Insurance Law

Case Analysis: Hindustan Corporation V. United India Fire and General Insurance AIR 1997 AP 347

Hindustan Corporation V. United India Fire and General Insurance AIR 1997 AP 347

Andhra Pradesh High Court (Court of Appeal)

Judgment Delivered: 06-06-1996

Bench: S.P Rao and A S Bhate

By

Sahil Tandon

Symbiosis Law School, NOIDA

Insurance-indemnity-damages-negligence-Damages caused to the goods-goods in transit-common carrier-power of attorney-compensation in respect of damages from appellant –owner’s risk-heavy rains damaged the consignments- mere right to sue transferable under Section 6(e) of transfer of property act-Doctrine of Subrogation- carrier cannot absolve liability in negligence-Section 8 of Carriers Act-Section 9 of Carriers Act-No special contract-quantum of damages-Appeal dismissed

 

Summary:

This was an appeal from a transport company against the judgment confirmed by the 6th Additional Judge, of city court Hyderabad towards loss and damages caused to the goods of 2nd respondents by the appellant and thus claiming damages from the transport company in this regard.

INTRODUCTION:

FACTS:

  1. The transport company i.e. appellant was given entrustment of 41 bales of semi tanned sleep skin for transportation from Hyderabad to Madras. The goods were in fact delivered to the 2nd Respondent at Madras on 15-12-11972. But after the delivery it was found that 24 bales were in wet condition and some bales were damaged. 2nd respondent had a insurance policy, with which it had insured these particular goods. 1st respondent in the persuasion of this claimed the damage from the 1st respondent (insurance company). The insurance company indemnified the respondents but took power of attorney from them for transferring all the rights, claims, title, litigation etc. in respect of the said goods.

  • The consignees claimed compensation in respect of the damage caused to its goods form the transport company but the plea taken by the transport company was that due to heavy and torrential rains during the journey caused damage to the goods and was a normal transit hazard due to the circumstances beyond its control. It was contended by the company that the goods were booked at “owners risk” and the liability in this matter does not fall within the purview of the appellants.

  • The learned 6th Additional Judge was of the view that it was not merely negligence of the appellant but also of the second respondent and the damages should be apportioned 50% on the negligence of the appellants. In view of this judgment appellants filed an appeal to the single judge bench who dismissed the appeal on the ground that the only question that needs to be answered is whether mere right to sue was transferrable under Section 6(e) of Transfer of Property Act and thus is not maintainable. The learned single judge held that the right was not a mere right to sue and the suit was laid jointly by the insurer and insured against a common carrier, thus maintainable. It was a breach of contract on the part of the appellants for the delivery of the damage or loss in the value of the goods in transit.

  • The appellants in this regard contented that, during the entrustment it was made clear that the goods were being transported at owners risk and the company shall not be liable for any damage to the goods. The principle states that no doubt the liability of a common carrier is absolved totally but only if there is no negligence on his part.

  1. The appellants in this regard could not furnish any reliable or convincing evidence that could discharge them form the burden and also which could establish that reasonable care and caution was taken by them personally or even by their agents or servants. The contention of the respondents that the goods were delivered cannot be questioned as the manager of the transport company himself certified it. It was also held that the plea of “owners risk” couldn’t stand, as there was n special contract between the appellants and respondents to the effect of the goods being transported.  Thus in the view of the above facts and circumstances it is evident that the appellant as a common carrier cannot contract out or relieve itself of its absolute liability under Section 8 of Carriers Act, 1865.

  • It was contented by the counsel for appellants that the respondent had no cause of action against them as they had already claimed compensation from the insurance company and the doctrine of subrogation has no effect as it is mere right transferred to the respondent 1 which is not permissible under Transfer of Property Act.

HOLDING:

  • The single judge bench held that, 1st respondent is entitled to be subrogated by the third party i.e. the party who caused the damages. The court is not wrong to interpret that the suit is maintainable in the matter of transferring the right to sue, because the doctrine of subrogation gives a mere right to the insurer to stand in the position of the insured and claim what the insured is liable to get out of party who made the loss. It was not mis joinder as on the payment of the loss the insurer became subrogated to the rights and remedies under Section 135(2) of Transfer of Property Act. But in view of the insurance contract which is a special type of a contract, even if the plaintiff has claimed damages in respect of some accident from the insurance company cannot be disqualified from bringing an action of the insurance company because every insurer has the right to be put in the place of the insured and to use the name of the latter in order to recover the compensation from the wrong doer who has caused the loss i.e the third party. Section 6(e) does not play role as there was no special contract between the parties to effect that the goods were being transported.  Common carrier is bound to carry the goods within the reasonable period of time, insure their safety during the carriage till the time delivered. And this duty is casted on them not because of the contract but because they are largely entrusted with the property of the public and hence “Public Policy”[1]. The court was also of the view that “common carrier” is no doubt absolved of the liability to compensate for the loss if happened during the transit, but it is only in the case where there is no negligence on the part of the carrier owners or its agents and servants. In the present case, the driver of the lorry or the person accompanying had not been examined, and it can be presumed they both would have the exclusive knowledge of the damage the goods were exposed to during the transit because of rainwater splashing.  It was also fatal on the part of the appellants as Section 9 of the carriers act provides that in any suit which is brought against common carrier it is on the part of the carrier to prove that there was no negligence on their part and not on the part of the plaintiff but there was no sufficient brought to the notice of the court that could satisfy this claim.

ROADMAP:

  1. This comment will argue that the Doctrine of Subrogation which is one of the most important principle of the contracts of indemnity. In cases relating to Right of Contribution and Subrogation, they find their way in every contract of insurance where indemnity is in question. Both are corollaries of indemnity. Subrogation is mere right to substitute one from another. It can be easily gathered that it basically makes the insurer stand in the place of the insured to compensate from the third party for the payment that the insurance company has made to the insured as stated in the case of Symons v. Mulkern. (1882) 46 LT 763. A mere right to sue is valid when the assignee is genuinely concerned with the assignment. Hence the transfer of the right of action of the insured to an insurer who has indemnified him under the policy of insurance is valid because the insurer has a genuine interest in recovering the loss sustained by the payment of the policy. The judge has interpreted the statue and the principle in a way that it highlights the backbone of its formulation behind the doctrines applied to formulate and give justice to the plaintiff. In addition, the comment will argue on the position and liability of the common carriers as highlighted in the case of Moolhora Kant Shaw v. India General Steam Navigation Company, ILR (1883) 10 Cal 166.

Endnotes

[1] Bcrgheim v. Great Eastern Railway Company, (1878) 3 CPD 22l :

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