Bombay High Court
Tata Consumer Products Limited vs Ecgc Limited on 10 June, 2025
Author: Abhay Ahuja
Bench: Abhay Ahuja
2025:BHC-OS:9132
1-COMSS 2030 OF 1996.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL SUMMARY SUIT NO. 2030 OF 1996
TATA Consumer Products Limited,
A company incorporated under the
Companies Act, 1956 and having is
Registered Office at 1, Bishop,
Leroy Road, Calcutta 700 020. ...Plaintiff
Versus.
ECGC Limited,
A Government Company incorporated
Under the Companies Act, 1956 and
Having its Registered Office at Express
Towers, 10th Floor, Nariman Point,
Mumbai - 400 021 ...Defendant
Mr. Pradeep Sancheti, Senior Advocate along with Mr. Sandeep Parikh,
Mr. Arun Siwch, Ms. Priyanka Mitra and Mr. Karan Gandhi i/by Cyril
Amarchand Mangaldas, Advocate for the Plaintiff.
Mr. Dinesh Purandare along with Ms. Shanaya Dadachanji and
Ms. Resham S. i/by Manilal Kher Ambalal & Co, Advocate
For the Defendant.
CORAM : ABHAY AHUJA, J.
RESERVED ON : 9th NOVEMBER 2023
PRONOUNCED ON : 10th JUNE, 2025
JUDGMENT :
–
1. The Plaintiff TATA Consumer Products Limited 1 is a company
incorporated under the provisions of the Companies Act, 1956,
carrying on business, inter alia as exporters of tea.
1
Formerly known as Tata Tea Ltd and then Tata Global Beverages Ltd.
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2. The Defendant is a Company incorporated under the provisions
of the Companies Act, 1956 and a wholly owned Government of India
undertaking set up in 1964 for the purpose of promoting the country’s
export promotion drive and its functions include issuing of guarantees
to exporters in connection with recovery of their export proceeds.
Rassik Woodworth Ltd. (“RWL”) is a company incorporated under the
Companies Act 1956 and the Seller. RVO Kazpischepromsyrio (“RVOK”)
is an organization in the Republic of Kazakhstan and the Importer.
FACTUAL BACKGROUND
3. On 26th August, 1993, RWL (Seller) entered into a Contract
bearing no. I-B/9-14/93 with RVOK (Importer) for the supply of 3000
Metric Tonnes (“MT”) of Tea (“Export Contract”)(Exhibit P-3). Clause 6
of the Export Contract stipulated the mode of payment and is
reproduced as follows:
“6. Payment
The payment for delivered goods shall be made by Barter
Exchange of goods within 120 days from the date of
delivery being affected by the Seller Plus interest for the
period of non-payment 15% per year. The above terms will
be covered by a guarantee for payment by the Ministry of
Foreign Economic Relations of Kazakhstan.
For Barter Exchange of goods Buyer presently has available
for offer goods as per supplement N2 to the present
contract.”
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4. On the same date, an addendum to the said Contract was
executed between RWL and RVOK stipulating that if the said Contract
for barter of goods could not be finalized for any reason, then RVOK
was to pay for the Tea in U.S. Dollars within 120 days of the date of
delivery with interest @ 15% per annum. (“First Addendum”)(Exhibit
P-4). The First Addendum is reproduced as follows:
“In case the payment terms as per clause 6 of the Contract No.
I-B/9-14/93 dtd. 26.08.93 are not possible that is to say if the
Contract for Barter supply of goods can not be finalized for
any reason or if delivery /shipment under such a Contract is
not made within the stipulated period, then the Buyer shall
pay to the Seller for delivered goods in US Dollars within 120
days from the date of delivery being effected by the Seller. This
payment is to made through remittance by the Buyer of the
Contracted amount of delivered tea, plus interest 15% per
year to the Bank Account of the Seller at Canara Bank Janpath
New Delhi, India. The above payment will be guaranteed by
the Ministry of Foreign Economic Relations of Kazakhstan. This
addendum forms an integral part of the Contract No. I-B/9-
14/93 dtd. 26.08.93.”
5. A further addendum of even date to the Export Contract was
executed between RWL and RVOK allowing RWL to ship Tea and
purchase barter goods from RVOK through nominated associates on
account of RWL (“Second Addendum”)(Exhibit P-5).
6. On 25th August, 1993, Guarantee was issued by the Ministry of
Foreign Economic Relations of Kazakhstan (“the Ministry”) in the event
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RVOK is unable to meet its payment obligations under the Export
Contract for any reason whatsoever (Exhibit P-8).
7. Earlier in and around September 1992, the Plaintiff obtained a
policy from the Defendant bearing Policy No. CAL/POL/SCR/30679/70
covering export risks in respect of shipments effected during the Policy
period which is 1st September 1992 to 31st August 1994. (As per
Defendant’s letter dated September 16, 1993 bearing Ref No
CAL/PCL/SCR/30679/93 (Exhibit P-1).
8. On 16th September, 1993, the Defendant issued a letter bearing
reference No. CAL/POL/SCR/30679/93, to the Plaintiff increasing the
maximum liability under the said Policy from Rs. 20 Crores to Rs. 40
Crores which would take effect from May 26, 1993 (Exhibit P-2).
9. On 6th October, 1993, RWL issued letter to Plaintiff referring to
the Export Contract and the Addendum and confirmed the assignment
to the Plaintiff as a nominated associate to supply 1225 MT of Tea to
the Importer (Exhibit P-6). Initially, RWL was to supply the entire
quantity of 3000 MT of Tea. However, by way of second addendum, the
supply of 1225 MT of tea was assigned by RWL to the Plaintiff, and the
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supply of the remaining quantity of tea was assigned to M/s.
Assambrook Exports Ltd.(now known as ABL Limited, “ABL”) and M/s.
Harrisons Malayalam Ltd (“HML”) (Exhibit D-1/7).
10. On 7th October, 1993 the Defendant by its letter agreed to issue
specific cover to the Plaintiff subject to the terms and conditions
mentioned therein (Exhibit P-7). The terms and conditions are
reproduced as follows:
“We have pleasure in approving above transaction subject to
the following terms and conditions.
1. The payment for delivered goods shall be made by Barter
Exchange of goods within 120 days from the date of delivery;
2. Our liability will arise only after default has been
established on the guarantee of the Ministry ;
3. Percentage of cover will be 75% of the loss;
4. Waiting period for filing of claim will be 4 months from the
due date of payment;
5. You have the right to export in your own name as per the
Contract and the Bills of Exchange shall be raised in your
name and also you have a right to recourse against buyer in
the event of any default; and
6. A premium rate applicable will be at the rate of 151 paise
per Rs. 100/- of the gross invoice value.”
11. From 30th September, 1993 till 29th October, 1993 the Plaintiff
effected 5 (five) shipments of the total value of US $ 3.185 million to
RVOK (Exhibit P-11).
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12. On 26th June, 1994, a letter was issued by the Plaintiff to the
Defendant lodging their claim with the Defendant for the amount due
at the time. In the said letter, the Plaintiff acknowledged receipt of
monies of Rs.1,05,34,020.25/- in respect of the shipments effected.
However, other than the part payment, no further payments of the
outstanding sum were made by RVOK to the Plaintiff. The Ministry also
failed to pay the dues owed by RVOK as a guarantor (Exhibit P-9).
13. On 4th July, 1994, RWL issued a letter to the Defendant stating
that the First Addendum was executed to safeguard RWL’s interests. The
said letter also enclosed a report which outlined the sequence of events,
details of the problem faced in the barter exchange of goods, why the
payment in US dollars was delayed, and the action taken by RWL in
order to recover the amounts due (Exhibit P-10).
14. On 7th July, 1994 the Plaintiff lodged a formal claim of Rs.
7,48,42,700.71/- (75% of the then outstanding amount i.e.
Rs.9,97,90,267.61/-) with the Defendant (Exhibit P-11).
15. On 5th August, 1994, the Plaintiff issued a letter requesting the
Defendant to settle their claim expeditiously since all documentation
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required by the Defendant for processing the Plaintiff’s claim had been
submitted (Exhibit P-12).
16. On 13th September, 1994 in reference to oral discussions with the
Defendant, the Plaintiff issued a Letter to the Defendant responding to
the queries of the Defendant, viz. That the contention on the ground
that there has not been any barter of goods is untenable as the First
Addendum which was submitted by the Plaintiff while applying for
specific approvals forms an integral part of the Export Contract. Further
the letter stated that since all necessary documents evidencing default
on the part of the Ministry as well as why barter of goods did not take
place have already been furnished, the Defendant’s liability to settle the
Plaintiff’s claim has arisen (Exhibit P-13).
17. On 15th September, 1994 the Defendant issued a Letter of
Repudiation to the Plaintiff (Exhibit P-14) repudiating their liability on
the following two (2) grounds:
i. RVOK offered goods in barter exchange, however, the Plaintiff
chose not to import goods offered by the Buyer for trade reasons,
without consulting the Defendant; and
ii. The loss suffered by the Plaintiff is a trade loss which is not
covered by the Defendant.
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18. On 22nd September, 1994, Plaintiff issued a Letter in response to
the Defendant’s Letter dated 15th September, 1994 reiterating their
position. Further, the Plaintiff once again requested the Defendant to
make the payments due against its claim without any further delay
(Exhibit P-15).
19. On 30th September, 1994, Defendant issued a Letter to the
Plaintiff reiterating their grounds for repudiation and further stating
that the guarantee issued by the Ministry was only a security for
payment (Exhibit P-16).
20. On 10th November, 1994, Plaintiff issued a Letter to the
Defendant clarifying its position and further stating that the Plaintiff
failed to keep the Defendant informed of the Barter Exchange not going
through is an untenable ground to reject the Plaintiff’s claim (Exhibit P-
17).
21. On 6th March, 1995, the Plaintiff’s Advocates issued a letter
calling upon the Defendant to make payment to the Plaintiff of their
claim with interest within a week from the date of the receipt of the
said letter (Exhibit P-18).
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22. On 22nd March, 1995, Advocates for the Defendant in response to
the aforesaid letter issued an Interim Reply, stating that they are taking
detailed instructions from the Defendant and will revert upon receiving
the same (Exhibit P-19).
23. On 25th April, 1995, Advocates for the Defendant issued a letter
to the Advocates for the Plaintiff contending that the non-payment in
hard currency was not a risk insured under the said Policy on the
ground that the “approved” mode of payment under the said Policy was
barter exchange. The said letter further stated that Defendant did not
provide approval to the First Addendum which sought to permit
payment in cash (Exhibit P-20).
24. On 8th August, 1995, Advocates for the Plaintiff issued a letter in
response to the Letter dated 25 th April, 1995 denying the contentions of
the Defendant (Exhibit P-21).
25. In the above factual background, the Plaintiff had filed the
present Commercial Summary Suit on 12th June, 1996 for recovery its
dues for a sum of Rs. 6,59,85,531.02/-.
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26. On 29th April, 1997 RWL issued a letter to the Plaintiff enclosing
a demand draft of the sum of Rs.25,95,409/- on account of RVOK as
further part payment for the export of tea in terms of the Export
Contract (Exhibit P-26). On 4th June, 1997, RWL issued letter to the
Plaintiff enclosing a demand draft of the sum of Rs. 17,07,000/- on
account of RVOK as further part payment for the export of tea in terms
of the Export Contract.
27. On 30th September, 1997, this Court had granted leave to the
Defendant to defend the Suit unconditionally. Accordingly the
Defendant has by its Written Statement filed on 14 th May, 1998 denied
its liability.
28. As the Defendant repudiated their liability with respect to all
three nominated associates, on 18 th December, 2003 ABL preferred a
Writ Petition before a Single Judge Bench of the Hon’ble Calcutta High
Court inter alia, praying for quashing of the Letters of Repudiation
issued by the Defendant and direction to the Defendant to make
payment of the dues under their Insurance Policy. The Ld. Single Judge
of the Hon’ble Calcutta High Court allowed the Writ Petition and
observed that there was nothing on the record to show that ABL was
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liable to consult the Defendant prior to rejecting the payment by barter
for any reason whatsoever. Thereafter, the Defendant herein preferred
an Appeal before the Appellate Bench of the Hon’ble Calcutta High
Court against the Order of the Ld. Single Judge allowing the Writ
Petition and issuing the directions as prayed for by ABL therein. The
Appellate Bench of the Hon’ble Calcutta High Court reversed the
findings of the Single Judge bench holding that as ABL’s claim involves
disputed questions of fact, the same cannot be adjudicated in a Writ
Proceeding under Article 226 of the Constitution of India. ABL
preferred an Appeal against the Judgment of the Appellate Bench of the
Hon’ble Calcutta High Court before the Hon’ble Supreme Court which
was allowed (Exhibit P-22).
29. As the Defendant repudiated their liability with respect to HML,
HML filed a Recovery Suit against the Defendant herein being O.S.
No.1367 of 1998 for monies under its Insurance Policy before the
Hon’ble Subordinate Judge’s Court, Ernakulam at Kerala. On 26 th
October, 2007 a judgment and decree was passed in favour of HML.
Being aggrieved by the said Decree, the Defendant herein preferred an
appeal before the Hon’ble Kerala High Court. The Hon’ble Kerala High
Court dismissed the appeal and placed reliance on the findings of the
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Ld. Single Judge of the Hon’ble Calcutta High Court in the case of ABL
v. ECGC which was upheld by the Hon’ble Supreme Court (Exhibit P-
23).
30. On 22nd April, 2009 this Court permitted the Plaintiff to amend
the Plaint and bring on record the Hon’ble Supreme Court Judgment of
Assam Brook Ltd. v. ECGC Ltd (2004) 3 SCC 553 (“ABL judgment”) and
the Kerala High Court Judgment of ECGC Ltd. v. Harrisons Malayalam
Ltd Order dated 26th October 2007 in R.F.A. No. 147 of 2003 (“HML
judgment”) as ABL and HML had also obtained export risk policies
from the Defendant and their claims were also repudiated and rejected
by the Defendant on identical grounds.
31. By Additional Written Statement filed on 23 rd June, 2009 the
Defendant has denied that issues involved in the present suit were also
involved in the petition filed by ABL and the suit filed by HML or that
the Plaintiff is entitled to a decree in terms of the reliefs sought on the
basis of judgment in those proceedings.
32. By Order dated 6th May 2014, this Court has framed the
following issues:
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(1) Whether the issues arising in the Suit are finally
decided by the Hon’ble Supreme Court in the matter of ABL
International Ltd v. ECGC & others (reported in (2004) 3 SCC
553) as well as by the Appellate Bench of the Kerala High
Court in the matter of ECGC v. Harrisons Malayalam Ltd in
favour of ABL International Limited and Harrisons Malayalam
Ltd?
(2) If the answer to Issue No.1 is answered in affirmative
then whether the Plaintiff is entitled to a decree as prayed for
in the Suit?
(3) In the event of Issue Nos. 1 and 2 being answered in
the negative, whether the claim made by the Plaintiff is
covered by the Insurance Policy dated 22nd September 1992
(Exhibit A to the Plaint) and the letter of approval dated 7 th
October 1993 read with the two addenda to the Contract
dated 26th August 1993 (Exhibits C and D to the Plaint) and
that the Defendant is liable to make payment to the Plaintiff
under the Policy and Cover?
(4) In the event of Issue Nos.1 and 2 being answered in
the negative, whether Plaintiff is entitled to the monetary
claim made in the particulars of claim to the Plaint or any
other amount from the Defendant?
(5) In the event of Issue Nos. 1 and 2 being answered in
the negative, whether the Plaintiff is entitled to interest at the
rate of 15% p.a. on the monetary claim made in the
particulars of claim?
(6) What order?
33. On 27th August, 2014, this Court passed Order marking the
Documents of the Plaintiff.
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34. By Order dated 21st June, 2017, the Statement of Claim of the
Plaintiff was amended in light of further payments received by the
Plaintiff, and the claim stood reduced to Rs. 4,39,05,715.31/- being
75% of the balance outstanding dues excluding interest.
35. By Additional Written Statement filed on 10 th July, 2017, the
Defendant has denied the amended claim of the Plaintiff.
36. On 15th September, 2017 Affidavit of Evidence of Plaintiff
Witness Mr. Amitava Ranjan Sen, who was the Head, Group Treasury
Services with the Plaintiff was filed.
37. On 5th February, 2020, the Court passed Order marking the
Affidavit of Evidence of Plaintiff Witness as Exhibit P-24 and marked
the pending documents in the Plaintiff’s Compilation of Documents.
38. From 21st December 2022 to 04th April 2022, Plaintiff’s Witness
Mr. Sen was examined by the Defendant.
39. On 20th June, 2022, Order was passed by this Court marking the
Letter dated 9th October 1993 from RWL to one R.K.Khosla and its
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enclosures tendered on behalf of the Defendant during the cross
examination of PW-1 Mr Sen as Exhibit D-1.
40. On 30th June, 2022 the Defendant filed the Affidavit of Evidence
of Mr. Lakshmi Narayan Sahu, Assitant General Manager-Buyer,
Underwriting Department at Defendant’s Mumbai Head Office. By
Order dated 21st July, 2022 the Affidavit of Evidence of Defendant
Witness Mr. Sahu was marked as Exhibit D-1/1.
41. On 28th July, 2022, the Documents in the Defendant’s
Compilation of Documents were marked as Exhibit.
42. From 23rd August 2022 to 30th August 2022, Defendant’s Witness
Mr. Sahu was examined by the Defendant.
43. Thereafter, I have heard the learned Senior Counsel at length on
11th October 2023, 13th October 2023, 25th October 2023, 26th October
2023, 8th November 2023. Extensive submissions have been canvassed
by the learned counsel appearing for the parties. Mr. Pradeep Sancheti,
learned Senior Counsel has made submissions on behalf of Plaintiff. Mr.
Dinesh Purandare, Learned Counsel (now learned Senior Counsel) has
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made submissions on behalf of the Defendant. The arguments were
concluded on 9th November 2023 with liberty to the parties to file
Written Submissions within a period of two weeks. On 11 th December
2023, the learned Counsel sought extension of time to file Written
Submissions. On 22nd December 2023, the Learned Counsel for both
parties sought the leave of the Court to tender the Written Submissions
accordingly Written Submissions were filed on 22nd December 2023.
SUBMISSIONS ON BEHALF OF PLAINTIFF.
44. Mr. Sancheti, the learned Senior Counsel appearing for Plaintiff
would submit that claim of the other two nominated associates ABL
and HML were also rejected by the Defendant on identical grounds. He
would submit that the Plaintiff has filed the present suit whereas ABL
preferred a Writ Petition before the Hon’ble Calcutta High Court and
HML filed a Recovery Suit before the Subordinate Judge’s Court,
Ernakulam at Kerala. That by the decision in ABL International Ltd. V.
ECGC & Ors2 the Hon’ble Supreme Court reinstated the Judgment of
the Ld. Single Judge and held that there was nothing on record to show
that ABL under the contract of insurance was liable to consult the
Defendant therein who is also the Defendant herein prior to rejecting
2
(2004) 3 SCC 553
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payment by barter for any reason whatsoever. Learned Senior Counsel,
has placed reliance on Paragraphs 31 to 51 of the judgment submitting
that the same are applicable to the present case as well.
45. Mr. Sancheti has taken this Court through the interpretation and
findings by the Hon’ble Supreme Court in the case of ABL International
Ltd. V. ECGC & Ors (supra), on the payment Clause 6 of the Export
Contract (Exhibit P-3), the First Addendum to the Export Contract
(Exhibit P-4), the Second Addendum to the Export Contract (Exhibit P-
5), the Insurance Policy (Exhibit P-1), the Letter of Specific Approval (P-
7) and the repudiation of claim by the Defendant.
46. Further, Mr. Sancheti submits that, the Defendant’s Letter of
Approval dated 7th October 1993 (Exhibit P-7) in the present Suit, is
identical to the Letter of Approval given by the Defendant to the other
nominated associates. That the Letter of Approval dated 8 th September,
1993 issued to ABL has been quoted by the Hon’ble Supreme Court in
its judgment and that Clause 3A of the Letter of Approval dated 08 th
September 1993 is identical to the Clause 2 of Exhibit P-7 viz. “Our
liability will arise only after default has been established on the
guarantee of the Ministry.”
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47. Mr. Sancheti would further submit, the Recovery Suit filed by
HML on similar facts was decreed in favour of HML and an Appeal
preferred by the Defendant therein who is also the Defendant herein
before the Hon’ble Kerala High Court came to be dismissed. Mr.
Sancheti has pointed out that Hon’ble Kerala High Court had placed
reliance on the decision in the case of ABL International Ltd. V. ECGC
& Ors (supra) of the Hon’ble Supreme Court and held that the factual
matrix in the cases of ABL and HML are in no way different and
accordingly dismissed the Appeal preferred by ECGC upholding the
judgment and decree passed by the Subordinate Judge’s Court.
48. Mr. Sancheti has submitted that the Kerala High Court Judgment
has quoted the Letter of Approval dated 07 th October 1993 (Exhibit A20
therein) issued by the Defendant to HML, submitting that this Letter of
Approval is identical to the Letter of Approval given to the Plaintiff
herein.
49. Mr Sancheti has also taken this Court through the judgment of
the Hon’ble Supreme Court, viz. paragraphs 2, 35, 39 to 51 and
through the judgment of the Hon’ble Kerala High Court, particularly
paragraphs 1, 2, 4, 6, 7, 8 to highlight the points of similarity. Learned
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Senior Counsel has further submitted that the following facts are
similar to all 3 (three) nominated associates and submitted that the
same cannot be disputed by the Defendant:-
(a) The Guarantee given by Ministry of Foreign Economic Relations
(Ministry) (Exhibit P-8);
(b) RBI was kept in the loop with respect to failure of barter in order to
effect necessary changes for banking transaction;
(c) Ministry of Foreign Economic Relations forwarded same letter dated
March 18, 1994 and admitted its liability that it has defaulted for its
own reasons;
(d) RVOK offered only some goods for barter and not all items included
in the schedule;
(e) Claim was made before the Defendant for compensation for loss
suffered by the Nominated Associates;
(f) Part Payment of the consideration by RVOK in US Dollars.
50. Mr. Sancheti, learned Senior Counsel has laboured to bring out
the points of similarity with present Suit, the ABL judgment as well as
the HML judgment on the aspects including the risks insured under the
ECGC policy, the payment clause in the principal contract, the First
addendum, Second addendum, the Defendant’s letter of approval, the
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Guarantee given by the Ministry, the letter to the RBI, the Ministry’s
letters, the offer by RVOK of some items for barter, the claims made
before the defendant, repudiation letter dated 15 th September, 1994,
the Defendant’s letter dated 30th September, 1994 as well as the fact of
part payment of the consideration by RVOK in US Dollars.
51. Mr. Sancheti would further submit that there cannot be any
doubt that both the aforesaid decisions squarely apply to the present
Suit. Learned Senior Counsel would rely on the judgment of the Apex
Court in Hari Singh v. State of Harayana3 and judgment of the Gujarat
High Court in Najuddin Karimuddin Shaikh v. Commissioner of Police,
Sural & Ors.4 and submit that like cases should be decided alike,
otherwise in same questions of law or same set of facts different
persons approaching a court can get different orders, leading to judicial
anarchy. Mr. Sancheti would also place reliance on the judgment of
Chairman-Cum-M.D., F.C.I.L. & Anr. v. Regional Labour Commissioner
& Ors5 and Ramachandra Barathi v. The State of Telangana6 to butress
the submission that law declared by the Hon’ble Supreme Court is
binding on all courts by virtue of Article 141 of the Constitution of
India.
3
(1993) 3 SCC 114
4
1989 SCC OnLine Guj 55
5
2016 SCC OnLine All 2504
6
Order dtd. November 21, 2022 passed in SLP (Crl.) No. 10356 of 2022
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52. Mr. Sancheti submits that since the documents are common,
identical (similar) and have already been interpreted in the ABL and
HML Judgments in favour of the other nominated associates, the Issues
No. 1 and 2 be answered in affirmative. Mr. Sancheti, learned Senior
Counsel has further submitted that interpretation of a contract is a
question of law and since the Hon’ble Supreme Court in the ABL
judgment has decided the question of law with respect to the particular
clauses of the contracts and since the Plaintiff has discharged its burden
of proving the similarity of issues, the onus shifts on the Defendant to
prove otherwise. Learned Senior Counsel placed reliance on the
following judgments:
i. Sir Chunnilal V. Mehta & Sons, Ltd. v. Century Spinning and
Manufacturing Co. Ltd.7
53. Mr. Sancheti has taken this Court through the correspondence
between the parties with respect to the claim of the Plaintiff and has
submitted that (i) the Plaintiff by Exhibit P-9 informed the Defendant
regarding the non-payment on their exports by RVOK to which no reply
has been received by the Defendant. (ii) that by the Claim Form
7
1962 SCC OnLine SC 57
8
(2006) 5 SCC 558
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submitted on July 7, 1994 (Exhibit P-11) the Plaintiff has lodged its
formal claim with the Defendant wherein the Plaintiff has provided the
details of outstanding bills, mentioning the details of the premium paid
by the Plaintiff. Mr. Sancheti has submitted that no reply was received
from the Defendant on their claim. Mr. Sancheti submits that the
Defendant has failed to show any demand for original bills was made
by the Defendant on their claim. Mr. Sancheti has submitted that the
Plaintiff has issued letters at Exhibit P-12 and P-13 on the Defendant to
settle their claim without delay.
54. Mr. Sancheti submits that by the letter at Exhibit P-14, the
Defendant has repudiated the claim of the Plaintiff on the ground that
the Plaintiff chose without consulting with the Defendant not to import
the goods offered in barter and therefore the same is a trade loss which
is covered by the Policy. That no other ground has been mentioned.
That Exhibit P-16, Exhibit P-19 and Exhibit P-20 are further letters sent
on behalf of the Defendant in which the same ground that export
transaction was approved only to the extent that the payment would be
made by a barter exchange and that no approval was granted to the
addendum clause which permitted payment in cash. Mr. Sancheti
submits that the correspondence between the Plaintiff and the
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Defendant clearly suggests that the only ground raised by the
Defendant is with respect to the Plaintiff’s action in declining the goods
offered by RVOK and the same being a trade loss.
55. Further, Mr. Sancheti submits that the Defendant cannot set up
additional grounds now for rejection of the Plaintiff’s claim which are
beyond the grounds set out in its Letter of Repudiation. Learned Senior
Counsel would rely upon the judgment of the Hon’ble Supreme Court
in the case of Galada Power and Telecommunication Limited v. United
India Insurance Company Limited & Anr 9 and Saurashtra Chemicals
Limited v. National Insurance Company Limited .10 Mr. Sancheti would
submit that the Defendant has attempted to raise grounds which are
well beyond the ground taken in the letter of repudiation dated
September 15, 1994 (Exhibit P-14). While the aforesaid ground of the
Plaintiff’s refusal to import goods offered by RVOK without consulting
the Defendant which the Defendant has termed as a trade loss has been
held by the Hon’ble Supreme Court and the Hon’ble Kerala High Court
as unsustainable, the Defendant is barred in law from pleading any
further additional grounds for the first time in this present Suit.
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56. Mr. Sancheti would further submit that the Defendant’s Cross
Examination of the Plaintiff’s witness has travelled far beyond the
pleadings and consequently the Defendant cannot be permitted in law
from raising new contentions. Reliance is placed on the judgment of the
Hon’ble Supreme Court in Bachhaj Nahar v. Nilima Mandal And
Another.11
57. Further, Mr. Sancheti submits that Export Contract is not
disputed. The first and the second addendum to the Export Contract is
also not disputed. It is also not disputed that the Plaintiff has exported
tea to the Kazakh Corporation viz RVOK. It is also not disputed that the
barter exchange of goods did not materialize between the Plaintiff and
the Buyer. The fact that the Kazakh Corporation did not pay the
consideration for the tea received by it in cash in US Dollars is also not
in dispute. That the Ministry failed to honor its guarantee is also not
disputed. Mr. Sancheti would submit that in the light of the admitted
fact, and the findings of the Hon’ble Supreme Court in the case of ABL
International Ltd. V. ECGC & Ors (supra), the claim made by the
Plaintiff is covered by the Insurance Policy dated September 22, 1992
and the Letter of Approval dated October 7, 1993 and therefore the
11
(2008)17 SCC 491
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Defendant is liable to make payment to the Plaintiff under the
insurance policy and cover.
58. Mr. Sancheti, Learned Senior Counsel submits that the
Defendant has in their submissions, submitted that payments against
the exports of tea were to be received by RWL and were to be
distributed amongst the nominated associates proportionately and
therefore Plaintiff ought to have proved what amounts were received
by RWL. Learned Senior Counsel would further submit that if the
Defendant wanted to show that RWL has received any additional
amount, they could have issued a witness summons to RWL for
production of documents. That Defendant had all the requisite details
from RWL as well as the documents submitted by the three nominated
associates. Mr. Sancheti submits that therefore once the Plaintiff has
disclosed and brought on record all amounts received by the Plaintiff
pursuant to the tea exported, prior to and after the filing of the present
suit, the burden of proving the negative has shifted onto the Defendant.
59. Further, Mr. Sancheti submits that the payment clause in the
Contract (clause 6 of Exhibit P-4) stipulates an interest at the rate of
15% p.a. That the suit arises out of a commercial transaction and hence
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the rate of further interest can exceed 6% as is provided for in the
proviso to Section 34(1) of the Civil Procedure Code, 1908, the letter
issued by the Plaintiff to the Defendant dated June 26, 1994 (Exhibit P-
9) and the formal claim form (Exhibit P-11) filed by the Plaintiff with
the Defendant will serve as Notice u/s. 3(1)(b) of the Interest Act,
1978.
60. Further, Mr. Sancheti submits that the plea of fraud and/or
misrepresentation cannot be raised by the Defendant for the first time
at the stage of final arguments as the same is not their pleaded case.
Reliance is placed by Mr. Sancheti on the decisions of the Supreme
Court in Ranganayakamma & Another v. K.S. Prakash and Others 12 and
Placido Francisco Pinto (D) by Lrs and Another v. Jose Francisco Pinto
and Another13 to submit that when fraud, misrepresentation, undue
influence is alleged, the same is required to be specifically pleaded and
if the pleadings/evidence are not indicative of any instance of
fraud/misrepresentation, the said plea cannot be orally argued.
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61. Mr. Dinesh Purandare, the learned Counsel (now learned Senior
Counsel) appearing on behalf of the Defendant would submit that the
Defendant has rightly repudiated the claim of the Plaintiff. He further
submits that the standard risk cover assumed by the Defendant, with
respect to exports to various countries including Kazakhstan were not
covered under the Defendant’s Shipment (Comprehensive Risks) Policy
(SCR) bearing no. 30679 , unless the insured had applied for and
obtained from the Defendant, specific written approval for each of such
shipments. Under the scheme of the policy export to many countries
are considered as patently bad risks or fraught with very high risk
owing to bad economic and/or political situations in those countries.
Such countries were categorized as “Restricted Cover Countries” in
Annexure I and special conditions were applicable to “Restricted Cover
Countries” as set out in Annexure II of the Policy. (Exhibit D-1 and D-2)
62. Referring to the Affidavit of Evidence of the DW-1, Mr. Purandare
submits that after the disintegration of USSR in the year 1992-1993
which weakened economic and financial condition of the countries
which were part of erstwhile USSR and limited the international
banking arrangements or any hard currency reserves for them. In light
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of the same, with effect from January 24, 1992 the Defendant placed
Kazakhstan under “Restricted Cover Countries” and cover for shipments
to Kazakhstan was upon specific prior approval by the Defendant
subject to strict compliance of the special terms and conditions to be
duly stipulated based upon the Export Contract and the mechanism for
recovering of export price.
63. Mr. Purandare submits that the object of such a provision is to
ensure that the Defendant is not saddled with risks and to afford the
Defendant an opportunity to contain the loss arising out of such risks
by stipulating additional/special conditions in respect of cover for such
shipments. Hence, in the usual course of its business policy and
practices, Defendant first assesses the risk involved in exports to a
country excluded from cover under the Insurance Policy. That based on
the representation and application for specific approval, the Defendant
considered the risk involved in receiving payment from Kazakhstan in
hard currency as extremely bad and the Defendant was not ready to
accept such a risk. The Defendant, however, noticed that Kazakhstan
was in a reasonably good position at the relevant time to offer each of
the goods mentioned in the list appended to the Export Contract which
were offered in barter. It was the barter method of payment that the
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Defendant primarily relied upon. As a fall-back option, a Sovereign
Guarantee from the Government of Kazakhstan was obtained by RWL.
The Defendant accepted the risk and insured the Exporter, on the
condition that the Exporter was to have a direct right of recourse
against RVOK for enforcing the Contract of Barter.
64. Mr. Purandare would submit that the Defendant considered
barter exchange as foundational to assume risk is clearly proved by the
contemporaneous Board resolution ratifying the Insurance contract
(Exhibit D-1/7). That as per the standard practice followed by the
Defendant, the acceptance of the Plaintiff’s proposal was placed before
the Board of Directors of the Defendant on February 10, 1994, when
the transaction was ratified and the Board Note placed all the relevant
details of the Export Contract. Mr. Purandare would submit that it is
unequivocally demonstrative that Defendant’s specific approval letter
dated 7th October 1993 clearly mandates Barter Exchange as imperative
for claiming under the Contract of Insurance in the event of any loss
arising on account of any issued risk. Mr. Purandare would further
submit that RWL also understood the amended Clause 6 of the Export
Contract to mean that barter was the primary means of securing
payment and referred to Letter dated 2 nd September 1993 (Exhibit D-
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1/3) which mentions that “non finalisation of barter supply contracts
or non-delivery of such goods for any reason whatever.” Mr. Purandare
would emphasize that this does not contemplate that the Exporter
would of its own volition and without any default of the buyer, refuse
to accept barter as a means of payment and contend that only
reasonable interpretation of this clause is that if the buyer for any
reason whatsoever fails to deliver the goods or does not finalize the
contract of barter, it is only then that the liability of the buyer to pay in
US Dollars would arise.
65. Mr. Purandare would submit that any subsequent arrangement
between the buyer and Exporter/Plaintiff would not bind the
Defendant and the aforesaid clause does not entitle the Exporter or
Plaintiff to refuse the offer for barter exchange for no fault attributable
to the Buyer.
66. Mr. Purandare would submit that the judgments referred to in
Issue No.1 of the Hon’ble Supreme Court and Hon’ble Kerala High
Court are not relevant till such time the Plaintiff does not prove that it
was entitled to unilaterally alter the contract of Insurance and not
inform the Defendant about the same when the Defendant has made
barter exchange as the first and foremost condition for assuming risk.
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67. Mr. Purandare would submit that the Plaintiff has alleged that
facts, circumstances, defense, documents and evidence in the present
suit are the same as the Judgments delivered by the Hon’ble Supreme
Court in ABL International Ltd. V. ECGC & Ors (supra) and Hon’ble
High Court of Kerala in Harrisons Malayalam Ltd v. ECGC (supra) but
has failed to bring on record the papers and proceedings of the Writ
Petition by ABL International Ltd and the papers and proceedings filed
by Harrisons Malayalam Ltd. That the Plaintiff has failed to bring on
record what is proved and pleaded before the Hon’ble Supreme Court
and High Court of Kerala. Learned Counsel would contend that as the
record and proceedings of the Writ Petition and the Suit are not
brought before this Court, the issues arising the present suit ought to be
determined basis the facts, circumstances, documents and evidence
placed before this Court. The decisions relied upon by the Plaintiff do
not dispense the requirement of examining new pleas, particularly
when they go to the root of the matter and were neither urged nor
decided earlier.
68. Mr. Purandare further submits that the Plaintiff has failed to
discharge its burden of proof to show that in fact the Hon’ble Supreme
Court and the Hon’ble High Court of Kerala have delivered their
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judgments on the same set of facts, circumstances, evidences and
defenses of the Defendant as pleaded in the present Suit.
69. Mr. Purandare would submit that Plaintiff’s assertion that the
Defendant being a party to the cases ought to have produced
documents through cross-examination and as the Defendant has not
done the same, adverse inference ought to be drawn against the
Defendant under Section 114 of the Evidence Act, 1872 as
unsubstantiated. Learned Counsel would contend that as the
proceedings are not documents which are in the exclusive custody of
the Defendant and as these are public documents under Section 74 of
the Evidence Act, 1872, no adverse inference can be drawn against the
Defendant.
70. Mr. Purandare would submit that this Court ought not to embark
on an exercise as to what would have transpired in the facts and
circumstances pleaded in the two judgments. Learned Counsel would
further submit that the judgments delivered by the Hon’ble Supreme
Court and Hon’ble High Court of Kerala are limited only to
interpretation of documents on the facts and circumstances pleaded in
them. The present suit is an original proceeding and therefore
conclusions arrived at by the Hon’ble Supreme Court and Hon’ble High
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Court of Kerala do not bind the Defendant in the present suit. To
buttress the aforesaid submission the Defendant places reliance on the
decision of the Hon’ble Supreme Court in Bharat Petroleum
Corporation Ltd & Anr. V. N.R. Vairamani & Anr14
71. Mr.Purandare would submit that the claim lodged by the Plaintiff
with the Defendant was in respect of the losses caused by events which
were not covered under the Insurance Policy read with the Letter of
specific approval dated 7th October 1993 (Exhibit P-7). Learned Counsel
would further submit that, the Defendant while examining the claim of
the Plaintiff discovered that the Plaintiff had brought about the peril
insured against into operation through its own wilful acts.
72. Mr. Purandare would submit that the Insurance Policy issued to
the Plaintiff specifically excludes risks that arise on account of any
willful act of the insured/Exporter/Plaintiff. Learned Counsel would
draw attention of this Court to the Insurance Policy more particularly
paragraph (xi).
73. Mr. Purandare would submit that the establishment of default of
guarantee of the Ministry of Kazakhstan in a case when the Plaintiffs
14
(2004) 8 SCC 579
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declined to accept the payment by way of barter exchange was not
covered by the letter of specific approval by the Defendant. Mr.
Purandare would further submit that evidence on record proved that
Plaintiff had made deliberate false representation and did not intend to
take recourse to barter as a method of payment since the very inception
of the contract and thereby has breached the clauses 2 and 7 of the
Letter of Insurance Policy. Learned Counsel would point out that the
evidence of PW-1 has confirmed that barter was never intended to be a
mode of payment and that on the date of the Export Contract i.e. 26 th
August 1993, Plaintiff had decided that it was not going to look at
barter and wanted to opt for payment in US Dollars and therefore the
Addendum to the Export Contract was drawn on the same day. Learned
Counsel would submit that the Plaintiff has failed in its duty of full
disclosure relating to the risk involved and on this ground alone the
Defendant is entitled to avoid the contract of insurance. To buttress the
submission that Insurance Contracts are based on the principle of
Utmost Good Faith and there should not be any misrepresentation of
material facts which was the basis on which risk was assumed by the
Defendant has relied on the judgment of Manmohan Nanda v. United
India Assurance Co Ltd. & Anr.15
15
(2022) 4 SCC 582
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74. Mr. Purandare would contend that the Plaintiff has breached the
terms of the Insurance Policy by:-
(i) Not consulting the Defendant at the time of refusing the offer for
barter made by Buyer directly affecting the risk insured by the
Defendant,
(ii) Not maintaining the right of recourse against the Buyer on default.
75. Mr. Purandare would submit that this breach is neither technical
nor illusory but the same is founded on sound commercial principles. It
may be that barter exchange was not commercially profitable for the
Plaintiff however, as an insurer who had undertaken the risk, the
Defendant was entitled to mitigate its loss by taking charge of the
goods offered for barter and then selling the same either in the Indian
or International market for whatever price that could be obtained.
That Defendant could have stepped into the shoes of the Plaintiff
(Subrogation) taken the goods and sold the same. Learned Counsel
would also contend that on a mere reading of the letter dated 7 th
October 1993 (Exhibit P-7) it is clear that the Plaintiff was required to
keep all options open for Defendant’s right to subrogation. The
Plaintiff’s right of recourse against the foreign buyer and Kazakhstan
government were to be kept alive by the Plaintiff and the Plaintiff
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ought to have filed legal proceedings in Kazakhstan against the Buyer
for the bills of exchange. That admittedly, no action is taken by the
Plaintiff and the Defendant as on date is left with no remedy/recourse
against the defaulting Buyer. Mr. Purandare would further submit that
failure to perform its part of the promise under the Contract of
Insurance, disentitles the Plaintiff to any relief under the Contract of
Insurance. Reliance is placed on the judgment of Economic Transport
Organization v. Charan Spinning Mills Pvt Ltd. And Another 16 to
canvass the submission that subrogation does not terminate nor put an
end to its right of the assured to sue the wrongdoer and recover the
damages for loss.
76. Mr. Purandare would submit that if according to the Plaintiff, the
payments to Plaintiff were routed through a third party and Plaintiff
was entitled to some money, then Plaintiff ought to have proved that
such money was in fact not received from RWL, which the Plaintiff has
failed to do. That no efforts were made by the Plaintiff to bring on
record the account of RWL to show the amounts received by RWL from
the foreign buyer towards Plaintiff’s export of tea. Learned Counsel
would further contend that the Plaintiff ought to have summoned
16
(2010) 4 SCC 114
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witness from RWL or summoned the account of RWL with Canara
Bank, New Delhi duly certified under the Bankers Books Evidence Act,
1891.
77. Mr. Purandare would conclude his arguments by submitting that
the Plaintiff has failed to prove the amount received from the foreign
buyer and therefore Issue No. 4 and 5 ought to be decided in favour of
Defendant and the Plaintiffs claim be rejected as unproved. That
Plaintiff is not entitled to any interest and the Defendant has rightly
repudiated the claim of insurance.
CONCLUSION
78. Before proceeding further, it would be apposite to address the
controversy raised by the Defendant with regard to Exhibit P-5. The
Defendant had on an earlier occasion raised an objection with respect
to the copies of the second addendum (Exhibit P-5) produced by the
Plaintiff by which RWL was allowed to ship tea to RVOK through its
nominated associates. The said controversy is inconsequential and
immaterial to the dispute between the parties and rather frivolous as
admittedly the Defendant has acknowledged the nomination of the
Plaintiff, ABL and HML by RWL. This is evident from the following
documents :
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(i) letter dated October 06, 1993 issued by RWL nominating the
Plaintiff with copy marked to ECGC;
(ii) letter dated October 07, 1993 issued by ECGC to the Plaintiff
acknowledging the nomination of the Plaintiff by RWL; and
(iii) Board Note dated February 10, 1994 by way of which ECGC’s
Board of Directors admitted to the said nomination.
79. Moreover, any objection raised against Exhibit P-5 cannot be
countenanced for the reason that by Defendant’s Statement of
Admission and Denial of Documents, the Defendant has explicitly
admitted the existence and contents of the said document and
therefore such objections cannot be raised at the time of final
arguments.
80. Further, the controversy sought to be raised by the Defendant
with respect to Exhibit P-10 is inconsequential and immaterial to the
dispute between the parties and therefore, the question of drawing an
adverse inference raised by the Defendant would not arise as:
(i) Exhibit P-10 is a letter dated July 04, 1994 issued by RWL to
ECGC which contains annexures, which in turn refer to certain
annexures within the same. While ECGC has admitted to the receipt of
the letter, it is their claim that Annexure ‘C’ to Annexure ‘A1’ was not
part of the letter received by it.
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(ii) The Plaintiff states that Annexure 'C' to Annexure 'A1' is a
document containing the quantities of tea exported by each of the
nominated associates. As the said nomination has been admitted by
ECGC and further ECGC has not disputed the quantities of tea exported
by the Plaintiff, the said Annexure ‘C’ is inconsequential and immaterial
to the present dispute. In my view, therefore, the alleged non-receipt by
ECGC or absence of the said documents or the rejection by ECGC of the
Plaintiff’s claim for payment of monies under the contract of insurance,
does not have any bearing on the Plaintiff’s claim.
81. Moving ahead, the uncontroverted facts pertaining to the
contract for supply of tea and the contract of insurance can be
summarised as under:-
(a) Export Contract (same in this and other two matters)
(i) Rassik Woodworth Limited (RWL-seller) entered into a contract
with RVO Kazpischepromsyrio, a Kazakhstan Corporation (RVOK-
buyer) on August 26, 1993 for the supply of tea with the mode of
payment being barter exchange of goods (the “Contract”).
(ii) On the same date as that of the Contract, the mode of payment
came to be amended, whereby if barter could not be finalized for any
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payment was guaranteed by Ministry of Foreign Economic Relations of
Republic of Kazakhstan (the “Ministry”). The addendum noted that it
formed an integral part of the Contract.
(b) Nominated Associates (except names and quantities for the
nomination-the other part is identical) :
(i) By a further addendum, RWL was allowed to ship tea to RVOK
through its nominated associates.
(ii) RWL nominated three separate associates i.e. the Plaintiff, Assam
Book Ltd. (“ABL”), and Harrisons Malayalam Ltd. (“HML”).
(c) ECGC Policy (same terms and conditions in this and other two
matters)
(i) The nomination made by RWL was communicated to and is to
the express knowledge of ECGC viz. the Defendant. The Defendant’s
Board of Directors duly approved the nomination and thereafter the
three nominated associates had obtained identical insurance policies
from the Defendant in relation to the Contract.
(d) There was no Barter Exchange (same fact in this in the case of
ABL and HML)
(i) As barter exchange of goods could not be finalized, RVOK did
make part-payment in US Dollars in accordance with the amended
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(ii) After default of the balance outstanding payment by RVOK and
as the Ministry also failed to honour its guarantee, the Plaintiff, ABL
and HML filed claims with ECGC under the contract of insurance.
(e) Rejection of Claim (grounds for repudiation are identical in all
three matters-only dates are different)
(i) ECGC rejected the Plaintiff’s claim on the ground that the
Plaintiff chose not to import the goods offered by RVOK without
consulting it thereby allegedly incurring a trade loss not covered by the
Insurance Policy issued by ECGC.
(ii) The Claims of ABL and HML were also rejected by ECGC on
identical grounds. The Plaintiff filed the captioned Suit against ECGC
whereas ABL preferred a Writ Petition before the Hon’ble Calcutta High
Court (“Calcutta HC”), and HML filed a Recovery Suit before the
Subordinate Judge’s Court, Ernakulam at Kerala.
82. The ABL Judgment of the Hon’ble Supreme Court reinstated the
Judgment of the Single Bench of the Hon’ble Calcutta High Court
holding that there was nothing on record to show that ABL under the
contract of insurance was liable to consult ECGC prior to rejecting
payment by barter for any reason whatsoever. The Hon’ble Supreme
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Court on an interpretation of the Insurance Policy also held as follows :
(i) Barter was not the sole mode of payment; ECGC had knowledge
of the same and it had insured all modes of payment.
(ii) There were only two conditions precedent for making ECGC
liable to pay for the insured risk, firstly, default on the part of RVOK;
and secondly, failure on the part of the Ministry to fulfill their
guarantee. The present Suit also concerns the same two conditions
precedent.
(iii) The use of words “any reason” in the said amended clause
includes the reasons of refusal by ABL to accept the goods offered in
barter;
(iv) That, the grounds for repudiation of the policy are unsustainable.
(v) There is no requirement of external aid, much less any oral
evidence to interpret the terms of contract; and
(vi) The Hon’ble Supreme Court, thereupon, reinstated the order of
the Single Judge Bench which directed ECGC to settle the claim of ABL
in terms of the policy dated September 30, 1993 with interest at 12%.
83. HML filed a Recovery Suit before the Subordinate Judge’s Court,
Ernakulam, Kerala. The Suit was decreed in favour of HML. Being
aggrieved by the said decree, ECGC preferred an Appeal before the
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Hon’ble Kerala High Court which came to be dismissed vide the HML
Judgment. The findings of the said judgment are as follows :
(i) The undisputed and disputed facts in the HML Judgment are
similar to the facts of this Suit.
(ii) There was no oral evidence led by HML in the Suit.
(iii) HML’s claim was decreed in the Suit with interest at 9% from
June 09, 1995 till the date of the Suit and thereafter at 6% till the date
of realisation.
(iv) The risk relating to the export tea to Kazakhstan was subject to
six conditions as per ECGC. The six conditions are identical in this
Suit. The first two conditions which are the bone of contention in the
captioned Suit are reproduced in paragraph 4(iii) of the HML
Judgment.
(v) The first addendum is an integral part of the Contract and ECGC
was aware of the same. The two conditions on which the repudiation
was made are unjustifiable. It is observed that the grounds of
repudiation taken by ECGC are identical in this Suit.
(vi) The Hon’ble Kerala High Court placed reliance on the ABL
Judgment of the Hon’ble Supreme Court and held that the facts and
circumstances in the cases of ABL and HML are in no way different and
accordingly dismissed the Appeal preferred by ECGC upholding the
AVK/Kanchan Dhuri/Nikita Gadgil/KSG 43/79
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1-COMSS 2030 OF 1996.docjudgment and decree passed by the Subordinate Judge’s Court,
Ernakulam, Kerala.
84. It is observed that the other defenses raised by the Defendant in
their written statements have been considered and rejected by the
Hon’ble Supreme Court in the ABL Judgment and the Hon’ble Kerala
High Court in the HML Judgment. The following defenses taken by the
Defendant in this Suit have already been dealt with in the ABL
Judgment and HML Judgment and rejected. The following table
annexed as Annexure-2 to the written submissions of the Plaintiff bear
a testimony of the same :-
Sr. Particulars Written ABL ECGC v.
No. Statement Internationa Harrisons
dated May l Ltd. v. Malayalam
14, 1998 ECGC Ltd., Kerala
(2004) 3 HC, PCOD,
SCC 553 Ex. P-23 at
PCOD, Ex.P- pg.
22 at pg.336
1. In terms of Clause 5 of Para 4(a) Refers to Fact noted in
the Policy r/w the third and (b) @ risk policy in Para 2 @ Pg.
column of Annexure Pgs.185-186, para 2 – 6th 369-370 and
“I” and Special Vol. I of line from Findings :-
Condition No.7 of Final the top @ Para 6 @ Pg.
Annexure 2 of the Compilation pg.344 - 374 - 382,
"Schedule of Premium Vol. II of
Rates" attached to and Final
forming part of the Compilation
Policy, exports to
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various countries
including Kazakhstan
were not covered
under the insurance
policy, unless the
insured had applied for
and obtained from the
Defendant, specific
written approval for
each of such shipment.
2. Kazakhstan was one of Para 4 (b) @ Para 2 - 4th
the countries under Pg. 187 Vol. last line @
'Restricted Cover' and I of Final Pg. 369 and
cover for shipments to Compilation 370
Kazakhstan was
subject to prior
approval by the
Defendant.
High risk area
3. Plaintiff is restricted by Para 4(c) Fact noted Fact noted in
terms of the conditions and (d) @ in Para 2 @ Para 2 - Pg.
imposed by the specific pgs. 186- Pg. 344. 370.
cover granted by the 187, Vol.I of Finding :- Finding :-
Defendant to the Final Para 50 and Para 6 @ Pg.
Plaintiff in terms of Compilation 51 @ Pg. 374-382,
their approval letter 360, Vol. II Vol. II of
dated October 07, of Final Final
1993 which inter alia Compilation Compilation
provided that the
payment of delivered
goods shall be made by
barter exchange of
goods within 120 days
from the date of
delivery.
4. Plaintiff's action in Para 4(f) @ Fact noted Fact noted in
declining to accept pg.189-190, in Para 2 @ Para 2 @ Pg.
goods offered in barter Vol. I of pg.344, 370 and
was a wilful act that Final Findings in Finding and
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brought about the peril Compilation Para 41, 42, interpretation
insured against into 44, 45 @ in Para 5-6 @
operation and that the pgs. 357- 373-382,
said act on part of the 358 and Vol.II of Final
Plaintiff absolved the Conclusion Compilation
Defendant of all in Para 51
liability under the @ pg. 360-
policy and is a trading 361, Vol.II
loss. Further, while of Final
refusing the barter and Compilation
opting for accepting
payment in US $, the
Plaintiff never
informed or sought the
specific approval of the
Defendant.
85. The facts and circumstances in the the ABL judgment are
identical to the facts and circumstances of this Suit: the contract and its
two addenda are the same and it is only the nominated associate which
is different in the two cases; the grounds of repudiation taken by the
Defendant are also identical in both the cases. The ABL and the HML
judgments apply to this Suit. That no material disputing these facts and
circumstances have been brought on record by the Defendant. Reliance
of the Defendant on the decision of the Hon’ble Supreme Court in
Bharat Petroleum Corporation Ltd. & Anr. v. N.R. Vairamani & Anr
(supra) does not assist the case of the Defendant. This Court has
already discussed above as to how the factual matrix and the defences
are identical to the decisions on which reliance is placed.
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86. In Hari Singh Vs. State of Haryana (supra), the Hon’ble Supreme
Court has observed that it is a basic principle of administration of
justice that like cases should be decided in a like manner or alike. It is a
sound rule and practice, otherwise on the same question of law or same
set of facts different persons approaching a Court can get different
orders leading to judicial anarchy as opposed to achieving harmony in
the judicial system. Paragraphs 10 and 12 of the said decision are
usefully quoted as under:-
“10. It is true that in the system of justice which is being
administered by the courts, one of the basic principles which
has to be kept in view, is that courts of coordinate jurisdiction,
should have consistent opinions in respect of an identical set of
facts or on a question of law. If courts express different
opinions on the identical sets of facts or question of law while
exercising the same jurisdiction, then instead of achieving
harmony in the judicial system, it will lead to judicial anarchy.
But before any such principle is applied it must be held that the
earlier order passed by this Court dismissing the special leave
petition of the co-accused amounts to a judgment or an
affirmance of the findings of the High Court, about the manner
of the occurrence, participation of the different accused
persons and the nature of offence committed by them.
12. It is a basic principle of the administration of justice that
like cases should be decided alike. It is a very sound rule and
practice otherwise on same question of law or same set of facts
different persons approaching a court can get different orders.
But can the appeal of an accused, who has been granted special
leave to appeal, be dismissed on the ground that the special
leave petition filed on behalf of a co-accused with more or less
similar charges has already been rejected by this Court,
although this Court is satisfied that either such accused whose
appeal is being heard is entitled to acquittal or ought to haveAVK/Kanchan Dhuri/Nikita Gadgil/KSG 47/79
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The doctrine of precedent is not applicable to an order passed
by this Court rejecting a special leave petition. Any such order
cannot be held to be stare decisis so that it is binding on us.”
87. In Najuddin Karimmuddin Shaikh Vs. Commissioner of Police,
Surat and Ors (supra), the Hon’ble Gujarat High Court had held that
the ratio of a decision of the Hon’ble Supreme Court on an identical
fact situation is binding on Courts under Article 141 of the Constitution
of India. Paragraphs 9 and 10 of the said decision are relevant and are
usefully quoted as under :-
“9. The facts situation in the present case is almost
identical. Consequently, the ratio of the aforesaid decision of
the Supreme Court squarely gets attracted in the present case
and would nullify the present order of detention on the very
same grounds which appealed to the Supreme Court in
Chhagan Kahar’s case (supra). However, the learned counsel
for the respondents tried to salvage the situation by submitting
that the Supreme Court, in the aforesaid case, had no
opportunity of referring to Section 6 of the PAS A Act which
reads as under:–
“6. Where a person has been detained in pursuance of an order
of detention under Sec. 3 which has been made on two or
more grounds, such order of detention shall be deemed to
have been made separately on each ground and accordingly —
(a) such order shall not be deemed to be invalid or inoperative
merely because one or some of the grounds is or are —
(i) vague
(ii) non-existent
(iii) not-relevant
(iv) not connected or not proximately connected with such
person, or
(v) invalid for any other reason whatsoever, and it is not,
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1-COMSS 2030 OF 1996.doctherefore, possible to hold that the Government or the Officer
making such order would have been satisfied as provided in
Sec. 3 with reference to the remaining grounds or grounds and
made the order of detention;
(b) the Government or the officer making the order of
detention shall be deemed to have made the order of detention
under the said section after being satisfied as provided in that
section with reference to the remaining ground or grounds.”
10. It was submitted that if Section 6 of the PASA Act was
noticed by the Supreme Court, it would have possibly held that
if some of the grounds for holding the detenu a bootlegger
have become irrelevant because the earlier order based on
them was quashed by the High Court, the detention order
could have been sustained on the remaining grounds which
were not suffering from such infirmity namely the fresh
grounds which emerged after the quashing of the earlier order
of detention and the order of detention could have been
treated to have been passed on these valid grounds as per the
provisions of Section 6 of PASA Act. It is not possible for us to
consider this argument. We cannot conjuncture as to what
would have been the decision of the Supreme Court if Section
6 of the PASA Act was cited before the Supreme Court. It is not
open to us to undertake that exercise. The ratio of the decision
of the Supreme Court on the identical facts situation is binding
on us under Article 141 of the Constitution of India. If at all, it
will be for the respondents to request the Supreme Court to
constitute a larger bench for reconsidering the aforesaid
decision in the light of Section 6 of the PASA Act. So far we are
concerned, we are bound by the decision of the Supreme Court
in Chhagan Kahar’s case (supra). Following the said decision,
therefore, this petition will have to be allowed.”
88. In Chairman-Cum-MD., F.C.I.L and Anr Vs. Regional Labour
Commissioner and Others (supra) the Hon’ble Allahabad High Court
has observed that the law declared by the Hon’ble Supreme Court is
binding on all courts by virtue of Article 141 of the Constitution of
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India and once a question arising out of identical facts and
circumstances has been decided by the Hon’ble Supreme Court, judicial
propriety forbids the High Court to re-appraise the questions all over
again at the instance of similarly placed parties. Paragraphs 10 to 16 of
the said decision are usefully quoted as under:-
“10. It would be relevant to record at this stage that the
controversy which had arisen in the matter of Kashi Prasad
Tripathi and was dealt with by the Apex Court on 05.5.2015,
was identical to the questions, which have been raised by the
petitioner employer in this petition. The judgment of the
Hon’ble Supreme Court was delivered in identical facts and
circumstances and the Apex Court has been pleased to hold
that the High Court was not required to have interfered with
calculation made by the authorities under the Payment of
Gratuity Act. It has categorically been observed that the High
Court should not have interfered with the calculation of
payment of gratuity and adhoc payment with interest. Once
identical questions raised, at the instance of other workers
similarly placed, have been adjudicated by the Hon’ble
Supreme Court the question is that whether this Court is
required to re-consider the cause afresh.
11. Learned counsel for the petitioner submits that the
directions of the Hon’ble Supreme Court in Special Leave
Petition No. 972 of 2014 appears to have been made in
exercise of jurisdiction under Article 142 of the Constitution of
India and the questions raised on merits are left untouched,
and therefore, this Court is required to adjudicate the
questions on merits. Learned counsel has relied upon the
judgment of the Hon’ble Supreme Court in State of U.P. v.
Synthetics and Chemicals Limited : (1991) 4 SCC 139, as well
as Government of India v. Workmen of State Trading
Corporation : (1997) 11 SCC 641 : 1999 AIR (SC) 1532.
12. Learned counsel with reference to the aforesaid
judgments contends that since there is no adjudication of theAVK/Kanchan Dhuri/Nikita Gadgil/KSG 50/79
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the Apex Court is not liable to be treated as a binding
precedent in the facts of the present case.
13. Sri. Shekhar Kumar Yadav, learned counsel appearing
for the respondent nos. 1 and 2 and Sri. H.C. Singh, learned
counsel appearing for the respondent no. 3, as well as other
counsel appearing for the parties in connected matters, have
contended that the issues which have been raised by the
petitioner employer was thereafter pressed again by way of
review petition filed by the petitioner employer, which came to
be rejected by the Hon’ble Supreme Court vide following order
dated 13.8.2015:–
“We have gone through the review petition and the relevant
documents. In our opinion, no case for review is made out.
The review petition is, accordingly, dismissed. Consequently,
all the applications are dismissed.”
14. Petitioner employer thereafter preferred a curative
petition before the Hon’ble Supreme Court, which was also
rejected on 3.3.2016 vide following order :–
“We have gone through the Curative Petition and the relevant
documents. In our opinion, no case is made out within the
parameters indicated in the decision of this Court in Rupa
Ashok Hurra v. Ashok Hurra, reported in (2002) 4 SCC 388.
Hence, the Curative Petition is dismissed.”
15. The grounds of review and curative petitions have
been placed before this Court by the counsel for the
respondents. The perusal of the record goes to show that the
grounds taken in review and curative petitions are virtually the
same, which are grounds urged to challenge the orders in the
present writ petition.
16. Law declared by the Hon’ble Supreme Court is binding
on all Courts by virtue of Article 141 of the Constitution of
India. Once on identical facts and circumstances, the question
as to whether adhoc payment is to be counted for payment of
gratuity has been raised and decided by the Hon’ble Supreme
Court by holding that the High Court ought not to have
interfered with the determination of gratuity, in exercise of
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jurisdiction under Article 226 and 227 of the Constitution of
India, and thereby affirmed the inclusion of adhoc payment
under the definition of wages for the purpose of computation
of gratuity payable to employee and such order having been
reaffirmed with dismissal of review and curative petitions,
judicial propriety forbids this Court to re-appraise the
questions all over again at the instance of the same employer.”
89. In my view, therefore, the decision of the Hon’ble Supreme Court
in the ABL judgment would need to be followed with respect to the
interpretation of the contract and its addendum as the decision of the
Hon’ble Supreme Court on identical/similar facts and circumstances
has a binding precedential value under Article 141 of the Constitution
of India: the Contract and its two addenda being the same, the grounds
of repudiation taken by the Defendant also being identical and only the
nominated associates being different.
90. In this view of the matter, the contract between RWL and RVOK
dated 26th August, 1993 (Exhibit P-3) and the even dated Addenda
(Exhibits P-4 and P-5), the insurance policy (Exhibit P-1), the letter
dated 7th October, 1993 issued by the Defendant granting specific cover
to the Plaintiff subject to the six conditions therein (Exhibit P-7), the
formal claim form dated 7th July, 1994 submitted by the Plaintiff to the
Defendant (Exhibit P-11) and the repudiation letter dated 15th
September, 1994 (Exhibit P-14) can be decided by interpretation of
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contract which is a question of law. This principle has been settled by a
five Judges bench of the Hon’ble Supreme Court in the case of Sir
Chunilal V. Mehta and Sons Ltd. Vs. Century Spinning and
Manufacturing Co., Ltd (supra), where it has been observed that it is
well settled that the construction of a document which is the
foundation of the rights of parties necessarily raises a question of law.
Paragraph 2 of the said decision is relevant and is usefully quoted as
under:-
“2. It is not disputed before us that the question raised by
the appellant in the appeal is one of law because what the
appellant is challenging is the interpretation placed upon
certain clauses of the managing agency agreement which are
the foundation of the claim in suit. Indeed it is well settled that
the construction of a document of title or of a document which
is the foundation of the rights of parties necessarily raises a
question of law.”
91. The Hon’ble Supreme Court in Anil Rishi Vs. Gurbaksh Singh
(supra), while dealing with the distinction between burden of proof
and onus of proof has held that ordinarily the burden of proof would be
on a party who asserts the affirmative of the issue and thereafter, after
evidence is gone into, the onus shifts and rests upon the party against
whom the judgment would be given, if no further evidence were to be
adduced by either side. Paragraphs 9, 10 and 19 of the said decision
are usefully quoted as under:-
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“9. In terms of the said provision, the burden of proving
the fact rests on the party who substantially asserts the
affirmative issues and not the party who denies it. The said
rule may not be universal in its application and there may be
exception thereto. The learned trial Court and the High Court
proceeded on the basis that the defendant was in a
dominating position and there had been a fiduciary
relationship between the parties. The appellant in his written
statement denied and disputed the said averments made in
the plaint.
10. Pleading is not evidence, far less proof. Issues are
raised on the basis of the pleadings. The defendant-appellant
having not admitted or acknowledged the fiduciary
relationship between the parties, indisputably, the relationship
between the parties itself would be an issue. The suit will fail
if both the parties do not adduce any evidence, in view of
Section 102 the Evidence Act. Thus, ordinarily, the burden of
proof would be on the party who asserts the affirmative of the
issue and it rests, after evidence is gone into, upon the party
against whom, at the time the question arises, judgment
would be given, if no further evidence were to be adduced by
either side.
19. There is another aspect of the matter which should be
borne in mind. A distinction exists between a burden of proof
and onus of proof. The right to begin follows onus probandi. It
assumes importance in the early stage of a case. The question
of onus of proof has greater force, where the question is which
party is to begin. Burden of proof is used in three ways : (i) to
indicate the duty of bringing forward evidence in support of a
proposition at the beginning or later; (ii) to make that of
establishing a proposition as against all counter evidence; and
(iii) an indiscriminate use in which it may mean either or both
of the others. The elementary rule is Section 101 inflexible. In
terms of Section 102 initial onus is always on the plaintiff and
if he discharges that onus and makes out a case which entitles
him to a relief, the onus shifts to the defendant to prove those
circumstances, if any, which would disentitle the plaintiff to
the same.”
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92. Once the Plaintiff has discharged his burden of demonstrating
the similarities of issues and the relevant underlying facts, the onus has
shifted onto the Defendant, however, no facts contrary to discharge the
burden to prove that the facts in the Suit are distinct and different from
those in the ABL / HML Judgments have been brought before me. The
Defendant has merely raised bald contentions and failed to adduce any
documentary evidence in support. The witness of the Defendant (Mr.
Sahu) in his examination-in-chief does not appear to have adverted on
this aspect. When called upon, Mr. Sahu has failed to bring forth any
evidence and or documents which show any difference between the
case of ABL and HML and the Plaintiff. I am, therefore, of the view that
the aforementioned documents are similar and have already been
interpreted in the ABL and HML Judgments in favour of the other two
nominated associates and the defences put forth by the Defendant have
been considered and rejected. The basic principle of administration of
justice as elucidated above is that like matters should be decided alike.
93. In fact, in response to questions 23, 25 and 50 reproduced as
under, Mr. Sahu has confirmed that payments have been made to ABL
and HML pursuant to the ABL and HML Judgments:-
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“Q.23: Are you aware whether the Defendant have made
payment to ABL International Ltd and Harrisons Malayalam
Ltd. pursuant to the issuance of the judgment at Exhibits P-22
and P-23 respectively?
Ans: I am not aware.
Q.25: Can you check and let us know on the next occasion,
whether the Defendant has made the payments as referred to
in Q.23?
Ans: I will check. If I get the information, I will provide the
same.
Q.50: Can you now answer Q. No. 25?
Ans: Yes. The payment has been made to ABL International
Ltd and Harrisons Malayalam Ltd.”
94. It has been brought to the notice of this Court that after Question
25 was asked on 23rd August 2022, Mr. Purandare, learned Counsel for
the Defendant had objected to the question on the ground that whether
payment to the other nominated associates was made by the Defendant
or nor is not relevant to the facts of the present case and not relatable
to any issues framed. As can be seen, the answer given by the
Defendant’s witness on 23rd August 2022 was that he will check and if
he gets information he will provide the same. However, as noted above,
on 24th August 2022 when Question 50 as above, was asked to the
Defendant’s witness, the Defendant’s witness has clearly answered in
the affirmative that the payment has been made to ABL and HML. In
view of the said answer, the objection raised by Mr. Purandare becomes
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infructuous. Moreover, this Court has clearly observed that the
documents referred to in paragraph 10 above have already been
interpreted in ABL And HML Judgment in favour of the other two
nominated associates and the defenses put forth by the Defendant have
been considered and rejected.
95. The judgment of the Hon’ble Supreme Court of India in the
matter of ABL and the judgment of Hon’ble Kerala High Court in the
matter of HML are squarely applicable to the captioned Suit.
Consequently, the submissions made and contentions raised by the
learned Counsel on behalf of the Defendant with respect to the two
issues are hereby rejected. Accordingly, Issues no. 1 and 2 are answered
in the affirmative.
96. The Plaintiff has also taken strong objection to the setting up of
additional grounds by the Defendant for rejection of the Plaintiff’s
claim, submitting that they are beyond the grounds set out in the letter
of repudiation.
97. In Galada Power and Telecommunication Limited Vs. United
India Insurance Company Limited and Another (supra), the Hon’ble
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Supreme Court has observed that if a letter of repudiation did not
mention an aspect, the same could not be taken as a stand when the
matter is decided. Paragraphs 13 and 18 are relevant and are usefully
quoted as under:-
“13. The National Commission has relied upon Clause 5 and
on that basis has rejected the claim by putting the blame on
the complainant. The letter of repudiation dated 20-9-1999,
which we have reproduced hereinbefore, interestingly, does
not whisper a single word with regard to delay or, in fact,
does not refer at all to the duration clause. What has been
stated in the letter of repudiation is that the claim lodged by
the complainant does not fall under the purview of transit
loss because of the subsequent investigation report. It is
evincible, the insurer had taken cognizance of the
communication made by the appellant and nominated a
surveyor to verify the loss. Once the said exercise has been
undertaken, we are disposed to think that the insurer could
not have been allowed to take a stand that the claim is hit by
the clause pertaining to duration. In the absence of any
mention in the letter of repudiation and also from conduct of
the insurer in appointing a surveyor, it can safely be
concluded that the insurer had waived the right which was in
its favour under the duration clause. In this regard, Mr.
Mukherjee, learned Senior Counsel appearing for the
appellant has commended us to a decision of the High Court
of Delhi in Krishna Wanti v. LIC, wherein the High Court has
taken note of the fact that if the letter of repudiation did not
mention as aspect, the same could not be taken as a stand
when the matter is decided. We approve the said view.
18. In the instant case, the insurer was in custody of the
policy. It had prescribed the clause relating to duration. It was
very much aware about the stipulation made in Clauses 5(3)
to 5(5), but despite the stipulation therein, it appointed a
surveyor. Additionally, as has been stated earlier, in the letter
of repudiation, it only stated that the claim lodged by the
insured was not falling under the purview of transit loss.
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Thus, by positive action, the insurer has waived its right to
advance the plea that the claim was not entertainable because
conditions enumerated in duration clause were no satisfied.
In our considered opinion, the National Commission could
not have placed reliance on the said terms to come to the
conclusion that there was no policy cover in existence and
that the risks stood not covered after delivery of goods to the
consignee.”
98. The aforesaid decision in the case of Galada Power and
Telecommunication Limited Vs. United India Insurance Company
Limited and Another (supra) has been followed by the Hon’ble
Supreme Court in the case of Saurashtra Chemical Limited Vs. National
Insurance Company Limited (Supra) and the Hon’ble Supreme Court
has observed that an insurance company cannot travel beyond the
grounds mentioned in the letter of repudiation. Paragraphs 20 to 23 of
the said decision are usefully quoted as under:-
“20. Insofar as issue No. (2) is concerned it is undisputed
that the letter of repudiation did not even remotely mention
anything about violation of duration Clause stipulated in
Clause (6) (i) of the General Conditions of Policy. The
Respondent-insurer repudiated the claim solely on the
ground that since spontaneous combustion did not result
into fire and loss had not been caused by fire as stipulated by
policy conditions, there was no liability under the policy. It
was for the first time the Respondent-insurer raised the issue
of delayed intimation of claim and violation of stipulation of
Clause 6(i) of the General Conditions of Policy in its reply
filed before NCDRC.
21.This Court in the case of Galada Power Ltd. has
elucidated upon issue (2) as under:
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“13….It is evincible, the insurer had taken cognizance of
the communication made by the Appellant and
nominated a surveyor to verify the loss. Once the said
exercise has been undertaken, we are disposed to think
that the insurer could not have been allowed to take a
stand that the claim is hit by the clause pertaining to
duration. In the absence of any mention in the letter of
repudiation and also from the conduct of the insurer in
appointing a surveyor, it can safely be concluded that the
insurer had waived the right which was in its favour
under the duration clause. In this regard, Mr. Mukherjee,
learned Senior Counsel appearing for the Appellant has
commended us to a decision of the High Court of Delhi in
Krishna Wanti v. LIC, wherein the High Court has taken
note of the fact that if the letter of repudiation did not
mention an aspect, the same could not be taken as a
stand when the matter is decided. We approve the said
view. (Emphasis supplied)
22. Undoubtedly, as mentioned supra, this Court in Sonell
Clocks has distinguished Galada Power on facts and held
that the appointment of a surveyor cannot, as a matter of
law, be construed as a waiver of the terms and conditions
of the insurance policy. However, in Sonell Clocks, the
insurer had taken a specific plea in the repudiation letter
that the loss was not conveyed within the stipulated
period. Hence the singular issue before this Court was
only whether the insurer had waived the condition as to
delay in intimation by appointing a surveyor. This Court
in Sonell Clocks did not have the occasion to consider
whether the insurance company could have raised delay
as a ground for repudiation for the first time before the
consumer forum.
23. Hence we are of the considered opinion that the law
as laid down in ‘Galada’ on issue (2), still holds the field.
It is a settled position that an insurance company cannot
travel beyond the grounds mentioned in the letter of
repudiation. If the insurer has not taken delay in
intimation as a specific ground in letter of repudiation,
they cannot do so at the stage of hearing of the consumer
complaint before NCDRC.”
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99. It is observed that the Defendant by way of its first written
statement has attempted to raise grounds which are well beyond the
ground taken in the letter of repudiation dated 15 th September, 1994.
In the said letter as can be seen, the only ground of repudiation taken
is, “The buyer also did offer the goods in barter exchange. You,
however, chose without consulting the Corporation not to import the
goods offered by the buyer may be for trade reasons. As a result, the
bills have remained unpaid. This is clearly a trade loss, which is not
covered by the Corporation. We are therefore, not in a position to
entertain your claim, which is hereby rejected.”
100. Moreover, from a bare perusal of the insurance policy and by the
ABL/HML judgments it can be seen that the Defendant is barred in law
from pleading any additional grounds for the first time during the
proceedings of this Suit. The Defendant was in possession of the Policy
and the Letter of approval and had the opportunity to raise additional
grounds/defences. By omitting to do so, the Defendant has waived its
right to advance additional defences and grounds. That these
additional grounds are not an elaboration of the ground of repudiation
as has been contended but are different grounds which have stood
waived. Accordingly, the ground is not sustainable, and the additional
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defences cannot be considered to come to the conclusion that the claim
of the Plaintiff is not covered under the policy and letter of approval.
101. Also the approach of the Defendant while cross-examining the
Plaintiff’s witness, Mr. Amitava Ranjan Sen cannot be permitted. The
broad line of questioning adopted by the Defendant during the cross-
examination fo the Plaintiff’s witness is as follows:-
(a) Viability of barter as a mode of payment.
(b) Mitigation of losses by the Plaintiff.
(c) Nomination of the Plaintiff by RWL as an associate.
(d) Payment to the Plaintiff through RWL.
(e) Commercial understanding with RWL.
(f) Default on guarantee and follow-up regarding payment with the
Republic of Kazakhstan.
(g) Demands to RVOK for payment and request for RWL to follow-up
(h) Bills.
102. By undertaking the aforesaid line of cross-examination the
Defendant has sought to set up a new and additional defences/grounds
justifying repudiation of the Plaintiff’s claim. None of these defences /
grounds were taken by the Defendant in its letter dated 15th
September, 1994. The terms of the contract are clear and no external
aid is required for the interpretation of the same. It is not the pleaded
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case of the Defendant that at the time when the Plaintiff took the
specific approval from the Defendant, the Plaintiff had a different
intention which should have been disclosed to the Defendant and that
the non disclosure of the same was a breach of the principle of
uberrimae fidei and therefore, the insurance policy stands vitiated. No
evidence has been laid to that extent by the Defendant. A new defence
cannot be culled out from the answers given by the PW-1 in his cross-
examination. Any questioning in the cross-examination must have the
foundation in the pleadings and in the present case the said foundation
in the Defendant’s pleading are absent. If it was the pleaded case of the
Defendant then the Plaintiff would have laid evidence of the person
who negotiated the contract as opposed to the PW-1 who is the only
person who applied for the insurance policy cover as per the contract
given to him. In the case of Bachhaj Nahar Vs. Nilima Mandal and Anr.
(supra), the Hon’ble Supreme Court has held that any evidence laid in
the absence of the foundational premises laid in the pleadings ought
not to be considered by the Court. Accordingly, the Defendant cannot
be permitted to raise new contentions on the basis of cross-examination
of the Plaintiff’s witness no. 1 as having travelled beyond the
Defendant’s pleading.
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103. Coming to Issue No. 3, the Plaintiff has submitted that the
contract is admitted. That the first addendum to the contract amending
the mode of payment is admitted. The second addendum to the
contract whereby the Plaintiff, ABL and HML were nominated as
associates by RWL under the Contract is admitted. That the actual
export of tea by the Plaintiff is admitted. That the fact that barter
exchange of goods did not materialize between the Plaintiff and the
buyer is admitted. That the fact that there was only part-payment of the
total consideration payable by the buyer is admitted and the fact that
the Ministry failed to honour its guarantee is also admitted.
104. The aforesaid facts are admitted facts. The findings in paragraphs
31 to 51 of the ABL judgment and paragraphs 1, 2, 5 to 9 of the HML
Judgment have been adopted by the Plaintiff and it has been submitted
that the same be treated as Plaintiff’s submission on the interpretation
of the contract read with the two addenda and as to why the
repudiation by the Defendant is illegal.
105. In the light of the admitted facts, the Plaintiff’s submissions and
the findings of the Hon’ble Supreme Court in the ABL judgment as
adopted by the Plaintiff leads to a conclusion that the claim made by
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the Plaintiff is covered by the insurance policy dated 22 nd September,
1992 (Exhibit P-1) and the letter of approval dated 7 th October, 1993
(Exhibit P-7) read with the two addenda to the contract (Exhibits P-4
and P-5). In my view, therefore, the Defendant is liable to make
payment to the Plaintiff under the insurance policy and the cover and
issue no. 3 is also answered in favour of the Plaintiff.
106. As regards issue No. 4, whether the Plaintiff is entitled to
monetary claim as per the revised particulars of claim to the Plaint, it is
observed that the Plaintiff had filed the Suit on 12th June, 1996 for
recovery of Rs. 6,59,85,531.02 as set out in the Statement of Claim
(Exhibit T). After the filing of the Suit, the Plaintiff received further
amount of Rs.25,95,409/-vide letter dated 29 th April, 1997 (Exhibit P-
26) and Rs.17,07,000/- vide letter dated 4th June, 1997 (Exhibit P-25)
from RWL on account of the buyer. Accordingly, the claim of the
Plaintiff was revised and stood reduced to Rs.4,39,05,715.31 being
75% of the balance outstanding dues excluding interest. As on 15th
September, 2014, the Plaintiff claimed to be entitled to a sum of Rs.
18,43,67,961/- including interest at the rate of 15% p.a. The Defendant
admittedly has not raised any dispute with respect to the receipt of the
amounts by the Plaintiff.
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107. The Plaintiff has disclosed and brought on record all the amounts
received by the Plaintiff pursuant to the tea exported by him prior to
and after the filing of the Suit. That any contradiction to the same
would have to be proved by the Defendant as the burden of proving the
negative has shifted upon the Defendant. It had been submitted on
behalf of the Defendant that payments against the exports of tea were
to be received by RWL and were to be distributed amongst the
nominated associates proportionately. In my view, if the Defendant
wanted to show that RWL had received any additional amount, witness
summons should have been issued to RWL and having failed to do so,
the Defendant has not been able to discharge the burden of proving the
negative. In my view, therefore, the Plaintiff is entitled to the claim as
per the revised particulars of the claim to the Plaint.
108. With respect to the argument of the Defendant regarding the
payment due and outstanding to the Plaintiff, it is not the Defendant’s
case that the Plaintiff has received full payment and therefore it is not
entitled to its claim in this Suit, nor has it disputed that the Plaintiff
exported the goods. The Plaintiff communicated its claim to the
Defendant by letter dated June 26, 1994 and this is positive evidence
led by the Plaintiff. During the course of submissions, it is the case of
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Defendant also that payments were to be received by RWL and were to
be distributed amongst the nominated associates proportionately.
Admittedly, by Exhibit D-1/5, RWL had also informed the Defendant
that it had not received payment. It is not a ground of repudiation of
the Defendant that the Plaintiff has received either the entire amount
or more than the amount stated in the Plaint, and it is therefore not
entitled to its claim. Both the amounts received by the Plaintiff after
the filing of the captioned Suit have not only been disclosed, but in fact
the claim has been reduced by amending the Plaint. The Defendant,
therefore, had full notice of the Plaintiff’s claim and the basis thereof.
There is nothing in the cross-examination of PW-1 to show that the
Plaintiff’s word should be disbelieved or that the Plaintiff has received
any further amount from RWL. The burden of proving the negative
cannot lie on the Plaintiff. If the Defendant wanted to show that RWL
has received any additional amount, they could have issued a witness
summons to RWL for production of the relevant documents as they had
all the requisite details from RWL as well as the claim form so
submitted by the Plaintiff. It is an admitted position that the other two
decrees have been honoured and paid off by the Defendant. Needless to
add, if any further amount was received by RWL or ABL and HML, then
the decretal amounts in the aforesaid two cases would also have been
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reduced and the Defendant would have been in a position to show that,
however, that is not the case.
109. Coming to the Issue no. 5 regarding the entitlement of the
Plaintiff to interest at the rate of 15%, it is observed that the payment
clause (Clause 6) in the contract stipulates the interest rate of 15% p.a.
(Exhibit P-4). The Suit admittedly arises out of the commercial
transaction and therefore, further interest can exceed 6% as is provided
for in the proviso to Section 34(1) of the CPC. The letter issued by the
Plaintiff to the Defendant dated 26 th June, 1994 (Exhibit P-9) and the
formal claim form (Exhibit P-11) filed by the Plaintiff with the
Defendant can be said to be a notice served under Section 3(1)(b) of
the Interest Act, 1978. The Hon’ble Supreme Court in the case of ABL
Judgment had directed the Defendant to settle the claim of ABL in
terms of the policy dated 30 th September, 1993 with interest at the rate
of 15% p.a. As the present Suit arises out of a commercial transaction
and as Section 34 (1) of the Civil Procedure Code,1908 as amended by
the Commercial Courts Act provides that Court in a commercial
transaction can provide rate of further interest exceeding 6% but not
exceed the contractual rate, I am of the view that Plaintiff is entitled to
interest @15% p.a this being a commercial transaction and as the claim
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of the Plaintiff has remained unsettled since 1996 though the claim of
the other nominated associates who stood on the same footing as the
Plaintiff in this case have been settled by the Defendant. Accordingly, I
am of the view that the Defendant be directed to pay interest in terms
of the policy at the rate of 15% p.a.
110. In view of the above discussion, the submissions made on behalf
of the Defendant with respect to the other three issues cannot be
sustained.
111. Regarding costs, the Plaintiff has submitted that under Section
35 of the Code of Civil Procedure, 1908 (“CPC“) as amended by Section
16 of the Commercial Courts Act, 2015, in any commercial dispute, the
Court has the discretion to determine :
(a) whether costs are payable by one party to another;
(b) the quantum of costs; (c) when they are to be paid.
112. That, the Plaintiff is seeking costs in terms of the schedule /
statement of costs incurred by the Plaintiff during the course of the
proceedings of the Suit as on 4 th December 2023 quantified at
Rs.1,73,23,096/-.
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113. The expression “costs” in Section 35 of the CPC would be a
reasonable cost relating to the fees and expenses of the witnesses
incurred, legal fees and expenses incurred and other expenses incurred
in connection with the proceedings. The Section stipulates that the
general rule is that the unsuccessful party will be ordered to pay costs
to the successful party and any deviation from the said general rule will
require the Court to make an order recording reasons in writing for the
said deviation.
114. The said schedule of costs contains the legal fees of the Advocate
for the Plaintiff / Senior Counsel / Counsel as well as the Court
Commissioner. The Suit is a commercial dispute. I have also perused
the schedule / statement of costs statedly incurred by the Plaintiff
during the course of proceedings annexed as Exhibit C to the written
submissions of the Plaintiff and I am of the view that the Plaintiff be
granted costs of Rs.1,73,23,096/- as per the said schedule of costs as
incurred by the Plaintiff, in as much as, they appear to be reasonable in
the absence of any contrary material being brought to my notice.
115. The Defendant has sought to raise a plea of fraud and / or
misrepresentation. The Hon’ble Supreme Court in the case of
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while relying upon Order VI Rule 4 of the CPC held that when fraud is
alleged, the particulars thereof are required to be pleaded. Paragraphs
39 and 40 of the said decision are usefully quoted as under:
“39. Another aspect of the matter cannot also be lost sight
of. Order 6 Rule 4 of the Code of Civil Procedure reads as
under :
“4. Particulars to be given where necessary– In all cases in
which the party pleading relies on any misrepresentation,
fraud, breach of trust, willful default, or undue influence, and
in all other cases in which particulars may be necessary
beyond such as are exemplified in the forms aforesaid,
particulars (with dates and items if necessary) shall be stated
in the pleading.”
40. When a fraud is alleged, the particulars thereof are
required to be pleaded. No particular of the alleged fraud or
misrepresentation has been disclosed.”
116. The Hon’ble Supreme Court in the case of Placido Francisco
Pinto (D) by Lrs. and Another vs. Jose Francisco Pinto and Another
(supra) has held that in all cases in which a party alleges
misrepresentation, fraud or undue influence, their pleadings shall state
the particulars with dates and items an if the pleadings / evidence are
not indicative of any instance of fraud / misrepresentation, the plea
cannot be orally argued. In the written statement, as can be seen, there
are no pleadings of fraud or misrepresentation much less any
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particulars. Admittedly, no issue of fraud and/or misrepresentation has
been framed. Moreover, the plea of fraud and/or misrepresentation is
sought to be raised for the first time at the stage of final arguments
without any pleadings or supporting particulars. Accordingly, the said
plea bereft of any pleading or requisite particulars as required under
Order VI Rule 4 of the CPC is only to be rejected as untenable. In view
of what has been held as above, the reliance placed on the decision of
the Hon’ble Supreme Court in Manmohan Nanda v. United India
Insurance Co. Ltd. & Anr. (supra) does not lead any assistance to the
case of the Defendant.
117. The Defendant has also alleged breach of Clause (2) of the
Insurance policy viz. disclosure of fact. The ground of repudiation is
that the Plaintiff refused to accept barter exchange of goods which
implies that the Plaintiff informed the Defendant of the same.
Therefore, as the Defendant was already informed of the same, the
question of non-compliance of Clause (2) of the Insurance policy by the
Plaintiff would not arise.
118. Clause (2) does not speak of any form of consultation with the
Defendant but only speaks of keeping the Defendant informed which
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has been done vide letter dated 4 th July 1994 (Exhibit D-1/5). There is
no other clause which speaks of consultation either. In fact, the aspect
of no prior consultation has been expressly dealt with and rejected by
the Hon’ble Supreme Court in ABL judgment in paragraph 51 which is
usefully quoted as under :
“51. From the terms of the contract, we have noticed in
Clause (6), as amended by the addendum, consideration by
way of barter of goods is not the sole consideration. The said
clause contemplates alternate modes of payment of
consideration, one of them being by barter of goods and the
other by cash payment in US $. The terms of the insurance
contract which was agreed between the parties were after the
terms of the contract between the exporter and the importer
were executed which included the addendum, therefore,
without hesitation we must proceed on the basis that the first
respondent issued the insurance policy knowing very well that
there was more than one mode of payment of consideration
and it had insured failure of all the modes of payment of
consideration. From the correspondence as well as from the
terms of the policy, it is noticed that existence of only two
conditions have been made as a condition precedent for
making the first respondent Corporation liable to pay for the
insured risk, that is, (i) there should be a default on the part
of the Kazak Corporation to pay for the goods received; and
(ii) there should be a failure on the part of the Kazakhstan
Government to fulfill their guarantee. This is clear from the
terms of the insurance contract read with the letter of the first
respondent dated 8th September, 1993 wherein at Clause 3-A,
it is stated : “Our liability will arise only after default has been
established on the guarantee of the Ministry.” From the above,
it is clear both the grounds as put forth by the learned counsel
for the respondent before us as well as in the two letters ofAVK/Kanchan Dhuri/Nikita Gadgil/KSG 73/79
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In our opinion, the first respondent insured the export risk of
the appellants in regard to the non payment of the
consideration for the tea exported whether it arose from the
non fulfillment of the barter clause or for the non fulfillment
of the cash payment clause. The argument advanced on behalf
of the respondent that the appellants refused to accept the
barter by goods offered by the Kazak Corporation which
amounted to a default under the contract on the part of the
appellants has no legs to stand in view of the clear language
of the amended Clause 6 of the agreement which as noted
above, states that the obligation of the buyer, namely, Kazak
Corporation to pay for the goods received by it in US $ arises
when payment by barter fails for “any reason whatever”. The
use of the words “any reason whatever” in the said amended
clause includes the reasons of refusal by the appellants to
accept the goods offered in barter. On the face of the said
language of amended clause, there could be no room for two
opinions at all in regard to the liability of the first respondent
to pay for the loss suffered by the appellants even in cases
where payment by barter fails at the instance of the appellant.
The learned counsel for the respondent contended for a
correct interpretation of this amended clause and the other
clauses of the contracts i.e. The contract of export and the
contract of insurance between the parties there is need for
oral evidence being led without which a proper interpretation
of this clause is not possible, therefore, it is fit case in which
the appellants should be directed to approach the Civil Court
to establish their claim. We find no force in this argument. We
have come to the conclusion that the amended Clause 6 of the
agreement between the exporter and the importer on the face
of it does not give room for a second or another construction
than the one already accepted by us. We have also noted that
reliance placed on Sub-clause (d) of the proviso to the
insurance contract by the Appellate Bench is also misplaced
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which is clear from the language of the said clause itself.
Therefore, in our opinion, it does not require any external aid,
much less any oral evidence to interpret the above clause.
Merely because the first respondent wants to dispute this fact,
in our opinion, it does not become a disputed fact. If such
objection as to disputed questions or interpretations are raised
in a writ petition, in our opinion, the courts can very well go
into the same and decide that objection if facts permit the
same as in this case. We have already noted the decisions of
this court which in clear terms have laid down that mere
existence of disputed questions of fact ipso facto does not
prevent a writ court from determining the disputed questions
of fact.”
119. Therefore, the argument of the Defendant does not fall within
the ambit of the clause because its repudiation is on the ground that
the Plaintiff chose not to import the goods without prior consultation
with ECGC.
120. The Defendant has also sought to raise a defence with respect to
the bills not being accepted / discounted or that the original bills had
not been provided. It is clear from Exhibit P-11 that the bills have been
discounted as stated in the formal claim form of the Plaintiff certified
by the bank. It is not even a ground of repudiation that the bills were
not accepted or discounted or that the originals of the bills were not
provided to the Defendant. In fact, the originals of the bills were not
even demanded at the relevant time by the Defendant. Whatever
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enquiries the Defendant had to make at the relevant time while
considering the claim of the Plaintiff, it made and no objections were
raised in respect of the bills not being accepted / discounted or that the
originals of the bills had not been provided. Moreover, the defence of
that the bills not being accepted / discounted or that the original bills
not having been provided cannot, in my view, be raised for the first
time after thirty years during the cross-examination of PW1.
121. With respect to the argument of the Defendant regarding
subrogation, it is settled law that subrogation takes effect as a matter of
law and as a matter of contract only upon payment of the claim
amount under the Insurance policy. There could be no subrogation
unless the Defendant first complies with its obligation to make the
payment under the Insurance policy. The printed proforma of the claim
form clearly supports this where the obligations mentioned therein
arise only on payment by the Defendant (Exhibit P-11). In fact, the
entire edifice of the argument of the Defendant based on the right of
subrogation presupposes that the Defendant is liable to make payment
and must make payment. This is the view of the Hon’ble Supreme
Court in the case of Economic Transport Organization, Delhi vs. Charan
Spinning Mills Private Limited and Another (supra) . Paragraph 20 of
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the said decision is relevant and is usefully quoted as under :
“20. Section 140 of the Contract Act, 1872 deals with the
principle of subrogation with reference to the rights of a
surety/guarantor. It reads :
“140. Rights of surety on payment or performance.- Where a
guaranteed debt has become due, or default of the principal
debtor to perform a guaranteed duty has taken place, the
surety, upon payment or performance of all that is liable for,
is invested with all the rights which the creditor had against
the principal debtor. ”
122. There is also no dispute about the entitlement of the Defendant
on payment of its insurance claim. In fact, on the other hand, if the
contention is that by reason of the Plaintiff’s alleged failure to take
action, the Defendant has become entitled to repudiate the claim, then
the same is only an afterthought as there is no such ground raised in
the letter of repudiation by the Defendant. Accordingly, this submission
of the Defendant also does not hold any water.
123. In view of the above discussion, the other contentions raised on
behalf of the Defendant are rejected.
124. In view of the findings as above, Issue Nos 1 to 6 are are
accordingly answered as follows:
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No. Issue Answer/Findings
1. Whether the issues arising in the Suit are finally decided by the Affirmative
Hon’ble Supreme Court in the matter of ABL International Ltd v.
ECGC & others (reported in (2004) 3 SCC 553) as well as by the
Appellate Bench of the Kerala High Court in the matter of ECGC v.
Harrisons Malayalam Ltd in favour of ABL International Limited
and Harrisons Malayalam Ltd?
2. If the answer to Issue No.1 is answered in affirmative then Affirmative
whether the Plaintiff is entitled to a decree as prayed for in the
Suit?
3. In the event of Issue Nos 1 and 2 being answered in the negative, Answered in favour
whether the claim made by the Plaintiff is covered by the of Plaintiff as per
Insurance Policy dated 22nd September 1992 (Exhibit A to the the above
Plaint) and the letter of approval dated 7 th October 1993 read discussion.
with the two addenda to the Contract dated 26 th August 1993
(Exhibits C and D to the Plaint) and that the Defendant is liable
to make payment to the Plaintiff under the Policy and Cover?
4. In the event of Issue Nos. 1 and 2 being answered in the negative, Answered in favour
whether the Plaintiff is entitled to the monetary claim made in of Plaintiff as per
the particulars of claim to the Plaint or any other amount from the above
the Defendant? discussion.
5. In the event of Issue Nos. 1 and 2 being answered in the negative, Answered in favour
whether the Plaintiff is entitled to interest at the rate of 15% p.a. of Plaintiff as per
on the monetary claim made in the particulars of claim? the above
discussion.
6. What order? Suit is Decreed
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125. On the basis of the findings recorded above, I hold that the claim
of the Plaintiff is covered by the Insurance Policy dated 22 nd September,
1992 and the letter of approval dated 07 th October, 1993 and the
Plaintiff is entitled to the monetary claim as per the revised Particulars
of Claim at the interest rate of 15% p.a. along with costs as above
computed.
126. Accordingly, the following order is passed:-
ORDER
i. Suit is decreed in terms of prayer clause (a), which reads thus:
“(a.) That the Defendant be ordered and decreed to pay to the
Plaintiff a sum of RS.18,43,67,961/- as per the revised
particulars of claim hereto annexed and marked as Exhibit-T1
with further interest on Rs. 4,39,05,715.31 at the rate of 15%
p.a. from 16th September, 2014 till payment and costs of the
suit.”
ii. In view of the above discussions in Paragraphs No. 111 to 114, it
is clarified that Costs of Rs.1,73,23,096.00/- be paid by the Defendant
to the Plaintiff.
iii. Decree be drawn up expeditiously.
(ABHAY AHUJA, J.)
Digitally
signed by
NIKITA
NIKITA YOGESH
YOGESH GADGIL
GADGIL Date:
2025.06.21
17:57:29
+0530 AVK/Kanchan Dhuri/Nikita Gadgil/KSG 79/79
::: Uploaded on - 21/06/2025 ::: Downloaded on - 21/06/2025 18:56:50 :::