Eagle Star Insurance Company Limited and Others vs L. Foolchand and Others

Veeraswami, J.—The first Respondent who is common to both the appeals and who was the Plaintiff, instituted the suit for recovery of Rs. 6,570-1-0 with interest, being the value of the goods short-delivered as per the particulars given in schedule B to the plaint. On December 22, 1955, a case containing cutlery and certain other goods detailed in schedule A to the plaint, said to be of the total value of Rs. 7,084-7-0, was consigned to the first Respondent from Madras Central to Howrah Railway Station on the first Defendant Railway, by Messrs. Moolchand Mittalal, Madras. The goods were insured with the fourth Respondent, Eagle Star Insurance Company, Limited, George Town, Madras, whose head office is stated to be at Bombay. The corresponding policy bears the date December 24, 1955, and covers rail risk, including risk of theft, pilferage and non-delivery. At the destination, it was found, about December 27, 1955, that the parcel had been tampered with and part of the goods missing. The same day, the first Respondent asked the Howrah station master, by a letter, to survey the loss and make an open delivery of the packet and marked and sent a copy of this letter to the Calcutta branch of the insurance company. But that branch wrote back the next day to the Respondent advising him to arrange for Messrs. Norman Steward and Company to act as surveyors on behalf of the company in the particular case. Actually, on December 30, 1955, Norman Steward and Company made a survey of the loss at the premises of the Respondent. It appears that in the meantime the Respondent had taken open delivery of the damaged packet and moved it to his premises for the purpose apparently of the survey by Norman Steward and Company. On January 3, 1956, the Howrah station master, on inspection of the damaged packet, issued a certificate of the loss of part of the goods consigned from Madras. On January 21, 1956, the Respondent preferred his claim to the Chief Commercial Superintendent, Eastern Railway, Calcutta. On January 2, 1957, he had also made a claim on the Insurance Company for payment of value of the loss under the terms of the cover. The Insurance Company did not reply immediately, but the first Defendant, however, intimated that the matter would be enquired into. As the demand was not met, the Respondent eventually brought the suit against Defendants one to three, Union of India, and the fourth Defendant, Insurance Company.

The first Defendant filed a written statement admitting that the parcel was received at its destination in a tampered condition and that open delivery of the consignment was given to the Respondent as alleged by the latter in the plaint. The first Defendant further admitted that some of the articles in the parcel were lost in transit, but denied its liability u/s 75 read with the second schedule to the Railways Act, on the ground that the Respondent had failed to make a declaration of the value of the contents of the parcel and pay the required percentage on the value so declared by way of compensation for the increased risk. The fourth Defendant in its written statement denied liability on the ground that under the terms of the policy survey was required to be made by the station master at Howrah and no one else, and that such a survey was not made in the instant case. It would assert that the survey made by Messrs. Norman Steward and Company was not binding on it by any means. The fourth Defendant also averred that no claim on it was over made. But this seems to be a mistake as in point of fact; as we already mentioned, the Respondent had, as early as January 2, 1957, made a demand on the Madras Branch of the Insurance Company for payment of the value of the loss. On these pleadings and certain others which are not material to our present purpose, a number of issues were framed by the Third Assistant City Civil Judge, and finding most of them in favour of the Respondent, decreed the suit against Defendants one to four. The learned trial Judge was of the view that the first Defendant''s contention, that in the absence of declaration, the Respondent could not invoke the liability of that Defendant under that section, was not well founded, because, as he thought, the Section would apply only if the entire package had been lost and not a portion of its contents. On the question of survey of the goods raised by the Insurance Company, he answered it in favour of the Respondent.

In the appeal preferred by the insurance company, its learned Counsel has reiterated the plea in the written statement. He argues that a survey of the loss of goods under the terms of the policy should only be by the Howrah station master and at the station itself, and, since this condition has not been complied with, no liability arose under the cover. The terms of the policy issued to the Respondent are briefly these. The insurance related to one wooden case with iron bands and wrapped with gunny and again iron bands around the case containing merchandise of various types as per invoice despatched from Madras Central to Howrah. The cover included rail risk as per clause, attached. The risk clause extended to risk of theft, pilferage and non-delivery, again as per clauses attached. The clauses attached, so far as may be relevant, only state that the policy covered the risk of theft and/or pilferage irrespective of percentage. The attached clause further stipulated that no liability for loss was to attach unless notice of survey had been given to underwriter''s agents within ten days of the expiry of risk under the policy. The policy required that survey, if any, to be made by the station master at Howrah. It is not clear from the terms of the policy whether the requirement that survey should be made by the station master at Howrah is a condition to the risk under the policy arising. We shall, however, assume that it is a condition. Even so, it seems to us that it has been complied with substantially. As already noticed at the outset, on December 27, 1955, itself the Respondent wrote to the station master, Howrah, for making a survey and an open delivery of the damaged packet, of which a copy was sent to the Howrah branch of the Insurance Company. The Howrah branch promptly replied the next day requesting the Respondent to arrange for Messrs. Norman Steward and Company to act as surveyors on behalf of the insurance company itself. Probably in view of this, the Respondent did arrange for such a survey and the records show that Norman Steward and Company surveyed the goods at the premises of the Respondent on December 30, 1955, and made a report of the loss. It is significant to note that factually the loss of a portion of the goods is admitted by the first Respondent and the fourth Respondent has not seriously denied the fact. Mr. Vedamanickam for the Appellant, insurance company, argued that the advice of the Howrah branch is not binding on the company. We are unable to appreciate this argument. The Howrah branch clearly took up the position that it had the authority and advised the second Respondent to have such a survey by Messrs. Norman Steward and Company. Not a word has been said or proved that there was anything wrong in the survey made by Messrs. Norman Steward and Company. What is even more important is that, as a matter of fact, on January 3, 1956, the station master at Howrah himself issued a certificate relating to the loss of goods in question in transit. This was clearly in any case a substantial compliance of the requirement that the survey should be made by the station master at Howrah. But it is argued for the insurance company that this survey by the station master was made only after the package had been brought back from the Respondent''s premises to the station for the purpose. Learned Counsel says that what is contemplated by the policy is a survey by the station master at the premises of the station before the goods are removed. There is no such requirement so expressly provided in the policy. All that the policy says is that a survey should be made by the station master at Howrah and nothing more. We can understand the contention of the insurance company if there was any bad faith alleged or proved on the part of either the station master at Howrah or Messrs. Norman Steward and Company. We cannot but observe that in this case the insurance company has taken a stand which is unwarranted and not justified by the circumstances of the case. We hold that the survey clause in the policy has been fully complied with in the instant case.

On the view we have taken of the liability of the Railway in the other appeal, learned Counsel for the insurance company argued that the liability under the insurance cover is dependent on and co-extensive with the liability of the carrier. In support, learned Counsel invited us to the following clause in the policy:

Warranted free of any claim in respect of goods shipped under a bill of lading or contract of carriage stipulating that the carrier or other bailee shall have the benefit of any insurance on such goods, but this warrantee shall apply only to claims for which the carrier or other bailee is liable under the bill of lading or contract of carriage.

It is obvious that this clause in the policy does not support the claim of the insurance company. This warranty clause will apply only to a case in which a contract of carriage stipulating that the carrier or other bailee shall have the benefit of any insurance on such goods. That is not the case here y and there is no such contract. The appeal of the insurance company must therefore fail.

The other appeal of the Railway seems to us to be based on a more substantial ground. We have already mentioned the defence on its behalf, which did not find acceptance with the trial Judge. The argument before us for the Railway is that the packet contained, among other things, goods which fall within the purview of the second schedule to the Railways Act and that u/s 75 of that Act in order that the Railway may be made liable, the value of the goods, if it is in excess of three hundred rupees, before this provision was amended, should be declared and a percentage calculated on the declared value should be paid in consideration of the additional risk borne by the Railway in respect of such goods. It is common ground that no such declaration was made. The Court below was of the view that Section 75 would apply only if the entire package had been lost. We fail to see the point of it. If the Section applied and no declaration has been made, the Respondent cannot rely on the section. If the Section applies only to a total loss of a packet, then too it will be of no assistance to the Respondent. But we find that the Respondent solely relied on the risk arising u/s 75. So much is clear from the terms of his plaint. We are unable to accept the view that Section 75 will apply only to a total loss of package and not if only part of the goods contained therein has been lost. No doubt Sub-section (2) of Section 75 says:

When any parcel or package of -which the value has been declared under Sub-section (1) has been lost or destroyed or has deteriorated, the compensation recoverable in respect of such loss destruction or deterioration shall not exceed the value so declared.

But any parcel or package in this sub-section as well as Sub-section (1) of Section 75 has reference to the goods contained therein, for, the value to be declared is in relation to them, so that the goods in the parcel will include also part thereof. The whole purpose of Section 75 is that the Railway should be informed of the special value and, therefore, of the additional liability the Railway will have to undertake in carrying such goods and in consideration of additional risk a higher charge is required to be paid. That being the purpose, it will be defeating it if the risk of the Railway arose only for the entire packet, in the sense that the entire goods had been lost and not merely a part of the goods. In our view, Sub-sections (1) and (2) of Section 75 will cover also partial loss of goods contained in any parcel or package of the specified type. The Respondent can take advantage of Section 75 only if he had declared the value of the goods, which he had failed to do. His claim, based on Section 75, must therefore fail.

Learned Counsel for the Respondent, however, argued that since the Railway has admitted the loss of part of the goods, it must automatically follow that the Railway, as a bailee and as a carrier, must make good the loss. But the Respondent has not based his claim in the plaint on Section 72 of the Railways Act. That Section provides for the responsibility of a Railway administration for the loss, destruction or deterioration of goods delivered to the administration to be carried by railway and such responsibility is subject to the other provisions of the Act, be that of a bailee under Sections 151, 152 and 161 of the Indian Contract Act, 1872. Section 151 of the Contract Act says that in all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed. The following Section is to the effect that a bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing-bailed, if he has taken the amount of care of it described in Section 161. It is obvious, therefore, that the Respondent, in order to succeed on the basis of Section 72 of the Railways Act, should not merely show that there was a loss of the goods entrusted to the carrier, but that the loss was due to the fact that the carrier had failed to take as much care of the goods bailed as a man of ordinary prudence would. As we mentioned, there is not only no pleading of any such character in the plaint, but the parties do not appear to have gone to trial on that basis and our attention has not been invited to any evidence which will bear on the question of the care statutorily required of a bailee like the carrier here.

It follows that the Respondent''s claim against the first Defendant Railway, which will include Defendants 2 and 3, should fail. Appeal No. 281 of 1961 is dismissed with costs and Appeal No. 401 of 1961 is allowed, but in the circumstances with no costs.