Kerala High Court
Arief Trading Co. vs United India Insurance Co. Ltd. on 13 July, 1993
Equivalent citations: II(1994)ACC199
JUDGMENT G. Rajasekharan, J.
1. Three Suits, O.S. 272/84, 269/84 and 275/84 on the file of the Sub Court, Kozhikode, were tried jointly and disposed of by a common judgment. A.S. Nos. 5/90, 11/90 and 12/90 arise from the above Suits respectively.
2. Plaintiff in the Suits in the United India Insurance Company, represented by the Divisional Manager. Defendants 1 & 2 represent the Carrier, and third defendant is the consignor of the goods through the Carrier.
3. O.S. 272/84 relates to the consignment of 50 bags of black pepper valued at Rs. 35,600/-, to be transported to M/s. G.S. Traders, Delhi through the Carriers, Economic Transport Organisation, Beach Road, Kozhikode. O.S. 269/84 is with respect to another consignment of 50 bags of black pepper which is valued at Rs. 37,200/-. The consignment in connection with O.S. 275/84 was also of 50 bags of pepper which was valued at Rs. 32,100/-. All these consignments were insured with the plaintiff-Insurance Company. The goods were to be delivered through the Indian Overseas Bank and Canara Bank.
4. In spite of considerable length of time, the goods were not delivered through the Banks and the correspondence would show that the consignee was not honouring the consignments for some reason or other. Then there was advice from the consignor to return the goods. That could not be complied with for the reason that the Carrier was claiming exorbitant demurrages. That is evidenced by the letter addressed by the Bank to the consignor. Ultimately, the Banks had returned the lorry receipts to the consignor. On the strength of those lorry receipts, the consignor made claims with the Insurance Company and the Insurance Company paid the consignor the sums covered by the Insurance Policies and took letters of subrogation, Exts. A8, A16 and A24. On the strength of those letters of subrogation, the plaintiff has instituted the Suits for realisation of the money from the carriers. It is alternatively prayed that in case it is proved that the consignor had received the payments from the carriers, then a decree may be passed against the third defendant-consignor.
5. The contentions of defendants 1 & 2 are that the Court has no jurisdiction to entertain the Suits, that the claim was barred by limitation, that the Suits are bad for want of notice under Section 10 of the Carriers Act, that there was delivery to the consignee, that the alleged subrogation is not valid and binding, and the plaintiff is not entitled to sue on those letters of subrogation, and that in any event the Suits are liable to be dismissed. The third defendant contended that the Suits are not maintainable against third defendant, that they are bad for mis-joinder of causes of action, that there was no delivery to the consignee, that the third defendant has not received any amount from the consignee or the carrier, and that the insurance claim made by third defendant and receipt of money is valid and cannot be questioned.
6. The Trial Court held that the Court has jurisdiction to entertain the Suits and the claims are not barred by limitation. It is further held that there was no notice under Section 10 of the Carriers Act, and the third defendant-consignor was negligent in that respect. In paragraph (10) of the judgment, the Trial Court held that defendants 1 & 2, the carriers have failed to prove that the goods have been delivered to the consignee. Nevertheless, the Court proceeded to hold that the consignor (third defendant) had received payments by way of price of goods and so, a decree was passed against the third defendant for realisation of the plaint claims with interest. Aggrieved by that, the third defendant has come up in appeal.
7. One of the main arguments advanced by the learned Counsel for the appellant is that, having found that the goods have not been delivered, it is unwarranted for the Trial Court to hold that the consignor had received payments and pass a decree against third defendant. In the written statement filed by defendants 1 & 2, they would contend that two payments with respect two of the consignments were made by the consignee direct to the consignor and with respect to another consignment, the payment was through the carriers at Kozhikode. In the written statement (paragraph 7) the D.D. number and date, and the description of the Bank are furnished. Learned Counsel for the defendants 1 & 2 would argue that in the light of these pleadings, the finding of the Trial Court that payments were made, is quite sustainable. According to defendants 1 & 2, even though the lorry receipts-the primary evidence for the delivery of the goods, were not with the consignee or the carrier, after the despatch of the goods there was an oral arrangement and settlement between the consignor and consignee and instructions orally were given to the carriers to deliver the goods direct to the consignee, instead of routing it through the bank on payment. It is maintained that according to that arrangement, the delivery was effected to the consignee direct, without taking any documentary evidence on delivery and actually payments were effected.
8. For delivery of the goods transported through carriers, the best evidence is the lorry receipts (the consignee copy). In this particular case, the consignee copy was with the bank and the consignee was to get the consignee copy of the lorry receipt on payment to the bank. That has not happened, and the lorry receipts have been returned by the bank to the consignor. The contention that without taking any documentary evidence or atleast receipt for the delivery of the goods, the carriers have delivered the goods to the consignee direct, prusuant to oral instructions, cannot be accepted at all. Defendants 1 & 2 did not choose to examine the consignee to prove that contention. Simply by saying that the consignee had paid the consignor direct and quoting some number of Demand Drafts, certainly will not be proof for the fact that actual delivery was effected, and that payments were made by the consignee. As adverted to earlier, the Trial Court had entered a definite finding that there is no proof for delivery of the goods by the carriers. But, the Court held that payments were effected by the consignee direct to the consignor. If actually the delivery of the goods had not taken place, how and why payments were made, is not known. For the alleged payments, there is no acceptable evidence and defendants 1 & 2 have miserably failed in proving that.
9. In cross-examination of the third defendant as DW 2, he was confronted with Exts. B-5 and B-6, two letters from the carrier company at Delhi, intimating the despatch of Demand Draft for Rs. 30,000/- in relation to the consignment involved in O.S. 275/84. Then he was asked whether that particular Draft has been encashed. He says:
(Matter Omitted of Regional Language) This was taken by the Trial Court as an admission of receipt of payment; but without referring to the evidence, if any, in relation to the other cases, reached the conclusion that for all the three consignments the consignor had received payments. The third defendant is found at fault for not producing the account books.
10. The burden to show that the goods were delivered and payments effected, is on defendants 1 & 2. There is the finding that delivery of the goods was not effected. Then why and how the payments were made, remains unexplained. Regarding the actual payment, there is only the bald plea in the written statement of the defendants 1 & 2 without having any support from the evidence tendered in the case. The admission quoted above is not sufficient to mulct the defendant with the liability of accepting the payments for the goods, especially when there is no evidence at all to show that actually the goods were delivered to the consignee. So, that finding and the consequent decree against third defendant cannot be sustained.
11. Defendants 1 & 2 have been absolved of the liability for more than one reason, namely actual payment was made to the consignor, and want to notice under Section 10 of the Carriers Act.
12. Ext. A.6 is the letter from the third defendant dated 18.6.1982 addressed to the carrier company at Bangalore and copies marked to offices of the company at New Delhi and Lucknow. The acknowledgements would show that the copy of the letter addressed to the New Delhi Branch of the Carrier Company was received by the company. The letter reads, after describing the goods and date of despatch etc:
The above goods were sent to M/s. G.S. Traders, Delhi through your medium vide L/R Nos. and dates shown against each. The above goods are undelivered till date. On account of that we have sustained huge losses which you should compensate us. So please deliver the goods to the banks mentioned above against each of your L/R Nos. Otherwise we would compel to ask claim from you.
This letter according to the trial Court was only a request to deliver the goods and it cannot constitute a notice under Section 10 of the Carriers Act. The finding cannot be faulted. After mentioning the delay in delivery or non-delivery, it is said that the consignor had sustained loss and so, the carrier was requested or directed to deliver the goods immediately. In case of non-delivery, it was stated that the consignor would be compelled to "ask claim from you". This certainly is not a claim and a notice as contemplated by Section 10 of the Carriers Act.
13. Then it was argued that Ext. A 7, the lawyer notice will constitute the notice under Section 10 of the Carriers Act. A copy of the purported lawyer notice dated 3.10.1982 is produced and marked as Ext. A. 7. There is nothing on record to show that actually this letter was posted or despatched or the addressee received the same. The mere production of a copy of a purported notice, is not proof for the issuance of notice and receipt of notice by the addressee. So, Ext. A7 cannot be acted upon. The result is that there was no notice at all under Section 10 of the Carriers Act within the specified time. That follows that the carriers cannot be made liable and the suits cannot be maintained against them for want of notice under Section 10 of the Carriers Act.
14. The next question is whether the decree passed by the Trial Court against the third defendant could be sustained. It is admitted that on the strength of the Insurance Policies, the third defendant had received payments from the Insurance Company. The suits are not to realise from the third defendant the payments received under the Insurance Policy, but the Suits are mainly against the carriers for non-delivery of the goods. It is only alternatively prayed that in case, it is found that the third defendant had received payments from the carriers, then a decree may be passed against third defendant. As stated earlier, there is no proof that the third defendant had received payments either from the carriers, or from the consignee. The finding to the contrary cannot be sustained.
15. That apart, there is the specific contention that the Suits cannot be maintained, since the plaintiff has not acquired any right to sue. The plaintiff sued on the strength of Exts. A8, A16 and A24 letters of subrogation. It is contended that these letters of subrogation do not entitle the plaintiff to sue on its own. Reliance was placed on the decision in Union of India v. Sri Sarada Mills Ltd. . That was a case where the Insurance Company sued on the strength of a subrogation from the insured, and the Court held:
Subrogation does not confer any independent right on underwriters to maintain in their own name and without reference to the persons assured an action for damage to the thing insured. The right of the assured is not one of those rights which are incident to the property insured....
Subrogation was held to be not assignment as understood under Section 135 of the Transfer of Property Act.
16. Now, the assignment of policy or conferment of right under the policy to another, is governed by Section 52 of the Marine Insurance Act. It is common case, that the law applicable is the Marine Insurance Act and an assignment of the right under the policy is to be governed by that, Sub-section (3) of Section 52 says:
A marine policy may be assigned by endorsement thereon or in any other customary manner.
17. Learned Counsel for the Insurance Company referring to the signatures on Exts. A5, A18 and A23, argued that the signatures appearing on the reverse of these documents of the consignor-insured is sufficient evidence of endorsement, and 'endorsement' only means affixing the signature on the reverse of the document. The argument might have been acceptable, had these documents been the insurance policies. The assignment contemplated under Section 52(3) of the Marine Insurance Act, is the assignment of the policy, and not any document. The documents referred to above are only applications by the insured, seeking insurance of the goods transported. They are not policies. Ext. Al is one of the policies issued by the Insurance Company, and that does not contain any endorsement at all. The result is that there is no assignment of the policies as contemplated by Section 52 of the Marine Insurance Act.
18. Learned Counsel further argued that the subrogation letters Exts. A8, A16 and A24, could very well be construed as assignments of policies or the right of third defendant, and he was referring to the first paragraph in the letter of subrogation. There, it is stated:
...and grant you full power to take and use all lawful ways and means in your own name and otherwise at your risk and expenses to recover the said loss/ shortages/non-delivery/damages.
This according to learned Counsel, assignment. Section 52 of the Marine Insurance Act does not approve of any such assignment. Assignment under that Section has to be by 'endorsement' or in other customary manner. The plaintiff has no case that the issuance of letters of subrogation is a customary manner by which policies are transferred. There is no plea in the plaint or oral evidence tendered by PW 1 to the effect that there is a custom of assigning the policy by issuing letters of subrogation. So, the letters of subrogation will not constitute 'assignment' of policies. If a subrogation letter could be treated as an assignment of policy, necessarily in the decision rendered by the Supreme Court referred to supra, the subrogation would have been taken as an assignment. It is evident from that judgment that a subrogation was not accepted as an assignment.
19. Relying on the decision in New India Assurance Co. v. Okay Transport Corporation 1991 (1) KLT 262, learned Counsel argued that since the insured-third defendant is also on the party array, the subrogation is sufficient enough authority for the Insurance Company to sue in its own name. The said decision is certainly not an authority for such a proposition. That was a case where there was a letter of subrogation by the insured to the Insurer, as well as a power of attorney in favour of the Insurance Company to sue on behalf of the insured. The insured was not arrayed as one of the plaintiffs along with the insurer. The Court held that the failure of the Insurance Company to implead the insured as a co-plaintiff should not be a ground to non-suit the Insurance Company, since the insured was on the party array as a defendant and there was the power of attorney executed by the insured in favour of the insurer. It was in those circumstances that a decree was granted to the Insurance Company.
20. Here, there is no power of attorney from the insured to the insurer for instituting the suit. Further, the interest of the Insurance Company and the third defendant-consignor in the Suits are not identical and their claims are conflicting. The plaintiff is seeking a decree against third defendant also and it is not a case where the Insurance Company and the insured together seeking relief against the Carriers or the consignee. As the letters of subrogation are not assignments of the policies and they by themselves do not confer any title to the plaintiff to sue, the plaintiff certainly cannot maintain the Suits as laid. In the circumstances, the Judgment and Decree under challenge are to be set aside.
21. In the result, the Appeals are allowed and the judgment and decree of the Trial Court are set aside. The suits shall stand dismissed. In the circumstances of the case, the parties will suffer their respective costs.
22. The Court fee payable on the Memoranda of Appeals is recoverable from the plaintiff in the suits. A copy of the decree shall be sent to the District Collector concerned for necessary action.