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United India Fire and General Insurance Co. Ltd. Vs. Mowli Bal - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal No. 64 of 1978
Judge
Reported in[1986]60CompCas372(AP)
ActsMotor Vehicles Act, 1939; Insurance Act, 1938
AppellantUnited India Fire and General Insurance Co. Ltd.
RespondentMowli Bal
Appellant AdvocateJ.V. Suryanarayana Rao, Adv.
Respondent AdvocateS. Venkateswara Rao, Adv.
Excerpt:
.....which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - 1, submitted his report, exhibit b-11, and, ultimately, recommended payment of a sum of rs. -3, the husband of the respondent, clearly establishes that not only extensive damage has been done to the vehicle but also the sum of rs. this question involves adjudication of an interesting question of law as to what is the method of valuation to be adopted in assessing the damages for a motor vehicle involved in an accident. the best evidence is that of persons who actually..........b-2, which was offered to be paid to the respondent. disagreeing with the offer relying upon the contract, exhibit a-1, the respondent laid the suit for the recovery thereof. the appellant repudiated the liability mainly relying upon the report, exhibit b-11, and the estimate, exhibit b-2, of d.w. - 1. after framing of appropriate issues and adducing of evidence by the parties, the trial court accepted the case of the respondent with respect to the estimate of the damages and awarded the decree impugned. 3. sri j. v. suryanarayana rao, learned counsel for the appellant, has contended that the lower court did not keep in view the correct principles to assess damages. in a case of indemnification by the appellant, the burden lies on the respondent to establish conclusively as to what is.....
Judgment:

K. Ramaswamy, J.

1. The dissatisfied defendant-insurance company is the appellant. The respondent laid the suit to recover Rs. 61,000 comprised of Rs. 40,000 towards repairs and replacements for the damage caused to the motor vehicle AAT 2545, in an accident which occurred on March 30, 1976, and Rs. 21,000 towards loss of profits during the interregnum. The trial court decreed the suit for a sum of Rs. 40,000 towards repairs and replacements but disallowed the rest of the claim.

2. The facts in a nutshell are that the respondent is the owner of the motor vehicle of 1963 model bearing number AAT 2545. It was purchased by K. K. Swamy from the Andhra Pradesh State Road Transport Corporation during the year 1973 from whom the respondent purchased it for Rs. 35,000. It was insured with the appellant for a maximum liability of Rs. 40,000. It sustained extensive damage in an accident and the respondent intimated the appellant of the estimated damage under exhibit B-1 and thereafter the appellant's values, D.W. 1, submitted his report, exhibit B-11, and, ultimately, recommended payment of a sum of Rs. 9,242 in his estimate, exhibit B-2, which was offered to be paid to the respondent. Disagreeing with the offer relying upon the contract, exhibit A-1, the respondent laid the suit for the recovery thereof. The appellant repudiated the liability mainly relying upon the report, exhibit B-11, and the estimate, exhibit B-2, of D.W. - 1. After framing of appropriate issues and adducing of evidence by the parties, the trial court accepted the case of the respondent with respect to the estimate of the damages and awarded the decree impugned.

3. Sri J. V. Suryanarayana Rao, learned counsel for the appellant, has contended that the lower court did not keep in view the correct principles to assess damages. In a case of indemnification by the appellant, the burden lies on the respondent to establish conclusively as to what is the value of the vehicle as on the date of the accident and what is its value after damages. The estimation thereof has got to be made and the resultant value would be the loss actually and it would be the measure of damages. The respondent made no such attempt, entailing in the dismissal of the suit in toto. Alternatively, he contended that the price list, exhibit A-9, given by the salesman in Pioneer Automobiles, Guntur, does not reflect the actual prevailing prices of parts or accessories. It was given on the date on which P.W.- 1 was being examined, viz., July 18, 1977. Therefore, even the prices of the articles were not given. The estimate given by P.W. 1 is highly exorbitant and inflated denuding (sic) to place reliance thereon. He also contended that the entire value cannot be taken since as a result of respondent with new articles, the value of the vehicle is being increased and, therefore, one-third thereof has to be deducted. He also contended that the report, exhibit B-11, and the estimate, exhibit B-2, furnished by D.W. 1 and the estimate, exhibit B-3, furnished by D.W. 1, the surveyor, are authenticated ones. D.W. 1 is not only representing the appellant but also other nationalised companies. He is a disinterested witness. His estimate is authentic and a correct method to determines the loss. The trial court did not consider this case from the above perspectives.

4. Sri S. Venkateswara Rao, learned counsel for the respondent, resisted it contending that after purchasing the vehicle in the year 1973, the respondent made extensive repairs by replacing it with new parts and has been using it till the date of accident. He insured the vehicle for Rs. 40,000 and that is the measure of damages which he claims in the event of an accident to recover from the appellant-company. In exhibit B-1, the estimate by P.W. - 1, he mentioned the estimate of the repairs and the articles to be replaced and he did not mention the prices thereof, but the prices have been mentioned in the price list, exhibit A-9, given by P.W. - 4. A motor vehicle inspector was appointed as commissioner by the court at the instance of the respondent. He submitted his report, exhibit C-1. He mentioned the extensive damage caused to the vehicle and when the valuer, D.W. - 1, was confronted with this report, he admitted that the report, exhibit C-1, of the commissioner who is examined as P.W. - 7 is in consonance with the report, exhibit B-11, so far as the extent of the damage is concerned. D.W. - 1 admitted that he did not ascertain from the market the prevailing prices of the new parts as on the date of the damage. He has also not given any reasons for refusing replacement of certain articles and the amount for effecting repairs and colouring. The documentary evidence, exhibit B-1, C-1 and A-9, and the disinterested evidence of P.Ws. - 1, 2, 4 and 7 coupled with the evidence of P.W. - 3, the husband of the respondent, clearly establishes that not only extensive damage has been done to the vehicle but also the sum of Rs. 40,000 decreed by the trial court is reasonable to effect and replacement of parts to the vehicle. In exhibit A-1, the insurance policy, under condition No. 4 thereof coupled with endorsement No. 23, the appellant is liable to effect repairs and in case of breach thereof, the respondent is entitled to indemnification not exceeding Rs. 40,000 as contracted for. The total amount required for the replacement of parts is Rs. 22,697.60 and the amount required for effecting repairs is Rs. 34,025 totaling Rs. 56,722.60. The evidence of one of the repairers, i.e., P.W. - 2, shows that an amount of Rs. 60,000 is required to effect repairs. In view of this evidence, even eschewing exaggeration and excluding one-third towards the value of the articles to be replaced as contended by the appellant, the respondent is entitled to not less than Rs. 40,000 and, therefore, the trial court has rightly granted a decree for Rs. 40,000.

5. The respective contentions given rise to the question whether the decree of Rs. 40,000 granted by the trial court towards effecting repairs to the vehicle and replacement of articles is justified in law. This question involves adjudication of an interesting question of law as to what is the method of valuation to be adopted in assessing the damages for a motor vehicle involved in an accident.

6. In the first instance, we have to see what is the intention of the parties when they entered into the contract of indemnity. Words are but servants to convey and express meanings but cannot always be servants of precision and may sometimes be given a dominance which is above their status. If language is the dress of thought, it is the thought that must be understood from the language couched. Therefore, let us first go to the contract itself to find the intention of the parties. This is a contract pursuant to the statute, i.e., Motor Vehicles Act, 1939, and the Insurance Act, 1938. Clause 4 of the policy, exhibit A-1, reads thus :

'The company may at its option repairs, reinstate or replace the motor vehicle or parts thereof and/or its accessories or may pay in cash the amount of the loss or damage and the liability of the company shall not exceed the actual value of the parts damaged or lost plus the reasonable cost of fitting and shall in no case exceed the insured's estimate of the value of the motor vehicle (including accessories thereon) as specified in the schedule or the value of the motor vehicle (including accessories there on) at the time of the loss or damage, which never is the less.'

7. A reading thereof manifests the intention of the parties. The company has an option to repairs, reinstate or replace the motor vehicle or parts thereof or its accessories. When it commits a breach thereof, it undertook to pay in cash the amount of the loss or damage. It shall not exceed the actual value of the parts damaged or lost, plus the reasonable cost of fittings. It shall in no case exceed the insured's estimate of the value of the motor vehicle, at the time of the loss or damage, which never is less. It admits of no doubt that the maximum for which the motor vehicle was insured was Rs. 40,000. Admittedly, the appellant committed breach of the contract. Therefore, the question is, what is the damage to which the respondent is entitled to Insurance is a contract upon speculation where special facts upon which the contingent chance is to be computed to secure indemnity. Surprisingly so far, there is no decided case of any court in India as to the method of valuation in assessment of damages to a motor vehicle when it is involved in an accident. Let us, therefore, tread on the principles in this regard. The general principle is restitution in integrum so far as money can do it. The insured person should be put in the same position as he would have been in, if he had not sustained the wrong, viz., if the tort has not been committed or that the contract has not been infringed. (vide Halsbury's Laws of England, fourth edition, volume 12, paragraphs 1129, page 430). In Livingstone v. Rawyards Coal Co. [1879-80] 5 AC 25 (HL), Lord Blackburn held in the realm of tort thus (at page 39) :

'The point may be reduced to a small compass when you come to look at it. I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.'

8. Regarding the measure of damages for a breach of contact under common law, Parke B. in Robinson v. Harman [1848] 1 Ex 850, has succinctly laid down thus :

'Where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.'

9. This statement of law was approved by the House of Lords in Watts, Watts and Co. Ltd. v. Mitsui and Co. Ltd. [1917] AC 227, 241 (HL). These principles were applied in a catena of decisions engrafting exceptions or extensions on diverse facts and for the present, it is needless to undertake a survey thereof, but suffice it to state that in the matter of assessment of damages, there is no distinctive between tort and contract. (Vide Mayne and Mc Gregor on Damages, 12th edition, Chapter XIII, page 425). The learned authors stated that the leading formulation of the general rule is sufficiently wide to cover contract and tort equally. The same principles were retired with precision by Asquith L.J. in Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. [1949] 1 All ER 997, 1002 (CA).

10. In Mayne and Mc Gregor on Damages, 12th edition, at page 566, in paragraphs 654, it is stated thus :

The measure of the indemnification is not limited by the terms of any contract but is co-extensive with the amount of the damages. The right against the wrongdoer is restitution in integrum, and the restitution he is bound to make without calling upon the party injured to assist him in any way whatsoever ...

If (the injured) party derives incidentally a greater benefit than mere indemnification, it arises only from the impossibility of otherwise effecting such indemnification without exposing him to some loss or burden, which the law will not place on him.'

11. In Mac Gillivray and Parkington on Insurance law, 6th edition, in respect of insurance policy, it is stated in paragraphs 1762, at page 725, thus :

'If there is a total loss, the amount payable to the assured will be the value of the thing insured at the time of the loss, but if there has only been a partial loss, the correct measure of indemnity is the difference between the value of the damaged property before and after the loss.'

12. At page 727, in paragraphs 1766, the learned authors have further stated thus :

'Where the property is capable of repair or reinstatement, the damaged value may be estimated by deducting the cost of repair from the repaired value. The amount payable by the insurers is then calculated by taking the difference between the undamaged value and the damaged value.'

13. In paragraphs 1767, it is further adumbrated thus :

'Every fact and circumstance which would logically tend to the formation of a correct estimate of loss must be taken into account, and in America a valuation has been set aside where replacement value less depreciation was the only factor taken into account.'

14. It is further stated that if the property is not in fact repaired, the cost of repair may not be representative of the actual loss. In such a case, the actual saleable value of the damaged property must be taken.

15. In Westminster fire Office v. Glasgow provident Investment Society [1888] 13 AC 699 (HL), the Earl of Selborne held at page 713 thus :

'The sum necessary to reinstate is one thing; the loss, if there be no reinstatement (which is the present case), is another.'

16. In 'Gazelle' case (166 ER 759), a deduction by the registrar and merchants of one-third for the full amount of the repairs and of the cost of new articles in consideration of new articles being substituted for old, has been sustained by the court. In the same volume, it is laid down by Dr. Lushington at page 1079 - 1080 thus :

'... The parties are entitled to restitution in integrum to complete repairs of all the damages done notwithstanding the result may be to render the ship more valuable, than she was prior to collision. If, in consequence of a collision, it is necessary to repair a ship, the effect may be to enhance the value, the render her worth more than she was prior to the collision. In case of insurance, one-third of the value of the material is deducted, because the new material is more valuable than the old, but it is not so where repairs are done in consequence of collision. The value of the ship before the collision, or the value when she has been repaired after collision, are questions wholly foreign to these enquiries. The best evidence is that of persons who actually inspected the vessel after the damage - of persons competent to say what repairs were necessary in consequence of the damage. With regard to the bills incurred - for such expenses they must necessarily, for the purpose of justice, be submitted for examination, and extravagant charges lowered by the opinion of persons conversant with the trade; but I must say it is a very arduous task for the court to decide when such opinions are conflicting.'

17. The principles that emerge from the above discussion are that in measuring damages, there is no distinction between tort and contract. The general principle is restitutio in integrum. In determining the sum of money as reparation for a breach of contract as damages, as nearly as possible, get at that sum of money which will place the party injured in the same position as he would have been in as if the contract has been performed or in the case of tort as if he had not sustained the wrong for which compensation is being paid for. Appreciation of value to the motor vehicle or grater benefit or advantage due to repair or replacement of part or parts or accessories is only incidental to restitution and inevitable and inseparable consequence. It is for the plaintiff to establish the factum of actual loss or damage suffered or the amount required or spent replacement of part or parts or accessories and reasonable repairing and fitting charges. The liability to indemnify the insured is limited to the contract. In no case it shall exceed the actual loss or damage or charges incurred subject to the maximum liability under the contract, which never is less. One-third is to be deducted from the value of the replaced new parts or accessories. No abstract principle could be laid down. On facts and circumstances in given cases, it is open to a party to establish by adducing of evidence as to what is the actually loss suffered due to the accident or the parts involved in the accident and to what extent the insurance company is liable to indemnify the loss so suffered.

18. In this case, as regards the actual damages suffered, we have documentary evidence of exhibit C-1, the reports of P.W. 7, the Commissioner, and exhibit B-11 given by the survivor, D.W. - 1, D.W. - 1 admitted that to the extent of the damages, both the reports concur. Therefore, the conclusion is that extensive damage has been done to the vehicle and it is not disputed. With regard to the amount required to effect repairs and replacement of parts, there is now conflicting evidence adduced by the parties. The appellant placed implicit reliance on the estimate made by the surveyor, D.W. - 1, under exhibit B-2. On the other hand, respondent is relying on the estimate given in exhibit B-1, by P.W. - 1, the auto repairer, at the earliest point of time and the prevailing prices under exhibit A-9, spoken to by P.W. - 4, the salesman of the authorised company. D.W. - 1 admitted that P.W. - 4 is an authorised dealer and the prices mentioned by him in exhibit A-9 were the correct prices. Therefore, as far as the prices are concerned, there is no dispute. As a matter of fact, there is no cross-examination of P.W. - 4 in that regard. No doubt, P.W. - 3, the husband of the respondent, admitted that exhibit A-9 was given by P.W. - 4 at his instance. But it is not implicit therefrom, as attempted to show by the counsel for the appellant, that it is a fabricated document. It is a price list given by the company and its authenticity has not been disputed. D.W. - 1 did not assign any cogent reasons as to why some parts are not required for replacement or the painting is not required when extensive damages had been caused. Though, an attempt has been made by the learned counsel for the appellant to case a cloud on the amount of repairs of Rs. 28.500 from exhibit B - 1, stating it to be an interpolation, but its shroud has been cleared when we look to the estimate of D.W. - 1 himself in exhibit B-2 where the admitted that P.W. - 1 has given an estimate of Rs. 28,500 to effect repairs to the body. P.W - 1 also stated in exhibit B-1, the parts and accessories required to be replaced. That was also mentioned in the report, exhibit B-11, by D.W. - 1. But he deleted some items without assigning any cogent reasons. Even in the evidence also, he did not give any cogent reasons. Under those circumstances, the necessary conclusion is that the parts mentioned in exhibit B-1 are required for replacement and unless they are purchased and fitted, it is not possible for the motor vehicle to be put on the road. The value of new parts admittedly comes to Rs. 22,697.60. As adumbrated, the old damaged parts are to be replaced with new ones. As a result of the replacement, the utility and value of the vehicle get enhanced; one-third, of its value has to be deducted and deducting one-third, it would come to Rs. 15,130 and odd. With regard to repairs, we have the evidence of P.Ws. - 1 and 2 and D.W. - 1. P.W. - 1 has stated that it required an amount of Rs. 28,500. P.W. - 2 has stated that a total amount of Rs. 60,000 is required. With regard to repairs, D.W. - 1 in his report exhibit B-11, itself mentions that Rs. 16,000 is required for body repairs whereas in his evidence, he did not state any specific amount is his chief examination, but in his cross-examination, he stated thus :

'I did not mention clearly of material required for repairs to the body under item 11. Item 11 was allowed on the contract basis as agreed by the repairer. I did not take the signature of P.W. - 1 accepting the contract.'

19. Item 11 in exhibit B-11 mentions that P.W. - 1 stated that a sum of Rs. 28,500 was required for effecting repairs to the body. In view of this evidence, the necessary conclusion to be drawn is that nearly a sum of Rs. 28,500 is required for effecting body repairs. It is true that under the contract, exhibit A-1, under condition 4 thereof, it is not mandatory on the parts of the appellant to effect repairs. It is only optional. In case the company undertakes to effect repairs, it is open to it. But when it was not done, it is open to insured to get the repairs effected and to the extent of the contract undertaken under the insurance, he can seek indemnification from the appellant as part of the damages suffered by her. The contract, exhibit A-1, provides that the maximum amount contracted by the parties to be reimbursed is Rs. 40,000. Therefore, the appellant has under taken the liability to reimburse to the extent of the actual damages suffered not exceeding Rs. 40,000. It is already held that after deducting one-third, the value of the new parts is Rs. 15,130 and the expenses for effecting repairs to the body are Rs. 28,500. Thus, a total sum of Rs. 43,000 odd is required but the liability undertaken is only Rs. 40,000. So, the respondent is entitled to claim only the maximum amount of Rs. 40,000. In this view, though for different reasons, I agree with the lower court and hold that the amount of Rs. 40,000 decreed by the lower court is justified in law and warrant no interference. The appeal is accordingly dismissed with costs.


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