M/S. Pick Up Carriers vs National Insurance Co. Ltd. & Anr.
2012 Latest Caselaw 3881 Del

       *       IN THE HIGH COURT OF DELHI AT NEW DELHI


%                                       Judgment delivered on 04.07.2012


+      RFA Nos.574/2004 & 72/2006

M/s. Pick up Carriers                                     ...Appellants

                                     Versus

National Insurance Co. Ltd. & Anr.                     ...Respondents


Advocates who appeared in this case:
For the Petitioner   :    Mr. S.K.Bhaduri
For the Respondent   :    Mr. L.K.Tyagi

CORAM:
HON'BLE MR. JUSTICE V.K.JAIN

                          JUDGMENT

V.K.JAIN, J. (ORAL)

1. By this common judgment, I shall dispose of both these appeal, since they

involve a common question of law. RFA No.574/2004 is directed against the

judgment and decree dated 16.07.2004, whereby a decree for recovery of

Rs.4,54,043/- with costs and pendent-lite at future interest @ 12% per annum was

passed against the appellant. RFA No.72/2006 is directed against the judgment and

decree dated 14.11.2005 whereby a decree of Rs.5,53,323/- with interest @ 12%

per annum with effect from 01.04.1997 till the date of filing of the suit, and interest

@ 6% per annum from the date of the suit till the date of the decree and future

interest @ 6% per annum from the date of decree till the realization was passed

against the appellant and in favour of respondent No.1 National Insurance

Company Ltd.

2. The facts giving rise to filing of RFA No.574/2004 can be summarized as

under:-

Hero Honda Motors Ltd./respondent No.2 in this appeal booked a

consignment with the appellant for transporting 53 Hero Honda Motorcycles

alongwith 6 packages of spare parts from Dharuhera/Gurgaon to Chhindwara in

Madya Pradesh. When the Motorcycles were being transported in truck No.HR-

47-1391, it met with an accident at about 1 A.M. on 18.03.2000, near Village

Barman District Narsinghpur at Sagar-Nagpur Road. The accident occurred on

account of Push Road Ends of the truck all of a sudden slipping off and

consequently, the steering system becoming free and the vehicle getting

imbalanced, going off the right hand side of the road and dashing against the

roadside tree. Extensive damages were caused to a number of motorcycles loaded

on the truck. A complaint was lodged by respondent No.2 Hero Honda Motors

Ltd. with the appellant for payment of Rs.5,15,265/-, vide letter dated 16.09.2000.

Prior to that, the consignment which respondent No.2 had booked with the

appellant was got inspected through M/s. G.P.S. Miglani Surveyors Pvt. Ltd., and a

survey report dated 10.04.2001 was submitted by them to the Insurance Company.

Since the consignment booked with the appellant had been insured with respondent

No.1 National Insurance Company Ltd., and they failed to settle the claim with

respondent No.2, the Insurance Company settled the claim with respondent No.2

for a sum of Rs.4,54,043/-, based upon the survey report submitted by the surveyor.

Respondent No.2, in consideration of settlement of its claim subrogated all its

rights and remedies in favour of respondent No.1 and executed documents such as

Letter of Subrogation and Power of Attorney in its favour. Since the appellant

failed to pay the aforesaid amount to respondent No.1, a suit for recovery of the

suit amount was filed by it against the appellant before this court. The suit having

been decreed, the appellant is before this Court by way of this appeal.

In its written statement, the appellant admitted booking of the consignment

with it and also admitted that the motorcycles were being transported by it from

Gurgaon/Daruhera to Chhindwara on truck No.HR-47-1391. It was alleged in the

written statement that the goods were being carried at owner‟s risk and the accident

occurred due to circumstances beyond the control of the driver, when the Push

Road End slipped all of sudden, resulting in steering system became free and the

truck got imbalanced, went off the road and dashed against a roadside tree. Thus,

the case of the appellant was that since the goods were being transported at the risk

of the consigner and there was no negligence on the part of its driver, it was not

liable to compensate either the consigner or the Insurance Company.

3. The facts giving rise to filing of RFA No.72/2006 can be summarized as

under:-

The consignment of motorcycles was booked by respondent No.2 Hero

Honda Motors Ltd. with the appellant for transporting those vehicles from

Dharuwhera/Gurgaon to Salem and Namakkal (Madras). The motorcycles were

being transported in truck No.HNL-9969. When the truck reached near Sholapur,

another truck bearing No.AP-0914-7307, coming from the opposite direction in a

rash, negligence and careless manner, hit the vehicle of the appellant from the

front, as a result of which not only the truck of the appellant but also the

motorcycles kept thereon were damaged. In this case also, a claim was lodged by

Hero Honda Motors Ltd. with the appellant and the consignment was got inspected

by the Insurance Company through its surveyors. Since the claim was not settled

by the appellant, the Insurance Company settled the claim with respondent No.2

and paid a sum of Rs.5,53,323/- to respondent No.2.

In this case also, the appellant admitted booking of consignment with it as

also the fact that the goods were being transported by it on truck No.HNL-9969. It

was also its case that the accident occurred on account of the negligence of another

truck which hit against the truck of the appellant. In this case also, the plea taken

by the appellant was that the goods were being transported at owner‟s risk and

there was no negligence on its part.

4. On pleadings of the parties, the following issues are framed in the suit

subject matter of RFA No.574/2004:-

"1. Whether there is no privity of contract between the plaintiff No. 1 and the defendant? OPD

2. Whether the suit is liable to be dismissed in view of Section 10 of the Carriers Act? OPD

3. Whether the suit has been signed, verified and instituted by a competent person? OPP

4. Whether the plaintiff has no cause of action to file the present suit? OPD

5. Whether the plaintiff is entitled for the suit amount? OPP

6. Whether the plaintiff is entitled for the interest, if so, then at what rate and to what extent? OPP

7. Relief."

The following issues are framed in the suit subject matter of RFA

No.72/2006:-

1. Whether the suit has been properly signed, verified or instituted? OPP

2. Whether the suit is bad for mis-joinder and non- joinder of parties? OPD

3. Whether the plaintiff has served notice under Section 10 Carriers Act? OPP

4. Whether the loss suffered by the plaintiff is due to the negligence of the defendant? OPP

5. Whether the plaintiff is entitled to the suit amount? OPP

6. Whether the plaintiff is entitled to any interest. If yes, at what rate and for what period? OPP

7. Relief."

5. In the suit, subject matter of RFA No.574/2004, only one witness namely

Amia Kumar, Deputy Manager of respondent No.1 was examined by the Insurance

Company whereas three witnesses were examined by the appellant.

DW 2, Sh. Sanjay Bajaj is one of the Directors of the appellant company. In

his affidavit, by way of his evidence he stated that before sending the truck to any

destination they used to get it serviced and only when the truck was found fit in all

respect, for road worthiness, it was sent for carrying the goods by respondent No.2.

DW 3 Mr. Raghunath Singh claims to be co-driver of truck No.HR-47-1391 in

which the motorcycles were being transported to Chhindwara. He has stated that

on 18.03.2000, he was a co-driver with Ashok Kumar Pandey, on the above

referred truck which was loaded with Hero Honda Motorcycles. He has further

stated that before leaving for the destination he alongwith Sh. Ashok Kumar

Pandey had carefully checked the truck and had found no defect in it. DW 1 Mr.

Shakil Khan is a motor mechanic, who had repaired truck No. HR-47-1391 after it

had met with an accident.

6. In the suit, subject matter of RFA No.72/2006, the Insurance Company

examined only one witness Mr. Ravinder Bowgal, whereas two witnesses were

examined by the appellant. Mr. Sanjay Bajaj, Director of the appellant company

has been examined as DW1 in this case whereas co-driver of the truck Mr. Mobin

Ahmed has been examined as DW2. In his affidavit, by way of evidence, Mr.

Mobin Ahmed has stated that he was a co-driver with Sh. Islamuddin on truck

No.HNL-9969 on 10.06.1996 when Hero Honda Motorcycles were being

transported on that truck. He has further stated that when the truck reached near

Tembhurni on Pune Road, truck No.AP 09/U-7307 which was being driven rashly,

negligently and carelessly hit the front of truck No. HNL-9969, as a result of which

their truck left the road and consequently, the motorcycles loaded in the truck got

damaged. According to him, the accident had occurred due to negligence and rash

driving on the part of the driver of the other truck.

7. The impugned judgment and decree have been assailed by the learned

counsel for the appellant on the following ground:-

(i) Notice under Section 10 of Carries Act was not given to the appellant.

(ii) There being no negligence on the part of the appellant, it cannot be held

liable for damage to the goods.

(iii) Respondent No. 1 has failed to prove that the plaint had been signed and

verified and the suit instituted by a competent person.

(iv) The Letter of Subrogation in favour of respondent No. 1 has not been proved

in accordance with law, and exhibit number has been put on it, without proving the

document.

8. As regards service of notice on the appellant, Section 10 of the Carriers Act

provides that no suit shall be instituted against a common carrier for the loss of or

injury to goods entrusted to him for carriage unless notice in writing of the loss or

injury has been given to him before the institution of the suit and within six months

of the time when the loss or injury first came to the knowledge of the plaintiff.

9. In the suit which is subject matter of RFA No.574/2004, the accident took

place on 18.03.2000. Admittedly, a notice dated 16.09.2000 was served by

respondent No.2, Hero Honda Motors Ltd. upon the appellant. Vide this notice, the

appellant was informed that 53 motor cycles transported on truck No. HR- 47-

1391, which had been booked vide G.R. No.30503 dated 16.03.2000, were

extensively damaged during transportation and the value of the damages was about

Rs.5,15,265/-. The appellant was requested to lodge the claim and settle it. It was

further requested to issue damage certificate for the above damage and send it to

respondent No.2 alongwith the copy of FIR.

In the suit which is subject matter of RFA No.72/2006, the accident took

place on 14.06.1996. Admittedly, a notice dated 13.08.1996 was served upon the

appellant by respondent No.2, Hero Honda Motors Ltd. vide notice dated

13.08.1996. The appellant was informed about the damage of the motorcycles

which were being transported on truck No.HNL-9969 vide G.R. Nos.8725-8727

dated 10.06.1996. It was further informed that the value of the damages was

approximately Rs.5,87,250.53. The appellant was requested to lodge the claim and

settle the same. It was, further, requested to issue a damage certificate alongwith

copy of FIR.

10. As observed by this Court, in CS(OS) No.1468/2001 decided on 23.11.2010,

2010 (10) AD DEL. 299, there is no particular form of notice prescribed in the

Carriers Act. The purpose of serving notice under Section 10 of Carriers Act is to

inform the carrier of the loss or injury to the goods and to give him an opportunity

to make amendments for the occurrence of the loss and settle the claim of the

consigner of the goods. Since no particular form of the notice has been prescribed

in the Act, a notice which gives requisite information and opportunity to the carrier

would meet the statutory requirement. In the cases before this Court, in both the

notices, the appellant was informed of the accident as well as the damage to the

motorcycles. The estimated loss caused to respondent No.2 was also conveyed to

the appellant which was asked to settle the claim with respondent No.2. Thus, the

appellant got ample opportunity to settle the claim with the consigner. The notices

issued to the appellant were, therefore, valid notice envisaged under Section 10 of

the Carriers Act. I, therefore, find no merit in the contention that the notices have

issued by respondent No.2 were not notices under Section 10 of the Carriers Act.

11. The main contention of the learned counsel for the appellant is that since

there was no negligence on the part of the appellant in either of the two cases, no

decree against the appellant could have been passed. It is submitted that in the first

case, the accident was an Act of God, since the push rod end slipped off all of a

sudden resulting in the steering system became free, the vehicle got imbalanced

and went off the right hand side of the road and dashed against the roadside tree. It

is also submitted by the learned counsel for the appellant that the appellant had

taken all necessary precautions since the vehicle was duly checked before it started

its journey and had successfully drive for about 1200 Kms before the accident took

place.

In the second case, according to the learned counsel for the appellant, the

accident took place entirely on account of negligence of the third party, for which

no blame can be placed on the appellant or its driver and, therefore, no decree

could have been passed against the appellant.

12. In Patel Roadways Limited vs. Birla Yamaha Ltd., AIR 2000 SC 1461,

Supreme Court held that the liability of a carrier in India is like that of an insurer

and is an absolute liability subject to an Act of God and a special contract which

the carrier may choose to enter with a customer. In this regard, the Court referred

to the provisions of Section 9 of the Act, which specifically provides that in case of

claim of damage or loss to or deterioration of goods entrusted to a carrier, it is not

necessary for the plaintiff to establish negligence. It was further held that even

assuming that the general principle in cases of tortuous liability is that the party

who alleges negligence against the other must prove the same, the said principle

has no application to the cases under the Carriers Act. Thus, liability of a carrier is

absolute and akin to that of an insurer, unless it can be shown that the damage to

the goods was attributable to an Act of God or that there was a special contract

between the carrier and the insured whereby the carrier is absolved of its liability in

case of loss or damage to the goods.

13. It was submitted by the learned counsel for the appellant that the goods were

transported at the risk of the consigner, as would be evident from the printed term

"at owner‟s risk" on the Goods Receipt consignment notes which the respondents

had filed during trial. This, according to the learned counsel for the appellant,

constitutes a special contract to the Supreme Court was referring in Patel

Roadways (supra). I, however, do not find any merit in this contention. The

special contract, to which the Supreme Court was referring in Patel Roadways

(supra) has to be on express agreement between the consigner and consignee

whereby it is consciously agreed by the consignor that the transporter will not be

liable to compensate him for any loss of or damage to the goods. Mere a printed

term such as the one which appears on the Goods Receipts in these cases does not

constitute the special agreement envisaged by the Apex Court. Admittedly, there is

no specific agreement between the appellant and respondent No.2, that in no case

of damage to the consignment, the transporter would be liable to compensate the

consigner. Therefore, the contention raised by learned counsel for the appellant

cannot be accepted.

14. The next question which comes up for consideration is as to whether the

appellant would be liable or not, in case the accident took place for no fault on the

part of the appellant or its employee. In South Eastern Carriers (P) Ltd. vs

Oriental F & G Insurance Co. Ltd. AIR 2004 Kerala 139, the plaintiffs had

chartered a truck for carrier of goods. The truck met with an accident. It was

claimed by the carrier that there was no negligence or carelessness on the part of

the driver and that the accident had occurred only due to unforeseen and inevitable

reasons. Noticing that under Section 8 of Carriers Act the liability of a common

carrier is absolute except for Act of God and no evidence had been produced by the

carrier to show that the accident had occurred due to Act of God, it was held that

the carrier was answerable for the loss of goods even when the loss is not caused

by negligence or for want of care on its part. It was held that the only exceptions

recognized by the Act are the Act of God and of State‟s enemies or a special

contract that the carrier may choose to enter into with the customer.

In Oriental Insurance Company vs Mukesh & Co. AIR 2000 MP 35, the

goods entrusted to the carrier were gutted by fire during transport. The cause of

fire was attributed to sparks emitted at the time of tightening of consignment by

nylon ropes at the octroi post. It was held by a Division Bench of High Court that

if the fire broke out due to some unknown cause or due to the negligence of

coolies, the transporter as the common carrier under Section 8 of the Carrier Act,

was liable to pay for the loss of the damage to the consignee.

15. In my view, if an accident takes place on account of a mechanical failure or

on account of the negligence of a third party or on account of the act of a third

party, such an act would not constitute an „Act of God‟ and the carrier would still

be liable to make good the loss to the consignor, his liability being absolute and

akin to that of the insurer. The Acts of God, to my mind, would be cases such as

loss or damage to the goods on account of rains, earthquake or cyclone which are

natural calamities. The accident which takes place on account of mechanical

failures cannot be termed as Acts of God. A mechanical failure would normally

occur if there is some defect in the machine or a component or the component has

out-lived its life on account of normally wear and tear. Yet another reason for

mechanical failure can be absence of proper upkeep and maintenance of the

machine. If a vehicle is regularly maintained and properly checked and the

damaged or the worn out parts are replaced well in time, there is no reason for a

mechanical failure to take place. As far as the act of a third party is concerned that

can never constitute an Act of God. For example, if there is a theft of the

consignment being transported by a carrier, it can never be said to be an Act of

God, it being a criminal Act on the part of a third person. In taking this view, I am

fortified by the above referred decision of Kerala High Court in South Eastern

Carriers (P) Ltd. (supra) and the decision of Madhya Pradesh High Court in

Oriental Insurance Company (supra).

16. The learned counsel for the appellant has placed reliance upon the decision

of the Rajasthan High Court in State of Rajasthan v State Mehtaq Transport

Company: AIR 2002 Raj 157. A perusal of the above judgment would show that

the Court noted that a carrier is responsible for safety of goods except on account

of act of God. In the case before the High Court, it was found that the accident had

taken place because of bursting of front tyre. It was a new truck. In these

circumstances, the Court was of the view that no negligence to the driver can be

attributed on account of bursting of tyre and it could not be said that the respondent

had not taken proper care in maintaining the tyres of the truck. However, the case

before this Court does not involve bursting of tyres. As observed earlier, the push

rod end could not have slipped all of a sudden unless there had been some

negligence with respect to the maintenance of the vehicle. In any case, it is not the

case of the appellant in the written statement that it was on account of latent defect

which was not discoverable on an inspection , that the push rod end slipped all of a

sudden resulting in steering system becoming free. Even in the case of bursting of

tyres, it may not always be an Act of God. For example, if worn out or damaged

tyres and/or tubes are used or excess air is filled in the tyres and consequently the

tyres get burst, it would not be an Act of God. Since at any stage, bursting of tyres

could have been easily avoided by not using worn out/ damaged tyres/tubes or

filling right quantity of air in the tubes or tyres. The learned counsel for the

respondent has relied upon the decision of Division Bench of Madras High Court in

the case of United India Insurance Co. Ltd. v Muthulakashmi and others: 2004

ACJ 1780. In that case, the goods were being transported in a lorry which

overturned and fell. As a result, the bundles of matches loaded in the lorry got fired

and were burnt. It was found that the tyre of the lorry got burst as the vehicle was

not properly maintained by the carrier. Relying upon the decision of the Supreme

Court in Patel Roadways Ltd. v Birla Yamaha Ltd. (supra), it was held that the

accident could have been averted by certain amount of foresight of the owner of the

common carrier and it is an accident which resulted from the action of the common

carrier and the accident could not be said to be an Act of God.

17. Though the appellant would be liable to compensate the respondent even if

the accident took place without any fault on its part, I find that the evidence

produced by the appellant in the suit subject matter of RFA 574/2004 to prove that

there had been no negligence on its part does not inspire confidence. Admittedly,

DW3 Sh. Raghunath Singh was not the driver of the vehicle on which motorcycles

were being transported, he claims to be co-driver on that vehicle along with the

driver Ashok Kumar Pandey. No driving license was available with this witness

despite his claim that he was a co-driver. More importantly, no documentary

evidence such as duty roster of the drivers was produced by the appellant to prove

that this witness was deputed as co-driver on truck bearing No. HR-47-1391, at the

time it med with an accident on 18.3.2000.

It would also be pertinent to note here that in the written statement, no plea

was taken by the appellant that Sh. Raghunath Singh was co-driver on this truck at

the time it met with the accident during which the motorcycles were damaged. In

these circumstances, it is difficult to place reliance upon the testimony of this

witness.

It is an undisputed proposition of law that the onus lies upon the carrier to

prove that it had taken all necessary cars and precautions and despite those cares

and precautions, it was not in a position to avert the accident in which the goods

were damaged. A mechanical failure of a vehicle can occur on account of defects

which may be latent or patent. If the defects were patent, it cannot be said that the

carrier had taken all possible cares and precautions in the matter since those defects

ought to have been rectified before transportation of the goods was to commence. It

is only in the case of latent defects that the carrier can say that since the defects

were not visible at the time of inspection, it was not in a position to rectify those

defects and consequently, could not have averted the accident. In Menu B. Mehta

& Anr v. Balkrishna Ramchandra Nayan & Anr (1977) 2 SCC 441, the Supreme

Court while considering a case of compensation in a case of vehicular accident,

held that in order to substantiate a plea that the accident was due to mechanical

defect, the owners must raise a plea that defect was latent and not discoverable by

use of reasonable care. It was further held that the burden to prove that the accident

was due to mechanical defect was on the owners and it was their duty to show that

they had taken all reasonable care and despite such care, the defect had remained

hidden. In the case before the Supreme Court, though it was stated that all

precautions were taken to keep the vehicle in a roadworthy condition, it was not

specifically pleaded that the defect i.e. excel brake coming out, was a latent defect

and could not have been discovered by use of reasonable care. This was held to be

a right ground to reject the defence set up by the appellant.

In the case before us though it is alleged that the accident took place when

the Push Road Ends slipped off, all of a sudden, resulting in steering becoming

free, there is no averment in the written statement that this was a latent defect

which could not have been noticed during the inspection of the vehicle. Since there

is no pleading that the defect in the vehicle which led to its accident was a latent

defect, not discoverable on inspection of the vehicle, no reliance can be placed

upon the testimony of Sh. Raghunath Singh to the effect that he along with Ashok

Kumar Pandey had carefully checked and had found no defect.

In the suit subject matter of RFA 72/2006, the copy of the resolution in

favour of the officers of the Insurance Company is Ex. Pw1/12 and the original

power of attorney executed by respondent No.2 Hero Honda Motors Ltd. in favour

of National Insurance Company Ltd is Ex. PW1/11. The authenticity of Ex.

PW1/12 was not disputed during the cross examination of PW1 Sh. Ravinder

Bowgal who had also brought the original resolution with him. The power of

attorney Ex. PW1/11 also purports to be executed by the Company Secretary of

respondent No.2 in favour of respondent No.1 and also purports to be attested by a

Notary Public. Therefore, the view taken by me with respect to the resolution and

power of attorney filed in the suit subject matter of RFA 574/2004 would also

apply to the documents filed in the suit subject matter of RFA 72/2006.

18. In the suit subject matter of RFA 72/2006, even if the accident involving the

truck of the appellant had taken place solely on account of negligence of the driver

of truck No. AP09/U 7303, such an act not being an act of the God but being an act

attributable to a third party and the liability of the appellant being absolute and akin

to that of a life insurer, the appellant is still able to compensate consignor for the

damages caused to the consignment which were being transported in its vehicle.

19. As regards institution of the suit and signing and verification of plaints, it has

been contended by the learned counsel for the appellant that the original power of

attorney in favour of Ms. S. Patnaik who has signed and verified the plaint and

instituted the present suit, having not been produced, the respondent No.1 has

failed to prove that the plaint had been signed and verified and the suit has been

instituted by a competent person. I, however, find no merit in the contention. Ex.

PW1/1 is a copy of the resolution purporting to be passed by the Board of Directors

of respondent No.1 at its meeting held on 16.5.1989. Vide this resolution, Deputy

Managers, Sr. Divisional Managers as well as Divisional Managers/ Assistant

Managers/Administrative Officers/Assistant Development Managers and Assistant

Administrative Officers and Assistant Branch Managers at all offices of the

company situated anywhere in the country, were appointed to act in the name of the

company and to appear and act either personally or through an advocate in all the

courts civil, criminal or revenue. They were further authorized to institute,

prosecute and defend all actions and proceedings for and against the company and

for that purpose to sign and verify vakalatnama, plaint, written statement etc. A

certified copy of Ex. PW1/1 was brought by PW1 Sh. Amiya Kumar with him, as

is evident from his cross examination dated 19.9.2003. The genuineness and

authenticity of Ex. PW1/1 was not disputed during cross examination of PW1. No

suggestion was given to him that the copy filed by the Insurance Company in the

suit was a forged or fabricated document. Ms. S. Patnaik being Assistant Manager

of the Insurance Company, it can hardly be disputed that she was competent to

institute the suit as also to sign and verify the pleadings on behalf of the Insurance

Company.

20. The suit on behalf of the National Insurance Company and Hero Honda

Motors Ltd. was filed way back in the year 2003. PW1 Sh. Amiya Kumar, Deputy

Manager of National Insurance Company, has vouchsafed the competence of Ms.

S. Patnaik to institute the suit and sign and verify the pleadings on behalf of the

company. Not only oral evidence was led, all material documents on behalf of

Insurance Company were filed in the suit instituted by Ms. S. Patnaik. Neither she

could have filed those documents, nor Mr. Amiya Kumar would have supported the

case set up in the plaint unless Ms. S. Patnaik was authorized to sign and verify the

pleadings and institute the suit on behalf of the National Insurance Company.

Though the suit remained pending for more than a year, the Insurance Company

did not dispute the competence of Ms. S. Patnaik to institute the suit on its behalf.

Such conduct on the part of the National Insurance Company is also corroborating

of the fact that Ms. S. Patnaik was duly authorized by it to sign and verify

pleadings and institute the suit on its behalf and that is why not only documentary

evidence was produced even an officer of the company confirmed the competence

of Ms. S. Patnaik in this regard.

21. In United Bank of India v. Naresh Kumar and Ors. (1996) 6 SCC 660, the

suit on behalf of the appellant United Bank of India was filed by one Mr L.K.

Rohtagi. The suit was dismissed by the Trial Court. However, in the first appeal,

the learned Additional District Judge upheld the case of the appellant on merits

with respect to loan taken from the appellant bank and execution of the relevant

documents by the respondent. It was, however, held by him that the authority of

Shri L.K. Rohtagi to file the suit on behalf of the appellant bank had not been

proved. The appeal filed before the High Court having been dismissed, the matter

was taken by the appellant bank to Supreme Court. Allowing the appeal, Supreme

Court, inter alia, observed and held as under:-

"9. In cases like the present where suits are instituted or defended on behalf of a public corporation, public interest should not be permitted to be defeated on a mere technicality. Procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is sufficient power in the Courts, under the CPC, to ensure that injustice is not done to any party who

has a just case as for as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable.

11. The courts below could have held that Sh. L.K. Rohatgi must have been empowered to sign the plaint on behalf of the appellant. In the alternative it would have been legitimate to hold that the manner in which the suit was conducted showed that the appellant bank must have ratified the action of Sh. L.K. Rohatgi in signing the plaint. If, for any reason whatsoever, the courts below were still unable to come to this conclusion, then either of the appellate courts ought to have exercised their jurisdiction under Order 41 Rule 27(1)(b) of the CPC and should have directed a proper power of attorney to be produced or they could have ordered Sh. L.K. Rohatgi or any other competent person to be examined as a witness in order to prove ratification or the authority of Sh. L.K. Rohatgi to sign the plaint. Such a power should be exercised by a court in order to ensure that injustice in not done by rejection of a genuine claim.

13. The suit had been filed in the name of the appellant company; full amount of. court fee had been paid by the appellant bank; documentary as well as oral evidence had been led on behalf of the appellant and the trial of the suit before the Sub Judge, Ambala, had continued for about two years, it is difficult, in these circumstances, even to presume that the suit had been filed and tried without the appellant having authorised the institution of the same. The only reasonable conclusion which we can come to is that Sh. L.K. Rohatgi must have been authorised to sign the plaint and, in any case, it must be held that the appellant had ratified the action of Sh. L.K. Rohatgi in signing the plaint and thereafter it continued with the suit"

In the case before this Court also, the suit had been filed in the name of

respondent No. 1, Court Fee was paid, documentary as well as oral evidence was

led on behalf of the insurance company and even the appeal is being contested by

it. In these circumstances, it can be safely presumed that these suits had, in fact,

been instituted by a competent person on behalf of respondent No. 1 which is

public sector company.

22. It was next contended by the learned counsel for the appellant that the Letter

of Subrogation Ex. PW2/2 and the power of attorney Ex. PW2/1, purporting to be

executed by respondent No.2 in favour of respondent No.1 having not been duly

proved by summoning the executant of the documents, no decree could have been

passed in favour of respondent No.1 there being no privity of contract between the

appellant and respondent No.1. Again I find no merit in the contention. The Power

of Attorney Ex. PW2/2 is an original document and purports to be attested by a

Notary Public. The power of attorney purports to be executed by the Company

Secretary of respondent No.2 Hero Honda Motors Ltd in favour of respondent No.1

National Insurance Company Ltd. There is a statutory presumption under Section

85 of Evidence Act that the Power of Attorney was executed by the person by

whom it purports to have been executed and the person who executed the power of

attorney was fully competent in this regard. In Jugraj Singh and Anr. Vs.

Jaswant Singh and Ors., AIR 1971 SC 761, the Power of Attorney attested by a

Public Notary was disputed on the ground that it did not show on its face that the

Notary had satisfied himself about the identity of the executant. Supreme Court

held that there was a presumption of regularity of official acts and that the Notary

must have satisfied himself in the discharge of his duties that the person who was

executing it was the proper person. In Rajesh Wadhwa vs. Sushma Govil, AIR

1989, Delhi 144, it was contended before this Court that till it is proved that the

person who signed the said power of attorney was duly appointed attorney, the

court cannot draw a presumption under Section 57 and 85 of the Evidence Act.

Repelling the contention, it was held by this Court that the very purpose of drawing

presumption under Sections 57 and 85 of the Evidence Act would be nullified if

proof is to be had from the foreign country whether a particular person who had

attested the document as a Notary Public of that country is in fact a duly appointed

Notary or not. When a seal of the Notary is put on the document, Section 57 of the

Evidence Act comes into play and a presumption can be raised regarding the

genuineness of the seal of the said Notary, meaning thereby that the said document

is presumed to have been attested by a competent Notary of that country. In

Punjab National Bank vs. Khajan Singh, AIR 2004 Punjab and Haryana 282,

the Power of Attorney in favour of a bank, which had been duly attested, was

rejected by the learned District Judge on the ground that the presumption under

Section 85 of Evidence Act was available to a particular class of Power of

Attorneys described in the section, which was confined to its execution and

authenticity alone. The High Court, however, rejected the view taken by the

learned District Judge holding that absence of proof of resolution authorizing the

executant to execute the Power of Attorney could not be sustained and a

presumption in favour of the attorney would arise under Section 85 Act.

Hence, in this case also, the Court can presume not only that the Power of

Attorney Ex. PW2/1 was executed by the Company Secretary of respondent No.2

in favour of respondent No.1, it can be further presumed that the person who

executed the power of attorney, was duly authorized by respondent No.2 company

to execute that document in favour of respondent No.1. Therefore, it was not

necessary for the respondents to examine the executant of this document.

Since a power of attorney was executed by respondent No.2 in favour of

respondent No.1, the suit on behalf of respondent No.2 could have been instituted

by respondent No.1. Since both the respondents had joined as co-plaintiffs even if

the Letter of Subrogation is to be excluded from consideration, the decree could

certainly be passed in favour of respondent No.2 Hero Honda Motors Ltd. which

itself seeks a decree in favour of respondent No. 1. I, therefore, find no merit in the

contention raised by the learned counsel for the appellant in this regard.

23. For the reasons stated hereinabove, I find no merits in the appeals, as far as

payment of the principal sum of Rs. 4,54,043/- in the suit subject matter of RFA

No.574/2004 and Rs.5,53,323/- in the suit subject matter of RFA No.72/2006 are

concerned. However, I find that in the suit subject matter of RFA No.72/2006, the

learned Trial Judge has awarded interest from 1.4.1997, the date on which the

claim was paid by the Insurance Company to M/s Hero Honda Motors Ltd as well

as interest @ 6% per annum from the date of the decree till realization. Admittedly,

there was no agreement between the parties for payment of the interest. Therefore,

no interest for the pre-suit period could have been awarded to the respondent.

Moreover, no court fee on the amount of interest for pre-suit period was paid by the

respondents. Hence, the judgment and decree dated 14.11.2005 is modified to the

extent that the respondent no.1 will be entitled to recover Rs.5,53,323/- with costs

along with pendent lite and future interest @ 6% per annum.

For the reasons stated hereinabove, RFA No.574/2004 is hereby dismissed,

whereas the judgment and decree dated 14.11.2005, which is subject matter of RFA

No. 72/2006 is modified to the extent indicated above. There shall be no order as to

costs.

Decree sheet be drawn accordingly. Trial court record be sent back

forthwith.

V.K.JAIN, J July 05, 2012 rb