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Union of India (Uoi) (as Representing the Eastern Rly. Administration) Vs. the Great American Insurance Co. Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectInsurance
CourtKolkata High Court
Decided On
Case NumberA.F.A.D. No. 381 of 1959
Judge
Reported inAIR1971Cal491,75CWN563
ActsTransfer of Property Act, 1882 - Section 135A, 135A(2) and 135A(3); ;Marine Insurance Act, 1963 - Sections 52(2), 79 and 91
AppellantUnion of India (Uoi) (as Representing the Eastern Rly. Administration)
RespondentThe Great American Insurance Co. Ltd. and anr.
Appellant AdvocateAjoy Kumar Basu, Adv.
Respondent AdvocateGopinath Nandi, Adv.
DispositionAppeal dismissed
Cases ReferredKing v. Victoria Insurance Co. Ltd.
Excerpt:
- .....loss, either of the whole, or, in the case of goods, of any apportion able part, of the subject-matter insured, he thereupon becomes entitled to take over the interest of the insured person in whatever may remain of the subject-matter so paid for, and he is thereby subrogated to all the rights and remedies of the insured person in and in respect of that subject-matter as from the time of the casualty causing the loss.(3) where the insurer pays for a partial loss he acquires no title to the subject-matter insured, or such part of it as may remain, but he is thereupon subrogated to all rights and remedies or the insured person as from the time of the casualty causing the loss, in so far as the insured person has been indemnified by such payment for the loss.(4) nothing in clause (e) of.....
Judgment:

P.N. Mookerjee, J.

1. This appeal is at the instance of the defendant No. 1 Union of India, representing the Eastern Railway Administration, The appeal arises out of a suit for recovery of Rupees 2,400/- as damages for alleged wrongful non-delivery of certain goods (mica blocks and condenser films), entrusted to the defendant Railway for carriage from Kodarma to Howrah, both on its own lines.

2. The suit was brought by the plaintiff Insurance Company, whose insurance covered the disputed goods and who indemnified the owner, who was the pro forma defendant in the suit, in respect of his loss and, on such indemnification, claimed, on the said owners' express authority, the disputed amount from the Railway Administration.

3. On the merits, the findings of the two courts below have been concurrently made in favour of the plaintiff, and, on those findings, the plaintiff Insurance Company would be entitled to succeed unless the suit was liable to be dismissed on the ground that the said plaintiff bad no locus standi under the law to maintain the suit.

4. Indeed, this was the only point, which was urged in support of this appeal in this Court and which was also the only point, on which the appeal was argued or behalf of the Railway Administration in the Court of appeal below.

5. The defence under this head was based on Section 135A of the Transfer of Property Act, which was in force at the relevant time and which has since been repealed and incorporated in substance in the Marine Insurance Act (vide Sections 52(2), 79 and 91).

6. There is no dispute between the parties that the instant case would be one of Marine Insurance, as defined in Section 2(13) of the Transfer of Property Act (sic). The only question is whether, under Section 135A of the said Act, the instant suit will be maintainable by the Insurance Company as plaintiff in its own name. On that question, the courts below have held in favour of the plaintiff and they have eventually passed the decree under appeal.

7. Before the lower appellate court, a decision of this Court, reported in Indian Trade and General Insurance Co. Ltd. v. Union of India, : AIR1957Cal190 , was particularly relied upon by the Appellant Railway for the purpose of showing that such a suit or a suit under similar circumstances by the Insurance Company alone in its own name as plaintiff would not be maintainable and the contention was that the Insurance Company's right under the circumstances was only to bring a suit in the name of the owner or the insured. A contrary decision of this Court was also cited before the lower appellate court, upon which the learned Subordinate Judge relied for passing the decree in favour of the plaintiff. That decision is reported in Alliance Assurance Co. Ltd. v. Union of India, (1958) 62 Cal WN 539.

8. Before this Court, the above decisions were cited and discussed and in addition thereto, we were also referred to the decisions in Union of India v. Alliance Assurance Co. Ltd., (1962) 66 Cal WN 419 and Textiles and Yarn (P.) Ltd. v. Indian National Steamship Co. Ltd., : AIR1964Cal362 . Reference was also made to the English decision, reported in King v. Victoria Insurance Co. Ltd., 1896 AC 250, on behalf of the appellant.

9. We have considered the above decisions and, in our view, on the statutory provision in question, namely, Section 135A of the Transfer of Property Act, the appellant's objection to the maintainability of the suit and to the locus standi of the plaintiff Insurance Company to institute the same must be overruled.

10. The relevant Section (Section 135A) of the Transfer of Property Act is in these terms:

'135A. Assignment of rights under policy of marine insurance--

(1) Where a policy of marine insurance has been assigned so as to pass the beneficial interest therein, the assignee of the policy is entitled to sue thereon in his own name; and the defendant is entitled to make any defence arising out of the contract which he would have been entitled to make if the action had been brought in the name of the person by or on behalf of whom the policy was effected.

(2) Where the insurer pays for a total loss, either of the whole, or, in the case of goods, of any apportion able part, of the subject-matter insured, he thereupon becomes entitled to take over the interest of the insured person in whatever may remain of the subject-matter so paid for, and he is thereby subrogated to all the rights and remedies of the insured person in and in respect of that subject-matter as from the time of the casualty causing the loss.

(3) Where the insurer pays for a partial loss he acquires no title to the subject-matter insured, or such part of it as may remain, but he is thereupon subrogated to all rights and remedies or the insured person as from the time of the casualty causing the loss, in so far as the insured person has been indemnified by such payment for the loss.

(4) Nothing in Clause (e) of Section 6 shall affect the provisions of this section.'

11. The instant case is, in substance, a case of 'total loss of an apportion-able part of the subject-matter insured' and would, accordingly, come under Sub-section (2) of Section 135A. Some argument was made before us that the instant case would really come under Sub-section (3) as it was suggested to be a case of partial loss. We do not think, however, that that contention can be accepted. The consigned goods, as we have already indicated, comprised mica blocks and condenser films. At the destination, the delivery was found short by 17 mds. and 12 ch. This would, obviously bring it, having regard to the nature of the goods, within the expression 'total loss of an apportionable part , however much it may be a case of partial loss with reference to the entire consignment. The distinction between Sub-sections (2) and (3) of Section 135A on this point lies in this that, under Sub-section (2), also, it may comprise a case of partial loss, where the loss can be fixed on an apportionable part of the subject-matter insured so as to bring it within the description 'a total loss of an apportionable part of the subject-matter insured'. In the case of Sub-section (3), such fixation would not be possible as in the case of damage by fire (vide : AIR1957Cal190 supra), which damaged in part some of the bales of jute of the disputed consignment and there was no total loss, either of the whole of the goods or of any apportionable part thereof. If it is a case under Sub-section (2) of Section 135A, the insurer, having paid for the total loss of the apportionable part of the subject-matter insured, becomes entitled, under that statutory provision, to take over the interest of the insured person in whatever may remain of the subject-matter, so paid for, and is thereby subrogated to all the rights and remedies of the insured person in and in respect of that subject-matter as from the time of the casualty causing the loss. In the case of Sub-section (3), the insurer, paying for the partial loss, as contemplated therein, acquires no title to the subject-matter insured or such part of it as may remain but he is thereupon subrogated to all rights and remedies of the insured person as from the time of the casualty causing the loss in so far as the insured person has been indemnified by such payment for the loss. The distinction between the two provisions is obvious. Under Sub-section (2), the insurer takes over 'the interest of the insured person in whatever may remain of the subject-matter so paid for' and he 'is thereby subrogated to all the rights and remedies of the insured person in and in respect of that subject-matter as from the time of the casualty causing the loss.' Under Sub-section (3), he 'acquires no title to the subject-matter insured or such part of it as may remain but he is thereupon subrogated to all rights and remedies of the insured person as from the time of the casualty causing the loss in so far as the insured person has been indemnified by such payment for the loss.' Under Sub-section (3), his rights and remedies are of a limited character as he acquires no title to any portion of the goods insured. Under Sub-section (2), however, the same cannot be predicated and, obviously, the intention was that, thereunder, the insurer will get interest in respect of the subject-matter insured. On this vital distinction, it may well be said that, so far as Sub-section (2) is concerned, the insurer stands on a better footing, so far as the institution of suit by himself is concerned, and, upon that ground, the decision of G. K. Mitter J., as he then was, in : AIR1957Cal190 ,--a case, dealt with under Sub-section (3) by the learned Judge himself,--may well be distinguished and similar distinction may also be made of the relative observations of our learned brother B. C. Mitra, J. in : AIR1964Cal362 . Apart from that, however, it seems to us that the subrogation, contemplated both under Sub-section (2) and under Sub-section (3), would entitle the insurer to institute the suit in its own name. Essence of subrogation is substitution. Indeed, on this statutory subrogation, the insurer, on the wordings of the statute itself, becomes entitled to all rights and remedies of the insured person in respect of the lost goods, for which he has made the payment or indemnified the insured. From this point of view, this subrogation is wider than the subrogation, contemplated in this very Act under Section 92 in the case of mortgages. Under Section 92, the subrogee becomes entitled to the rights only of the original mortgagee concerned. In spite of that, however, it has uniformly and consistently been held that, by reason of such acquisition of rights, he was entitled to enforce them in the same manner as the original mortgagee concerned, or, in other words, entitled to enforce them on that footing in his own name. We do not think that a different situation was contemplated by using the same word in a more comprehensive form in Section 135A, Sub-sections (2) and (3). This view is further strengthened and confirmed by a reference' to Sub-section (4) of this section, which, as already quoted, is in these terms 'Nothing in Clause 3) of Section 6 shall affect the provisions of this section'; or, in other words, the assignment of the mere right to sue, if there was any, under any of the previous subsections, would remain valid notwithstanding the general bar or provision to the contrary, contained in the aforesaid Sec. 6(e) of the Transfer of Property Act. Sub-section (4), which speaks of the said Section 6(e) as not affecting the provisions of 'this section', that is, Section 135A, thus contemplating its application to all the sub-sections, preceding the same, would be redundant and absolutely meaningless, unless it was contemplated that, under the previous sub-sections, it might be contended that a mere right to sue was being transferred. Indeed, in the instant case, having regard to Exts. 9 and 10 and reading the same closely, there can be no doubt that the right to sue for recovery of the damages in question was assigned by the insured to the Insurance Company. We would, accordingly, hold that the instant suit would he maintainable and the plaintiff Insurance Company would have locus standi to maintain the same in its own name, be it considered to be a case under Sub-section (2) or Sub-section (3) of Section 135A. In this view, we are not prepared to accept the opinion on this aspect of the law, as expressed in : AIR1957Cal190 , relying inter alia on the observations of the Privy Council in 1896 AC 250. The legislature in this country has made a deliberate departure from that view, if it was really to the contrary, in Section 135A of the Transfer of Property Act, with which we are here concerned, and the analogous Section 92 of the same Act.

12. We may add further that, so far as Sub-section (2) is concerned, the decision of this Court, reported in (1958) 62 Cal WN 539 (per Renupada Mukherjce, J.) took the same view as we are taking in this case in favour of maintainability of the suit by the insurer in its own name, and we agree with the same.

We would, accordingly, dismiss this appeal but there will be no order for costs.

Amiya Kumar Mookerji, J.

13. I agree.


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