Marine Insurance Policy with a specific condition that in
case of one trip limit for sending goods would be Rs.20 lakhs
and the sum insured for the entire period of one year was Rs.8 Crores.


Section 30 defines Unvalued policy, to mean, a policy which does not specify
the value of the subject matter insured, but is subject to the limit of the sum
insured, and leaves the insurable value to be subsequently ascertained, in the
manner provided under the Act. For ascertaining the insurable value Sub-section
(3) of Section 18, inter alia, provides that in
insurance of goods or merchandise, the insurable value is the prime cost of the property insured, plus the expenses of and incidental to shipping an
the charges of insurance upon the whole. That has been worked out by the


Surveyors have rightly discussed this aspect and have arrived at the conclusion
that only prime cost including all expenses could be the basis for claim settlement as per the
M.I.Act. For assessing the loss, they have relied
upon undisputed document, Annexure R-3, dated 28th July, 1993, given by the Complainant wherein the cost is
worked out as under:




Working of Cost of 49,820 Jars of Loot Unienzyme


Sl. No.


Amt. In Rs.


Rawmaterials cost @ 8.72 per jar



Pkg. Material
cost @ 2.01 per jar



Mfg. Charges
paid @ 1.75 per jar



Excise duty
paid @ 6.86 per jar



cost involved (working enclosed)



Interest cost
involved (working enclosed)



Adm. Overhead
cost involved (working enclosed)



inward (proof enclosed)



Freight outward
(proof enclosed)



Grant total




upon the loss assessed by the Surveyors,
as the Complainant has not protected the recovery rights against the
Carrier by initiating legal action, the Insurance Company treated the case as
non-standard claim and reduced the loss by 25%
and offered to pay Rs.8,05,611/-

vide its letter dated 28.11.1997 which was not accepted by the Complainant.


From the aforesaid discussion, it can be held that
the total loss suffered by the complainant is
for a sum of Rs.10.74,149/-, which in case of default by the carrier, Insurance Company is required to reimburse to
the Complainant.


Carriers liability:

next question is with regard to carriers liability. As per the
settled law, primary liability to reimburse the Complainant is that of the


the present case, carrier has not disputed the fact of fire at the godown and the loss suffered by the Complainant. Evidence by way of affidavit is filed by one Arun
K. Singh, Assistant Manager (Legal) of the Carrier Company. In the said
affidavit, it has been pointed out that the carrier was not negligent in
discharge of its duties and the damage caused to the consignments was beyond
their control. It is also pointed out that on 3.4.1993, the Complainant was
asked, requested and advised to lodge the claim with their underwriters
immediately to avail the maximum and speedy compensation. The Complainant was
also requested to submit an affidavit stating that the consignment was insured
for transit risk with their respective underwriters and that the insurance
cover was valid and in existence with the underwriters, along with the copy of
the original invoices, insurance policy cover note and consignees copy. It is
also contended that
consignment of the Complainant was at owners risk and carrier was not
responsible for the loss caused to the consignment. Hence, within 3 months of
the loss of consignment by fire, the certificate with the remark consignment
not delivered was issued to enable the Complainant to lodge the claim with
their underwriters.


It is also pointed out that the Insurance Company
of the Carrier has appointed M/s.Mehta & Padamsey Surveyors Pvt. Ltd. and the claims were divided
into three heads, namely, (i) consignments which were
declared to have not been covered by separate marine insurance covers by the
concerned consignors-consignees; (ii) consignment initially as covered under
separate marine insurance covers by consignors-consignees but later found to have
expired and/or not valid at the time of fire; and, (iii) consignments which
were declared to have been covered by separate marine insurance covers by the
concerned consignors-consignees.


that basis, the loss was assessed by the Surveyors. As per the Surveyors
report, they have not assessed the loss with regard to consignments for which marine insurance cover
were taken by the consignors/consignees separately and to that effect survey
report dated 4th April, 1997 given by M/s. Mehta and Padamsey Surveyors Pvt. Ltd. is produced on record.


conclusion, they have stated as under:

insurers liability arises only when the insured makes payment to their customers, in their capacity as bailees. Documentary evidence
of the insured having paid out an aggregate amount of Rs.29,03,145/- has been produced before us and verified. Based on the above On Account
Payment not exceeding Rs.21,94,423/- as worked out
above, can be made to the insured.


reimbursements can be made to the insured as and when they make further payments to the various consignors/consignees; subject to their producing documentary evidence thereof, for which we will issue supplementary reports from time to time.


with the survey report there are various annexures
including Annexure D-1, which is a
statement giving details of affected consignments in
booking-cum-delivery-cum-transhipment godown declared to have been covered under the separate
marine insurance cover is produced wherein the goods transported by the
Complainant is also mentioned.



said survey report dated 4th April, 1997 leaves no doubt that the
Insurance Company of the carrier has kept the question open with regard to payment of damages to be reimbursed by the
carrier to those other consignors/consignees to whom their Insurance Company
has not reimbursed the damages.


the same effect, on behalf of the Carrier (Opposite Party No.2), written
submissions are filed on 17.8.2006 wherein it is, inter alia,
contended that:

that the fire was serious in nature, and there was no fault on
their part as they have taken necessary precautions to prevent the fire in the godown;

non-delivery certificate was also issued to the
Complainant to enable them to lodge their claim with their underwriters
(Respondent No.1);

no relief is sought in the prayer clause against
the carrier;

the claim of the Carrier Company against its
Insurance Company was assessed by the Surveyor by dividing into three parts:

(a). 539
consignments declared to have not been covered by separate marine insurance;

(b). 239 consignments covered
under separate marine insurance by the consignors/consignees but later
found to have been expired and/or not valid at the time of fire;

(c). 202 consignments covered by
separate marine insurance cover taken by the consignors/consignees and on that
basis the Complainant was asked to lodge claim against their underwriters;

(v). Insurance Company (RespondentNo.1) is not a

(vi). the claim is
barred under Section 24-A.

our view, the aforesaid submissions are without any substance. Firstly, law is
settled on the subject. It is the primary liability of the carrier to reimburse
the plaintiff/Complainant in case of loss/damage for non-delivery of the goods
entrusted to them for carriage. For this Sections 8 and 9 of the Carriers Act,
1865, are very clear and the same are interpreted by the Apex Court in Nath Bros. Exim International
Ltd. Vs. Best Roadways Ltd. (2000) 4 SCC 553, wherein the Court has held that
the liability of the carrier to whom the goods are entrusted for carriage is
that of the insurer and is absolute in terms, in the sense that the carrier has
to deliver the goods safely, undamaged and without loss at the destination,
indicated by the consignor. So long as the goods are in custody of the carrier,
it is the duty of the carrier to take due care as he would have taken of his
own goods and he would be liable if any loss or damage was caused to the goods
on account of his own negligence or criminal act or that of his agent and
servants. The Court has also observed that the carrier can escape his liability
only if it is established that the loss or damage was due to an act of God or
enemies of the State. The Court has also observed that the expression at owners
risk does not exempt the carrier from his own negligence or negligence of his
servants or agents.


the contention that the claim is barred under Sec.24-A of the Consumer
Protection Act, 1986, is without any substance. The Carrier has not settled the claim made
by the parties till the Surveyors of the Insurance Company of the Carrier
submitted their report. The report, as stated above, was submitted only on 4th April, 1997. Further,
the Complainant has also written letters to the Carrier to settle their claims.
Their letters are dated 12.6.1993; 27.8.1994; 21.5.1996; 25.5.1996; and,
27.3.1997. At no point of time the carrier has denied its liability. However,
the Carrier had asked the Complainant to lodge its claim with the underwriters.
On that basis, claim was lodged with Opposite Party No.1. But, as the claim was
not settled, complaint was filed before this Commission on 31st March, 1997. Therefore, the
contention that the claim is time barred is without any basis.


next contention is with regard to prayer clause. In the complaint which is
filed before this Commission, the Carrier is a party Respondent. All the
necessary facts are stated with regard to the Carriers liability. It is stated
that documents pertaining to the loss and resultant claim was furnished to the
Carrier. Thereafter, the Complainant wrote a letter to the Carrier to make good
the loss to the tune of Rs.23,23,604/-. Another
communication was sent. Repeated letters were sent. But, there was no response.
Thereafter, an inquiry was made as to whether the Insurance Company of the
Carrier has settled the claim of the Complainant or nor. However, the
Complainant had not received any information. Therefore, at the initial stage,
National Insurance Company Ltd. which had insured the Carrier was also made as
party Respondent. However, as the
Insurance Company of the Carrier was not necessary party it was required to
be deleted. Further, before the Consumer Forum, inquiry is inquisitorial one and
not adversary. Therefore, not claiming specifically against the Carrier in the
prayer clause would not defeat the right of the Complainant to receive the
reimbursement from the Carrier which is primarily liable to reimburse the
Complainant for the loss suffered by it.



view of the foregoing discussion, the complaint is partly allowed. It is held
that the Respondent No.2 Carrier shall pay a sum of Rs.10,74,149/- with
interest at the rate of 9% p.a. from 23.9.1993 (i.e. after six months from the
date of the incident of fire). The Carrier is directed to pay the said sum
within a period of three months from today.
If the amount is not
paid by the carrier within the stipulated time, it would be open to the Complainant to
recover the remaining amount from the Insurance Company. In case the Carrier pays the amount as stated
above, Complainant shall refund the amount paid by the Insurance Company as per our
interim order dated 1.12.2005. In any
case, if there is failure on the part of the Carrier to pay the amount, it
would be open to
the complainant to recover the same by filing execution petition and refund
the amount paid
by the Insurance Company.















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