The New India Assurance Company ... vs M/S Raman Roadways And Others
2010 Latest Caselaw 4947 Del

*IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  CS(OS) No. 2637/1998

                                    Judgment delivered on : 27.10.2010

THE NEW INDIA ASSURANCE CO.LTD.                   ..... Plaintiff
                           Through: Mr.Salil Paul, Advocate


                   Versus


M/S RAMAN ROADWAYS & ORS.                              ..... Defendants
                                    Through: None


CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER

1. Whether the Reporters of local papers may
   be allowed to see the judgment ?

2. To be referred to Reporters or not ?

3. Whether the judgment should be reported
   in the Digest ?

Rajiv Shakdher, J. (Oral)

1. This is a suit filed for recovery of a sum of ` 23,57,465/- with

pendente lite and future interest at the rate of 18% per annum from the

date of filing of the suit till realization of the decretal amount. The

plaintiff before me is: The New India Assurance Company, which is,

involved in the business of general insurance throughout India. The

plaintiff has instituted the present suit for recovery, in its capacity as an

assignee of interest, of the original owner of the goods in issue, that is

the insured, in respect of its claim for damages. The damage was caused

to the goods in issue which were in transit between Delhi and Jaipur. The

owner of the goods ( i.e., the insured) is impleaded as defendant no.3.

The transporter is defendant no.1; which is a proprietorship concern of

defendant no.2.

2. The plaintiff‟s case is briefly as follows.

2.1 It appears that a company by the name of M/s Machine Tools

(India) Ltd in an around December, 1994 had imported a sophisticated

state of the art machinery, which is broadly referred to as, 3-D Co-

ordinate Measuring System (hereinafter referred to in short as the

„equipment‟) in connection with an exhibition held in Delhi. The original

manufacturer of the said equipment evidently is an entity which is

situate in Derby, United Kingdom.

2.2. It is the case of the plaintiff that once the exhibition was over

defendant no.3 negotiated the purchase of the equipment. Accordingly, a

work order dated 25.02.1995 for purchase of the equipment was placed

on the manufacturer. Defendant no.3 having purchased the equipment

essentially for the purposes of manufacturing its goods (i.e., Auto head

lamps) decided to transport the said equipment from Delhi to Jaipur. For

this purpose, defendant no.3 did two things. Firstly, it engaged the

services of the plaintiff for insuring the equipment during the course of

its transit from Delhi to Jaipur, by road. Consequently, a marine

insurance policy dated 15.12.1995 was drawn up in favour of defendant

no.3. The equipment was insured for a sum of ` 27,76,767/-. Secondly,

having secured insurance cover, defendant no.3 engaged the services of

defendant nos 1 and 2 for transportation of the equipment. Resultantly,

G. R. No. 35246 and consignment note of even date i.e., 16.12.1995 was

issued in favour of defendant no.3.

2.3. The equipment, however, reached its destination (i.e., Jaipur) on

16-17.12.1995 in a damaged condition. This fact, according to the

plaintiff is exemplified, on perusal of the endorsement on the reverse

side of the G.R. and challan purportedly made by the driver of the vehicle

in which equipment was transported. The endorsement of the driver

seems to convey that the equipment was loaded on to the vehicle in good

condition; while it was found damaged, on being unloaded at the

destination.

2.4. It may only be noted that it is the plaintiff‟s case that prior to the

transportation of the goods and issuance of the insurance policy referred

to hereinabove, the equipment in issue was subjected to a pre-shipment

inspection. The pre-shipment inspection was carried out by M/s Srishti

Services (Regd.), Delhi on 16.12.1995. The pre-shipment inspection

revealed, according to the plaintiff, that the equipment was in good

condition and properly packed.

2.5. Continuing with the narrative, on receipt of equipment by

defendant no.3 in a damaged condition, intimation with regard to its

condition was sent to the plaintiff. Since this necessitated a preliminary

survey the plaintiff appointed Anupam Comtech Services Pvt. Ltd, Jaipur

to do the needful. The survey team included, not only technical experts

but also representative of the suppliers, its local agent, as also the

representatives of defendant no.3. The preliminary survey report,

according to the plaintiff, revealed that the equipment was badly

damaged. The considered opinion of the preliminary survey team was

that the equipment in issue could be rectified only by the original

manufacturer/supplier. Consequently, on 05.08.1996 the equipment was

sent to United Kingdom, where the manufacturer/supplier was situate.

2.6 In the interregnum, on receipt of the preliminary survey report

dated 06.05.1995, defendant no.3, issued a legal notice dated 05.01.1996

to defendant nos 1 and 2. The said legal notice was sent by registered

AD. Defendant nos 1 and 2 chose not to respond to the said legal notice

which, propelled the plaintiff to issue a second legal notice on

02.04.1996. The second notice was also sent by registered AD. There

was no response to even this notice by defendant nos 1 and 2.

2.7 Consequent upon the equipment having been repaired, defendant

no.3 lodged a final claim with the plaintiff, which included the cost of

repairs and claims under various other heads. A break up of the details is

provided in paragraph 16 of the plaint. The sum total of the claims was a

figure of ` 26,82,583/-. The plaintiff, in turn appointed a surveyor to

examine the sustainability of the final claim lodged by defendant no.3.

The surveyor issued a report dated 12.05.1997, and an addendum dated

15.09.1997. The sum and substance of the analysis made by the surveyor

i.e., one Wg. Cdr. G R Sharda, was that even though the claim lodged by

defendant no.3 was valid and genuine; the assessed loss was only a sum

of ` 15,92,867. It is averred in the plaint that defendant no.3 accepted a

payment of ` 15,45,879; albeit provisionally, against its final claim of `

26,82,583. A receipt for the payment received by defendant no.3 i.e.,

` 15,45,879 dated 27.11.1997 was issued in favour of the plaintiff.

Defendant no.3 in order to facilitate the recovery of the sums paid by the

plaintiff executed three documents in favour of the plaintiff. These

being: a Letter of Authority; a Letter of Subrogation and a Special Power

of Attorney. All three documents are dated 26.11.1997.

3. Based on the aforesaid circumstances, the plaintiff instituted the

present suit in this Court, on 19.11.1998. In its claim, for a sum of

` 23,57,465 is included, a principal amount of ` 15,45,879, and interest

in the sum of ` 8,11,586; which is calculated at the rate of 18% p.a. on

the principal sum for the period 17.12.1995 to 19.11.1998.

4. At this stage it may be pertinent to note that while defendant nos 1

and 2 filed their defence, defendant no.3 chose not to file a written

statement. Defendant nos 1 and 2 in their written statement have

broadly raised the following preliminary objections:-

(i) there is no privity of contract between them and the plaintiff;

(ii) the suit is bad for non-joinder of the driver of the vehicle;

(iii) they are neither directly nor indirectly or even vicariously liable for

the alleged acts of omission and commission, since they were

neither the owner of the vehicle in issue nor the driver of the

vehicle in issue (the last part is obviously relatable to defendant

no.2);

(iv) the instant suit is a collusive action; filed at the behest of

defendant no.3;

(v) the suit is barred by limitation.

4.1. Apart from the above, defendant nos 1 and 2 have also averred that

the purported endorsement of the driver on the reverse side of the G.R

and/or challan is fabricated and concocted. It is further averred by the

said defendants that the labourers engaged both at the time of loading

and unloading were hired by defendant no.3. It was stated that the driver

engaged was not in the employment and/or control of the said

defendants. There being no incident of mishap at the time when the

equipment was in transit, the driver was not responsible for any

breakage or damage. It is further averred that at the time of loading, the

goods were packed in opaque boxes and hence, the defendants were

unaware of the condition of the equipment.

4.2 In the replication, the plaintiff has reiterated its claim while,

refuting the averments made in the written statement.

5. After the completion of pleadings, the matter was set down for

admission/denial. Since defendant nos 1 and 2 did not appear at the

stage of admission/denial, the learned Joint Registrar by an order dated

03.05.2000 directed that all original documents filed by the plaintiff

concerning defendant nos 1 and 2 will be deemed as having been

admitted by them under the provisions of Order 12 Rule 1A of the Code

of Civil Procedure, 1908 (in short „CPC‟). It may be pertinent to note at

this stage that since defendant no.3 was situate outside the territorial

jurisdiction of this Court, an application was moved under Section 20(b)

of the CPC by the plaintiff, seeking permission of the Court to prosecute

defendant no.3. The Court allowed this application of the plaintiff vide

order dated 06.12.2000. Accordingly, following issues in the matter

were framed by the Court vide its order dated 12.03.2001:-

(i) Whether there is any privity of contract between the plaintiff and Defendants No.1 and 2? OPP

(ii) Whether the Plaintiff is entitled to recover the suit amount from Defendants No.1 and 2 as the attorney of Defendant No.3? OPP

(iii) Whether the suit is bad for non-joinder of the driver of the vehicle? OPD

(iv) Whether Defendants No.1 and 2 were the owners of the truck bearing registration No. HR47-2350? If not, to what effect? OPD

(v) Whether the goods as described in the plaint were in a good condition at the time of loading the same? OPP

(vi) Whether the goods arrived at the destination in a proper condition? If not, to what effect? OPP

(vii) Whether the Plaintiff has suffered any damage and if so, to what extent? OPP

(viii) Relief.

6. In support of its case the plaintiff cited three witnesses these

being: PW-1, Wg. Cdr. G. R. Sharda who had issued the final survey

reports dated 12.05.1997 (Ex P-13) and 15.09.1997 (Ex P-13A); PW-2 Sh

Rajeev K Agarwal who proved the preliminary survey report dated

06.05.1996 (Ex P-12) and lastly, PW-3 Mr Rajesh Kalra, its own Deputy

Manager. On the other hand, even though the defendant nos 1 and 2 had

filed evidence by way of affidavit of one Sh Sher Bahadur Yadav, who

was evidently the Manager of defendant no.1; he was eventually not

produced and hence, could not be cross-examined by the plaintiff.

7. As indicated above, PW-1 proved his final survey reports dated

12.05.1997 (Ex P-13) and 15.09.1997 (Ex P-13A), while PW-3 proved the

preliminary survey report dated 06.05.1996 (Ex P-12). In the cross-

examination the testimony of aforementioned witness stood firm. PW-3

in his cross-examination reiterated what he had opined in his report that

the equipment was damaged and could be repaired only by the original

manufacturer/ supplier. Similarly, PW-1 has also supported the case of

the plaintiff that the equipment was damaged. However, he opined in his

reports that the assessed loss was a sum of ` 15,45,879.

8. This brings me to the testimony of PW-3 i.e., Sh Rajesh Kalra. In

his examination-in-chief the said witness has replicated the stand taken

in the plaint. More importantly, PW-3 has proved the Certificate of

Incorporation of the plaintiff (Ex P-1), and the power of attorney issued

in favour of Mr A K Mehta who at the relevant point of time was the

Manager of the plaintiff. PW-3 has also proved the signatures of Mr A K

Mehta on the plaint. The witness has testified that defendant no.1 is a

common carrier, which is, in the business of transporting the goods from

one place to another on payment of consideration. The witness has also

proved the challan dated 15.12.1995 (Ex P-9), as also communication

dated 18.12.1995 (Ex P-11) issued by defendant no.3 informing the

plaintiff about the damage to the equipment, and its request for deputing

a surveyor to assess the damage. The witness has also testified to the

effect that Anupam Comtech Services Pvt Ltd was appointed as a

surveyor, and that they had it issued the preliminary survey report dated

06.05.1996 (Ex. P-12). The witness has also adverted to the fact that the

final reports dated 12.05.1997 (Ex P-13) and 15.09.1997 (Ex P-13A) were

issued by Wg. Cdr. G.R Sharda. PW-3 also testified to the effect that

legal notice dated 05.01.1996 (Ex. P-14) and 02.04.1996 (Ex. P-15) were

issued by defendant no.3 to defendant no.1 by registered AD covers. The

said documents have been marked as Ex P-14, P-14A, P-15 and P-15A.

The witness has also adverted to the fact that defendant no.3 had

submitted a final claim bill dated 16.08.1997 (Ex P-16). PW-3 also

asserted that defendant no.3 had executed a Letters of Authority, a

Letters of Subrogation cum assignment and a Special Power of Attorney;

all dated 26.11.1997 in plaintiff‟s favour. The said documents are

marked as Ex P-19, P-20 and P-21.

8.1 In his cross-examination, PW-3 has candidly stated that he had no

personal knowledge of the case and that he was not present at the time

of loading and unloading of the equipment. The witness went on to say

that he was also not aware of the fact as who had engaged the labour for

the purposes of loading or unloading the equipment. The witness also

accepted the fact that he did not know whether Narayan Singh (i.e., the

driver) was the employee of defendant no.1. It was accepted by the

witness that the testimony was based on the records of the case available

with the plaintiff. The witness, however, alluded to the fact that the

plaintiff had received information with regard to the damage of the

equipment in January, 1996 at their office in Delhi. The witness refuted

the suggestion made to him that the manager‟s letter dated 12.06.1997

(Ex P-10) had been fabricated by the plaintiff. The witness admitted that

he was unaware as to the person who had signed the said document i.e.,

Ex P-10 and further more he was unable to identify the signatures on the

said document; though on the face of it the signatures appeared to be of

a person who purportedly was the Manager of defendant no.1.

8.2 To a question as to whether the equipment in question was shown

to defendants prior to it being packed, the witness testified that he could

not say as to whether such an exercise was conducted. The witness

however voluntarily stated that since second report was available

nothing was hidden from defendant nos 1 and 2. The witness

categorically refuted the suggestion that no damage was caused to the

goods during transportation, as also the suggestion that the plaintiff had

not informed defendant nos 1 and 2 to settle the claim of defendant no.3.

9. Mr Paul who appears for the plaintiff has largely based his

submissions on the case set up in the plaint. In support of the averments

made in the plaint, he has argued that the equipment was in the custody

of defendant nos 1 and 2 right from the day it was loaded on to the

vehicle and till it reached its destination. In view of this position

obtaining, he has argued that the liability of the defendant nos. 1 and 2

to ensure that the goods reach their destination, in sound condition, was

that of defendant nos 1 being a common carrier. It was argued that this

liability, was absolute in nature. In support of his submissions, reliance

was placed on Sections 8 and 9 of the Carriers Act, 1865 (in short the

„Carriers Act‟).

9.1 Mr Paul submitted that since the plaintiff had after assessing the

damages to the equipment paid to defendant no.3 a sum of ` 15,45,879,

the plaintiff was entitled to a reimbursement of the said amount

alongwith interest as prayed for in the plaint.

9.2 Mr Paul further submitted that since defendant no. 3‟s interest

stood assigned in favour of the plaintiff on execution of the relevant

documents in its favour (i.e., the Letter of Subrogation, Letter of

Authority and Special Power of Attorney), it is entitled to a decree in the

sum claimed from defendant nos 1 and 2. Mr Paul further submitted that

notwithstanding the fact that the GR bore the endorsement that the

equipment was being transported at the owner‟s risk, the liability on

account of damage to the equipment would be that of defendant no. 1

being a common carrier. It was contended that the liability of a common

carrier for loss during transit was absolute, which could not be avoided

by a contractual provision. In support of his submissions Mr Paul relied

upon the following judgments:-

Northern India Goods Transport Co. Pvt Ltd vs M/s Guru

Hosiery Factory Ludhiana: AIR 1964 Punjab 318 (V 51 C 87);

Tugun Ram vs Dominion of India & Ors.: AIR 1966 Allahabad 260

(V 53 C 83); Gaya Muzaffarpur Roadways Co. & Ors vs Ford

Gloster Industries Ltd. & Anr.: 1972 ACJ 362; and Union of India

& Anr. vs United India Insurance Co. Ltd.: 1993 ACJ 437.

10. To be noted on behalf of the defendants there has been no

representation.

11. I have heard the learned counsel for the plaintiff and also perused

the pleadings and the evidence on record. On perusal of the evidence on

record there is no doubt in my mind that defendant nos 1 and 2 had

entered into a contract with defendant no.3 for transportation of the

equipment from Delhi to Jaipur. The plaintiff has also been able to prove

that the equipment in issue had been insured vide insurance policy dated

15.12.1995 (Ex P-6). The said insurance policy has been proved by PW-3.

There is also a proof on record that the equipment was subjected to a

pre-shipment inspection. The report in that regard dated 16.12.1995 (Ex

P-7) was issued by M/s Srishti Services (Regd.). Therefore, defendant nos

1 and 2 were well within their right to peruse the pre-shipment

inspection report or the equipment in issue before it was boarded on to

the vehicle. The defendant nos 1 and 2 at their own risk chose to do

neither.

11.1 In the plaint there is a specific averment to the effect that

defendant nos 1 and 2 are in the business of carrying goods on payment

of consideration from one place to another. In support of this averment

PW-3 has made necessary assertion in his examination-in-chief. This

aspect of the matter has not been seriously disputed by defendant nos 1

and 2. In these circumstances, defendant nos 1 and 2 fall within the

definition of a "common carrier" as defined in Section 2 of the Carriers

Act, which inter alia provides that a common carrier denotes a person

(other than the Government) engaged in the business of transporting

property under multimodal transport document or of transporting for

hire property from place to place, by land or inland navigation for all

persons "indiscriminately". The term person has been defined to

include any association or body of persons, whether incorporated or not.

Therefore, in my opinion there is no doubt that defendant no.1 is a

common carrier within the meaning of Section 2 of the Carriers Act. In

view of this position, it is quite clear that defendant no.1 falls within the

ambit and scope of the provisions of the Carriers Act. In the instant

case, since the rights in respect of the claim of defendant no.3 as against

defendant nos 1 and 2 had been assigned by virtue of execution of the

Letter of Authority (Ex P-19), Letter of Subrogation (Ex P-20) and Special

Power of Attorney (Ex P-21); the plaintiff is entitled to sustain an action

against defendant nos 1 and 2. In consonance with the provisions of the

Carriers Act, before the institution of the present suit a notice under

Section 10 was issued to defendant nos 1 and 3. As indicated

hereinabove, the said notices were issued on 05.01.1996 (Ex P-14) and

02.04.1996 (Ex P-15). These notices were issued by registered AD post.

The receipts in that regard are marked as Ex P-14A and Ex P-15A,

respectively. Even though PW-3 would have no knowledge of

issuance of notices, there is a reference to the said notices in paragraph

18 of the plaint. Noticeably, PW-3 has not been cross-examined on this

aspect despite his assertion that such legal notices were issued. In my

view, even though the onus of proof is on the plaintiff, the burden shifted

once the original receipts were produced. The defendants at their own

peril chose not to confront the witness on this aspect of the matter.

11.2 In view of the position in law that the common carriers liability law

is absolute and is akin to that of an insurer - the fact that at the

destination the equipment was found in a damaged condition would

undeniably require defendant nos 1 and 2 to compensate the owner or

his assignee-in-interest. As indicated hereinabove, the plaintiff has

already settled the claim of the owner/insurer i.e., defendant no.3.

Therefore, the plaintiff is entitled to seek recompense from defendant

nos 1 and 2, having stepped into the shoes of defendant no.3. The

plaintiff having been assigned rights by defendant no.3 to pursue its

claim against defendant nos 1 and 2, in law, is entitled to sustain the

present action. The stand taken by defendant nos 1 and 2 that there is no

privity of contract between the plaintiff and defendant nos 1 and 2; thus,

has to be rejected at the very threshold.

11.3 The other objection of defendant nos 1 and 2 that the claim is

barred by limitation is also not sustainable. Firstly, there is no

articulation as to how and why the claim is barred by limitation. If one

were to take into account the date on which the damage occurred which

was 16.12.1995 then the claim for recovery was required to be filed

within a period of three years. Since the suit was instituted in

November, 1998 therefore, even this objection of the defendant is

untenable.

11.4 The other argument advanced in the written statement that the

suit is bad on account of non-joinder of parties, according to me, is

completely untenable. There is no denial of the fact that the contract

with regard to transportation of equipment was executed between

defendant no.3 and defendant nos.1and 2. Therefore, in my view, the

driver for the purposes of a civil action was neither a proper nor a

necessary party. The suit as framed is maintainable in the eyes of law.

The objection being without merit is rejected.

11.5 The stand taken by defendant nos 1 and 2 that since the vehicle by

which the equipment was transported was not owned by defendant nos 1

and 2 nor was defendant no.2 the driver of the vehicle at the relevant

point of time, is also without merit. There is on record no proof of the

said averment in so far as defendant no.3 was concerned. There is

nothing on record to show that defendant no. 3 was aware of this

circumstance. In any event, it is not even the case of defendant nos 1

and 2 that they were not engaged in the transportation of the equipment

from Delhi to Jaipur. Their liability being absolute, they cannot wriggle

out of it, on such specious plea.

11.6 The other argument of defendant nos 1 and 2 that they were

unaware of the state of the equipment at the time of loading and

unloading is also without merit. As indicated above, the liability of the

carrier i.e., defendant no.1 is absolute. Nothing prevented Defendant nos

1 and 2 from exercising their right, to insist on the examination of the

condition of the equipment, at the stage of loading. Having not done so,

once the goods were loaded the liability for their safe custody was on

defendant nos 1 and 2. The objection being without merit, is also

rejected.

11.7 Similarly, the submission that the labourers who were hired were

engaged by defendant no.3, is also untenable, for the reason that apart

from a bald averment, there is no evidence led by defendant nos 1 and 2

to establish this fact.

12. In view of the above, the answers to issues framed in the suit is as

follows.

Issue Nos 1 & 2:

Issue nos 1 and 2 are answered in favour of the plaintiff and against the

defendants. The plaintiff, having stepped into the shoes of defendant

no.3, was entitled to sustain an action based on the contract obtaining

between defendant no.3 and defendant no.1. The plaintiff is entitled to

recover the amount claimed from defendant nos 1 and 2 which was due

in law to defendant no.3.

Issue No.3:

Issue no.3 is also answered in favour of the plaintiff and against

defendant nos 1 and 2. Since, in my opinion the driver was neither a

proper nor a necessary party to the instant action, the suit, as framed, is

maintainable. The issue is answered accordingly.

Issue No.4:

The onus of proof in respect of Issue No.4 was on the defendants. The

defendants have led no evidence in support of the issue. The issue is

accordingly answered against the defendants.

Issue No.5:

Issue No.5 is answered in favour of the plaintiff and against the

defendants. As discussed above, the plaintiff had subjected the

equipment in issue, to a pre-shipment inspection. A report generated in

that connection was proved by PW-2 and PW-3. The defendants made no

attempt whatsoever to inspect the equipment at the stage of loading and,

therefore, in my opinion, could not have made it an issue after it was

damaged. Being a common carrier, the liability of the defendants is

absolute and similar to that of an insurer. The issue is accordingly

answered in favour of the plaintiff.

Issue No.6:

This issue is answered in favour of the plaintiff in view of the fact that

the survey report bears out that the equipment was damaged. It is not

disputed that between 16-17.12.1995 the equipment was handed over to

defendant nos 1 and 2. On appraisal of the evidence on record, the

preponderance of probability is that the equipment was damaged while,

in the custody of defendant nos 1 and 2. The issue is accordingly

answered in favour of the plaintiff.

Issue no.7:

The said issue is also answered in favour of the plaintiff. The final report

of the surveyor dated 12.05.1997 (Ex P-13) and the addendum dated

15.09.1997 (Ex P-13A), which was proved by PW-1, clearly establish that

the goods had been damaged and a loss had been suffered to the extent

of ` 15,45,879. The said amount has been reimbursed by the plaintiff, as

is evidenced by receipt dated 27.11.1997 (Ex P-18). It is therefore clear

that the plaintiff has suffered damage in the sum of ` 15,45,879.

Issue No.8:

In view of the findings returned by me on the issues referred to above,

plaintiff is entitled to a sum of ` 15,45,879. The only issue left is what

should be the rate of interest and the period for which the plaintiff

should be paid interest. The plaintiff has prayed for interest at the rate

of 18% p.a. from 17.12.1995 till filing of the present suit, as also interest

during the pendency of the suit and till the realization of the decretal

amount. Considering the fact that the suit was filed in 1998 and since

then, the banking rate of interest has fallen, in my view, it would sub-

serve the interest of justice if interest is paid at the rate of 9% p.a. from

05.01.1996, that is, the date of issuance of the first legal notice till its

realization.

13. The suit is decreed in the above terms, as indicated hereinabove. A

decree sheet be prepared accordingly. The suit be consigned to record.

RAJIV SHAKDHER, J OCTOBER 27, 2010 mb