The firm obtained a comprehensive insurance policy from the Export Credit Guarantee Corporation of India (ECGC), which was valid from October 1, 2004, to September 30, 2006.
The policy included coverage against the risk of non-payment for any export shipment, loss due to delay caused by commercial or political risk, protection against other unpredictable losses, and insolvency or liquidation of the buyer. The terms of the policy required that the shipments made during each calendar month would have to be intimated through a declaration made by the 15th day of the following month.
Chandak Brothers (the insured) was sanctioned a limit of Rs. 25 lakh, against which it made an export of goods to Famplan Ltd. In the United Kingdom. The latter acknowledged the receipt of the goods and issued a bill of exchange on September 6, 2006, promising to make payment. Subsequently, on September 28, 2006, the NatWest Bank of Birmingham failed to honour the bill of exchange. The insured then lodged an insurance claim.
ECGC repudiated the claim on the ground that the approval for business dealing with Famplan was obtained without disclosing the full and correct address and that the declaration of sale was not made within the stipulated period of 15 days. Further, the importer, Famplan, denied having placed any order or that any money was due and payable by it, just as its two sister concerns Sovereign Hardware and Wetherall Group PLC had previously defaulted in making payment. The insured was also blamed for neither having protested nor having initiated any action for non-payment of the bills of exchange.
Aggrieved by the repudiation of its claim, the insured filed a consumer complaint before the Delhi State Commission, against ECGC as well as the overseas importer. After considering the rival contentions, the State Commission held ECGC as well as Famplan jointly and severally liable to pay Rs. 23,24,850. Additionally, interest at 9 per cent per annum was also awarded.
