EXPORT CREDIT GUARANTEE CORPN. OF INDIA LTD. & ANR. versus M.S. CREATIONS & ANR.

Citation: [2019] 5 S.C.R. 484 · Decided: 13-03-2019 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

Judgment (excerpt)

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SUPREME COURT REPORTS
[2019]  5 S.C.R.
EXPORT CREDIT GUARANTEE CORPN.OF INDIA
                               LTD. & ANR.
 v.
M.S. CREATIONS & ANR.
(Civil Appeal No.2987of 2019)
 MARCH 13, 2019
[DR DHANANJAYA Y CHANDRACHUD AND
HEMANT GUPTA, JJ.]
Insurance– Shipments Policy– First Respondent obtained
Shipments (Comprehensive Risk) Policy from the appellant-ECGC
– First respondent obtained purchase order for handloom goods,
worth about Rs 64 lakhs, from one Society Ivoirienne De Commerce
ET DE Representation (SICOREP) situated in the Ivory Coast – First
respondent made shipments to SICOREP – SICOREP sought change
in the name of its bank under the contract from Credit Lyonnais to
Banqyue De ‘L’ Habitat De Cote D’Ivoire (BHCI)– BHCI allegedly
released the documents without receiving any acceptance from
SICOREP – First respondent was unable to make payment to its
own banker, Punjab National Bank (PNB)-second respondent – PNB
made application for provisional payment of its claim under the
policy called ‘Whole Turn Over Post Shipment Export Credit
Guarantee’ (WTPSG Policy) issued to it by ECGC – ECGC paid Rs.
6 lakhs to PNB – First respondent submitted two claims of Rs.22.87
lakhs to ECGC against the overdue amounts from SICOREP – ECGC
called upon the first respondent to submit various documents
together with its claim forms – First respondent invoked the
intervention of the Indian Embassy in the Ivory Coast in order to
produce the necessary documents – Indian Embassy informed that
according to BHCI it did not have SICOREP as client at all and that
the possibility of the documents being forged could not be excluded
– ECGC rejected the claim of the first respondent inter alia invoking
exclusionary provision – First respondent’s complaint allowed by
the State Commission – National Commission confirmed the order –
On appeal, held: First respondent was unable to produce the
relevant documents as required by ECGC – Further, ECGC raised
the exclusion contained in the insurance policy, in terms whereof
[2019] 5 S.C.R. 484
 484
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the insurer was not to be held liable for any loss from any act or
default on the part of the collecting bank – Evidently, BHCI handed
over the original documents to a person representing SICOREP
without acceptance – There was clear default on the part of BHCI
– State Commission and the National Commission held against ECGC
inter alia on the ground that by honoring its commitment to PNB
under WTPSG Policy, ECGC had in turn admitted its liability to the
first respondent – Guarantee which ECGC furnished to PNB, similar
to those it furnishes to other bankers, was to secure their exposure
against the risks involved in the advances which the bank had made
in respect of export contracts to its constituent – This guarantee
would not conclude the issue as to whether the claim made by the
first respondent under a distinct insurance policy was sustainable
– Basis on which the State Commission and National Commission
held against ECGC was erroneous– However, order passed by the
State Commission was duly executed and in compliance, the amount
due and payable has been paid over by ECGC to the first respondent
– There is no allegation that the first respondent was in any way
connected with or colluded with SICOREP – First respondent was
itself a victim of SICOREP having retired the documents without
making payment for the export consignments – No recoveries be
made from the first respondent – Judgment of the National
Commission set aside – Constitution of India – Art.142.
The First Respondent obtained Shipments (Comprehensive
Risk) Policy from the appellant-ECGC. ECGC also issues policy
called ‘Whole Turn Over Post Shipment Export Credit Guarantee’
(WTPSG Policy) to various banks. First respondent obtained
purchase order for handloom goods, worth about Rs 64 lakhs,
from a buyer named Society Ivoirienne De Commerce ET DE
Representation (SICOREP) situated in the Ivory Coast. First
respondent entered into sales contract with SICOREP and made
shipments to SICOREP. SICOREP sought change in the name
of its bank under the contract from Credit Lyonnais to Banqyue
De ‘L’ Habitat De Cote D’Ivoire (BHCI). BHCI allegedly
released the documents without receiving any acceptance from
SICOREP.  First respondent was unable to make payment to its
own banker, Punjab National Bank (PNB)-second respondent.
PNB made application for provisional payment of its claim under
EXPORT CREDIT GUARANTEE CORPN.OF IN

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