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Thakur Gopal Singh Vs. Mutual Indemnity and Finance Corporation (India) Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectInsurance;Motor Vehicles
CourtAllahabad
Decided On
Reported inAIR1937All535
AppellantThakur Gopal Singh
RespondentMutual Indemnity and Finance Corporation (India) Ltd. and anr.
Excerpt:
- - the corporation did not clearly support the plaintiff nor in express terms stated that the plaintiff was entitled to a decree for the amount claimed against the insurance company. 3. the same plea was repeated in other paragraphs as well. , and on the strength of it they endorsed the policy to the plaintiff and the corporation on 14th march 1931. the terms and conditions of the contract are embodied in this insurance policy. now this policy witnesseth that the company, during the said period or during the continuance of this policy by renewal shall, subject to the terms and conditions of this policy, whether inscribed on the face hereof or endorsed hereon, indemnify the assured, in respect of any vehicle described in the schedule, and used within limits of india, burma and ceylon......sulaiman, c.j.1. this is a plaintiff's appeal arising out of a suit for recovery of damages on the basis of an insurance policy for damage done by fire to a motor lorry run by the plaintiff. the motor vehicle had been purchased on 20th january 1931, by indar lal sah and was insured with the insurance company, defendant 2. the proposal form of that date is not on the record. indar lal sah had taken this motor lorry on a hire purchase system from defendant 1, the mutual indemnity and finance corporation ltd. the corporation later on transferred this motor lorry to the present plaintiff, gopal singh, and on an application made to the insurance company, the insurance policy also was transferred by the insurance company to the plaintiff. a fresh proposal form was taken on this occasion which.....
Judgment:

Sulaiman, C.J.

1. This is a plaintiff's appeal arising out of a suit for recovery of damages on the basis of an insurance policy for damage done by fire to a motor lorry run by the plaintiff. The motor vehicle had been purchased on 20th January 1931, by Indar Lal Sah and was insured with the Insurance Company, defendant 2. The proposal form of that date is not on the record. Indar Lal Sah had taken this motor lorry on a hire purchase system from defendant 1, The Mutual Indemnity and Finance Corporation Ltd. The Corporation later on transferred this motor lorry to the present plaintiff, Gopal Singh, and on an application made to the Insurance Company, the insurance policy also was transferred by the Insurance Company to the plaintiff. A fresh proposal form was taken on this occasion which is dated 9th March 1931 (pp. 32 to 33). Against the description 'Owner's name' it was stated 'Gopal Singh and/or M.I.F.C.I.'. This proposal form was filled up by the director of the Corporation and was submitted to the Insurance Company which transferred the policy dated 20th January 1931, to Gopal Singh and/or M.I.P.C.I. The reason why both the names were mentioned is obvious. Gopal Singh and his predecessor, Indar Lal Sah, had paid certain instalments, but a part of the price was still outstanding. Under the hire purchase agreement the Corporation was to remain the owner of the vehicle until all the instalments were paid and the hirer acquired an interest on account of the payment of the instalments and was also the owner of the body which he built himself.

2. It is an admitted fact that on 20th October 1931, this motor vehicle while running between Kathgodam and Banikhet caught fire and was burnt completely. At that time it was carrying four passengers in addition to the driver and the cleaner and had also about 60 tins of mustard oil weighing about 20 maunds. As soon as fire was caused the driver and the passengers got down and removed a part of the load but did not succeed in removing more than 10 tins of the oil. The lorry was almost completely burnt together with its contents and hardly anything worth having was saved. There was however the body of the chassis and other pieces of iron. Admittedly the Corporation took over the burnt lorry and appropriated the same. The plaintiff on the other hand stopped making any further instalments to the Corporation and then ultimately brought the present suit against the Insurance Company impleading the Corporation as a defendant. The reliefs claimed by the plaintiff principally were a claim for damages against the Insurance Company and a claim for a declaration against the Corporation that he was not liable to pay further instalments. So far as the Corporation, defendant 1, was concerned, it took up the position that the Corporation was not liable to the plaintiff and that the plaintiff's suit should be dismissed against it. The Corporation did not clearly support the plaintiff nor in express terms stated that the plaintiff was entitled to a decree for the amount claimed against the Insurance Company. The main defence was raised by the Insurance Company which in para. 5 stated:

The plaintiff by allowing and using a passenger carrying motor bus to run up an incline on the Almora-Ranikhet road with 20 maunds of hazardous merchandise in the shape of oil violated the terms of the contract as embodied in the said policy, namely, that the motor bus in question should be used only for the purpose of carrying!, passengers.

3. The same plea was repeated in other paragraphs as well. The plaintiff had farther alleged in the plaint that he had asked the Insurance Company to nominate an arbitrator in order to constitute a board of arbitrators to adjudicate on the claim, but the latter had not done so. The Insurance Company admitted the allegations contained in that paragraph and stated that in the circumstances of the case it was unnecessary for the defendant to nominate any arbitrator as the motor lorry was used for the purpose involving risks other than those covered by the policy. Numerous issues were framed by the learned Subordinate Judge, some of which have been decided in favour of the plaintiff and the others have been left undisposed of, but the main ground on which the suit has been dismissed is that one of the basis of the contract was that the lorry should be used for carrying passengers only, and inasmuch as at that, time the lorry was carrying 50 tins of oil, there was no liability on the Insurance. Company at all. The learned Subordinate Judge has also held that the Corporation were fully entitled to seize the bus when, the plaintiff fell behind with his instalments. The Court has further held that the suit is maintainable. It has found that Rs. 50 were incurred as costs by the. plaintiff in removing the burnt lorry and the Company is liable to pay this amount, under Section 5 of the insurance policy.

4. The main findings on the essential question of fact which was in dispute are that-the evidence on the record is all one sided as the defendants have not produced any evidence of their own in regard to the statement and so the statement of the plaintiff's witness in regard to it stands uncontradicted, and there is nothing to show that the accident was due to any carelessness on the part of the plaintiff or his driver. It is further stated that there is no reason for rejecting the figures given by the plaintiff in regard to the amounts paid for the construction of the body and the conveyance of the burnt remains.

5. The first point which arises for consideration is whether owing to the fact that the plaintiff was carrying 60 tins of oil at the time when the accident occurred, the risk was no longer covered and the defendant company is not liable. When the policy was transferred to the plaintiff on 11th March 1931, the proposal form had been signed by the Corporation afresh. It may be noted here that the Corporation was the Lucknow representative of the Insurance Company and the proposal form was signed by the Director of the Corporation. It was not actually signed by the plaintiff, Gopal Singh, at all. According to the plaintiff's evidence the Corporation inspects the registration papers and its managers and agents often come to Haldwani to see the lorries that are running. According to the evidence of the motor engineer who had been working for the Corporation which acted as agents for different insurance companies, including defendant 2, all the insurance companies have ordinarily the same rate for general insurance, that a copy of the registration certificate is supplied to the insurance people through the financing company, and that there is no classification of buses into heavy goods, light goods, passenger and so on for the purpose of insurance. It was not suggested on behalf of the Insurance Company that there were separate rates charged for a motor bus and for motor lorry, one required for carrying passengers and the other required for carrying goods only; nor was it suggested that there were different rates charged for different routes. The proposal form however was for 'Motor Bus Insurance'. Under the rules framed by the Local Governments, particularly the United Provinces Government a motor bus is defined as a public motor vehicle which is used for the carriage of passengers and light personal luggage, and which has seating accomodation for eight or more persons, including the driver; whereas motor lorry means a public motor vehicle for the carriage of goods, or goods and passengers. There was no suggestion at the trial that the motor vehicle which was insured in this case had not seating accommodation for eight or more passengers, nor was it suggested that as designed it was not a motor bus for carrying passengers. The main point taken was that at the time of the accident, in addition to carrying four passengers (excluding the driver and the cleaner it was carrying 60 tins of mustard oil also. The proposal form had three different headings. The first is 'Benefits'. Under this heading there is a provision:

Claims by the public up to Rs. 16,000 or an agreed amount, any one accident. Accidental damage to the insured vehicle, whilst in a public thoroughfare, (excluding damage to lamps, tyres, mudguards and/or paint work).

6. Then follows the following provision:

Fire, lightning, etc. Loss or damage to the insured vehicle, whilst in a public thoroughfare during regular running hours caused by fire, lightning, explosion or self-ignition (subject to above-mentioned exclusions).

7. Then there is reference to loss or damage due to theft. Then follows the heading: 'Form of proposal', which gives the owner's name and address, and contains certain other printed headings: 'Licensed to ply on route No.... Make of Vehicle...., No. of Cylinders...., horse power....' and then follow the words : 'Licensed to carry...passengers', followed by other descriptions of the 'Registered letter and Nos.' 'Chassis No.', 'Year of make', 'Date of purchase', 'New or second hand', 'Price paid', and 'Value to be insured'. After these follow certain specific questions: 'Do you wish to insure passengers?' 'If so, to what amount?' 'Riot and civil commotion?' 'Is fire in garage required?' ultimately followed by the 'Period of cover' to be stated. Below this form is the heading : 'Declaration' under which the following endorsement was made:

I/we, the undersigned, hereby declare that the above statements are correct and shall form the basis of the contract between me/us and the Motor Insurance Co., Ltd., subject to the terms and conditions prescribed by the company therein.

8. Now the details contained in this proposal form may either be of the nature of a description of the vehicle that was-insured or they may be a description of the risk undertaken by the Insurance Co. or they may be specific terms or conditions amounting to a warranty. This proposal form was submitted to the Insurance Co., and on the strength of it they endorsed the policy to the plaintiff and the Corporation on 14th March 1931. The terms and conditions of the contract are embodied in this insurance policy. It begins with the heading : 'Commercial Motor Vehicle. (Comprehensive Policy)' and would prima facie apply to all commercial motor vehicles and was intended to be a comprehensive policy. These headings are embodied in the body of the policy before the preamble. The preamble beginning with the word 'whereas' contains the following recital : The assured has delivered

a proposal in writing (which is hereby declared to be the basis of the contract, and is to be deemed as incorporated herein) for the indemnities hereinafter contained....

9. After the preamble begins the operative portion of the policy which is in the following terms:

Now this policy witnesseth that the company, during the said period or during the continuance of this policy by renewal shall, subject to the terms and conditions of this policy, whether inscribed on the face hereof or endorsed hereon, indemnify the assured, in respect of any vehicle described in the schedule, and used within limits of India, Burma and Ceylon.

10. Then follow a number of sections. Section 1 refers to the liability on account of any accident, and may in certain cases cover accidental bodily injury to any person (if insured), as well as accidental damage to the property other than property of the assured or held in trust by him, or being conveyed by the said vehicle. Section 2 refers to accidental or malicious damage caused during transit, whether caused while loading or unloading. Section 3 fixes the liability of the company at the value of the vehicle at the time of the occurrence or the value stated in the schedule, whichever is less. Section & refers to theft, and Section 5 to removal charges. Then comes Section 6 which contains certain exceptions when the company shall not be liable under this policy. They are seven in number and do not include either the specification as to the carriage of passengers only or the route over which the lorry is to run. Exception 5 exempts the company from liability in case of any accident, loss or damage

caused by explosion of the boiler or by sparks or ashes from any insured vehicle or arising from the overloading of such vehicle or the nature of the load carried thereby.

11. After referring to the 'non claimant's bonus' comes the heading 'Conditions', under which no less than eight different conditions are prescribed which are to govern this contract. They include a reference to arbitration. Below these conditions there was the signature of the Attorney of the Insurance Co. On the back appears the heading 'Schedule' under which there is a tabular form which has to be filled up. It contains details as regards 'Make of motor vehicle', 'Horse power', 'Date of make', 'Chassis number', 'Registration number and letter', ' Present value (including accessories)', and below the table are the words 'purpose for which vehicle will be used : Carrying passengers'. Below this Schedule there is a third heading 'Endorsements' 'Special Bus Clause', under which two or three more conditions are put down. It is to be noted that both the Schedule and the Endorsements are on the back of the Insurance Policy, while the conditions are on the face thereof. We are really not so much concerned with the terms of the agreement which was entered into between the Corporation, defendant 1, and the plaintiff, which terms cannot be binding on the Insurance Co. But it may be mentioned in passing that in the description given in that agreement there was no reference to the lorry carrying passengers only. The main point for consideration is whether the Insurance Co. is exonerated from all liability on account of the fact that the lorry was carrying tins of oil in addition to certain passengers on the date when the accident occurred. As already pointed out, under the heading 'Benefits' which the assured was to get, there was no mention whatsoever that the benefit was confined to the case where passengers only would be carried by the lorry. On the other hand the company was bound to make good the loss or damage caused to the insured vehicle, whilst in a public thoroughfare during regular running hours caused by fire, lightning, explosion or self-ignition, 'subject to above mentioned exclusions'.

12. The above mentioned exclusions only referred to damage to lamps, tyres, mudguards or paint work. There was no reference therein to any exclusion mentioned below. It would therefore seem prima facie that the details given in the form of the proposal which follows would not come within the exclusions which are mentioned under the heading 'Benefits'. But of course as the declaration specified that the statements made above were to form the basis of the contract between the parties, they can be incorporated into the contract if they amounted to a definition of the risk of insurance. But, as already noted, the declaration drew a distinction between the statements being made the basis of the contract and the terms and conditions of the policy which were to be prescribed by the company in the policy, and the proposal form was to be subject to the terms and conditions prescribed by the company therein. The proposal form certainly contains some parts which are merely descriptive. For instance, the registered number was 3893 as entered in the proposal. In point of fact the real number as now found is 3993. It will be difficult to contend that a mistake of this kind would exonerate the defendant from all liability.

13. Further the first few headings which are not put in the form of questions appear more to be of a descriptive nature than the later headings which are in the form of specific questions to be answered. [The other thing to be noted is that the heading 'Licensed to carry passengers' does not say 'Passengers only', or 'exclusively'. It rather seems that it was intended for specifying the number of passengers which the bus was licensed to carry. The blank was not filled up, and the number of passengers for which it had been licensed was not noted in the proposal at all. As it stands, it is certainly ambiguous and it cannot be contended that it meant that -the lorry had been licensed for carrying passengers only. The first difficulty in the way of this construction is that there is no mention of any luggage at all. If the heading is to be construed strictly, then it would exclude luggage, with the result that if passengers carry some luggage with them, there would be no liability under 'the insurance policy at all. This could hardly have been intended. If we bring in luggage by way of exception, then unless there is some clear specification it may be difficult to exclude other moveables. If the proposal form had stood by itself, it might have been open to some ambiguity; but there is no doubt that it is the policy which was finally issued by the company which contains the final contract, particularly as it was provided in the proposal form that the policy was to be subject to the terms and conditions prescribed by the company therein.

14. Now coming to the policy we find that although the preamble specifically stated that the proposal was to be the basis of the contract and was to be incorporated in the policy, the operative clause did not refer to the proposal again and specifically made the company liable for damage caused subject to the terms and conditions of the policy inscribed on the face thereof or endorsed thereon. There is no mention that it was subject to the terms and conditions contained in the schedule attached to the policy. On the other hand the operative clause stated that the indemnity would be in respect of any vehicle described in the schedule. Thus a clear distinction was drawn between the terms and conditions inscribed on the face of the policy or endorsed thereon and the description of the vehicle as given in the schedule. It is a point worthy of note that there is no reference to any qualification that the lorry should carry passengers only, either in the terms and conditions mentioned in the body of the insurance policy or in the endorsements on the back thereof. The only reference to this is to be found at the foot of the schedule which, according to the operative clause, was to describe the vehicle which was insured. There were two blanks which were left unfilled; one was chassis number, and the other was registered number and letter. These specifications had however been supplied in the proposal form. Below the table the words: 'Purpose for which vehicle will be used, carrying passengers', no doubt to some extent support the defendant's case, but they too do not say 'carrying passengers only or exclusively', and were certainly intended to be a description of the vehicle insured because they occur in the schedule which was to describe the vehicle, and are no part of the conditions and the endorsements of the insurance policy.

15. The insurance policy is a very exhaustive, comprehensive and detailed document covering no less than six pages in print and containing numerous conditions and exceptions. It is indeed surprising that although the operative clause should have made the company liable subject to the terms and conditions contained inscribed on the face of the policy or in the endorsement, without reference to any terms that may be contained in the schedule, there was a clear omission of all reference to such a specification in Section 6 which contained the contingencies under which the company was not to be liable under this policy. In that list there is no mention of the nature of the load carried by the vehicle, for fixing liability, nor is there any such reference in the numerous conditions entered in the policy, much less in the endorsements at the back thereof. The question then is whether a mention of the purpose for which the vehicle was to be used, namely, carrying passengers, at the foot of the schedule, which was intended to contain the description of the vehicle, was of the essence of the contract so as either to amount to one of the conditions or even to a definition of the risk. In the former case a breach of such condition would terminate the contract completely, and in the latter case if the breach occurred at the time of the occurrence, it would exonerate the company from all liability.

16. The defendant company is presumably a very old company carrying on business on a large scale throughout the British Empire and must have had the form of its policy carefully drafted after taking legal advice. It is therefore curious that if the specifications mentioned in the first part of the form of proposal were to be the necessary conditions of the contract, there should not have been any specific mention of them in the policy itself, and the company would have rested contented with a mere recital that such terms were the 'basis', as distinct from the terms and conditions of the contract. Furthermore, the heading 'licensed to carry passengers' does not indicate that the lorry should not at any time carry anything in addition to passengers. It was more in the nature of finding out its capacity i.e. the number of passengers for which it was licensed.

17. In the present case the lorry had undisputedly been licensed for carrying passengers 19 in number (including the driver and the cleaner) or load up to 38 maunds. There can be no doubt that it was designed as a motor bus, and there has been no suggestion that it had not the necessary seating accommodation. It is therefore difficult to say that the description given in the proposal form 'licensed to carry passengers' was incorrect or inaccurate or that the vehicle ceased to be a motor bus at the moment when some extra tins of oil were put on it. According to the definition of 'Motor bus', a public motor vehicle would be a bus when it is used for the carriage of passengers and light personal luggage and which has seating accommodation for eight or more passengers. It is difficult to say that the moment some goods also are put in the vehicle it would cease to be a motor bus within the meaning of that definition. Its nature cannot vary from time to time according to the load that the vehicle is carrying for the time being.

18. Another thing to be noted is that the latter half of the form of the proposal contains specific questions which have to be definitely answered, whereas the earlier portion merely contains certain headings which merely describe the owner's name and the address as well as the vehicle completely. Had it been intended that every description given in the proposal form was of the essence of the contract and that the assured was not authorized to go beyond the terms of it, which were absolutely comprehensive, then some pro. vision to that effect would have been found in the policy itself. But apart from stating that the proposal form is the basis of the contract and is incorporated in it, there is nothing more said about it in the policy, which in itself contains all the necessary conditions as well as the extent and the amount of the liability of the company in the case of an accident or damage.

19. The question whether the company has been exonerated on account of anything; done by the assured in excess of the terms f the contract is primarily one of an interpretation of the written contract between the parties, and unless the terms are exactly identical, other cases would not be exactly in point. Great reliance has been placed on behalf of the Insurance Company on three English cases. The first is the case in Farr v. Motor Traders Mutual Insurance Society Limited (1920) 3 K.B. 669. In that case two cabs had been insured with the condition that they would be driven in one shift per day. One cab had been driven in two shifts per day for some time when the other cab was not in use. But at the time of the accident the cab was being driven in one shift a day. The Court of appeal held that the conditions relating to the shifts was not a warranty but a mere description of the risk, and that accordingly the company was liable. It is argued that by implication the Court held that if the cabs had been driven in two shifts on that day there would have been no liability. In that case the proposal form had contained a specific question : 'State whether driven in one or more shifts per 24 hours' which the assured had answered : 'just one'. Obviously that was of a promissorial character and contained an assurance by the assured, that the oab would be driven in just one shift per day and no more. It may therefore well be that if on the day of the accident the cab had been driven in more than one shift, the company would not have been liable at all. But that case is clearly distinguishable from the case before us. The next case is that of Dawson Limited v. Bonnin (1992) 2 A.C. 413. There in the proposal form there was a specific question put : 'State full address at which the vehicle will usually be garaged'. The address given in the answer was the firm's ordinary place of business in Glasgow. This however was not true as the lorry was usually garaged at a firm on the outskirts of Glasgow where the fire actually occurred causing the destruction of the lorry. The question arose whether the Insurance Company was liable. The House of Lords held that the insurance company was not liable because the fire occurred at a place different from the place specified in the proposal form. Viscount Haldane at p. 421 laid down that if the company could show that they contracted to get an accurate answer to the question, and to make the validity of the policy conditional on that answer being accurate, whether the answer was of material importance or not, the fulfilment of the contract is a condition of the plaintiff being able to recover. In that case it was obviously a matter of considerable importance whether the lorry was kept inside the town where there would be greater precaution taken than in some out of way farm on the outskirts of the town. The proposal form also contained a specific question in a specific form and the answer to that question was also definite, but for which the company might not have accepted the insurance at all. The noble Lord at p. 425 further emphasized:

It was a specific insurance, based on a statement which is made foundational if the parties have chosen, howsoever carelessly, to stipulate that it should he, so.

20. No doubt it was also observed that where answers, including that in the question, are declared to be the basis of the contract, this can only mean that their truth is made a condition exact fulfilment of which is rendered by stipulation foundational to its enforceability. But that observation would of course not apply to specifications which are in the nature of a mere description as distinct from answers to specific questions put. The third case relied upon is Morgan v. Provincial Insurance Co. Ltd. (1932) 2 K.B. 70. In that case a proposal form had contained certain questions to be answered by the proposer as to the purpose for which the lorry was to be used and the nature of the goods to be carried, and the proposer had answered the question by stating that the purpose was the delivery of coal and that the substance to be carried was coal. The question ran as follows : 'State (a) the purpose (in full) for which the vehicle will be used' '(b) the nature of the goods to be carried.' Answer (a) 'delivery of coal', (b) 'coal'. Thus there too questions were specifically put and the purpose for which the vehicle was to be used had to be stated in full and the nature of the goods to be carried had to be specified. There are no such specific questions put in the proposal form in the present case. In that case the lorry on some occasions had carried wood in addition to coal, but on the date when the accident took place only coal was being carried. The Court accordingly held that the company was not freed from liability. In that case the learned Judges held that the questions and answers in the proposal amounted to nothing more than the description or definition of the risk intended to be insured against, and that, as the accident occurred while the car was in the course of delivering coal and was therefore within the risk at the time, the appeal should fail. That case also is distinguishable because the questions and answers in that case were not identical with the heading which appeared in the proposal before us, and furthermore there was nothing in the policy itself which went against such an interpretation. This case went up in appeal to the House of Lords and the judgment was affirmed in Provincial Insurance Co. Ltd. V. Morgan (1933) A.C. 40. Lord Buckmaster at p. 246 quoted a passage from Lord Haldane's judgment in Dawsons' case Dawson Limited v. Bonnin (1992) 2 A.C. 413 and emphasized that the noble Lord had continued in words which had been overlooked in some of the other cases, for he had said that:

The question which lies at the root of the matter is simply one of construction. From that it follows that unless some other Contract of insurance is either couched in identical term or terms the effect of which cannot be distinguished from those which were there considered, this authority, except so far as it shows that a Contract as to future conduct can equally be made the basis with a statement of existing fact, does no more than apply well established principles to a special state of facts.

21. It was pointed out at p. 247 that to state in full the purposes for which the vehicle is to be used may not be the same thing as to state in full the purpose for which the vehicle will be exclusively used. Lord Russell expressed the view that:

It was a matter of great regret that the printed forma which insurance companies prepare and offer for acceptance and signature by the insuring public should not state in clear and unambiguous terms the events upon the happening of which the insuring company would escape liability under the policy,

and that the case before his Lordship was a conspicuous example of an attempt to escape liability by placing upon words a meaning which, if intended by the insurance company, should have been put before the proposers in words admitting of no possible doubt.

22. Lord Wright at p. 252 also pointed out that:

Though the general scheme of policy has been, as it were, sanctified by long usage, it has often been pointed out by judges that it must be very puzzling to the assured, who may find it difficult to fit the disjointed parts together in such a way as to get a true and complete conspectus of what their rights and duties are and what acts on their part may involve a forfeiture of the insurance.

23. In Robert v. Anglo-Sexon Insurance Association Ltd. (1927) 96 L.J.K.B. 590 it was pointed out on p. 248 by Romer, J. that it was to be inferred by Farr's case Farr v. Motor Traders Mutual Insurance Society Limited (1920) 3 K.B. 669 that the words used in the proposal form may be capable of three constructions, that is to say, they must bear one of three constructions : (1) either they are pure words of description - words of description only - or (2) they constitute a definition of the risk, or (3) the words amount to a warranty or promise that the motor car will be used in a particular way only. In the first case the words would not affect the liability of the insurance company at all. The case has to be decided on an interpretation of the proposal form and the insurance policy in the light of all the surrounding circumstances. The provisions in both these documents have been already set forth in detail and they point to the conclusion that the heading 'Licensed to carry passengers' was not in the form of a specific question put to the assured which he had to answer so that it may become either a condition or term of the contract or at any rate constitute a definition of the risk, but was in the 7nature of a mere description of the lorry and was to convey to the company the information as to the number of passengers to carry which it had been licensed, just as the next words registered letters and numbers' were intended for the identification of the vehicle. It is also significant that the words Licensed to carry passengers' occur in the middle of other things which are purely descriptive, like the 'make of vehicle' 'No. of cylinders,' etc. 'horse power,' 'Chassis No.', 'Year of make,' 'Date of purchase', etc., and do not occur in the array of specific questions which appear below. It is also significant that there is no such reference in the conditions and the endorsements in the policy, and all reference that can be found is in the foot-note attached to the schedule which was professedly intended to describe the vehicle.

24. The defence of the insurance company really amounts to saying that the carrying of the extra load put an end to the insurance liability, for it cannot be doubted that even at that time the lorry was carrying some passengers and had been licensed; to carry passengers. In the absence of any specific prohibition in the insurance policy and in the absence of any exception to that effect, it is difficult to hold that this circumstance alone 'protects the company. The suit has been dismissed on the sole ground that the liability ceased to be effective on account of this extra load. That view on a proper interpretation of these two documents is unsound. The Second point which has been raised in appeal on behalf of the insurance company is that the proposal form had also contained a heading 'Licensed to ply on route No....between and...' and that the space between the last two dashes was filled up by the entry of the words 'Kathgodam and Naini Tal'. It is therefore argued that inasmuch as the accident took place on a slightly different route, namely, at some place between Bhowali and Ranikhet, the risk was not covered. Unfortunately for the defendant company this point does not appear to have been specifically raised at the trial. There was reference to the fact that the motor bus was running up an incline on the Almora-Ranikhat road in para. 5 of the written statement in the course of a long sentence, but the breach of the contract which was really mentioned was the fact that it was carrying 20 maunds of hazardous merchandise in the shape of oil, etc. It was this which was stated to have amounted to a violation of the rules as embodied in the policy. That this was the intention of the company is made further clear by the last two lines which specifically mention what the breach was,

namely, that the motor bus in question should be used only for the purpose of carrying passengers.

25. In none of the other paragraphs there was any reference to the fact that the accident took place on a different route and therefore the company was not liable. It is no doubt true that when there is a pure question of law arising between the parties or a mere question of interpretation of some document, the Court may even in appeal allow the point to be raised for the first time. Their Lordships of the Privy Council have pointed this out in M.E. Moola Sons Ltd. v. Mrs. Perrin R. Burjorjee . But the question must be an absolutely clear and unambiguous one and it should not require the production of any additional evidence. In the present case the difficulty is that the proposal and the insurance policy when they refer to the routes do not contain identical expressions. In the proposal form the heading 'Licensed to ply on route No....' might well have been intended for indicating and identifying the lorry which had been licensed to ply along a certain route. It was never suggested on behalf of the company that a different rate would have been charged for insurance if the route had been slightly different. This heading also occurs along with headings relating to the name of the owner and address of the owner and make of the vehicle and No. of cylinders, horse power, etc., and is not contained in the array of the specific questions which were put to the assured lower down. The other difficulty is that the proposal form in express terms was to be subject to the terms and conditions prescribed by the company in the policy. The policy nowhere refers to the specific route along which the lorry was to ply, except at one single place, namely, in the operative portion of the insurance policy quoted above, just preceding the sections. At that place the defendant company was held liable subject to the terms and conditions of this policy, whether inscribed on the face thereof or endorsed hereon, to indemnify the assured in respect of any vehicle described in the schedule and used within the limits of India, Burma and Ceylon.

26. The insurance company did not choose to strike out these words from the policy, but allowed them to remain in the main clause under which their liability was fixed, and the liability was to be in respect of any vehicle described in the schedule and used within the limits of India, Burma and Ceylon. Thus the insurance policy had a wider scope than the description of the route given in the proposal form, and as already pointed out, the form was to be subject to the terms and conditions prescribed in the policy. The point therefore was not so clear as is contended and does not therefore appear to have been specifically taken by the insurance company; at any rate it was not put forward before the trial Court because we find that no issue was framed with regard to it, although no less than twelve issues with several parts of each were framed by the learned Subordinate Judge. Nor is there any reference to this circumstance in the judgment of the Court below, which suggests that the point was not even argued. It is therefore a fair presumption that it was not in the contemplation of the insurance company that the description given of the route for which the license was in force on the date when the insurance was effected was to be a necessary condition of the insurance. Had that been the intention there would have been some reference to it in the comprehensive policy and also a point taken in regard to it in the written statement. As the point was not specifically taken, the road permit was neither produced by the plaintiff nor called for by the defendant. The result is that there is nothing to show that the description as given on 9th March 1931, was really inaccurate or untrue. In these circumstances it would be unfair to the plaintiff to allow this point to be raised for the first time in appeal.

27. The amount of damages claimed by the plaintiff is on the face of it somewhat excessive. What he has done is to claim the entire amount which he paid either by way of the original deposit or by way of instalments together with the amount which he may have to pay in future for the instalments still remaining due. But the extent of the liability of the insurance company was fixed by Section 3 of the policy under which they were liable up to the value of the vehicle at the time of the occurrence or the value stated in the schedule, whichever was leas. The value stated in the schedule was Rs. 5,000, but the lorry had been used for sometime before it was destroyed. Thus it is the value of the vehicle at the time of the occurrence which should be the true criterion. According to the oral evidence in this case the estimate of deterioration would per month be about Rs. 100. The lorry having been used from January till October must therefore have deteriorated by an amount of Rs. 900. It is also clear that the amount of instalments which the plaintiff might have paid or would have to pay would include interest and compound interest which the, Corporation may charge on account of the deferred instalments and should not be included in the amount of the damages awarded to the plaintiff. In the proposal form the year of the make and the date of the purchase had been given and in the schedule attached to the insurance policy the insurance company put down Rs. 5,500 as the then value of the lorry, including accessories. In the absence of anything better, that admission may be taken to represent the original value of the lorry, from which the sum of Rs. 900 has to be deducted in order to find out the value of the lorry at the time of the occurrence thus leaving a balance of Rs. 4,600.

28. The other difficuly is that the insurance policy was transferred to both Gopal Singh and the Corporation. The reason was that the Corporation was the owner of the engine and the chassis until all the instalments were paid up and the plaintiff Gopal Singh was the owner of the body which had been built by Indar Lal Sah, and he had also acquired some interest in the chassis on account of the instalments which he had already paid up. It was therefore thought necessary that the insurance policy should be transferred to both these owners. In the agreement which was executed between these parties there was a specific provision that the insurance would be effected in the names of the owner and the hirer for their respective rights and interest. There was a further provision that if the default was made by the hirer then the owner shall be entitled without notice to determine the hiring and re-take possession of the vehicle and thereupon the hiring and the agreement shall cease and determine, and the hirer in case he failed to return the vehicle to the owner would be liable to further moneys. It was further provided that the vehicle would remain the property of the owner unless and until the hirer exercised the right to repurchase after having made all the payments. There was a specific provision that the hirer held the vehicle solely as the bailee of the owner and would not have any property or interest as purchaser in the vehicle. It is an admitted fact that after the lorry was burnt the defendant Corporation took possession of the burnt lorry on the ground that instalments had not been paid duly by the plaintiff; that is to say, they exercised their right to determine the hire by seizing the lorry. They were also the owners of the lorry and they have seized it. It follows that the contract of hiring has come to an end and with it has terminated the plaintiff's liability to pay future instalments.

29. Although the defendant Corporation had a joint benefit in the insurance policy the Corporation did not think it fit to bring any suit, and what is more, in their written statement, they did not wholeheartedly support the plaintiff, and furthermore, when the claim for damages against the Insurance Company was dismissed, the Corporation acquiesced in it, and has not thought fit to prefer any appeal or objection. Indeed, if the defendant Corporation had the intention of recovering damages from the Insurance Company it should either have brought a separate suit or at any rate joined the plaintiff in the claim. In these circumstances it would be unfair to the Insurance Company to pass a decree against the Company for any amount to which the defendant Corporation is really entitled as distinct from the amount to which the plaintiff is entitled. Now the amount of the unpaid instalments was Rs. 1,380. Indeed the Corporation was at one stage prepared to compromise the matter with the Insurance Company on payment of these outstanding instalments. The extent of the interest of the Corporation is therefore represented by this sum which should be deducted from the plaintiff's claim. I would accordingly allow the, appeal in part and modifying the decree of the Court below grant the plaintiff a decree for Rs. 3,270 against defendant 2, the Insurance Company, and a declaration against defendant 1, the Corporation, that the plaintiff is not liable to pay any further instalments, and that the Corporation has not got any right to a share in the amount decreed to the plaintiff. The rest of the claim should be dismissed.

Bennet, J.

30. I agree with the observations that have fallen from the learned Chief Justice and I would like to briefly mention one or two matters which have occurred to me in connection with two points. The first point is in regard to the claim of learned Counsel for the defendant-respondent that because in the proposal form at p. 33 there was the statement 'Licensed to ply on route No....between Kathgodam and Naini Tal' that the liability of the insurance company is limited to accidents occurring on that route. This particular point has been taken by learned Counsel for the Insurance Company only and was not taken by the company in its written statement. Learn, ed counsel however was, under the ruling referred to M.E. Moola Sons Ltd. v. Mrs. Perrin R. Burjorjee , allowed to raise this point as a point of law. Now it is to be noted that the route appears only in the proposal form and not in the policy. The policy follows in this respect the form of ordinary policies for motor vehicles generally including private cars in which there is the statement that the company

shall indemnify the assured in respect of any vehicle described in the schedule and used within the limits of India, Burma and Ceylon.

31. It is necessary therefore to see whether the specification of a route in the proposal form is intended to limit this liability which is described in the policy. I should certainly have expected that if the company had intended to limit its liability, these words referring to India, Burma and Ceylon would have been taken out of the policy which is for commercial motor vehicles because in the case of commercial motor vehicles, I think, in the rules of all the Local Governments there is a provision for the limitation of a route by the registration authorities. Now the suggestion of learned Counsel is that where registration authorities prescribe a particular route, then that route should be the only route for which there is the insurance. This view would be extremely awkward in practice because it is frequently necessary for the route to be changed. A particular owner or hirer of a commercial vehicle may find that it no longer pays to continue on a particular route and he 1 therefore applies to the registration authorities and in a few days receives permission for altering his route. Moreover besides travelling on a particular route it may from time to time be necessary to take the commercial vehicle to some other place not on the route for the purposes of repairs or for other purposes. If it were to be laid down that each time it was desired to take the commercial vehicle to any place not on the route, a change in the insurance policy was necessary, this would involve a great deal of trouble both to the person owning or hiring the vehicle and to the Insurance Company. An application of such a change would undoubtedly take some time to obtain assent from the Insurance Company which in this case is in Calcutta. Moreover the proceedings would be absolutely pointless because the Insurance Company would naturally not refuse to make any such alteration.

32. It was not shown by learned Counsel that in England or in Calcutta or in India there had ever been any case in which such a dictum has been laid down. The English rulings which learned Counsel for the company quotes are on other points and there appears no reason why the rulings should be extended in a way that would be impracticable. On the other hand, the description of route occurs in a part of the proposal form where details are given to fix the identity of the vehicle which is to be insured. This question of fixing the identity of the vehicle is one of very considerable importance for the company because when a claim is made that an accident has occurred, the company desires to be certain that the vehicle concerned is the particular vehicle which was insured. The form therefore shows the number of the chassis, the registration number and details about the engine, and in addition to this the detail about the route on which the motor vehicle is at the time of application licensed to ply. It appears that this detail about the route is merely one of the details fixing the identification of the particular oar. The registration number alone is not sufficient as in the present case the registration number is one of Luoknow and the oar was actually licensed to ply on a route several hundred miles away from Lucknow in the district of Naini Tal. The route therefore appears merely to be a further description of the vehicle in question. The second point which was argued was based on the words occurring in the schedule of policy: 'Purpose for -which vehicle will be used : Carrying passengers'. Now the policy makes provision in Section 1(a) that the company is exempt from any liability for passengers who are carried in an insured vehicle, and in Sub-section (b) there is exemption of any damage to property which is being conveyed by the said vehicle. On the other hand, the form of proposal contains a question: 'Do you wish to insure passengers?' If the proposer desires to insure passengers, he is charged an extra premium and a slip is attached to the policy stating that passengers are insured. There is on the other hand no question in the proposal form which allows the proposer to ask the company to insure property or goods which are carried by the vehicle.

33. These considerations show that the company is at pains to know what is proposed in regard to passengers; but the company does not propose to insure goods carried in any case whatever. It is in this connection, in my opinion, that the note is appended to the schedule that a particular vehicle is one which will be used for carrying passengers. In the body of the policy the only reference to the schedule is contained in the words 'in respect of any vehicle described in the schedule'. This indicates that what is in the schedule is something intended to show the identity of the vehicle insured. The contention of learned Counsel for the insurance company was that this reference to passengers would constitute a breach of the insurance if goods were carried in addition to passengers and would be tantamount to an undertaking that no goods should be carried in addition to passengers. In my opinion, if there had been any intention that such was to be a condition of the policy, then this condition would have been expressed in clear language as one of the terms of the policy. It is impossible to read this term into the policy from the mere description in the schedule. Now when the claim was made by the plaintiff, he stated that the type of the body was a passenger's body and in answer to the question 'If goods were carried?' that 20 maunds of mustard oil was carried in sealed tins.

34. The defendant Insurance Company seized on this entry and made an objection at once that the lorry was being used for the transport of hazardous merchandise, whereas it was described as carrying passengers. Possibly some idea existed at that time of taking advantage of condition No. 4 of the policy that the assured shall at all times exercise reasonable care in the protection and use of the insured vehicle. If it were shown that he was carrying hazardous merchandise, that possibly might have been some defence and the same statement of hazardous merchandise appears in para. 5 of the written statement. No evidence was given on behalf of the Insurance Company that mustard oil is hazardous merchandise and Mr. De Fonseca stated on p. 9, lines 23 to 25:

Explosive inflammable substances like petrol or carbide and kerosene are considered as dangerous by car Insurance Companies. Mustard oil in sealed tins is not so considered.

35. Mustard oil may be combustible as the evidence shows that 50 out of 60 tins were burnt but there is no evidence on the record to show that it is inflammable and therefore it does not appear to be established that it was in any sense hazardous merchandise. Now it appears to me that the company may have put forward the claim in this connection in regard to passengers owing to the particular rules in force in Calcutta under the Calcutta and Howrah Motor Vehicle Rules which are very different from the U.P. Rules. The Calcutta Rules provide in Rule 2(14) for classification of a motor lorry as a motor vehicle which is ordinarily-used for the carriage of goods and the registration of such a vehicle comes under Rule 4(4)(c). Motor omnibus is defined in Rule 2(17)(b) as a motor vehicle which carries passengers and it is to be registered under Rule 4(4)(b). Now there is no provision in the Calcutta Rules that a motor omnibus may carry goods or indeed that any vehicle can carry goods and passengers at the same time. If there is to be any change in the classification, an application must be made under Rule 6(b). The U.P. Motor Rules which apply in the present case are different and as the learned Chief Justice has shown in detail it is possible to have a vehicle, that is a motor lorry, which is a public motor vehicle for the carriage of goods or goods and passengers. The permit which was granted in this case allows carriage of goods and passengers. There was therefore nothing illegal being done by the plaintiff in carrying goods and passengers under the present conditions. I am of opinion therefore that the validity of this policy was not affected in any way by this action. I therefore agree with the decree proposed by the learned Chief Justice.


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