Delhi District Court
New India Assurance Company Ltd vs M/S Darcl Logistics Limited on 19 February, 2021
In the Court of SCJcumRC, (West District)
Tis Hazari Courts, Delhi.
Presided by : Ms. Susheel Bala Dagar
Case No. 611571/2016
CNR Number: DLWT030009682013
In the matter of :
1. New India Assurance Company Ltd.
Divisional Office : 323200, 2/2A,
3rd Floor, Laxmi Insurance Building,
Asaf Ali Road, New Delhi110002.
2. M/s JSL Limited
Corporate Office: Jindal Centre,
12, Bhikaji Cama Place,
New Delhi110066. ...........Plaintiffs
Versus
M/s Darcl Logistics Limited
(Formerly known as Delhi Assam
Roadways Corporation Ltd)
Regd. Office :M2, Himland House,
Karampura, Commercial Complex,
New Delhi110015. .........Defendant
Date of institution : 28.03.2013
Date of reserved for judgment : 19.02.2021
Date of judgment : 19.02.2021
SUIT FOR RECOVERY OF SUM OF Rs. 1,84,741/
AGAINST THE DEFENDANT UNDER ORDER XXXVII CPC
READ WITH THE MARINE INSSURANCE ACT 1963 AND THE
CARREIERS ACT/ THE CARRIAGE BY ROAD ACT, 2007
JUDGMENT : Brief facts of the case:
1. It is submitted that the plaintiff no. 1 is an underwriters company incorporated under the company Act, and is carrying on the business of CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 1 of 14 general insurance having its registered & head office : New India Assurance Building, 87 M.G. Road, Fort, Mumbai 400001 and one of its Divisional Office :323200, 2/2A, 3rd Floor, Laxmi Insurance Building, Asaf Ali Road, New Delhi110002 is the insurer of the goods in present case. The present suit is filed by its said Divisional Office on behalf of plaintiffs through AR.
2. Plaintiff no. 1 is also authorized by the plaintiff no. 2 to file the present suit on their behalf as well. Plaintiff no. 2 is the insured of the plaintiff no. 1 and have subrogated its rights and remedies in the present suit in favour of the plaintiff no. 1 vide a Letter of Subrogation & Special Power of Attorney, hence it has been impleaded as a proforma plaintiff. The defendant is a common carrier having its place of business and Regd. Office in Delhi , where the contract for transportation was entered into by the defendant with the plaintiffs, and the defendant have also created an exclusive jurisdiction in their documents for the Delhi Court to try the present suit.
3. The plaintiff no. 2 has taken a Marine Cargo Policy from plaintiff no.1 for the period from 01.04.2011 to 31.03.2012 covering the risks of dispatches of their goods during the transit. The plaintiff no. 2 after insuring their suit goods with the plaintiff no. 1 has entrusted to the defendant a consignment dated 30.04.2011 for dispatch from Hisar and for delivery to the consignee at Dhaka Bangladesh. The defendant had taken custody of the suit goods, loaded in their vehicle and dispatched the same vide their Consignment Note dated 30.04.2011 from Hisar to Dhaka, Bangladesh for sound delivery to the consignee. CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 2 of 14
4. During the transportation while passing through the Bilaspur Distt. Gurgaon the vehicle loaded with the suit goods was high jacked by some miscreants on 04.05.2011. A Police report and FIR dated 04.5.2011 was lodged with the Bilaspur Police Station. The police investigated the matter and truck loaded with the suit goods was recovered by the police. On checking of the consignment, 2 drums out of 32 drums were found short by the police. The defendant taken delivery of the suit consignment from the police and delivered 30 drums, and effected short delivery of 2 drums out of total consignment to the plaintiff no. 2. The plaintiff no. 2 after receipt of short delivery of two drums out of total consignment had approached to the plaintiff no. 1 to arrange survey and assessment of loss to the suit goods. The plaintiff no. 1 had deputed M/s C.K. Sharma & Co. as surveyor and loss assessors. The said surveyor had visited the premises of the plaintiff no. 2, and examined the documents relating to the consignment. The surveyor assessed the quantum of loss to the tune of Rs. 1,99,230.57 in terms and conditions of the policy. The defendant have also accepted the cause and quantum of loss of the goods and executed a comprehensive Short Delivery Certificate dated 11.07.2011. A loss Notice dated 04.07.2011 under section 10 or the Carriers Act/section 16 of the Carriage By Road Act. 2007 was served upon the defendant through Regd. A.D. Post within the stipulated period, and the same was duly serviced to the defendant.
5. Inspite of said statutory notice the defendant did not settle CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 3 of 14 the claim of the plaintiff no.2. Since the consignment was insured with the plaintiff no. 1, therefore, the plaintiff no.2 have filed their claim against the plaintiff no.1 who paid them full and final payment of loss of the suit goods. After settlement of the claim and receiving the full and final payment of loss of Rs. 1,84,741/ from the plaintiff no. 1, the rights and remedies of plaintiff no. 2 automatically stood subrogated under Section 79 read with section 90 of the Marine Insurance Act, 1963 in favour of plaintiff no. 1. The plaintiff no. 2 after receipt of full and final amount of loss of suit goods have also executed a letter of Subrogation and Special Power of Attorney in favour of plaintiff no. 1 and directed the plaintiff no. 1 to recover the same amount of loss from the defaulting defendant / carrier.
6. Hence, the present suit is filed for recovery of Rs. 1,84,741/ amount. The present suit has been filed under Order XXXVII Rule 1(b) CPC read with the Marine Insurance Act and the Carriers Act/ the Carriage by Road Act. The defendant resides and carrying on their business in Delhi.
7. Summons were served upon the defendant, who appeared and filed leave to defend application alongwith application under section 8 of the Arbitration Act, 1996. It is submitted that plaintiffs have suppressed the material fact that there is a work order 04.04.2011 for transaction was carried out for delivery of goods, from Hisar to Bangapole, Bangladesh. It is stated that the Annexure I and II of the said order contain General Terms and Conditions between the parties. In CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 4 of 14 clause 20 and 21 of the said annexures respectively it is clearly stated that in case of dispute between the parties the matter will be referred to the sole arbitration of Shri Vijay Sharma, Vice President JSL Stainless Ltd, whose decision/ award shall be final and binding between and upon the parties concerned. T h e T&C also contain that disputes would be subject to the Jurisdiction of Hisar Courts only. The true copy of the work order dated 04.04 2011 alongwith its Enclosures/Annexures is annexed as Annexure A.
8. Further it is averred that assuming for the sake of argument but not admitting that the Defendant is liable to pay the suit amount, even then the maximum liability that can be fixed on the Defendant Company as per the New Carriage by Road Act, 2007 read with Carriage by Road rules, 2011 notified with effect from 01.03.2011 is limited to ten times of the freight paid or payable to the Defendant and shall not exceed the value of the goods as declared in the goods forwarding note. Therefore, the amount of Rs. 1,84,741/ is not payable to the plaintiffs. It is vehemently denied that the loss of 2 drums has occurred due to the negligence of the defendant company or its servants and agents. It is submitted that as per the said new Act of 2007 if the defendant is able to prove its and its agents/ servants non negligence then the defendant is not liable. It is further stated that even the survey report and the FIR do not attribute the theft/ loss to the defendant company. The defendant has not acknowledged its liability by issuing short damage certificate dated 11.07.2011. It is submitted that the certificate has been issued CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 5 of 14 without prejudice and without admission of any liability and negligence by the defendant company. Hence, the certificate is not acknowledgment of any liability by the defendant company.
9. In reply to the application for leave to defend and Section 8 of the Arbitration and Conciliation Act moved on behalf of the defendant, the plaintiffs have submitted that the arbitration clause referred by the defendant herein is quite repugnant to the declarations made by the insured/plaintiff no. 2 in their Marine Policy at the time of insurance of the suit goods, and the same is contrary to the provisions of sections 17,18,23 and 28 of the Contract Act. The introduction of disputed clauses of the said contract pertaining to arbitration and exclusion of territorial jurisdiction of the Court entered into between the defendant and the insured/plaintiff no. 2 as alleged is not applicable to the plaintiff no. 1 being a third party to the said terms. Neither the insured/plaintiff no. 2 have informed and made known to the plaintiff no. 1 about the said disputed terms of agreement with the defendant through any of their documents from the date of insurance of goods till the settlement of the claim in present case, nor has also not shown the same terms in their Goods Receipt, and damage certificate and any other correspondence thereto addressed to the plaintiff no. 2 for making aware it to the plaintiff no. 1. Hence, such terms excluding jurisdiction of the Court, and introducing the arbitration clause are without any knowledge to the insurer, hence it cannot bind a third party/ plaintiff no. 1 unless it is shown that they acted upon the CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 6 of 14 contract consciously knowing the effect and implications of such a contract.
10. It is submitted that the contents of the said disputed clauses have come to the knowledge of plaintiff no.1/, third party only when the defendant has filed its affidavit for leave to defend the present suit. Even in the Letter of Subrogation executed by the insured/plaintiff no. 2 it is nowhere directed to the plaintiff no. 1 to recover the suit amount from the defendant subject to the alleged terms of T & C /work order. The contents of alleged clauses of 20 and 21of the said T & C are also insubordination to the provision of Section 79 of the Marine Insurance Act, which is enacted in favour of plaintiff no.1 / insurer for free flow recovery against the defendant/carrier without any such restraint. It is submitted that the liability of the common carrier as provided under section 10 of the Carriage By Road Act, 2007 shall be limited to the such amount as may be prescribed having regard to the value, freight and nature of goods, documents or articles of the consignment on agreed rate without intervention of the higher rate fixed by the common carrier under Section 11 of the Act. The ten time freight charges fixed under the Carriage by Road Rules, 2011 is derogatory to the provisions of the Carriage By Road Act, 2007, and is void and inoperative in the present case. It is submitted that loss of goods in the custody of defendant itself is a proof of carelessness and negligence on the part of the defendant till the same is not covered CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 7 of 14 under the exception clauses of the Act.
11. On the basis of above pleadings and after argument were addressed on the leave to defend application and the application under Section 8 of the Arbitration and Conciliation Act and considering the reply to the application, it was observed by the Ld. Predecessor vide order dated 19.07.2016 that the main bone of contention is that whether plaintiff no. 1 had the knowledge of the work order dated 04.04.2011, annexure to which contained the arbitration clause, which is the basis of the application for leave to defend as well as the application under Section 8 of the Arbitration and Conciliation Act. It was further observed by the Ld. Predecessor that the same is mixed question of law and fact and cannot be decided without framing of a preliminary issue. Hence, a preliminary issue was framed as under :
Preliminary Issue Whether the suit of the plaintiff is not maintainable as the same is hit by Section 8 of the Arbitration and Conciliation Act? OPP Plaintiff evidence
12. During evidence, AR of the plaintiff through Shri Daljeet Singh, Senior Divisional Manager entered into the witness box as PW1 and deposed on the lines of the petition. Further, he relied upon the following documents : CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 8 of 14
a) The copy of Power of Attorney dated 13.09.2017 as Ex. PW1/8. After, plaintiff evidence was closed.
Defendant Evidence
13. In his turn, the defendant through Shri Prabhat Himakar, Officer Legal entered into the witness box as DW1 and deposed on the lines of the written statement. Further, he relied upon the following documents :
a) Special Power of Attorney as Ex. DW1/1.
b) Copy of GPA as Ex. DW1/2 (OSR)
c) Copy of Board Resolution as Ex. DW1/3 (OSR).
d) Work order dated 04.04.2011 alongwith terms and conditions as Ex. DW1/4 (Colly.).
After, defendant evidence was closed.
14. I have heard Shri Navdeep Singh, Ld. Counsel for plaintiff no. 1, Shri Sarad Kumar, Ld. Counsel for plaintiff no. 2 and Shri Manu Beri, Ld. Counsel for defendant and gone through the record. Findings
15. My findings on the preliminary issue is as under :
Whether the suit of the plaintiff is not maintainable as the same is hit by Section 8 of the Arbitration and Conciliation Act? OPP
16. The onus of proof is on the plaintiff. Section 8 of the Arbitration and Conciliation Act, 1996 reads as under:
"8. Power to refer parties to arbitration where there is an arbitration agreement.−(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 9 of 14 (2) The application referred to in sub−section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub−section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
17. The essential pre−requisites for the applicability of Section 8 of the Act, 1996 as laid down by Supreme Court in P. Anand Gajapat Raju v. P. V. G. Raju AIR 2000 SC 1886 are that (1) there must be an arbitration agreement; (2) a party to the agreement bring in action in the Court against the other party; (3) the subject matter of the action is the same as subject matter of the arbitration agreement; (4) the other party moves the Court for referring the purpose to arbitration before submitting the statement in dispute.
18. During crossexamination of PW1 stated that he has not signed, verified and filed the plaint as he was not posted with the plaintiff at that time. He admitted that the plaint has been filed jointly with the plaintiff no. 2 i.e. JSL Stainless Ltd. He also admitted that the work order Ex. DW1/4 between the plaintiff no. 2 and defendant came into picture when the claim is settled with plaintiff no. 2. He stated that as the claim is settled in Delhi in favour of the JSL Stainless Ltd. Hence, recovery suit against the carrier has been filed in Delhi.
19. Thus, from the version of PW1, it is clear that at the time of settlement of claim which was prior to issuance of letter of CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 10 of 14 subrogation by the plaintiff no. 2, the plaintiff no. 1 was aware about the work order Ex. DW1/4 alongwith the enclosure of terms and conditions of Annexure I and II. Hence, it cannot be disputed that there is an agreement between the parties which contains arbitration clause as per Section 8(2) of the Act of 1996. The said clause in annexure I and II of the terms and conditions is as under :
Clause 21 of the Annexure I as under :
"That in case of any dispute between the parties or any condition thereof or interpretation of any condition, the matter will be referred to the sole arbitration of Shri Vijay Sharma, Vice President JSL Stainless Limited, whose decision/ award shall be final and binding between and upon the parties concerned."
Clause 20 of the Annexure II as under :
"That in case of any dispute between the parties or any condition thereof or interpretation of any condition, the matter will be referred to the sole arbitration of Shri Vijay Sharma, Vice President JSL Stainless Ltd., whose decision/ award shall be final and binding between and upon the parties concerned."
20. Therefore, the above clause 21 of Annexure I and clause 20 of Annexure II of the work order Ex. DW1/4 is complete arbitration agreement in itself within the contemplation of the Arbitration and Conciliation Act, 1996. Thus, the existence of the arbitration agreement between the parties cannot be denied. Once the existence of the arbitration agreement between the parties is brought to the notice of the Court by way of a proper application and evidence is led in this regard CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 11 of 14 which shows that arbitration clause was within the knowledge of the plaintiff no. 2, then Section 8 of the Arbitration and Conciliation Act, 1996 springs into operation.
21. The defendant has filed the present application under Section 8 of the Arbitration and Conciliation Act before submitting their first statement on the substance of the dispute, which in the present case must necessarily be the written statement. It is clearly ascertainable that the defendant purposely filed the leave to defend alongwith the present application. Thus, the defendant never submitted to the jurisdiction of the Court and maintain that the dispute is liable to be referred to Arbitrator.
22. The language of Section 8 of the Act of 1996 is pre−emptory and it is obligatory for the Court to refer the parties to arbitration once the existence of the arbitration agreement covering the subject matter of the suit is established if the conditions of Section 8 of the Act, 1996 are satisfied. Reference may be made to the judgment Hindustan Petroleum Corporation Ltd. v. Pink City Midway Petroleums (2003) 6 SCC 503 wherein the Apex Court held that in such circumstance parties should be referred to arbitration and nothing remains in the original action once the requisite application is filed in the Court.
23. The dispute in the present suit is definitely a dispute arising between the parties with regard to the terms and conditions of the agreement. The net result is that the dispute in the present suit is liable to be referred to the arbitration in terms of the Section 8 of the Arbitration and Conciliation Act, 1996 as plaintiff no. 1 was already having CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 12 of 14 knowledge about the Arbitration Clause at the time of settlement of claim with the plaintiff no. 2, when plaintiff no.2 is stated to have issued the letter of subrogation.
24. The issue which is relevant for consideration whether arbitration clause between the plaintiff no. 2 and the defendant is binding on the plaintiff no. 1 or not. In this regard reliance may be placed upon M/s Rahul Cargo Pvt. Ltd. v. M/s National Insurance Company Ltd 2014 SCC Online Del 2229 the Hon'ble High Court of Delhi has observed:
"7. Once therefore the respondent no. 2/ plaintiff no. 2 transferred his rights under the transportation of contract to the respondent no. 1/ plaintiff no. 1 by virtue of letter of subrogation, the respondent no. 1/ plaintiff no. 1 therefore will only exercise those rights and obligations between the consignor/ plaintiff no. 2 and the carrier/ petitioner/ defendant. Since therefore it cannot be disputed that the respondent no. 1/ plaintiff no. 1 as an insurance company is only suing as a subrogee of the rights of the respondent no. 2/ plaintiff no. 2, i.e. the original rights for claiming loss for the goods lost under the contract of transportation was of the respondent no. 2/ plaintiff no. 2. If the contract of the plaintiff no. 2/ respondent no. 2 with the petitioner / defendant also. Once the respondent no. 2/ plaintiff no. 2 had a contract of arbitration with the petitioner/ defendant, and that is not disputed that there is an arbitration clause in the contract of transportation between the CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 13 of 14 respondent no. 2/ plaintiff no. 2 and the petitioner / defendant, then, surely the respondent no. 1/ plaintiff no. 1 who steps into the shoes of the respondent no. 2/ plaintiff no. 2 as its subrogee, will consequently therefore be bound by the arbitration clause binding the respondent no. 2/ plaintiff no. 2 and the petitioner / defendant..."
25. Applying the ratio of the aforesaid judgment to the facts of the present case, the plaintiff no. 1 vide letter of subrogation has stepped into the shoes of the plaintiff no. 2, and therefore will exercise only these rights and obligation which are between the plaintiff no. 2 and the defendant. Thus, this issue is decided against the plaintiffs and in favour of the defendant.
Relief.
26. In these facts and circumstances and as the preliminary issue is decided against the plaintiffs and in favour of the defendant, the present suit is not found to be maintainable being hit by Section 8 of the Arbitration and Conciliation Act and stands dismissed. The present suit stands dismissed. Decree sheet be prepared accordingly. File be consigned to Record Room.
Announced in open Court (Susheel Bala Dagar)
on 19th Day of February 2021 SCJ cum RC(West)
Tis Hazari Courts, Delhi.
(This judgment contains 14 pages.)
CS No. 611571/16 New India Assurance Company Ltd. v. M/s Darcl Logistics Ltd. Page no. 14 of 14