LexCONTSHIP CONTAINER LINES LTD. versus D.K. LALL AND ORS.
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A B [2010] 3 S.C.R. 460 CONTSHIP CONTAINER LINES LTD. v. D.K. LALL AND ORS. (Civil Appeal No. 3245 of 2005) ' . MARCH 16, 2010 [MARKANDEY KAT JU AND T.S. THAKUR, JJ.}i Consumer Protection Act, 1986: c Claim for compensation by shipper for non-delivery of consignment - Liability of insurance company and carrier of goods - On facts, held: Insurance company not liable as the insured obtained insurance policy on misrepresentation and thus failed to maintain utmost good faith - However, service D provided by carrier was deficient - Liability of carrier for payment of compensation to the consignee is limited by the provisions of the 1925 Act - Bill of Lading is the document on the basis of which compensation is determinable against the carrier in terms of provisions of 1925 Act - Bill of Lading did not mention either the nature or the value of the goods - E That being so, carrier is liable to pay compensation of rupee equivalent of 666. 67 - Special Drawing Rights - Indian Carriers of Goods by Sea Act, 1925 - ss.2, 4 - Export-Import - Bill of Lading. F Insurance: Marine insurance - Export of goods - FOB contract - Right of seller of goods upon delivery of goods to carrier - Held: In case of FOB contracts, goods are delivered free on G board the ship - Once seller places the goods safely on board at his cost and thereby hand over possession of goods to the ship responsibility of seller would cease and delivery of goods to buyer is complete - Goods from that stage onwards would be at the risk of buyer - On facts, since consignment was sent H 460 CONTSHIP CONTAINER LINES LTD. v. D.K. LALL 461 AND ORS. on FOB basis, seller reserved no right or lien qua the goods A in question - Goods were from that stage onwards held by the carrier at the risk of the buyer and the property in the goods stood vested in the buyer - National Commission was right in holding that seller had no insurable interest in the goods - Sale of Goods Act, 1930 - ss.46 and 47 - Marine Insurance B Act, 1963 - s. 7 - Contract - Consumer Protection Act, 1986 - Export-Import. Misrepresentation by exporter wnile obtaining insurance cover that the goods were despatched on CIF ba.sis whereas C the goods were, in fact, sent on FOB basis - Material departure breached the duty of utmost good faith cast upon the exporter towards insurance company - Liability of insurance company in case of mis-delivery of goods - Held: Since the exporter had not observed utmost good faith, insurance company stood absolved of its liability under the D contract to reimburse loss to him. ' Contract: CIF contract and FOB contract - Distinction between - E Discussed. Words and phrases: Expression 'insurable interest' - Meaning of, in the context of marine insurance. F Responr:fent-exporter received two orders for export, one for the export of steel furniture from Mis Natural Selection International and the other from M/s Pindikas for export of miniature paintings. According to the G respondent, all the items meant for export in terms of the orders were packed in 122 different cartons. The mipiature paintings were packed in one carton meant for export to Mis Pindikas and the iron furniture items were pa~ked in 121 other cartons. The case of exporter was that while 121 cartons were duly delivered, one carton H 462 SUPREME COURT REPORTS (2010) 3 S.C.R. A comprising of miniature paintings was not delivered to M/ s Pindikas. The respondent filed a claim for compensation of Rs.34.23 lacs representing the value of llliniature paintings. The National Commission held that the insurance policy was obtained on the representation B that the transactions between the exporter and the purchasers were on C.l.F. basis whereas the consignment had in fact been sent on FOB basis, thus, there was failure of the insured to maintain utmost good faith easential for a. marine insurance policy. The Commission . c also noted that in the declaration of the consignment sent to the insured, no details of the conditions of shipment were mentioned and on that basis held that there was no deficiency of service on the part of the Insurance Company. Regarding the claim against the carrier, the 0 Commission recorded a finding that the service provided by them was deficient but held that the liability of the carrier for payment·of compensation to the consignee was limited by the provisions of the Indian Carriers of Goods by Sea
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