Court orders insurance company to pay Rs.57 lakh to firm after ship hijack
The consumer court has ordered an insurance company pay Rs. 57.42 lakh as compensation with 10% interest to a firm that suffered huge losses after a ship carrying its goods was hijacked by pirates near Yemen in 2008. Charul Shah reports.mumbai Updated: Oct 25, 2012 01:50 IST
The consumer court has ordered an insurance company pay Rs. 57.42 lakh as compensation with 10% interest to a firm that suffered huge losses after a ship carrying its goods was hijacked by pirates near Yemen in 2008.
The Mumbai-based CJ Shah & Company filed a complaint against United India Insurance Company Ltd in the State Consumer Commission in 2011 after it rejected the firm’s insurance claims following the hijack.
In 2008, CJ Shah & Company had imported 580 metric tonnes of hexane, which is a chemical used in the preparation of glues for shoes and leather products and to extract cooking oils from seeds, from Israel. The firm had also insured the consignment under a special policy.
On November 5, 2008, the vessel carrying hexane left from Haifa port in Israel and was on its way to Kandla in Gujarat when it was hijacked by pirates near the coast of Yemen on November 14.
The vessel was released on January 12, 2009, and arrived at Kandla on January 27.
On finding that there was not as much chemical as it had imported and that the chemical was contaminated, the firm informed the insurance company, which appointed a surveyor and collected samples for testing.
The laboratory report stated that there was more benzene (contaminating element), in the hexane (1.31%) against the permissible limit of 0.20%. The surveyor also assessed the shortage of material to the tune of 13.182 metric tonnes as a result of mishandling by the pirates.
On January 2009, the complainant then filed a claim of Rs. 57.42 lakh. After two years, the insurance company, however, rejected the claim, stating that the product was not as per specifications prior to shipment.
During the hearing, the consumer court observed that after receiving the surveyor’s report, the insurance company ought to have decided on the claim within 30 days, but while the surveyor’s report came in January 2010, the insurance firm’s repudiation letter was issued in April 2011.
“The repudiation of the claim is arbitrary and without any supporting documentary evidence. Repudiating the claim amounts to deficiency in service by the insurance company,” the state consumer commission ruled, directing the insurance company to pay the claim amount with 10% interest from November 2011.