Karnataka High Court
National Insurance Company Limited vs Mizar Govinda Annappa Pai And Sons And ... on 13 January, 2005
Equivalent citations: 2005(2)KARLJ171
Author: B.S. Patil
Bench: B.S. Patil
JUDGMENT B.S. Patil, J.
1. This appeal is directed against the judgment and decree dated 31-1-1997 passed by the Principal Civil Judge (Senior Division), Mangalore, in OS. No. 154 of 1990. The 1st defendant-Insurance Company which has suffered the decree has preferred this regular first appeal.
2. For the sake of convenience, the parties will be referred to by their ranks obtained in the Court below. Few facts, which are essential for the purpose of disposal of this appeal may be set out as under:
The plaintiff is a partnership firm and is the consignor of the goods. The 2nd defendant-M/s. Roshan Transport and Forwarding Agency is the carrier to whom the goods were entrusted. The 1st defendant-National Insurance Company Limited, Mangalore, is the Insurer of the goods consigned.
3. The case of the plaintiff is that it despatched through the 2nd defendant-Transport Agency vide Consignment Note No. 37775, dated 21-10-1988. 100 cartons of cashew kernels from Mangalore to Delhi comprising of 25 cartons "W 210" and 75 cartons "SSW" under Marks "WTC/Delhi". As the consignee did not take delivery, under the instructions from the plaintiff, the 2nd defendant-Transport Agency rebooked the said consignment to Mangalore for delivery to the plaintiff. The goods so rebooked were covered under the 1st defendant's Insurance cover bearing Marine Declaration No. 19/89/25923, dated 9-3-1989. The said policy of the 1st defendant was an open policy bearing Nos. 602309/4400056, ENDT 41/202/1987 and 44/209/89 for Rs. 2,17,200/-. It is the further case of the plaintiff that the Consignment Note bearing No. 37775 was surrendered on 6-3-1989 with a request for rebooking the consignment for the 2nd time. The receipt of the Consignment Note has been endorsed on the copy of the letter dated 6-3-1989. However, the plaintiff contends that the 2nd defendant delayed in rebooking the goods. By the letters dated 14-4-1989, 22-4-1989 and a Lawyer's notice dated 16-5-1989, the plaintiff called upon the 2nd defendant to transport and deliver the goods at Mangalore. The further case of the plaintiff is that immediately after receiving the intimation over phone from the 2nd defendant that the goods have arrived at Mangalore, the partner of the plaintiff along with Sri Ganapathy, Surveyor from M/s. J.B. Boda, Surveyors Private Limited, Mangalore, who were the official surveyors of the 1st defendant, visited the office and the godown of the 2nd defendant at Mangalore to receive the goods and found the cartons damaged. It is the further case of the plaintiff that though the plaintiff wanted to take open delivery of the cartons containing the grade marks covered by the Consignment Note No. 37775, the 2nd defendant-Transport Agency insisted the plaintiff to take the delivery of cartons containing other grade marks also and refused to give delivery of the part agreeable. This necessitated issue of letter dated 22-6-1989 to the 2nd defendant-Transport Agency with a copy marked to the 1st defendant. The plaintiff contends that another attempt was made on 30-6-1989 for taking delivery which was also in vain as the 2nd defendant did not oblige to deliver the goods. A letter dated 30-6-1989 in this regard was again sent recording the events that happened when the 2nd defendant refused to deliver the goods. The plaintiff has further contended that the 1st defendant's surveyor who was present at the time when the plaintiff visited 2nd defendant to receive the goods also reported vide letter dated 4-7-1989 about the absence of grade marks in the consignment received back at Mangalore and the refusal of the 2nd defendant to hand over the graded consignments/goods. They have also mentioned the fact that the 2nd defendant-Transport Agency refused to deliver the goods keeping open the question of damage to the consignments on 'as is where is' basis.
4. On 4-7-1989, the plaintiff claims to have forwarded the claim to the 1st defendant for a sum of Rs. 2,17,200/- along with a letter of the even date notifying the non-delivery of the consignment. However, a printed claim form duly filled up was submitted on 11-7-1989 along with a letter dated 11-7-1989. The plaintiff claims that it has addressed several letters dated 28-7-1989, 23-8-1989 and 15-9-1989 to the 1st defendant seeking settlement of the claim. The 1st defendant initially sought for certain clarifications by letter dated 19-10-1989. Though the said letter was replied by the plaintiff on 21-10-1989 accompanied by another letter dated 11-12-1989 addressed to the Chairman and Managing Director of the 1st defendant, the 1st defendant chose to illegally repudiate the liability by letter dated 3-1-1990. Thus, the plaintiff claims that the 1st defendant was liable to pay a sum of Rs. 2,17,200/- A sum of Rs. 34,597.28 is claimed towards interest at 18% from 11-7-1989 till the date of suit and a sum of Rs. 500/- is sought towards costs of notice. In all Rs. 2,52,297.28 is sought.
5. Initially the claim was made against 1st defendant-Insurance Company only on the basis of non-delivery clause in the Policy. However, the 2nd defendant, was later on, added as a party. The plaintiff has further contended that the 2nd defendant being a common carrier engaged in the business of transporting the goods from place to place for hire, caused non-delivery/loss of the goods entrusted to it for carriage by the plaintiff and was therefore liable to pay compensation for non-delivery. The plaintiff also claimed that the defendants were liable to pay interest past and future at the rate of 18% as per law, custom, usage and also by way of damages. However, the claim for interest was made with effect from 11-7-1989, the date on which the printed claim form was submitted by the plaintiff to the 2nd defendant.
6. The 1st defendant-Insurance Company has resisted the plaint/averments by filing the written statement. They principally contended that the liability cannot be fastened on it. As per the 1st defendant, the consignment was to the self that is to the plaintiff and therefore the plaintiff was not entitled to plead that the consignee failed to take the delivery. The alleged grades and trade marks on the consignment was denied contending that no such information was found in the Consignment Note and therefore the insurance cover related only to 100 cartons of cashew kernels and not to any specified grade/marks.
7. It is the further contention of the 1st defendant that the insurance cover covered onward journey from Mangalore to Delhi and return journey from Delhi to Mangalore and also a period upto 7 days after reaching the destination and the loss/damage caused thereafter was not the responsibility of the Insurance Company. It is further contended by the 1st defendant that the alleged loss/damage to the cartons was not made known to 1st defendant on arrival of the consignment at Delhi. That, there was violation of the terms of the policy and that no valid claim was made as per the conditions of the Insurance Policy. The assessment of loss by the Surveyor in terms of the policy was not reported and therefore there was no valid claim. That, there being no storage cover for storage of the commodities at Delhi/Mangalore after the expiry of the period of 7 days, the Insurance Company was not liable for loss/damage at storage. That, from 28-10-1988 to 29-4-1989 (date of retransmit) and thereafter with effect from 29-5-1989 onwards from the date on which the goods were received at Mangalore they were allowed to remain in the custody of the carrier namely the 2nd defendant without Insurance coverage. That, at the time of rebooking the consignment from Delhi to Mangalore there was no verification of the contents and the conditions of the rebooked consignment and even the plaintiff had no knowledge of the condition of the same, therefore, the Insurance Company was not liable for the damage or mis-description/variation in the grades of the consignment. That, the plaintiff was not justified in not taking the delivery of the rebooked consignment on arrival of the same at Mangalore. That, the alleged non-delivery of the consignment was attributable solely to the carrier and hence the Insurance Company was not liable for the same.
8. That the consignment was physically available at carrier's godown at Mangalore and the same was not irretrievably lost, hence the Insurance Company was not liable as there was no cause of action against the 1st defendant. The 1st defendant further contends that the claim having been based on alleged variations or change in the grades by the Carrier and the said change having occurred at storage/rebooking time at Delhi when there was no Insurance coverage, any claim relating to the trade mark or contents thereunder due to negligent acts or omissions on the part of the Carrier lies only against the Carrier and not against the Insurance Company. The 1st defendant further contends that the plaintiff-consignor has not acted as a prudent man taking necessary steps to mitigate the damages.
9. The 2nd defendant-Transport Agency (Carrier) has contended that the suit was not maintainable against it as the goods were booked at owner's risk as per Consignment Note No. 37775 from Mangalore to Delhi and in spite of reminders, the plaintiff did not take steps till 6-3-1989 to rebook the consignment to Mangalore. It is also contended by the 2nd defendant that immediately after the consignment reached Mangalore, though the 2nd defendant informed the arrival of the cartons and requested the plaintiff to take the delivery of the same, the plaintiff failed to take the delivery of the goods on frivolous grounds. The 2nd defendant has also contended that the plaintiff has failed to pay the freight for consignment from Mangalore to Delhi and from Delhi to Mangalore and also failed to pay the demurrage charges for keeping the consignment for more than the stipulated period. That, since the plaintiff failed to take the delivery of the consignment after paying the freight charges of Rs. 5,130/- and demurrage of Rs. 29,250/- due to the 2nd defendant, in spite of issue of legal notice dated 13-12-1990, after publication in the Kannada newspaper 'Udayavani' dated 8-1-1991, the 2nd defendant auctioned the goods on 15-1-1991 and realised a sum of Rs. 18,100/-. That the said amount realised out of the sale proceeds was appropriated against the freight charges, demurrage charges, legal notice charges and publication charges and giving due margin to all these still the plaintiff was liable to pay a sum of Rs. 16,780/- to the 2nd defendant. The 2nd defendant has denied that it was the case of non-delivery attributable to the Transport Agency. It has asserted that it was the case of failure to take the delivery of the goods by paying the freight and demurrage charges for which it is not liable at all. The 2nd defendant has also contended that the suit was barred by limitation as against it.
10. The plaintiff has filed a rejoinder in respect of the claim made by the 2nd defendant and has denied the same.
11. In support of the case of the plaintiff P. W. 1 is examined and Ex. P. 1 to Ex. P. 45 are marked. Whereas, in support of the defendant, the Branch Manager of the 1st defendant is examined as D.W. 1 and no documents are marked. Based on the respective pleadings, the Court below has framed as many as 10 issues, which are as follows.-
(i) Whether the plaintiff proves that the defendant is liable to pay the suit claim?
(ii) Whether the defendant proves that the suit is bad for non-joinder of the carrier and mis-joinder of parties?
(iii) Whether the defendant is liable to pay interest and cost of notice?
(iv) What reliefs?
(v) Whether the plaintiff can raise the dispute about the contents of the consignment, with reference to grade or mark on the cartons?
(vi) Whether the Insurance cover in respect of onward transit from Mangalore to Delhi ceased 7 days after arrived of the consignment at Delhi?
(vii) Whether the Insurance cover in respect of transit from Delhi to Mangalore ceased 7 days after arrival of the consignment at Mangalore?
(viii) Whether there is valid claim in terms of the condition of the Insurance Policy and whether there is violence of the condition of the policy by the plaintiff?
(ix) Whether the defendant proves that the plaintiff is disentitled from claiming the amount for non-production of consignment loan under Section 10 of the Carriers Act?
(x) Whether the defendant proves that the plaintiff is not entitled for claiming the amount on account of violation of policy conditions and for not taking steps for mitigate of damage?
12. Considering the evidence on record adduced by the plaintiff and defendant 1, the Court below upon consideration of oral and documentary evidence, has recorded its findings on all the issues. The Court below has held that the plaintiff proved the liability of the defendant to pay the suit claim. The assertions of the defendant with regard to the expiry of the Insurance cover after 7 days from the date of arrival of the consignment was negatived. The allegations of violation of terms of the policy were also negatived. With regard to the issue framed regarding the dispute about the contents of the consignment with reference to grade/mark on the cartons, the Court below has held that if the Consignment Note disclosed the grades of cashew kernels consigned to Delhi and if the said graded cashew kernels were not made available for delivery, then the plaintiff had every right to dispute and could refuse to take the delivery of the consignment which are not in conformity with the Consignment Note. Thus, the Court below held that the plaintiff was entitled for a decree for a sum of Rs. 2,52,297.28 against the defendants with Court costs and future interest at 13% p.a. The plaintiff was held entitled to interest at the rate of 18% p.a. from the date of the claim. The defendants 1 and 2 are held equally liable under the decree.
13. Aggrieved by the said judgment and decree passed by the Court below, the 1st defendant-Insurance Company is before us by way of this appeal.
14. We have heard Sri Kolekar, learned Counsel for the 1st defendant-Insurance Company (appellant herein) and Sri K.R. Subramanyam, learned Counsel for the respondents herein.
15. Sri Kolekar, learned Counsel for the appellant contends as under:
(i) That the policy of Insurance being in force only for 7 days after the arrival of the consignment at Delhi, the loss that has occurred either at Delhi or at Mangalore was not covered under the policy and therefore the Insurance Company was not liable to reimburse the same.
(ii) That there is violation of the terms of the policy both as regards the onward journey from Mangalore to Delhi and as also in the course of return journey from Delhi to Mangalore and therefore the Insurance is not liable.
(iii) That the goods having not been received by the consignee, which fact was informed by the Syndicate Bank vide their letter dated 17-1-1989, the liability of Company seized.
(iv) That in terms of Clause 8 read with Clause 7 of the policy, the policy stood terminated immediately after the expiry of 7 days from the date of arrival of consignment at Delhi and that no overt act was necessary on the part of the Insurance Company to terminate the policy. This is particularly so, the learned Counsel contends, in the absence of any extension sought for by the plaintiff. That no storage cover having been obtained by the plaintiff, the policy will not extend to cover the risk and damage during storage. He submits that as per Ex. P. 32, it was only on 14-4-1989 that a notice was issued calling upon the Carrier to deliver the goods containing the proper grade mark.
(v) Referring to the provisions of Section 65(2) of the Marine Insurance Act, 1963, learned Counsel for the appellant herein contended that the Insurer is not liable for any loss attributable to the misconduct of the assured. Elaborating this the learned Counsel contends that the gradings and the contents of the cartons are not verified by the Consignor at Delhi.
(vi) That there is no loss, it is only a case of refusal to receive the goods and it is not the case of damage or loss for which the Insurance Company can be held liable. According to him, the extent of loss having not been established by the plaintiff, the measure of indemnity was not forthcoming and as per Section 71 of the Marine Insurance Act, the Company could not have been made liable for the entire consignment.
(vii) That, by its own act, the consignor has deprived the Insurance Company of its right to get back the money from the Carrier and particularly, in the absence of any certificate of extent of loss, the benefit of subrogation is not available to the Insurance Company. Placing reliance on Ex. P. 24 which is a reply given by the plaintiff, Sri Kolekar, learned Counsel for the appellant herein contends that the omissions of the Consignee is admitted and that being the position, whatever be the correspondence internally between the Consignor and the Carrier which has resulted in the unreasonable delay, the Insurance Company could not have been saddled with the responsibility.
(viii) That the contract of Insurance being a contract uberrima fides based on utmost good faith when the consignor himself has not acted in a prudent manner so as to further the trust, which the Insurance Company had in the transaction, it cannot be saddled with the responsibility.
(ix) That the evidence of P.W. 1 which highlights the omission of the plaintiff has remained unchallenged. He has lastly contended that the interest awarded is highly excessive inasmuch as 18% interest from the date of claim and 13% interest from the date of suit till realisation allowed by the Court below was highly excessive.
16. Per contra, Sri K.R. Subramanyam, learned Counsel appearing for the plaintiff-respondent 1 herein has contended that the only question is as to whether the Insurance Policy covers the risk. Learned Counsel would also contend that all the risk namely T,D and P meaning "Theft, Pilferage and Non-delivery' have been covered under the policy. He contends that Clause 7, in unmistakable term states that policy will be valid unless it is cancelled. Admittedly, there is no cancellation by either of the parties as per the said clause. Inviting our attention to Ex. P. 2, learned Counsel contends that the grade of the commodities in respect of 25 cartons is specifically mentioned as 'W 210' and in respect of 75 cartons it is mentioned as 'SSW under marks "WTC/Delhi". He also submits that Ex. P. 3 mentions the grade of the cashew kernels. Inviting our attention to paragraph 6 of the written statement, learned Counsel would point out that there is an admission by the Insurance Company itself of the valid cover both for onward journey from Mangalore to Delhi and return journey from Delhi to Mangalore. Learned Counsel would specifically contend that there is no such condition in the policy, which restricts the duration of the policy to 7 days upon the arrival of the goods. He has further drawn our attention to the evidence of D.W. 1, which shows that admittedly it was a special policy covering more than one transaction. Further, inviting our attention to various correspondences made between the plaintiff on the one hand and the 2nd defendant on the other, learned Counsel has contended that despite repeated correspondences and the legal notice issued, the Carrier-2nd defendant it did not deliver the goods as agreed. It is his contention that the consignor came to know about the return of the goods from Mangalore only one week prior to 22-6-1989 and in this regard, he places reliance on Ex. P. 39. In the wake of the respective contentions urged before this Court by both the parties, the points that arise for our consideration are as under.-
(i) Whether the plaintiff-respondent 1 establishes that it was entitled for the recovery of the suit claim from the 1st defendant-Insurance Company?
(ii) Whether the 1st defendant-Insurance Company (appellant herein) has made out any grounds to show that the judgment and decree passed by the Court below suffers from any illegality in law and on the facts?
(iii) Whether the interest awarded - current and future at 18% and 13% respectively is legal and justified?
17. Having heard the learned Counsels for both the parties at length, upon careful perusal of the entire pleadings and evidence on record and upon consideration the findings recorded by the Court below, our findings on the points raised for consideration are as under.-
Point Nos. 1 and 2:
18. A careful perusal of the pleadings and the evidence on record would disclose that goods were consigned from Mangalore to Delhi through the 2nd defendant-Carrier on 21-10-1988. The consignee having not taken the delivery at Delhi, a letter was written by the 2nd defendant to the plaintiff as per Ex. P. 7 on 12-12-1988 stating that the consignee has not taken the delivery of the goods. Thereafter, the plaintiff has addressed a letter dated 6-3-1989 to the 2nd defendant to rebook the consignment back to Mangalore from Delhi to the plaintiff. The materials on record in the form of correspondences would also disclose that the plaintiff made several correspondences to the 2nd defendant to deliver the goods consigned with reference to the grade/mark or to give open delivery of the goods or at least to give delivery of the goods on 'as is where is' basis without prejudice to his rights to recover damages. The plaintiff has demonstrated that the 1st defendant has issued an open insurance policy in favour of the plaintiff in respect of the consignment of the cashew kernels as per Ex. P. 1. Ex. P. 2 is the waybill dated 21-10-1988 as per which the cashew kernels are consigned to Delhi by the plaintiff. The said waybill/Consignment Note bearing No. 37775 contains the grade of 25 cartons of cashew kernels which are graded as "W 210", whereas, 75 cartons of cashew kernels are graded as 'SSW under Marks "WTC/Delhi". Even Ex. P. 3 - Form 39 issued under Sales Tax Act mentions about the grade and quantity and other particulars relating to the consignment. In the Insurance Policy -Ex. P. 1, the particulars of the consignment are referred to by referring to the Consignment Note dated 21-10-1988. The Insurance Company has not denied the factum of coverage of both the transits from Mangalore to Delhi and Delhi to Mangalore.
19. It is the case of the Insurance Company that the insurance ceases 7 days after the arrival of the consignment at Delhi. A perusal of the Insurance Policy does not disclose anywhere that the coverage ceased on the expiry of 7 days after the arrival of the goods. The witness D.W. 1 does not also state anything to this effect. D.W. 1 also does not dispute the particulars of the goods covered under the policy nor does he say that any false recitals were made regarding the identity and condition of the consignment and the markings. There is nothing in the evidence of D.W. 1 in this regard. The 2nd defendant has not tendered any evidence.
20. Therefore, having regard to the aforementioned documentary and oral evidence and in the absence of any clause or stipulation in the insurance policy stating that the policy stood terminated automatically upon the expiry of 7 days on arrival of the goods, it has to be held that the contention taken in this regard by the 1st defendant-appellant herein is untenable and the same deserves to be rejected. As regards the next contention urged by the Counsel for the appellant stating that there is violation of the terms of the policy by the plaintiff inasmuch as the goods were not received by the consignee and that the consignor has not acted as a reasonable prudent man in taking steps to mitigate the damages and further that there was undue delay in rebooking the consignment to Mangalore is concerned, it is to be stated that there is absolutely no evidence placed on record by the 1st defendant to substantiate this point. As already stated, the 2nd defendant, Carrier has not tendered any evidence. The plaintiff has produced several correspondences to show that the 2nd defendant was called upon to take action to rebook the goods back to the plaintiff. As the consignee did not take delivery at Delhi, the Consignment Note bearing No. 37775 (original) was surrendered on 6-3-1989 with a request to the 2nd defendant to rebook the consignment. Ex. P. 10 is the letter in this regard. The receipt of the Consignment Note has been endorsed on the copy of the said letter dated 6-3-1989. The delay in rebooking the consignment is not attributable to the plaintiff as it has produced letters dated 14-4-1989, 22-4-1989 and legal notice dated 16-5-1989 which have been addressed to the 2nd defendant-Transport Agency. There is ample material to show that there is no lapse on the part of the plaintiff in calling upon the 2nd defendant to rebook the consignment when they came to know that the consignee did not take steps to receive the goods. Therefore, the assertions of the 1st defendant stating that the plaintiff has not acted as a prudent man and that the plaintiff failed to receive the goods on frivolous grounds is not supported by any material evidence either oral or documentary.
21. It is borne out from the evidence on record that the consignment contained specific grading. This is disclosed from the Consignment Note itself, apart from mentioning the quantity of the materials, it specifically states about the grade of the cashew kernels. When the consignor requests to rebook the consignment and the rebooked consignment is also insured, the Consignor expects that he should be delivered the rebooked items containing the same quality, quantity and markings. It is not in dispute that the graded commodities were not delivered to the Consignor at Mangalore. On the other hand, what were sought to be delivered to the plaintiff was consignment without containing any such grading/marking. The partner of the plaintiffs Company along with Sri Ganapathy, Surveyor from M/s. J.B. Boda, Surveyors Private Limited, who is none other than the official surveyor of the 1st defendant-Insurance Company approached the office of the 2nd defendant, Carrier at Mangalore and found the cartons not in order. The plaintiff justifiably wanted to take the delivery of the cartons containing the grade covered by the Consignment Note bearing No. 37775, but the 2nd defendant, Carrier as borne out from the record insisted on taking delivery of cartons containing other grade marks and refused to give delivery of part of the agreed consignment. Ex. P. 38 - a letter dated 22-6-1989 was sent by the plaintiff to the 2nd defendant with a copy marked to the 1st defendant nothing the refusal on the part of the 2nd defendant. Again on 30-6-1989, another attempt was made by the plaintiff to take delivery of the consignment, which also failed on account of the refusal on the part of the 2nd defendant. This incident was also recorded by way of a letter dated 30-6-1989 vide Ex. P. 39. The Surveyor of the 1st defendant has also written a letter dated 4-7-1989 which is marked as Ex. P. 12 recording the fact that the materials did not bear the grades and that the 2nd defendant did not deliver the goods as per the Consignment Note. By another letter Ex. P. 40, dated 24-7-1989, the plaintiff has demanded the 2nd defendant to give delivery of the goods covered by the Consignment Note. The plaintiff has demanded that keeping open the question of damages to the contents, the goods may be delivered on 'as is where is' condition. This was also not acceded to by the 2nd defendant, which necessitated a registered letter dated 14-8-1989 being sent by the plaintiff as per Ex. P. 17. This was also not responded to by the 2nd defendant. It is only thereafter that on 4-7-1989, the plaintiff has forwarded a claim bill vide Ex. P. 13 to the 1st defendant for the sum of Rs. 2,17,200/- for non-delivery, enclosing a letter of even date vide Ex. P. 14. These material correspondences which are produced and marked by the plaintiff clearly disclose that the 2nd defendant has committed serious default in discharging its obligations. There is serious omission on its part to deliver the consignment containing the grading and marking as per the Consignment Note. The non-delivery of the consigned goods as per the stipulation has resulted in breach of obligations on the part of the 2nd defendant-Carrier. This has further entailed the liability of the Insurance Company, which has undertaken to indemnify the loss/damage and the non-delivery of the goods consigned. Accordingly, the plaintiff has justifiably sought for settlement of the claim from the 1st defendant by addressing a letter dated 28-7-19898 (Ex. P. 16) followed by letters dated 23-8-1989, 15-9-1989 (Exs. P. 19 and P. 20). The 1st defendant though sought for certain clarification by its letter dated 19-10-1989 (Ex. P. 23), which was in fact replied by the plaintiff on 21-10-1989 (Ex. P. 24), still failed to settle the claim. On the contrary, by a letter dated 3-1-1990 as per Ex. P. 26 the claim came to be repudiated by the 1st defendant-Insurance Company. The reason assigned for repudiation, as can be seen from Ex. P. 26 is that there was no valid claim by the plaintiff for non-delivery as the consignment was physically available at the Carrier's godown at Mangalore and had not been lost irretrievably.
22. The learned Counsel for the plaintiff reputing the above contention of the defendant has relied upon the judgment of the Apex Court in the case of Governor-General in Council (now Union of India) v. Musaddi Lal, . As the facts in the instant case would reveal that the goods described as per the Consignment Note containing the specification and the grades were not delivered by the 2nd defendant to the plaintiff. The plaintiff was not obliged to take goods other than those which conformed to the description and the grade as per the Consignment Note. The Carrier, 2nd defendant was under an obligation to deliver the same goods and refusal to do so has resulted in loss to the plaintiff on account of non-delivery. The contention of the 1st defendant stating that there was no loss caused by destruction, deterioration or damages to the consignment as the consignment was very much available cannot be accepted inasmuch as other goods not containing the description or marking as disclosed in the Consignment Note cannot be said to form the same consignment which were available and offered for delivery. Had it been that the same consignment was offered by the Carrier, it would have been a case of wrongful non-acceptance or refusal to accept on the part of the plaintiff. But, in the instant case, that is not the position. The lapse on the part of Carrier, the 2nd defendant is clear from the report of the very Surveyor. The Surveyor, in this case, is none other than the representative of the Insurance Company, the 1st defendant. Under these circumstances, the letter of repudiation sent by the 1st defendant stating that it is under no obligation to settle the claim as the consignment were available for delivery is bereft of any merit and therefore this contention of the learned Counsel deserves to be rejected.
23. The next contention urged by the appellant placing reliance on the provisions contained in Section 55 of the Marine Insurance Act, 1963, is that the Insurer, in the instant case was not liable as the loss was attributable to the wilful misconduct of the assured and such a loss is excluded as per the provisions of Section 55, Sub-section (2)(a) of the Marine Insurance Act, 1963. The learned Counsel for the plaintiff-respondent contends that the provisions of the said Act are inapplicable. Without going into the question of the application of this provision to the instant case, we may straightaway point out here that the loss in the instant case is not attributable to any wilful misconduct of the assured. There is no material placed by the 1st defendant, appellant herein to show that there was any misconduct on the part of the consignor/assured. As already stated no such misconduct is attributed by D.W. 1 in his evidence. The 2nd defendant, Carrier who is the best person to speak about this has not led any evidence. In these circumstances, there is no merit in the contention of the learned Counsel for the 1st defendant-appellant herein.
24. Yet another contention is canvassed by the Counsel for the Insurance Company-1st defendant (appellant herein) taking support from the provisions of Section 57(1) of the Marine Insurance Act, 1963. He contends that as per the provisions contained under Section 57(1), the liability arises where the subject-matter insured is destroyed or so damaged as to cease to be a thing of the kind insured or where the assured is irretrievably deprived thereof, otherwise there is no actual total loss. In the instant case, the question is non-delivery of the materials that were consigned as per the Consignment Note No. 37775, be it on account of destruction/damage or on account of lapse on the part of the carrier to deliver the graded goods. As long as there is no lapse on the part of the assured, the non-delivery of the goods to the assured in terms of the Consignment Note entails liability on the part of the Carrier and the indemnifier and therefore this argument of the appellant's Counsel is untenable in law and on the facts of the instant case.
25. As regards the further contention of the learned Counsel for the appellant advanced with reference to Sections 61 and 71 of the Marine Insurance Act, 1963, it is to be stated that they are misconceived in the facts of this case. Section 61 relates to effect of constructive total loss and Section 71 deals with partial loss of goods. None of these provisions are applicable to this case inasmuch as what has happened in the present case is non-delivery of goods resulting in consequent loss to the assured. The question of ascertaining the extent of loss and establishing the same by the plaintiff did not arise in the instant case as the entire materials were not delivered as per the specifications contained in the Consignment Note. We do not find any merit in the contention of the learned Counsel for the appellant to the effect that the Insurance Company is deprived of its right to get back the money from the Carrier and that this situation is attributable to the conduct and omissions on the part of the consignor. The reliance placed on Section 79 pertaining to subrogation in this regard stating that there is no certificate of extent of loss which in turn affects the interest of the Insurance Company is totally unacceptable.
26. The learned Counsel for the appellant herein placing reliance on the decision in the case of Traders Syndicate v. Union of India, , next contended that D.W. 1 having not been cross-examined, his evidence is required to be accepted in toto and therefore the case of the plaintiff deserves to be rejected. In the instant case D.W. 1 has not said anything with regard to any material particulars against the transaction or against the plaintiffs claim. In fact, his evidence, in some respect, supports the claim of the plaintiff inasmuch as he has admitted the existence of insurance cover both for onward and return journey and has not said anything regarding the termination of the policy. Under these circumstances, the reliance placed by the appellant's Counsel on the decision of the Calcutta High Court is not well-founded.
27. Further, the learned Counsel for the appellant has drawn our attention to Halsbury's Laws of England, Vol. 22 (Insurance), Paragraph 200, whereimder, it has been stated that contract of insurance is a contract uberrima fides meaning thereby it is a contract based upon the utmost good faith, and if the utmost good faith is not observed by either party, the contract may be avoided by the other party. The facts of the case do not disclose that the plaintiff has not acted in good faith. Nor is it the case of the defendant that on account of lack of good faith it has avoided the contract. The improvement in the stand of the defendant-appellant herein on this aspect of the matter has no basis or foundation in the facts of the case. Therefore, these observations in the commentary are not opposite to the facts of the case.
28. The facts of the case as disclosed by the oral and documentary evidence clearly show that the 2nd defendant has failed to deliver the goods as per the Consignment Note.
29. The rejection of the goods by the plaintiff as they did not contain the specified grade and mark is perfectly justified in the facts and circumstances of the case. The findings recorded by the Court below on this aspect of the matter are based on evidence both oral and documentary. There is absolutely no error or illegality in the findings recorded by the Court below.
30. The respondent 1-plaintiff has placed reliance on the rulings reported in the case of Inter-State Transports v. Pfizer Limited, , to meet the contention of the learned Counsel for the appellant that there is no necessity on the part of the plaintiff to prove negligence of the 2nd defendant-Carrier. In the said ruling, the Division Bench has stated in categorical terms that it was incumbent on the 2nd defendant-Carrier to prove that there was no negligence or misconduct on its part. Be that as it may, in the facts of the instant case, what is relevant for our purpose is that the plaintiff has established by leading evidence both oral and documentary that the 2nd defendant-Carrier had defaulted in delivering the goods consigned and hence it has entailed the liability under the contract. The learned Counsel for the respondent-plaintiff has contended placing reliance on the rulings of the Division Bench of this Court in the case of Transport Corporation of India (Private) Limited v. Oriental Fire and General Insurance Company Limited and Anr., 1987(1) Kar. L.J. 168 (DB), that the provisions of Section 79 of the Marine Insurance Act, 1963, are not applicable to the cases of inland transactions. It is unnecessary for us to go into this question now, in view of the findings that we have recorded already that as per the facts which are proved in this case, having regard to the terms of the policy and the lapse on the part of the 2nd defendant-Carrier in refusing to deliver the goods, the 1st defendant's liability to indemnify the plaintiff has been established. The findings recorded by the Court below on all these aspects of the matter in the case are in accordance with law and are just and proper. There is absolutely no miscarriage of justice nor any omission to consider relevant evidence on record. The Court below has dealt with each aspects of the matter and has assigned proper and cogent reasons for its conclusion. In this view of the matter, we answer Point Nos. 1 and 2 accordingly.
Point No. 3:
31. The question that remains to be considered is as regards the entitlement of the plaintiff-respondent to claim interest and the extent of the same. The Court below has framed a specific issue in Issue No. 3 regarding the liability of the defendant to pay interest. The Court below has come to the conclusion that the defendants were liable to pay interest at the rate of 18% p.a. from 11-7-1989 as claimed in the suit. Thus, interest is awarded at the rate of 18% p.a. from 11-7-1989 till the date of suit. As regards future interest, the Court below has awarded interest at the rate of 13% p.a. from the date of suit till realisation. The Court below has persuaded itself to award interest as claimed by the plaintiff at 18% p.a. on the value of the consignment. The reason assigned by the Court below in decreeing the suit including the claim for interest at the rate of 18% p.a. from the date of the claim till the date of suit is that the plaintiff has sought for the said rate of interest on the grounds of trade, usage and custom. The other reason that is assigned by the Court below in granting interest at 18% p.a. is that while the plaintiff has specifically deposed in his evidence with regard to the rate of interest to which he is entitled to, having due regard to the nature of the transaction, the defendant has not said anything in that connection. Having regard to the nature of the transaction and the period during which the transaction has taken place and taking note of the prevailing Bank rate of interest with regard to commercial transaction, learned Counsel for the plaintiff-respondent contended that the rate of interest awarded does not require any interference by this Court. Though the learned Counsel for the appellant contended that the interest awarded was excessive, having regard to the fact that the defendant refused to return the goods and abide by the terms of the contract and also having regard to the period during which the transaction took place and the prevailing Bank rate of interest at that time, we are of the view that the interest at 18% p.a. awarded is not excessive. However, the Court below has proceeded to award interest at 13% from the date of the suit till realisation. There are absolutely no reasons recorded in support of award of interest at that rate. The discretion exercised by the Court below in this regard is not supported by any reasons. The interest to be awarded normally from the date of suit till the date of realisation will be 6% p.a. In the instant case, having regard to the facts and circumstances of the case and the liability that is fastened on the Insurance Company, we deem it appropriate to modify the award of future rate of interest from the date of suit till realisation by restricting the same to 6% p.a. instead of 13%) as awarded by the Court below. In the result, we pass the following.
ORDER As regards the suit claim made for a sum of Rs. 2,52,297.28 paise, the judgment and decree passed by the Court below is affirmed. However, insofar as future interest awarded at 13% from the date of the suit till realisation is concerned, the judgment and decree shall stand modified, in that the future interest payable shall be 6% from the date of suit till the date of realisation, instead of 13% as awarded. Appeal stands disposed off accordingly.
In the circumstances of the case, the parties shall bear their respective costs.