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M/S. Oriental Fire and General Insurance Co. Ltd. Vs. Union of India and Others - Court Judgment

LegalCrystal Citation
SubjectInsurance
CourtKarnataka High Court
Decided On
Case NumberRegular First Appeal No. 183 of 1982
Judge
Reported in1993ACJ1107; AIR1991Kant385; ILR1991KAR1614; 1991(1)KarLJ401
ActsIndian Contract Act, 1872 - Sections 148, 151 and 152; Railway Act, 1890 - Sections 72 and 78B; Sale of Goods Act, 1930 - Sections 20, 21, 22, 23(2) and 55(1); Code of Civil Procedure (CPC), 1908 - Sections 80
AppellantM/S. Oriental Fire and General Insurance Co. Ltd.
RespondentUnion of India and Others
Appellant Advocate B.L. Acharya for B.V. Acharya, Adv.
Respondent Advocate N.S. Srinivasan, Adv.
Excerpt:
- karnataka land reforms act, 1961.[k.a. no. 10/1962]. section 48a: [h.v.g. ramesh, j] rejection of form no.7 vesting of land in the state under section 44 no notice to purchasers who had purchased the lands in the year 1967 and subsequently order of vesting of land passed by the land tribunal held, the purchasers who had purchased the land in the year 1967 and subsequent to that are entitled to be informed by the land tribunal about the order of rejection of form no. 7 and the order of vesting. hence, the matter requires reconsideration for want of due notice to the petitioners. -- karnataka land revenue act, 1964.[k.a. no. 12/1964]. sections 128 & 129: [h.v.g. ramesh, j] registering of mutations and register of disputed cases held, it is needles to say it is duty bound on the part.....orderhiremath, j.1. the appellant was. the 1st plaintiff in original suit before the court of the civil judge, bangalore district in o. s. 583/1981 and the 2nd plaintiff was insurer whereas the present respondent wasdefendant no. 1 and assistant engineer, karnataka electricity board. gadag was the 2nd defendant. the facts in brief are that as against the order placed by the 2nd defendant with the 2nd plaintiff n.g.e.f. ltd. ('ngef' for short hereafter) it manufactured a transformer for the use of the 2nd defendant at gadag in dharwar district. it was despatched with its necessary fittings and accessories to the address of the 2nd defendant from baiyappanahalll railway siding in bangalore district on 31-5-1972. a special type of wagon was provided by the railways for transporting it on.....
Judgment:
ORDER

Hiremath, J.

1. The appellant was. the 1st plaintiff in original suit before the Court of the Civil Judge, Bangalore District in O. S. 583/1981 and the 2nd plaintiff was insurer whereas the present respondent wasdefendant No. 1 and Assistant Engineer, Karnataka Electricity Board. Gadag was the 2nd defendant. The facts in brief are that as against the order placed by the 2nd defendant with the 2nd plaintiff N.G.E.F. Ltd. ('NGEF' for short hereafter) it manufactured a transformer for the use of the 2nd defendant at Gadag in Dharwar District. It was despatched with its necessary fittings and accessories to the address of the 2nd defendant from Baiyappanahalll railway siding in Bangalore District on 31-5-1972. A special type of wagon was provided by the Railways for transporting it on Rails. It was on 11-10-1972 that NGEF came to know that transformer had sustained damages during its transshipment from broad guage to meter guage at Guntakal and even 3000 litres of oil that the transformer was filled with had leaked away. The same day as required under Section 78B of the Railways Act NGEF gave particulars of the damages caused. A joint inspection was conducted and joint inspection report also prepared. The original Railway Receipt (R.R.) which had already reached the 2nd defendant consignee ('consignee' hereafter for short) was secured by the NGEF for the purpose of re-booking perhaps for carrying out necessary repairs at Bangalore. On 15-2-1974 the NGEF sent a bill to the respondent showing the approximate cost of repair and damages. The total cost of these repairs came lo about Rs. 2,75,399-48 ps. inclusive of what the plaintiff called incidental expenses etc. However, the NGEF demanded from the appellant insurer Rs. 1,71,000/- in full satisfaction of their claim in pursuance of the contract of insurance entered into between the appellant and the NGEF. A letter of subrogation and general power of attorney in favour of the appellant came to be given on 29-10-1975. Thus the insurer appellant became the assignee of the rights of NGEF to recover the damages from the respondent.

2. The letters addressed by the appellant to the respondent were of no avail. Ultimately notice under Section 80, C.P.C. came to be issued to the General Manager, Southern Railways, Madras and after the expiry of the statutory period under notice the suit came to be instituted by both the plaintiffs for Rs. 1,17,000/-.

3. The suit was resisted by the 1st defendant-respondent on various grounds including the correctness of the quantum claimed. As far as 3000 liters of oil that leaked away from the transformer is concerned, respondent maintained that there was no declaration whatsoever about the transformer containing this quantum of oil and also maintained that there was no negligence on the part of the Railways. It was carried in the same wagon till Guntakal under escort provided by the NGEF and while the transformer was being transhipped from broad guage wagon to metre guage with 65-ton steam crane in the presence of the escort of the NGEF and under their supervision, the transformer dropped on the match truck of the crane due to slipping of main hoist wire rope from its brake drum. At the request of the NGEF the consignment was re-booked to Baiyappanahalli where the consignor took delivery of the consignment. That was a case of pure accident inasmuch as the crane used was in good condition, the transformer was lifted from the broad guage wagon to transship into the metre guage wagon and while it was being brought down slowly to be placed in the metre guage wagon the main hoist wire rope from its brake drum slipped suddenly and transformer fell down on the match truck of the crane. The whole incident was unforeseen and sudden. The Railway Administration had used reasonable care and foresight. The claim with regard to the leakage of oil was denied.

4. As far as the right of NGEF to claim damages, respondent contended that the consignment was booked to named consignee that is the 2nd defendant of Gadag and therefore, it denied that the NGEF had any right and title to the consignment at the material time. Even the NGEF taking the policy lo cover the risk of transportation under the appellant was denied. It maintained that there is absolutely no basis for making claim of Rs. 1.71,000/-. It is further pleaded that the damage was surveyed or. 12-10-1972 before re-booking the consignment from Guntakal to Baiyappanahalli. It was in the custody of NGEF from the time of unloadingafter re-booking till it was surveyed second time on 13-6-1973.

5. In the additional written-statement it was also pleaded that the consignor had not declared in the Forwarding Note the parts that formed part of the transformer at the time of booking and defendant was not aware of either the parts or their condition. The 2nd defendant entered a formal defence contending that it is neither a necessary party nor a proper party and that 2nd plaintiff had despatched the transformer from Bangalore and this defendant received the R.R. as an authority to receive the consignment at Gadag. The delivery of the transformer could not be taken as it was in a damaged condition and it did not reach Gadag. It admits of having sent back the R.R. to the respondent for the purpose of re-booking the same to Bangalore. It further urged that the plaintiffs had chosen to subject it to the pain and labour of defending the suit without there being any claim preferred against it. The rejoinder filed by the plaintiffs only asserted that there was negligence on the part of the Railways.

6. The trial court addressed itself to the following issues on these pleadings :

1) Whether the 2nd plaintiff entrusted the transformer loaded in good condition with 3000 litres of transformer oil. to the defendant for carriage?

2) Whether the 2nd plaintiff declared to the defendant about the actual quantity of transformer oil loaded in the transformer?

3) Whether the damage caused to the transformer was accidental, sudden, unforeseen and beyond the control of the Railway Administration?

4) Whether the 2nd plaintiff had right, title and interest to the suit consignment at the material time and the plaintiffs are entitled to sue for damages?

5) Whether the 2nd plaintiff had insured the suit consignment with the 1st plaintiff and the 1st plaintiff is entitled to recover damages from the defendant?

6) Whether the plaintiff suffered damages and if so, to what damages they are entitled?

7) Whether the notices issued are not valid?

8) Whether the suit claim is barred by limitation?

9) To what reliefs are the plaintiffs entitled?

It answered issues 2 to 8 in the negative while issue No. 1 was answered partly in the affirmative and partly in negative. In substance the findings of the trial Court have been that the plaintiffs have not proved by cogent and reliable evidence the actual damage suffered by them. Secondly, as the property in goods passed on the consignee the 2nd defendant by virtue of the nature of the contract and in the absence of there being any proof of a different intention, the plaintiffs could not file this suit for damages against the respondents. Consequently the suit came to be dismissed.

7. It is only the insurer the 1st plaintiff who has preferred this appeal challenging the findings of the trial Court and the consequent decree. It is mainly contended during arguments by the learned counsel for the appellant that the various bills sent by the NGEF to the respondent established the claim of the NGEF and by dint of subrogation of letter appellant has become entiled to claim the same. Secondly the circumstances of the case as well as conduct of the parties clearly demonstrate that the property in the goods did not pass on to the 2nd defendant and still remained with the consignor NGEF when the consignment was booked at Bangalore and as a matter of fact only on delivery of the transformer at Gadag the title could be passed to the consignee. These are the only two points that require to be considered and determined in this appeal.

8. Thus the points that arise for determination in this appeal are :

1) Whether the appellant who has stepped into the shoes of NGF.F has proved the quantum of damage sustained to the NGEF by way of repairing it and restoring it to the condition in which it was at the time of booking at Bangalore

2) Whether the property in goods still remained with the consignor so as to entitle it to make a claim for damages?

3) Whether the property in goods has passed to someone else i.e., to the consignee in the instant case?

4) Whether the consignor can still maintain a suit of this nature?

9. The trial Court has found on evidence that the damage to the transformer did occur on account of negligence of the respondent herein. We do not find any serious dispute on this point. Having so found the trial Court also found that there was no acceptable evidence with regard to the quantum of damage sustained as the various items that find place in the bills sent by the NGEF to the respondent were not proved. We think the trial Court was right in coming to this conclusion by examining the documentary as well as oral evidence adduced by the appellant and re-assessing the same. Exs. P-2, P-3 and P-5 are the three bills cent by the NGEF to the respondent. While Exs. P-2 dated 14-2-1974 and P-5 dated 10-12-1973 are described as provisional claim bills, Ex. P-3 dated 21-12-1974 is the final claim bill. In Ex. P-2 the bill is for Rs. 1,79,396-48 ps. whereas in Ex. P-5 it is Rs. 1,85,396-48 ps. The final bill however is for Rs. 2,55,896-48 ps. The major item of Rs. 1,08,000/- in Ex. P-3 relates to oil replacement. The rest are re-conditioning charges, repair charges for the tank, repair charges for divert or switch, cost of materials replaced, freight charges from Bangalore to Guntakal and from Guntakal to Bangalore, insurance charges, escort charges, travel charges and survey charges paid to the Surveyor. In Ex. P-2 total repair charges including the cost of material are shown Rs. 1,59,500/-. In Ex. P-5 the freight charges for re-booking are claimed at Rs. 6000/-. The oral evidence in this behalf is practically nil. The only witness who gave evidence with regard to the quantum of damages was PW-2 Somanath, Engineer incharge of transformers sales department in the NGEF. While giving the necessary details with regard to the components of the transformer and the method of its manufacture he clearly exhibited that he had no personal knowledge whatsoever in the matter of its repairs. He deposed that the report was prepared by the Works Manager after inspecting the damaged transformer on 13-6-1973 and referring to Ex. P-3 he stated that original estimate was Rs. 2,55,896.48 and with regard to the details he only states that they were contained in the bills. It was the Transport Department that complied with the necessary formalities of booking. He does not know the date of Forwarding Note and he is not aware of the quantity of oil in the transformer and it was not disclosed to the Railways at the time of execution of Forwarding Note. He admitted at Para 19 of his evidence that he has no personal knowledge about the quantity of oil in the transformer. There is nothing to show that the Raw Oil was subjected to degassing and filtering and approximate cost of oil was Rs. 3/- per Kg. in 1972 and Rs. 2/- per litre. There is no mention of the cost of the oil per liter in the bills presented. The Indian Electrical Manufactures' Associate publishes the cost of transformer oil every month. He also did not supervise the repair work of the transformer. Under Ex. P-5 he admits that there is no mention of the cost of oil in it. In this claim quantity of oil and its value were not shown by a separate department in the Factory and the spare parts and other necessary replacements though shown in Ex. P-5 their individual costs have not been mentioned. Ex. P-5 is signed by the representative of Bangalore Sales Office and though he states that he furnished some information to the Sales Officer NGEF in arriving at the figure Rs. 2,36,000/- towards the cost of material and labour in repairing the transformer, he has no personal knowledge of it. The information was however collected by him from the Costing Department. He also admitted that the amount claimed in Ex, P-3 was only an estimated claim even though it is not stated in so many words in it. However, he again stated that Ex. P-3 is a final claim. The trial court while adverting to this aspect regarding the proof of the claim under issue No. 6 reasoned as follows:

'In this a claim has been made to the tune of Rupees. 1,79,396.48 Ps. Ex. P-3 isdated 21-12-1974 which is the final claim bill under which an amount of Rs. 2,55,896-48 has been claimed. Under this amount an amount of Rs. 1,08.000/- has been shown towards the price of the oil replaced. In Ex. P-8 dated 10-12-73 total amount of damages is shown as Rupees 1,85,396.48, which has been shown in Ex. P-4. From these, it is quite clear that plaintiffs were not at all consistent in showing the extent of the damage. The plaintiffs have not furnished any details as to the price of each of the parts which were replaced to the damaged transformer. There is also no evidence to show how much amount was spent. In the absence of these details, the damage claimed by the plaintiffs cannot be granted simply on the ground that the 1st plaintiff has paid Rs. 1,71,000/- to the 2nd plaintiff. Hence, this issue is decided partly in favour of the plaintiffs and partly against them.'

10. Two other witnesses examined by the plaintiffs were not concerned with the actual cost or preparation of the bills and they have not spoken as to how the claim came to be calculated. Mere presentation of a bill does not amount to proof. When claim is being made against the third party, viz., the carrier it is but necessary that the plaintiffs must show by legal evidence as to what were the repairs carried out, what were the labour charges paid, what were the materials used, what were the costs at the relevant time and the like. Though Rs. 1,08,000/- have been claimed in the final bill only towards the oil replacement when PW-2 speaks about the price of oil at Rs. 3/- per Kg. or Rs. 2/- per litre none of the witnesses has come forward to state how and why such huge claim of Rs. 1,08,000/- came to be included in the final bill. Added to this there are also no conceivable reasons as to why only Rs. 1,71,000/-came to be claimed by the N.G.E.F. from their insurer which is not the amount shown in any of the bills referred to above. Therefore, in the absence of necessary particulars and clear and unambiguous evidence as to the actual cost of repairs to the transformer, the trial court was justified in finding that the plaintiffs have not proved that Rs. 1,71,000/-was actual damage sustained by the NGEF. We do not think there are any reasons to arrive at a different finding after reassessing the evidence adduced. Though the appeal should fail on this ground itself the determination of the other two points has to be considered by this Court as the material issues involved require to be answered even in the first appeal.

11. Admittedly before booking the consignment the R.R. was despatched to the consignee the 2nd defendant. The booking was on F.O.R. basis. The trial Court negatived the claim of the appellant on the ground that the consignor NGEF could not make a claim for damages as property in the goods or title to the transformer had passed to the consignee as the same was booked for being carried to Gadag. Referring to a Division Bench decision of the Madras High Court in the case of Yacob Rowther Sons v. Union of India : AIR1965Mad162 the trial Court found that the consignor could not make any claim against the railways, i.e. the respondent. It was held therein that where a consignment is delivered to the railway, the consignor, except where he is acting as the agent of another, can be regarded as the party to the contract of carriage; prima facie, he can also be treated as the bailor; where he is acting as an agent, his principal can be regarded as the bailor so far as the railway is concerned. But where under a contract of sale, goods are delivered by the seller to the railway for carriage, in order to effect delivery, the railway is ordinarily treated as the agent of the buyer to receive the goods from the seller. Hence, the property in the goods had passed to the buyer, on the delivery to the railway, the latter should have to be regarded as bailee to the owner of the goods, namely the consignee. It is the consignee that can sue for loss caused by the non-delivery of the goods after the goods have been delivered to the railway for delivery to him.

12. In sum the trial Court found that because the consignor had booked the transformer and delivered for carriage to the railway and there was no other evidence to show a different intention of the parties, as the property in the goods had passed on to the consignee and hence, the consignor could notmaintain the suit. If that is the position, the insurer getting a subrogation letter from the consignor also cannot sue the railway for damages though it stepped into the shoes of the consignor.

13. Section 20 of the Sale of Goods Act, 1930 (in short the Act) states that where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of goods, or both, is postponed. Under Section 21 of the Act where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof. Under Section 22 of the Act where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test, or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the properly does not pass until such act or thing is done and the buyer has notice thereof. Finally under Section 23(2) of the Act where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract. For instance, where a contract for sale of item of machinery said that delivery will be given (or taken) within 15 to 30 days from the date of contract and that driver of the seller himself will go and instant the engine at the buyer's place, and put it in working order, and that whatever parts, excepting shafting, if lacking would be supplied by him at his own cost and on the seller having done that, the buyer would pay the balance of price, under Section 21 the property would not be in a deliverable state and therefore the property in the goods would not pass to the buyer unless the seller did all he had to do under the contract before the buyer committed a breach of contract and non-payment of price within the period and therefore the seller would not be entitled to remedy under Section 55(1) which applied to cases where the property in goods has passed to the buyer. It would thus be clear that in the normal circumstance the property in goods passes to the buyer as provided under Section 20 of the Act. It is up to the buyer or any other party challenging such a position to plead and prove that it did not so pass to the buyer. Reference may be made to the observations of Baron Parke extracted at page 98 of the Sale of Goods Act by Pollock and Mulla, third Edition, while considering Section 23(2) of the Act. The relevant observations are as follows :

'It may be admitted that if goods are ordered by a person, although they are to be selected by the vendor, and to be delivered to a common carrier to be sent to the person by whom they have been ordered, the moment the goods which have been selected in pursuance of the contract are delivered to the carrier, the carrier becomes the agent of the vendee and such a delivery amounts to a delivery to the vendee; and if there is a binding contract between the vendor and vendee.... then there is no doubt that the property passes by such delivery to the carrier. It is necessary, of course, that the goods should agree with the contract.'

14. It is relevant to look to the pleadings in this behalf. Nowhere in the plaint has it been stated that the transformer was not in a deliverable state as required under Section 21 of the Act. What all has been stated is that the transformer was handed over to the Railways for carriage and that on 11-10-1972, the N.G.E.F. came to know that the transformer has sustained damages during its transhipment. Significantly it has been pleaded that the property in goods still remained with the N.G.E.F. when it delivered the same for carriage, if that be so, the evidence now given by P.W.3, the Deputy Divisional Manager that till the destination and delivery, the plaintiff had title to the consignment would be evidence without any pleading in this behalf. At the same time, it is clearly admitted that the consignment was on F.O.R. basis. It may also be mentioned at this stage that neitherparty has produced the contract between the N.G.E.F. and the 2nd defend ant nor anything is pleaded with regard to the terms of the contract. Therefore, if the normal incidence of sale goods as provided under Section 20 of the Act would prevail, then the intention of the parties may have to be taken into consideration if at all it could be made out from the conduct or any other circumstances. It is a settled position that the rules referred to above arc subject to the intention of the parties who enter into the contract of sale and they may add special conditions or warrantees. Extra terms if any. must be carefully considered in every case. It is undisputed that R. R. becomes a document of title which can be dealt with by the party who receives it in any manner be chooses. Even goods can be pledged by transfer of Railway Receipt. This was so held in the case of The Morvi Mercantile Bank Ltd. v. Union of India, : [1965]3SCR254 . In the case of Union of India v. West Punjab Factories Ltd. : [1966]1SCR580 , the Supreme Court held that if title to goods did not pass to the consignee, the consignor can bring such suit. From the mere fact that a Railway Receipt is a document of title to goods covered by it, it does not follow, where the consignor and consignee are different, that the consignee is necessarily the owner of goods and the consignor can never be the owner of the goods. The mere fact that the consignee is different from the consignor does not necessarily pass title to the goods from the consignor to the consignee, and the question whether title to goods has passed to the consignee has to be decided on other evidence. Ordinarily, it is consignor who can sue if there is damage to the consignment, because the contract of carriage is between the consignor and the railway administration. Where, however, the property in the goods carried has passed from the consignor to consignee, the latter may be able to sue. Whether title to goods has passed from the consignor to the consignee depends on the facts of such case.

15. In order to see if the title to goods had passed to the consignee in this case, one significant factor to be noticed in booking of the consignment on F.O.R. basis. In a latest decision in the case of M/s. Marwar Tent Factory, v. Union of India , the Supreme Court with approval extracted the observation in Halsbury's Laws of England, 4th Edition (Volume 41), at page 1756 of the report. The learned Author says -

'Under a free on rail contract (F.O.R.) the seller undertakes to deliver the goods into railway wagons or at the station (depending on the practice of the railway) at his own expense, and (commonly) to make such contract with the railway on behalf of the buyer as is reasonable in the circumstances. Prima facie the time of delivery F.O.R. fixed the point at which property and risk pass to the buyer and the price becomes payable.'

As referred to above, even in the instant case, it is not disputed that the booking was on F.O.R. basis meaning thereby that the property in goods had passed on to the consignee. The two other factors which deserve consideration are -- the N.G.E.F. taking insurance and re-booking of the transformer when the damage was noticed at Gunthakal.

16. The respondent has totally denied the very taking of the policy by the consignor. It was even urged that it cannot be made out on whose count or at whose instance the insurance came to be taken and either insurance policy or the contract of the indemnity entered into between the appellant and the respondent could have thrown some light in how, why and who exactly took the insurance in the absence of any such particulars either being pleaded or produced. The mere taking of insurance by the N.G.E.F. does not in any way militate against the normal position that the property in goods passes to the buyer the moment the contract is completed as provided under Section 20 of the Act. The re-booking, of course, was made at Guntakal when the damage was noticed and it is admitted by the 2nd defendant that R.R. was sent back to the N.G.E.F. for the purpose of re-booking. In our view, if re-booking had taken place for the purpose of getting the transformer repaired it could be said that it was done only as the agent of the consigneeand nothing more can be inferred from this circumstance alone. In that view of the matter, we are of the view that there is practically no evidence to infer that the property in goods had not passed to the consignee the moment the contract was entered into. The trial Court was, therefore, justified in finding that the consignor i.e., the N.G.E.F, was not entitled to the damages from the respondent. Consequently, the insurer by dint of subrogation cannot also step into the shoes of the N.G.E.F. and claim damages from the respondent.

17. In the case of West Punjab Factories Ltd., : [1966]1SCR580 (supra) at para-10, the Supreme Court while saying that the property in the goods carried had passed from the consignor to some-one-else, that other person may be able to sue, said nothing on the point whether in such a case the consignor can also sue for the reason that the facts in that case did not raise such a question. It appears, the decision of the Madras High Court referred to by the trial Court and also by us earlier answers this question. We are in respectful agreement with the view taken by the Division Bench of the Madras High Court and find that the consignor on the facts and circumstances of this case cannot sue to recover damages.

18. Accordingly, we do not find any reasons to interfere with the judgment and decree of the trial Court and we dismiss the appeal. Parties shall, however, bear their respective costs in this appeal.

19. Appeal dismissed.


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