NDLI: Export Credit Guarantee Corpn. of India Ltd. & Anr. Vs. M.s. Creations & Anr.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	bank guarantee Insurance ECGC overdue amounts Comprehensive Risk policy SICOREP Shipments Policy
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Constitution of India
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	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 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 its own WTPSG Policy. ECGC paid Rs. 6 lakhs to PNB as provisional payment. First respondent submitted two claims of Rs.22.87 lakhs to ECGC against the overdue amounts from SICOREP. ECGC rejected the claim of the first respondent. Complaint filed by the first respondent before the State Commission, which was allowed. National Commission confirmed the said order. Hence, the present appeal.
Judge	Hon'ble Dr. Justice D.Y. Chandrachud
Neutral Citation	2019 INSC 358
Petitioner	Export Credit Guarantee Corpn. Of India Ltd. & Anr.
Respondent	M.s. Creations & Anr.
SCR	[2019] 5 S.C.R. 484
Judgement Date	2019-03-13
Case Number	2987

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