Industrial Electrodes and Ganges Ltd. vs Hanover Insurance Co.

T.K. Basu, J.—This is an action by the Plaintiff, the Industrial Electrodes and Ganges Ltd., for recovery of Rs. 32,220 with interests and costs against the Defendant Hanover Insurance Co.

According to the claim made in the plaint, the Plaintiff was interested as owner or otherwise in 833 coils of core wire of steel shipped at Cleveland U.S.A., on board the ship S.S. Jaladharma. On September 17, 1964, the Defendant in consideration of payment as arranged insured the Plaintiff for the amount of Rs. 24,415-53, equivalent to Rs. 1,16,462, upon the said 833 coils which were despatched as aforesaid under the bill of lading No. 1 dated November 28, 1964, against the risks mentioned in the policy of insurance.

Subsequently, on or about February 20, 1956, the Defendant made an endorsement on the policy of insurance by which an extension of 15 days was allowed at the Plaintiff''s warehouse after arrival of the consignment. The vessel carrying the 833 coils arrived at Calcutta on or about February 17, 1965. On or about March 11, 12 and 13, 1965, 826 coils were delivered at the warehouse of the Defendant.

According to the Plaintiff, during the currency of the policy and while the goods were insured, there was loss or damage in respect of the goods by one or more of the perils insured against, namely, shortage and/or non-delivery and/or rust due, inter alia, to contact with moisture in transit and/or having been sprayed with water. According to the particulars, 7 coils of wire were short landed and/or not delivered to the Plaintiff. Out of 826 coils delivered, 620 were found rusted. The goods were surveyed by the Defendant''s Surveyor on or about March 18, 1965, pursuant to the Plaintiff''s application for survey dated March 12, 1965. It is on the above allegations that the claim in the plaint has been made.

In the written statement filed on behalf of the Defendant, the Hanover Insurance Co., the Defendant does not admit that the Plaintiff was interested as owner or otherwise in the goods. Save that the Defendant issued a Cargo Insurance Policy dated December 17, 1964, in favour of the Plaintiff insuring a cargo alleged to consist of 833 coils of core wire steel particulars whereof are not admitted by the Defendant and save what appears from the policy, the Defendant does not admit any of the allegations in paras. 2 and 3 of the plaint.

In para. 3 of the written statement various terms and conditions of the policy of insurance have been set out. I shall have occasion to advert to this aspect of the matter at a later stage. Paragraphs 4 to 10 of the written statement consist of general denials of the Plaintiff''s claim as made in the plaint.

According to para. 11 of the written statement the Plaintiff knew or is deemed to have known or ought to have known that at all material times prior to and at the time of the insurance, the said goods were in an unprotected state and particularly susceptible to damage by coming into contact with moisture and water. This fact was material to be known to the Defendant for the purpose of entering into the insurance. At all such material times prior to and at the time of insurance, the Plaintiff, concealed the said fact from the Defendant. By reason of concealment of the material fact the Defendant claims to be entitled to avoid and has avoided and/or avoids the insurance.

In para. 12 of the written statement the Defendant mentions various facts and circumstances by reason of which it is entitled to avoid and avoids the Plaintiff''s claim. The facts and circumstances may be briefly noted:

(a) The alleged rusting of the goods was caused by the inherent vice or the nature of the subject-matter insured in its unprotected state.

(b) The Plaintiff and its agents failed and neglected to take reasonable measure for averting or minimising the loss to the goods by wrapping the same in bituminised paper so as to give minimum protection.

(c) The Plaintiff and its agents became aware of the alleged rusting of the goods as soon as they were landed from the ship but failed and neglected to give prompt notice of the alleged rusting to the Defendant.

(d) The Plaintiff failed to make immediate claim on the carriers and on the Port authorities for 7 alleged missing coils.

(e) The Plaintiff failed to apply immediately for survey in docks by the carriers and Port authorities.

(f) The Plaintiff failed and neglected to give notice in writing to the carriers and Port authorities representatives within three days of taking delivery.

The following issues were framed at the trial of the suit:

(1)(a) Did the consignment under the bill of lading No. 1 dated November 28, 1964, consist of 833 coils of core wire of steel?

(b) Was the Plaintiff interested in the said consignment as the owner or otherwise?

(2) Were the goods rusted as alleged in para. 6 of the plaint?

(3) If so, what were the costs incurred by the Plaintiff on account of the de-rusting?

(4) Was there any short landing or short delivery of the goods as alleged in the plaint?

(5)(a) Were the goods surveyed in accordance with the policy of insurance?

(b) Did the goods which were surveyed form part of the consignment under the bill of lading No. 1 dated November 28, 1964?

(6) Is the Defendant entitled to avoid the policy of insurance as alleged in para. 11 of the written statement?

(7) Is the Defendant entitled to avoid the policy of insurance by reason of the facts stated in para. 12 of the written statement?

(8) To what relief, if any, is the Plaintiff entitled?

I propose to give my findings in respect of the issues one by One.

Issue No. (1)(a)

It has to be considered whether the 833 coils of core wire of steel in respect of which the claim in the plaint has been made are covered by the bill of lading No. 1 dated November 28, 1964. According to Mr. Sailen Majumdar appearing on behalf of the Defendant insurance company, no proof has been adduced by the Plaintiff as to what was the actual quantity of coils which were shipped per S.S. Jaladharma from the United States to Calcutta. The bill of lading No. 1 dated November 28, 1964, issued by the carrier Scindia Steam Navigation Co. Ltd., has been marked as an exhibit (Ex. E) in this suit. The bill of lading describes the goods as 32 spindles said to contain 366 coils. It again mentions another lot of 467 coils. The aggregate of these two figures, viz. 366 coils and 467 coils would come to 833 coils.

But then Mr. Majumdar submits that the correctness of the contents of the bill of lading has not been proved as the author or the maker of the document has not come to give evidence. It was submitted that the contents of the bill of lading could not operate as an admission against his client the insurance company. In support of this latter proposition reference is made to a recent decision of this Court in the case of Khalil Adalkhah Vs. Great American Insurance Company, in which the judgment was delivered by Deb J. on September 17, 1968. In that decision, which concerned a claim against an insurance company, the question arose, whether the bill of lading which had been tendered subject to an objection when the case was earlier heard by B.N. Banerji J. would be admitted in evidence. Deb J. after a consideration of the provisions contained in the bill of lading as also several authorities in that connexion came to the conclusion that his Lordship was unable to admit the bill of lading in evidence.

The decision of Deb J. does not require a detailed analysis for the reasons which will presently be discussed.

Mr. Milan Banerjee for the Plaintiff relied on a passage in a decision of the Madras High Court in the case of Home Insurance Co. Ltd. and Another Vs. Ramnath and Co., Madras, . Paragraph 6 of the judgment contains, inter alia, the following observations:

Before the point in issue could be discussed it is necessary to state at this stage that there is no dispute with regard to the 9 drums, having been put on board the ''S.S. Indian Shipper''. The bill of lading is sufficient evidence to establish the fact that the goods were actually put on board and were received by the Master of the ship.

On the strength of these observations it was submitted that, the contents of the bill of lading are evidence against the insurance company which was one of the party Defendants in the suit which came up before the Madras High Court in the above case. This argument was sought to be countered by Mr. Majumdar with reference to the sentence of the extract I have quoted above showing that the question of the admissibility of the bill of lading was not in dispute in that case. In that state of affairs the observations of Basir Ahmed Syed J. should be taken as obiter. It was also pointed out by Mr. Majumdar that the statements contained on the face of the bill of lading cannot be construed as an admission in view of the stipulations in Clause (5) on the reverse thereof. The material portion of Clause (5) is set out hereinbelow:

Unless otherwise stated herein, the description of the goods and the particulars of the pieces, packages or customary freight units mentioned herein, arc those furnished by the Shipper and the carrier shall not be concluded as to the correctness of the leading marks, number, quantity, weight, gauge, measurement, contents, nature, quality or value.

According to Mr. Banerjee, this does not constitute a ''disclaimer'' by the carrier in the bill of lading which is a clean bill of lading. Clause (5) merely stipulates that the carrier or the persons who are affected by the bill of lading are not precluded from leading evidence to prove that the contents of the bill of lading are not correct. There is another aspect of this matter which will be adverted to at a later stage.

Strong reliance is placed on behalf of the Plaintiff on the provisions of the Commercial Documents Evidence Act in this connection. Section 3 of the Commercial Documents Evidence Act, 1939, provides as, inter alia, follows:

For the purposes of the Indian Evidence Act, 1872 and notwithstanding anything contained therein, a Court (a) shall presume, within the meaning of that Act, in relation to documents included in part I of the Schedule and (b) may presume, within the meaning of that Act in relation to documents included in part II of the Schedule.

Part I of the Schedule has the following heading: ''Documents in relation tp which the Court shall presume''. Item No. 9 in pt. I reads as follows:

The following documents relating to marine insurance, namely, insurance policy, receipt for premium, certificate of insurance and insurance cover note.

It is submitted that in view of the provisions of item No. 9 of pt. I of the Schedule to the Commercial Documents Evidence Act, 1939, it is the duty of the Court to presume the correctness of the statements contained in a policy of marine insurance. Turning now to the policy of insurance in the instant case, which is Ex. B., it is found to contain, inter alia, the following statements:

Marks and Nos. as per B/Lading No. 1 dated 28.11.1964. On 833 coils of core wire of steel valued at U.S. Dollars 24,415-53 only.

It is, therefore, said on behalf of the Plaintiff that the statement in the policy of insurance is to the effect that 833 coils of wire mentioned therein have been insured and have been shipped as per bill of lading No. 1 dated November 28, 1964. This, it is submitted, prima facie shows that 833 coils were shipped. It was undoubtedly open to the Defendant to adduce proper evidence to show that in spite of that statement in the policy of insurance, in actual fact, this quantity was not shipped. No attempt has been made by the Defendant to establish such a case. In the circumstances, the Court should find that 833 coils were in fact shipped.

Mr. Majumdar for the Defendant submitted that the statement in the policy of insurance was to the effect that 833 coils were being insured under the policy. The statement in the policy was not a statement of the fact that 833 coils have been shipped. In other words, the statement in the policy is of what is being insured. It is not a statement that the insured goods have been shipped.

I am unable to accept this submission of Mr. Majumdar. The combined effect of mentioning the bill of lading number and the date thereof and a further statement that the quantity of goods insured is 833 coils of core wire of steel is in my view a clear statement that these 833 coils have been shipped. After all, the bill of lading is only issued by the carrier after the goods are put on board the ship. Consequently, in my view, this statement in the policy of insurance is presumed to be correct under item No. 9 of pt. I of the Schedule to the Commercial Documents Evidence Act, 1939.

I must not be understood as laying down a general proposition as to whether all statements in the policy of (insurance would be presumed to be correct or whether a statement would be a statement of shipment or a statement of what is being insured. I hold that, in the facts of the present case having regard to the language of the policy of insurance a presumption should be drawn against the insurance company that 833 coils were shipped according to the bill of lading No. 1 dated November 28, 1964. As the insurance company has not led any evidence to displace this presumption, the issue No. (1)(a) must be answered in the affirmative.

Certain arguments were advanced by Mr. Milan Banerjee on the question as to whether certain provisions of the Carriage of Goods by Sea Act makes the statements in the bill of lading prima facie evidence against the insurance company. Reference was made to the provisions of Rule 3 and 4 of Article Ill in the Schedule to the Indian Carriage of Goods by Sea Act, 1925. Rule 3 provides, inter alia, as follows:

After receiving the goods into his charge, the carrier or the Master or Agent of the carrier shall on demand of the Shipper issue to the Shipper a bill of lading ''showing amongst other things

(a) ...........

(b) ...........

(c) ...........

Rule 4 provides as follows:

Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs 3(a), (b) and (c).

It was pointed out that the Indian Carriage of Goods by Sea Act, 1925, would have no application to the present case as it dealt only with exports out of India. It was stated, however, that the United States Carriage of Goods by Sea Act, 1936, which contains provisions which are ipsissima verba with the provisions I have quoted above, would be applicable to the present case because of the clause paramount read with Clause (1) on the reverse of the bill of lading (Ex. E).

Mr. Majumdar submitted that the provisions of Rule 4 of the Indian Carriage of Goods by Sea Act or its American counterpart could only be invoked in the case of a bill of lading which has been issued on demand by the Shipper. It was submitted that there was no evidence before me that this bill of lading was issued on demand by the Shipper. Reference was also made to a decision of the Judicial Committee of the Privy Council in the case of Attorney-General of Ceylon v. Scindia Steam Navigation Co. Ltd., India (1962) A.C. 60.

I merely record the contentions of the respective parties and I do not propose to discuss them in detail or express any opinion thereon. As I have already found, in view of the provisions of item No. 9 of pt. I of the Schedule to the Commercial Documents Evidence Act, as applied to the facts and circumstances of the present case, issue No. (1)(a) must be answered in the affirmative.

Issue No. (1)(b) relates to the question whether the Plaintiff was interested in the consignment as the owner or otherwise. It was contended oh behalf of the Defendant that the Plaintiff had not proved its ownership of the consignment in question. The contract which was the subject-matter of the sale and purchase of these coils has not been disclosed. No evidence has been given that the propriety in the goods had passed to the Plaintiff as the buyer. There was no evidence of the payment of the purchase price by the Plaintiff. The bill of lading, it was submitted, assuming it is evidence against the insurance company, does not show that the Plaintiff is the owner of the goods. It was further submitted that the Plaintiff was not even described as the consignee of the goods under the bill of lading. The consignee, it was contended, according to the bill of lading is ''order of Shipper''. The Plaintiff, it was submitted, had failed to produce the best evidence of the ownership of the goods.

Refenence was made by Mr. Majumdar in this connection to various passages in Arnould''s Law of Marine Insurance and Average (British Shipping Laws, vols. 9 and 10). Particular reference was invited to Article 347 at p. 317 of vol. 9 for the proposition that consignees who have a mere ''naked right to take possession'' do not have an insurable interest so as to maintain an action on the policy of insurance. Reference was also made to several passages in Halsbury''s Laws of England (3rd ed., vol. 22) in connection with the question of insurable interest.

In my view, the Plaintiff does not have to go to the extent of proving absolute ownership of the goods in question in order to satisfy the test of having an insurable interest.

Mr. Das for the Plaintiff relied on the provisions of Section 14 of the Marine Insurance Act, 1963, which provides that

In the case of advance freight, the person advancing the freight has an insurable interest insofar as such freight is not repayable in case of loss.

My attention was drawn in this connection to the statement of the bill of lading which, inter alia, says : ''Ocean freight pre-paid''. This, it was submitted, was sufficient to give the Plaintiff an insurable interest in the goods.

In my view, this contention is without substance. Without going into the question as to whether the statement in the bill of lading is evidence against the insurer and it was strenuously contended that it was not so, the statement in the bill of lading must mean that the freight has been pre-paid by the consignor at the American end. If that is so, the consignor would have an insurable interest but not the Plaintiff inasmuch as there is no evidence before me to show that the Plaintiff had supplied the consignor with the necessary amount of money to advance the freight.

The Plaintiff is, however, on much firmer grounds insofar as Section 16 of the Marine Insurance Act, 1963, is concerned. Section 16(2) is in the following terms:

Mortgagee, consignee, or other person having an interest in the subject-matter insured may insure on behalf of and for the benefit of other person''s interest as well as for his own benefit.

Although as contended by Mr. Majumdar for the Defendant the bill of lading does not clearly show that the Plaintiff is the consignor of the goods, the matter in my view is set at rest by a letter written by the insurance company to the Plaintiff which is to be found at p. 26 of Ex. A. This letter dated February 17, 1965, which was written in response to a request for an extension of the period of risk for 15 days states, inter alia, as follows:

We are issuing an endorsement with effect to an extension of 15 days at the consignee''s warehouse after arrival of the shipment.

The endorsement to the original policy,, which is to be found at p. 26 of Ex. A, describes the Plaintiff as the assured. It further declares that an extension of 15 days is allowed at the consignee''s warehouse after arrival of the consignment. These two documents, in my view, clearly establish that the Plaintiff is a consignee of the goods in question. In that view of the matter, the Plaintiff must be held to have an insurable interest in the goods by virtue of provisions of Section 16(2) of the Marine Insurance Act. Issue No. (1)(b) is, therefore, answered in the affirmative.

It was submitted on behalf of the Plaintiff that the Defendant had at no stage in the correspondence challenged the ownership of the Plaintiff in respect of the insured goods. In fact, the Plaintiff had been throughout treated as the owner and the entire correspondence had proceeded on that footing. In my view, this comment is entirely justified. I do not find that any dispute has been raised by the Defendant prior to the present litigation regarding the ownership of the Plaintiff with regard to the goods.

Reference was also made on behalf of the Plaintiff in this connection to two documents, viz., the invoice and the packing list which were furnished to the Plaintiff by the American manufacturer Mid-West Materials Inc. These two documents show that the goods were sold to the Plaintiff. Certain, controversies arose as to whether the statements in these two documents were admissible in evidence without proving the correctness of the contents of these documents by calling the makers thereof. It was submitted on behalf of the Plaintiff that these documents were admissible u/s 163 of the Evidence Act which provides that

when a party calls for a document which he has given the other party notice to produce and such document is produced and inspected by the party calling for its production, he is bound to give it as evidence if the party producing it requires him to do so.

On behalf of the Defendant, it was submitted that the conditions precedent for the applicability of Section 163 of the Evidence Act have not been fulfilled in the present case with regard to these two documents. Consequently, the Plaintiff is not entitled to invoke its provisions. In view of my finding that the Plaintiff had insurable interest in the goods in question, it is not necessary to express any opinion on this controversy in the present case.

Issue No. (2) deals with the question as to whether the goods were rusted as alleged in para. 6 of the plaint. Paragraph 6 of the plaint, inter alia, is as follows:

The Plaintiff states that during the currency of the said policy and while the goods were so insured as aforesaid there was loss of or damage in respect of the said goods by one or more of the perils insured against, i.e, shortage and/or non-delivery and/or rust due, inter alia, to contact in moisture in transit and/or having been sprayed with water.

It may be mentioned that the policy of insurance in the instant case is one known as Warehouse to Warehouse Policy. Such a policy covers all risk commencing from the point of time when the goods leave the warehouse until the point of time when it reaches the warehouse of the assured. It is not seriously disputed, by Mr. Majumdar that if the rusting took place at any point of time after the goods left the warehouse of the American exporter and before it reached the warehouse of the Plaintiff, his client would be liable. In view of the amendment to the original policy, this liability would extend to a further period of 15 days after the goods reached the Plaintiff''s warehouse. The only argument advanced by Mr. Majumdar is that it was for the Plaintiff to prove the condition of the goods before they left the warehouse of the American exporter and before the risk attached to the goods.

Before I discuss in further detail the evidence on the question of rusting, it would be necessary to dispose of another aspect of this matter. Mr. Majumdar advanced elaborate arguments as to the cause of the rusting. He drew my attention to the policy of insurance which in course of enumerating various risks insured against says:

Including the risk of rusting due to sea and/or fresh water.

It was, therefore, submitted that unless the rusting was due to sea or fresh water the insurer will not be liable. If the rusting was caused only by reason of moisture in the air, it was submitted that no liability would attach. It was pointed out with reference to the report of the Surveyor, which is to be found at p. 36 of Ex. A, that according to item No. 8(b) ''contact with moisture in transit'' was the cause of the rusting. Whether this report is evidence or not is a question I shall have to deal with presently. Even assuming it was evidence, Mr. Majumdar submitted, this being the cause of rusting according to the Surveyor, his client was not liable in terms of the policy of insurance.

Mr. Banerjee for the Plaintiff in this connection drew my attention to the opening part of the enumeration of risks which contains the following remarks:

Insured against Marine All Risks (as per Institute Cargo Clauses All Risks attached).

It was submitted that since the policy of insurance covered ''all risks'' the onus of proof on the Plaintiff to establish as to how the rusting took place is very slight. Reference was made in this connection to Chalmer''s Marine Insurance Act, 1906 (6th ed., p. 178), where the learned commentator sets out an extract from the judgment of Lord Birkenhead L.C. in the leading case of British and Foreign Marine Insurance Co. Ltd. v. Gaunt (1921) 2 A.C. 41. The Lord Chancellor observed as follows:

In construing these policies it is important to bear in mind that they cover ''all risks''. These words cannot, of course, be held to cover all damage however caused for such damage as is inevitable from ordinary wear and tear and inevitable depreciation is not within the policy...Damage, in other words, if it is to be covered by policies such as these, must be due to some fortuitous circumstance or casualty....

We are, of course, to give effect to the rule that the Plaintiff must establish his case, that he must show that the loss comes within the terms of his policies; but where all risks are covered by the policy and not merely risks of a specified class or classes, the Plaintiff discharges his special onus when he has proved that the loss was caused by some event covered by the general expression and he is not bound to go further and prove the exact nature of the accident or casualty which, in fact, occasioned his loss.

In my view, this contention of Mr. Banerjee is of substance. It is apparent from a perusal of the policy of insurance that it covers all risks. The enumeration of the various risks thereafter is mere illustrative and not exhaustive. It would, therefore, follow that if there is rusting during the currency of the policy the Defendant would be liable. In that view of the matter, it would be unnecessary to go into the question as to what was the exact cause of the rusting so long as it is established that the rusting took place in course of the policy.

That brings me to the next question as to what is the evidence that the goods in question were rusted during the currency of the policy. Mr. Banerjee submits that the report of the Surveyor which is to be found at p. 36 of Ex. A is an admission binding the Defendant by virtue of the provisions of Section 20 of the Evidence Act. This contention will have to be examined in some detail. Section 20 of the Evidence Act is in the following terms:

Statements made by the persons to whom a party to the suit has expressly referred for information in reference to matter in dispute are admissions.

Coming to the facts of the present case, reference is made to the evidence of Anil Kumar Mukherjee, the principal officer of the Defendant. In answer to Q. 46 Mukherjee says that, according to the practice of the trade, the insurance company nominate the Surveyor to the assured. In Q. 47 he says that he did nominate the Surveyor in the present case. In Qs. 83 and 84 Mukherjee states that he nominated the Surveyor and the Surveyor was authorised to carry on the survey and do whatever was necessary. In Q. 85 it is said that the Surveyor was deputed to assess the loss. Questions 89 to 91 of Mukherjee are very material on this aspect of the question and are set out below:

Q. 89. Does this letter not mean that you are willing to pay the money provided the bill was approved?

We have mentioned that we shall forward the bills to the Surveyor for their approval of course the word ''approval'' has been mentioned here but it would have been better to mention ''for their observation'' or ''comment''.

Q. 90. But you have used the word ''approval''?

Yes, but then the quantum has to be apportioned by the Surveyor only. He is the competent authority to assess the loss. So we sent the bill for his remark.

Q. 91. And once he had approved it?

Whatever'' quantum he approves it is obligatory to us to pay that amount.

This is also corroborated by the evidence of the Plaintiff''s witness Sangal in answer to Qs. 56 to 59 and Q. 48 where Sangal states that Mr. Dench, the Surveyor, was a nominee of the insurance company.

The documentary evidence appears to corroborate the oral testimony. From the letter dated August 28, 1965, addressed by the Plaintiff to the Defendant, it is seen that the original copy of the Surveyor''s report was forwarded to the Defendant. This clearly indicates that the Plaintiff was furnished with the original copy of the Surveyor''s report by the Surveyor. The letter dated August 31, 1965, by the Defendant shows that the claim bill of the Plaintiff is being passed, on to the Surveyor for approval. In another letter dated August 31, 1965, written by the Defendant, the following statement occurs:

It is rioted that your claim bill is not certified by the Surveyors as indicated in the relative Survey Report and as such, we are forwarding the pertinent claim bill to the Surveyors for approval.

From the letter dated November 7, 1965, addressed by the Plaintiff, it is found that the Plaintiff is furnishing the details of its claim for derusting to the Surveyor. This is followed up by a letter dated November 3, 1965, from the Surveyor to the Plaintiff stating that the charges alleged to have been incurred by the Plaintiff in connection with derusting do not appear to be fair and reasonable.

The correspondence between the parties and the Surveyor, in my view, clearly establishes that the insurance company was placing an absolute and implicit reliance on the Surveyor with regard to the survey of the damage and the assessment of the loss. This has to be taken in conjunction with the oral evidence of Mukherjee for the Defendant that if the Surveyor had certified the claim bill, it would have been obligatory on the part of the insurance company to make the payment.

It is on the strength of all these pieces of oral and documentary evidence that it is submitted (that the contents of the Surveyor''s report should be held to be an admission binding the Defendant u/s 20 of the Evidence Act.

But then, it is said by Mr. Majumdar on behalf of the Defendant that this contention runs contrary to the view taken by this Court in a decided case. Reference was made to a decision of this Court in the case of S. Bhattacharjee Vs. Sentinel Assurance Co. Ltd., . In that case, the Plaintiff claimed on a policy of Fire Insurance on account of the damage caused by fire to goods insured under the policy. The insurer Standard General Assurance Company appointed M/s. Sinclair Murray and Co. Ltd. of Calcutta to assess the loss to the Plaintiff''s goods. In the written statement filed by the Defendant the assessment report of Sinclair Murray and Co. Ltd. was challenged as an incorrect one. It was stated that the Assessors based their report on hearsay evidence and on the oral statement of the Plaintiff and they also failed to properly scrutinise the books of account of the Plaintiff with the result that the amount of loss assessed was, far in excess of the actual loss suffered by the Plaintiff.

It is in this background that Bose J. (as he then was) was called upon to decide the question whether the report of Sinclair Murray and Co. Ltd. was an admission against the insurers u/s 20 of the Evidence Act. The observations of Bose J. on this question may be noted:

Then Section 20, Evidence Act, cannot be said to apply to the facts and circumstances of this case. The illustration appended to this section which is taken from the case of Williams v. Innes (1808) 1 Camp 364 (1), shows that the section requires that there should be three parties one of whom, viz. A refers another, viz. B to a third party, viz. C, for some information and the third party (i.e. C) supplies the information to B.

In such a case the information supplied by C will be treated as an admission made by A. In the present case, there is no question of referring the Plaintiff to Sinclair Murray and Co. for any information. The Defendant company simply informed the Plaintiff that they had appointed Sinclair Murray as the Surveyors to assess the loss on their behalf and requested the Plaintiff to assist the Surveyors from the Plaintiff''s side.

The Surveyors also did not supply any information to the Plaintiff as contemplated by Section 20. They submitted their report to their employers and Defendant company and Standard General Insurance Company. The evidence of the Plaintiff is very definite on this point (Qs. 49, 54, 55 and 56 of S. Bhattacharjee). The Plaintiff did not receive any information from Sinclair Murray and Co. Ltd. direct.

With great respect to Bose J., as he then was, the facts of that case seem to be distinguishable from the facts of the instant case. In the first place, it is to be remembered that in the written statement the Defendant had made certain specific and serious complaints against the assessment report of the Surveyors. In the written statement before me, there is no grievance of any kind made against the correctness of the contents of the survey report. In course of the entire correspondence between the parties there is no suggestion by the Defendant that the survey report is incorrect in any material particulars. On the other hand the correspondence appears to proceed on the basis that whatever is contained in the survey report is, correct. The only ground raised by the Defendant in the correspondence inter-parties prior to the intervention of the lawyers appears to be that the claim bill has not been certified by the Surveyors. It is to be further remembered that in the case before Bose J. the Plaintiff did not receive any information directly from the Surveyors who submitted their report to the insurance company. As I have already indicated, the correspondence shows that the original survey report was supplied to the Plaintiff, company in the present case. In view of all the above facts, I am of opinion that the decision of Bose J. in the above case is not of any assistance to the Defendant.

In my view, the facts of the present case appear to fit in very squarely with the statutory illustration appended to Section 20 of the Evidence Act. This seems to be a case where A (the Plaintiff) is making a claim against B (the insurer) and B is referring the Plaintiff to C (the Surveyor) for certain information. This reference as I have already said appears to be based on an implicit faith and reliance on competence of the Surveyor in surveying the loss and quantifying the claim.

Without intending to lay down a general proposition of law as to whether the report of a Surveyor would in all cases to be binding on the insurance company, I hold that, in the facts and circumstances of the present case, the contents of the Surveyor''s report are admissions against the Defendant u/s 20 of the Evidence Act.

Turning to the contents of the Surveyor''s report it is found that the cause of the damage is described as ''contact with moisture in transit''. The schedule appended to the report (at p. 40 of Ex. A) contains the following finding "some 75 % of coils shows signs of rust in parts indicative of having been sprayed with waiter."

The combined effect of these findings seems to Be that the rusting took place during transit on account of the goods having come in contact with water. This evidently took place during the currency of the policy and while the risk attached. It, therefore, follows that the goods were rusted as alleged in para. 6 of the plaint. Issue No. (2) is, therefore, answered in the affirmative.

It may be mentioned at this stage that the bill of lading describes the goods consigned as in ''apparent good order and condition''. It was contended by Mr. Banerjee that this was a clean bill of lading containing no disclaimer as to the condition of the goods. Reference was made to a decision of the Supreme Court in the case of Ellerman and Bucknall Steamship Co. Ltd. v. Sha Misrimal Bherajee (1966) Sup. S.C.R. 92 on the question as to what is a ''clean bill of lading''. It was said that Clause 5 on the reverse of the bill of lading merely provides that the statements in the bill of lading are not conclusive against the carrier. Reference was made to the provisions of Carriage of Goods by Sea Act in support of the contention that the contents of the bill of lading are prima facie evidence against the insurance company. Mr. Majumdar relied on the decision of this Court in Khalil Adalkhah v. Great American Insurance Co. Supra, a case to which I have made a reference hereinabove. Having regard to my finding as the cause of rusting the goods on the basis of the survey report, it is not necessary for me to express any opinion on this controversy.

It may be also noted before I leave this issue that neither party called Mr. Dench who actually surveyed the goods in question. Both Sangal on behalf of the Plaintiff and Mukherjee on behalf of the Defendant gave evidence before me on the whereabouts of Mr. Dench as also on the question of what efforts were made to produce Mr. Dench. The obvious conclusion from the oral evidence seems to be that Mr. Dench is not in India. He was connected with an American company of underwriters. He must be either in America or in some other part of the world. If it was necessary for me to decide the question, I would have had no hesitation in holding that the report of Mr. Dench is also admissible under the opening part of Section 32 of the Evidence Act by virtue of which statements, written or verbal, of relevant facts made by persons whose attendance can not be procured without an amount of delay or expenses which under the circumstances, of the case appears to the Court unreasonable.

The report of the Surveyor was admitted in evidence by consent of the parties formal proof, being dispensed with. A question was canvassed before me as to whether on such an admission the contents of the documents are proved, even when the maker or author thereof is not called. My attention was drawn to the decision of a Division Bench of this Court in the case of Lionel Edwards Ltd. Vs. State of West Bengal, . It was held in that case that documents are either proved by witnesses or marked on admission. When it is marked on admission without reservation, the contents are not only found but are taken as admitted the result being the contents cannot be challenged either by way of cross-examination or otherwise. In respect of documents marked on admission dispensing with formal proof, the contents are evidence although the party admitting docs not thereby accept the truth of the contents but is free to, challenge the contents by way of cross-examination or otherwise. It was submitted that since this report went on admission formal proof being dispensed with, it was open to the insurance company to challenge the correctness of the contents. Mr. Majumdar for the Defendant sought to answer this contention by pointing out that when the document was admitted he made an express reservation that the correctness of the contents was not being admitted by the Defendant and as such, the principle enunciated in the above decision had no application to the present case.

This question as to the proof of the truth of the contents of a document when formal proof has been dispensed with has always been a vexed question in the law of evidence. Having regard to my finding on the admissibility of the document u/s 20 of the Evidence Act, I would prefer to reserve my opinion on this question for an appropriate future occasion.

I propose to take up the issue No. (3) along with the issue No. (8).

Issue No. (4) is whether there was any short landing or short delivery of the goods as alleged in the plaint. Since the risk covered by the policy is from warehouse to warehouse, it would really be immaterial whether there was shortage when the goods were landed from the carrier or whether they were, short delivered to the Plaintiff assured at its warehouse. In either view of the matter, the Defendant would clearly be liable as the shortage would have occurred during the currency of the risk. The only argument advanced by Mr. Majumdar on this aspect of the matter was that there was no evidence as to how many coils were actually shipped by the American exporter. I have already field under the issue No. (1)(a) that the statement in the insurance policy with regard to the number of coils is prima, facie evidence that this number of coils were shipped. That being so, the onus is on the Defendant insurer to establish that in fact 833 coils were not shipped. No evidence of any nature whatsoever has been adduced by the Defendant to establish this. Therefore, the conclusion is inescapable that 833 coils were shipped. Further, there is no real dispute that only 826 coils were received by the Plaintiff at its warehouse. This is borne out by the survey report which in the schedule records that 7 coils are stated to have been short landed. In the correspondence prior to the lawyer''s letter no dispute is raised by the insurance company on the factum of the short landing of these 7 coils. In fact, it is found that the Plaintiff has also made a claim against the carriers on March 12, 1965, with regard to the 7 coils which are alleged to have been short landed. In view of all these, the issue No. (4) must be answered in the affirmative. As I have said, it is unnecessary to decide whether it was a case of short landing or short delivery of the goods.

Issue No. (5)(a), viz., whether the goods were surveyed in accordance with the policy of insurance was not pressed by the Defendant. This issue is, therefore, answered in the affirmative.

Issue No. (5)(b) is whether the goods which were surveyed form part of the consignment under bill of lading No. 1 dated November 28, 1964. Mr. Majumdar for the Defendant submits that the identity of these goods has not been established. In other words, it has not been proved that the goods which were surveyed by the Surveyor were the goods which came under the bill of lading No. 1 dated November 28, 1964. It is submitted that the Plaintiff should have produced its records, viz. stock register and godown register, which have shown whether these goods were kept'' separate or they had been mixed up with other coils which admittedly the Plaintiff had been importing on previous occasions. Reference is made in this connexion to the oral evidence of Sangal in answer to Qs. 506 to 514 which is to the effect that the stock register would show that other goods were there in the godown of the Plaintiff. It is not really necessary to discuss this question in any detail. This is because I have already held that the contents of the Surveyor''s report are evidence and admission against the Defendant. It was rightly argued by Mr. Banerjee on behalf of the Plaintiff that it was the primary job of the Surveyor to identify the goods before undertaking a survey. From the report of the Surveyor I find that this primary job has been done. Item No. 1(d) at p. 36 of Ex. A shows that these goods were discharged from S.S. jaladharma, In item No. 5(a) at p. 37 of Ex. A it is recorded that the bill of lading had been inspected by the Surveyor. Even the import licence number covering the consignment in question has been noted by the Surveyor in the schedule to the report. From all these facts it must be concluded that the Surveyor satisfied himself as to the identity of the goods before undertaking the survey. Issue No. (5)(b) is, therefore, answered in the affirmative.

Issue No. (6) is whether the Defendant is entitled to avoid the policy of insurance as alleged in para. 11 of the written statement.

Paragraph 11 of the written statement alleges that the Plaintiff knew or is deemed to have known, or ought to have known that at all material times prior to and at the time of the insurance the goods were in an unprotected state and particularly susceptible to damage by coming into contact with moisture and water. This fact, it is alleged, was material to be known to the Defendant for the purpose of entering into the said insurance. At all material times, prior to and at the time of insurance the Plaintiff concealed the said fact from the Defendant. By reason of the concealment of the material fact, as aforesaid, the Defendant is entitled to avoid and has avoided and/or avoids the said insurance.

It is evident that this is a plea of avoidance of liability under a policy of insurance on the ground of concealment of material particulars. The question is : Has the Defendant established this case of concealment of any material particulars? The sheet-anchor of Mr. Majumdar''s contention on this aspect of the case seems to be a remark appearing under item No. 20 in the Surveyor''s report to the following effect:

The cargo was unprotected and in the opinion of the Surveyor particularly susceptible to damage if landed in drizzle or wet weather. It is recommended that further parcels be wrapped in bituminised paper as minimum protection.

It was submitted that the report of the Surveyor, insofar as it is evident, should be evidence against both parties. It should, therefore, be held that this finding is binding on the Plaintiff insofar as the unprotected condition of the cargo was concerned. I do not, think that this is a valid contention. Section 20 of the Evidence Act speaks of admission only against a party who has referred to another third party any information. But, I do not think it would be correct to say that this statement would operate as admission against the Plaintiff in the present case. It is, however, not necessary to probe this question in any further depth because this part of the case assumed an entirely different complexion in course of the oral evidence.

Questions 58 and 59 of Mr. Mukherjee may be noted in this connection.

Q. 58. You have used the word ''unprotected'' in respect of the information which you say was not given to you what exactly do you mean by the use of the word ''unprotected''?

This is such a cargo I mean coils which were insured, 1 mean protected or unprotected relates to the package, packing of the materials. So, if it is unprotected that means there was no packing excepting that they were bundled.

Q. 59. Before you issued the policy on telephonic instruction, did you then make any enquiry from Mr. Garg as to the nature of the packing of this cargo?

He said that they were covered by hessian.

Therefore, according to the evidence of Mukherjee, he was informed by a representative of the Plaintiff that the goods were packed in hessian. Assuming that I accept the finding of the Surveyor that the cargo was unprotected and I further accept the statement of Mr. Majumdar that the goods were not packed in gunny and this is a question on which elaborate arguments were advanced, it would simply amount to this that the insurer was given a false information. In other words, this would be a case of misrepresentation of a material particular but not of concealment.

Faced with this difficulty Mr. Majumdar fell back on various legal propositions. My particular attention was drawn to several Articles in Halsbury''s Laws of England (Simond''s ed., vol. 22) on the meanings of concealment and misrepresentation. Strong reliance was placed on a passage in Article 222 (p. 120) which is to the following effect:

A concealment of a material fact may virtually amount to representation that the fact does not exist and every misrepresentation evidently involves a concealment of the truth.

According to this argument, the border line between concealment and misrepresentation is really a vanishing one.

Undoubtedly from an ethical standpoint there may be some substance in this argument. When a person misrepresents a fact, he is undoubtedly concealing the truth with regard to that fact. But, can this concept be imported into the law of marine insurance for the purpose of deciding as to whether when a party has pleaded a case of concealment of material particulars he is entitled to argue at the trial that it is a case of misrepresentation of a material fact.

In my view, such a course, is not permissible. The scheme of the Indian, Marine Insurance Act seems to have kept these two errors of omission and commission in separate, statutory compartments.

Section 20 of the Marine Insurance Act, 1963, inter alia, provides as follows:

Subject to the provision of this section the assured must disclose to the insurer before the contract is concluded every material circumstance which is known to the assured and the assured is deemed to know every circumstance which in the ordinary course of business ought to be known to him. If the assured fails to make such disclosure the insurer may avoid the contract.

This provision clearly authorises the insurer to avoid a policy in the event of non-disclosure by the assured.

Section 22 of the Marine Insurance Act, 1963, inter, alia, provides as follows:

Every material representation made by the assured or his agent to the insurer during the negotiations for the contract and before the contract is concluded must be true. If it be untrue the insurer may avoid the contract.

This is the statutory provision entitling the insurer to avoid a policy on the ground of misrepresentation.

According to the learned commentator of Arnould on the Law of Marine Insurance and Average (British Shipping Laws, vol. 10, Article 590, p. 557)

non-disclosure in the law of insurance is the suppression of, or neglect to communicate material fact within the knowledge of one of the parties which the other has not the means of knowing or is not presumed to know.

Therefore, non-disclosure is an offence of suppression or omission to do something. If what is stated turns out to be untrue, then it is not a case of omission or suppression of anything. This is also clearly illustrated by the specimens of pleading of the two grounds of concealment and misrepresentation which are to be found in Nos. 745 and 746 of M/s. Bullen and Leake, Precedents of Pleadings (11th ed., pp. 851-52).

For the reasons given above, I am unable to hold that if the pleading is of concealment of material particulars the party can be allowed to urge the case of misrepresentation at the trial. It, therefore, follows that in the state of the oral evidence the Defendant is not entitled to urge issue No. (6) as framed. Issue No. (6) is, therefore, answered in the negative.

Certain arguments were advanced on the question as to what is a material fact the concealment whereof or misrepresentation whereof entitles the insurer to avoid the policy. Controversies were also raised as to whether the assured in this case knew or was deemed to have known the material fact, namely, the nature of the packing of these goods. Having regard to my finding that the Defendant is not entitled to urge the issue as framed it is not necessary to deal with these questions any further.

Issue No. (7) is whether the Defendant is entitled to avoid the policy of insurance by reason, of the facts stated in para. 12 of the written statement. It is found from para. 12 of the written statement that'' the Defendant has alleged six reasons for which it is entitled to avoid the policy. They are as follows:

(a). The alleged rusting was caused by the inherent vice or the nature of the subject matter insured in its unprotected state.

(b). The Plaintiff failed to take reasonable measures for minimising the loss by wrapping the same in bituminised paper so as to give minimum protection.

(c) The Plaintiff failed to give prompt notice to the Defendant.

(d) The Plaintiff failed to make immediate claim, on the carriers and on the Port authorities for the seven missing coils.

(e) The Plaintiff failed arid neglected to apply immediately, for survey in the docks by the carriers and the Port authorities.

(f) The Plaintiff failed to give notice in writing to the carriers and Port authorities within three days of taking delivery.

At the stage of argument Mr. Majumdar gave up the grounds noted in (d) and (f) above. With, regard to the ground (e) the part regarding notice to Port authorities was not pressed.

With regard to ground (a) in para. 12 of the written statement the question is, was the rusting due to any inherent vice of the goods in question? The relevant clause is Clause 5 of the Institute Cargo Clauses (All Risks) which provides as follows:

This insurance is against all risks of loss or damage to the subject-matter insured but shall in no case be deemed to extend to cover loss, damage or expense proximately caused by delay or inherent vice or nature of the subject-matter insured. Claims recoverable herein shall be payable irrespective of percentage.

The law on this question of inherent vice has been discussed in Halsbury''s Laws of England (Simond''s ed., vol. 22, Article 156, p. 88). The summary of the learned commentator is illuminating and is set out below:

As regards the inherent vice or nature of the subject-matter, unless the policy otherwise provides, the underwriter is not liable for loss or damage that is not the consequence of some casualty which can properly be considered a peril of the sea; he is therefore not liable for loss or damage arising solely from decay or corruption of the subject-matter insured, that is, when fruit becomes rotten or flour-heats not from external causes but from internal decomposition, nor is he liable for spontaneous combustion generated by some chemical change in the thing insured arising from its putting on board to a wet or otherwise damaged condition or for damage caused by inadequate packing of the goods.

In the case of F.W. Berk and Co. Ltd, v. Style (1956) 1 Q.B. 180 Sellers J. quotes an observation of Birkenhead L.C. in the case of British and Foreign Marine Insurance Co. Ltd. v. Gaunt Supra. In that decision Lord Birkenhead sets out an extract from the judgment of Walton J. in Schlosh Brothers v. Stevens. Those observations clearly establish, that ''All Risks'' policy were intended to cover all losses by any accidental cause of any kind occurring during the transit, but there must be a casuality. In other words, the damage that is covered by such policies must be due to some fortuitous circumstances or casualties. To quote:

It covers a risk, not a certainty; it is something which happens to the subject-matter from without, not the natural behaviour of that subject-matter, being what it is, in the circumstances under which it is carried.

From the above observations and also the illustrations noticed in Halsbury it is evident that an inherent vice would be something internal to the thing itself. It has been picturesquely described as something that ''contains the seeds of its own destruction''. The illustrations of decomposition of fruit or the heating of flour amply bears out this description.

The question therefore is: is there any evidence of any such ''inherent vice'' of the core wire of steel so as to result in rusting? Mr. Majumdar sought to rely on the evidence of Sangal (Qs. 310 to 313) which is to the effect that if there is contact with moisture these coils will get rusted. I do not see how this can be said to be the evidence of any ''inherent vice''. After all, rusting is a process of oxidisation of the material by coming into contact with moisture or water. Something that happens by result of contact with something outside the thing itself, in my view, cannot be called an ''inherent vice'' of the thing. The policy of insurance is also a clear evidence of the fact that the assured was being covered against this particular-contingency of these coils coming into contact externally with moisture or water. In this view of the matter, also rusting cannot be possibly called the result of any ''inherent vice'' of these goods. For the reasons given above, it must be held that the Defendant is not entitled to avoid the policy on the ground (a) of para. 12 of the written statement.

The next question is whether the Plaintiff failed to the measures for minimum protection of the goods which were the subject-matter of the policy of insurance. As I have already noticed the pleading in para. 12(b) is to the effect that the Plaintiff and its agents failed and neglected to take reasonable measures for averting or minimising the loss by wrapping the same in bituminised paper so as to give minimum protection. The relevant clause is Clause 9 of the Institute Cargo Clauses which runs as follows:

It is a duty of the Assured and their Agents, in all cases, to take such measures as may be reasonable for the purpose of averting or minimising a loss and to insure that all rights against Carriers, Bailees or other third parties are properly preserved and exercised.

It would be noticed at once that this clause docs not cast any obligation on the assured or its agents to wrap the insured goods in bituminised paper. As there is no such obligation the question of any failure to discharge this obligation does not arise. This part of issue No. (7) must be answered accordingly.

The next allegation in the written statement is that the Plaintiff failed to give prompt notice to the Defendant about the loss and damage. The first notice to the Defendant alleging that the coils have been found to be rusty and 7 coils have been short landed is dated March 12, 1965 and is to be found at p. 28 of Ex. A. Mr. Majumdar refers to a letter dated April 29, 1965, written by the Plaintiff to the principal officer of the Defendant wherefrom it appears that the goods landed at the Calcutta Port on February 22, 1965. On the basis of this it is argued that no notice of the alleged rusting was given by the Plaintiff for a period of twenty days after the goods had landed. Hence, the Plaintiff failed to give prompt notice.

Reliance is placed by Mr. Majumdar in this connection on a clause in the attached sheet to the policy of insurance which is marked ''Important'' and is to the following effect:

In the event of damage which may involve a claim under this policy or certificate, immediate notice of such damage must be given to and a Survey Report obtained from Lloyd''s Agents or as below.

This clause in my view clearly postulates that the assured must discover the loss or damage before such notice as required by the above clause can be given. Turning to the survey report it is found that the goods were delivered into the Plaintiff''s warehouse between March 11 and 13, 1965, by trucks. This is clear evidence of the fact that the first lot of these goods arrived at the warehouse on March 11, 1965. The notice of claim was given on March 12, 1965. Sangal in his evidence has stated that he discovered the rusty condition of the goods when they reached the warehouse and after the coils were unwrapped. There is no evidence on record to the contrary of any prior knowledge oh the part of the Plaintiff or its agents as to the rusty condition of the goods. The letter dated March 12, 1965, addressed to the Defendant, also corroborates the oral evidence that the rusty condition of the goods was discovered on their delivery at the warehouse of the Plaintiff at 106 Andul Road, Howrah. On the evidence, I am satisfied that there was no delay on the part of the Plaintiff in giving notice to the Defendant as to the damage to the goods.

The last part of this issue turns on a clause in the ''Important'' notice which requires the assured or their agents ''to apply immediately for survey in the docks by carriers'' and the Port''s representatives if any loss or damage be apparent and claim on the carriers and the Port authorities for any actual loss or damage found at such survey. It is submitted by Mr. Majumdar that the Plaintiff failed to apply for survey at the docks and allowed the goods to be removed before any such survey was held. It is clear and it was not disputed by Mr. Majumdar that this clause will only apply when the loss or damage is apparent when the goods are in the docks. As I have already found, the loss or damage to the goods were discovered as and when the goods reached the Plaintiff''s warehouse and after they had left the docks. In that view of the matter, the clause which I have quoted above does not have any application to the facts of the present case. Consequently, it must be held that there has been no failure on the part of the Plaintiff as alleged in para. 12(e) of the written statement.

In view of what has been stated above it must be held that the Defendant is not entitled to avoid the policy of insurance by reason of facts stated in para. 12 of the written statement. Issue No. (7) is, therefore, answered in the negative.

Certain arguments were advanced by Mr. Majumdar on the basis that the clauses to which I have made a reference above were warranties. With reference to certain observations in Halsbury''s Laws of England (3rd ed., vol. 22) is was submitted that these warranties must be strictly complied with and any failure to do so would entitle the insurer to avoid the policy. Mr. Banerjee, on the other hand submitted that these clauses were not warranties but collateral stipulations in the policy of insurance. Reference was made to certain observations in the Law of Insurance by Preston and Colinvaux (2nd ed., pp. 101 and 102) on the distinction between warranties and collateral stipulations in the law of insurance. It was further submitted that a requirement as to giving notice must of necessity be a procedural obligation which cannot go to the root of the matter. Consequently, even if there is a breach of such a procedural obligation, it would not entitle the insurer to avoid the policy.

Reference was made in this connection to a decision in the case of Stoneham v. The Ocean, Railway and General Accident Insurance Co. 19 Q.B.D. 237. In that case the insurance policy contained the following clause:

In case of fatal accident notice thereof must be given to the company at the head office in London within the like time of 7 days.

Dealing with this clause Mathew J. observed as follows Supra (240):

The notice is not stated to be a condition of liability nor is there any stipulation that if no notice is given the policy shall be void. The clause is probably inserted in order to save the company from the extra expense which they would incur if they had to investigate the circumstances of accidents at long intervals after their occurrence. On consideration of all the terms of the document, I am satisfied that, according to the correct interpretation, the giving of notice of the accident within 7 days is not a condition precedent to the enforcement of the policy.

Cave J. also concurred with the finding of Mathew J. on this point.

Relying on the above observations it was submitted that I should also come to the conclusion that the conditions in the policy as to giving of notices should not be held to be conditions precedent for enforcement of the liability and consequently, even assuming that there had been a breach of any of such conditions it would not entitle the insurer to avoid the policy.

Having regard to my finding that there has been no breach on the part of the Plaintiff of any of the above stipulations, it is not necessary for me to express any opinion in this case as to whether these are warranties or collateral stipulations. Further, it is not necessary to decide whether the breach of any if these clauses would entitle the insurer to avoid the policy.

This brings me to the other two issues, viz., the issues Nos. (3) and (8). These relate to the question as to what were the costs incurred by the Plaintiff for derusting the goods and to what relief is the Plaintiff entitled.

As I have already noticed the claim in the plaint on account of derusting is for a round sum of Rs. 31,000 as the costs of derusting of 620 coils. No particulars are to be found in the plaint as to the basis of this claim.

Turing to the correspondence it is found that the Plaintiff submitted a claim bill to the Defendant claiming the identical sum of Rs. 31,000. This bill was submitted on August 28, 1965. No basis was, however, indicated for the calculation of the amount of the claim. Thereafter, pursuant to an enquiry by the Surveyor a letter was addressed to the Surveyor on November 1, 1965, wherein the claim has been based on the calculation given below:

Cost of derusting one coil:

Cost of 5 litres of Deoxiden used @ Rs. 9-20 nP.

per litre Rs. 46-00

Labour charges ... Rs. 4-00

Total Rs. 50-00

Therefore, cost of derusting 620 coils = 620 � Rs. 50 = Rs. 31,000.

Apart from this there is no other material in the documents as to the mode of calculation or the particulars of this claim. There is oral evidence on this question. This is to be found in the evidence of Sangal in answer to Qs. 66 to 92. The substance of this evidence is that 26 kgs. of potassium silicate of the thinner quality was mixed with another 25 kgs. of potassium silicate of the thicker type and with 100 kgs. of rutile sand. This mixture of 150 kgs. was made in a vat. Three coils each of which weighed 150 kgs. could be derusted with this 150 kgs. of the mixture. Thereafter, it had to be thrown away and a fresh mixture prepared. According to this evidence, potassium silicate was purchased from a firm at Calcutta known as Producers Forum Pvt. Ltd. and rutile sand was being imported from Australia. There was no local dealer of rutile sand in, Calcutta at the relevant time and the Plaintiff had to, import it as ''actual users''. The Plaintiff did not ever employ any outside agency for the derusting but did it themselves. The price of the thinner type of potassium silicate is about Rs. 221 per kg., the price of the thicker variety is Rs. 125 per kg. and the price of rutile sand is 0-55 P. per kg. On the above pricing the cost of the mixture for derusting one coil, according to the witness, comes to Rs. 46 per coil.

The only other evidence which needs to be considered in this connection is the further disclosure of the Plaintiff being PFD No. 1 to PFD No. 4. The first two documents are invoices from William Gedds and Co. Pvt. Ltd. of 19/23 Hamilton Street, Sydney. The first invoice relates to 358 bags of Australian rutile sand weighing a little over 18 tons and the amount is mentioned as � 695-10s. The second invoice is for 400 bags of the same sand weighing 22 tons. The amount in this invoice is �775 on the basis of � 38-15s. per ton. The last two documents in these disclosures are two bills of the Producers Forum Pvt. Ltd. for certain quantities of potassium silicate. The price therein is mentioned as Rs. 2,210 per metric ton of potassium silicate 120� T.W. and Rs. 1,250 per metric ton of potassium silicate 80� T.W.

It is on the basis of this evidence that I am invited to hold that the Plaintiff is entitled to claim Rs. 46 as the cost of the materials used for derusting one coil and Rs. 4 by way of labour charges for the same.

It is to be noticed at once that the Plaintiff has not produced any records to show as to what quantity of potassium silicate and what quantity of rutile sand were actually utilised by the Plaintiff in this operation of derusting 620 coils. The Plaintiff has not produced its stock register or stores register which, in my view, would have indicated what quantities of this particular types of derusting materials were being purchased by the Plaintiff and what quantities were being consumed at different points of time. Sangal in oral evidence admitted that indents in proper forms were being made, on the stores by the factory for the purpose of obtaining derusting materials. He also said that those indent forms should be available. In reexamination, however, in answer to Q. 538 Sangal stated that the factory was closed from October 8, 1969, to November 4, 1970, due to labour trouble and during that time ''lots of records and goods were spoiled''. Assuming that this is sufficient explanation for the non-production of the indent forms, there is no explanation on record as to why the other documents like the stock register or the stores register of the Plaintiff could not be produced. It is to be remembered that the Surveyor in letter dated. November 3, 1965, stated that the charges which the Plaintiff is alleged to have incurred in derusting were not fair and reasonable. After this it was clearly open to the Plaintiff to adduce proper materials before the Surveyor and substantiate this claim for the cost of derusting by proper breakup and with reference to the actual quantity of materials used and the actual costs incurred. No attempt appears to have been made in course of the correspondence to do that. No doubt, by their letter dated April 16, 1966, the Plaintiff offered a few rusted coils to the Surveyor for getting an estimate of derusting charges ''from your source without prejudice to our claim''. Strangely enough, there does not appear to have been any response from the side of the Surveyor and the correspondence was abruptly closed by the Surveyor by letter dated April 18, 1966. Be that as it may, it is difficult to understand why the Plaintiff would offer these coils to the Surveyor for obtaining an alternative estimate of the costs if they had actually incurred the cost which they allege to have done.

Even if it is assumed for the sake of argument although there is no evidence on record that the Plaintiff was unable to produce the relevant records in this connection, it is difficult to see why independent corroborative evidence could not have been adduced for the cost of derusting similar materials from other parties. Mr. Sangal in answer to Qs. 161 and 162 said that the firm Indian Oxygen manufactures similar electrodes as the Plaintiff does. No attempt appears to have been made to find out from this reputed firm as to the cost of derusting coils for the manufacture of electrodes. There is no explanation before me as to why Indian Oxygen could not be called in this connection.

There is, however, in my view, a more fundamental obstacle in the way of the Plaintiff in establishing this claim. This is because the Plaintiff has, in my opinion, failed to establish that the method adopted by it for derusting the coils was the only possible method. It must be remembered that the Plaintiff''s witness Mr. Sangal does not anywhere positively state in his evidence that the method adopted by them was the only method for derusting the coils. His explanation seems to be that they were working in collaboration with an American Pacific Lloyds Co. Inc. and the technical know-how for the various operations were supplied by this American collaborator. In fact, Mr. Sangal admitted that the ''saw-dust'' method which was one of the methods recommended by the Surveyor was a possible method. According to him, it would be more expensive. In fact, the Plaintiff''s own witness Ramesh Chandra Gupta in answer to Qs. 18 and 19 speaks of various method for derusting including a method in which sulphuric acid is used. This admittedly is a much cheaper process.

It is possible that in view of the collaboration of the Plaintiff company with the American company the Plaintiff was obliged to use this particular process of derusting as a part of the technical know-how supplied by the American counterpart. If that is so, the Plaintiff must have necessary documents and technical data at its possession to prove that. No such data has been produced before me and there is no explanation for their non-production. It is again possible that having regard to the nature of the materials and the specialised use to which they were to be put, viz. the method of electrodes, the sulphuric acid method is not a proper method to be adopted by the Plaintiff. This, however, has not been established by proper evidence. In that view of the matter, it must be held that the Plaintiff has failed to establish that the method adopted by it for derusting the coils was technically only possible method which had to be adopted by it to the exclusion of other less expensive method.

There is another aspect of the matter. It was said by Mr. Sangal in his evidence that the process for derusting went on from March 1965 to August 1965. His evidence was to the effect that the derusting of these coils took place as and when the Plaintiff required them for the purpose of manufacture of electrodes. He also admitted that, as time went by, these coils which were lying in the Plaintiff''s godown would get more and more rusty. Consequently, the cost of derusting would necessarily be more with the passage of time.

It was submitted by Mr. Majumdar with reference to several observations in Halsbury''s Laws of England and other text-books that the relevant point of time when the damage is to be calculated is at the time of the loss. I do not sec that this proposition can be disputed. If that is so, the point of time would be around March 12, 1965. If the Plaintiff chose to keep the goods till the month of t August 1965 and then have them derusted, it is not in my view entitled to the costs which would be incurred in August 1965 and which would on the evidence be more than what it would have cost in March 1965. To allow such a claim would be to allow unjust enrichment.

For these reasons, I am constrained to come to the conclusion that the basis on which the Plaintiff has made the claim in this suit is, on the evidence, unacceptable.

The question that naturally arises is what then is the damage to which the Plaintiff is entitled.

Mr. Banerjee sought to argue that the damages in the present case could be calculated on the basis of a certain percentage of the actual cost incurred by the Plaintiff in connection with the import of these goods. My attention was drawn to the letter of the Surveyor dated November 3. 1965, in which it was being contended that the Plaintiff''s estimate was too high as it constituted 37 per cent of the insured value of the coils. The Plaintiff in reply pointed out that the claim it was making consitituted only 21 per cent of the total cost as will appear from its letter dated April 16, 1966. On the basis of this correspondence it was submitted that the damages could be assessed at something between these two percentages.

In support of this contention reliance was placed on a decision of this Court in the case of Gambhirmull Mahabirprasad Vs. The Indian Bank Ltd. and Another, . In that case S.P. Mitra J. was pleased to assess the damages on the basis of a certain percentage.

I am unable to accept this contention of Mr. Banerjee. In my view, although it is the duty of the Court to assess the damages, it will be extremely unsatisfactory in this case to assess it on a percentage basis. After all, this is a claim against an insurance company. The Plaintiff is only entitled to get the amount which it had spent in derusting the coils. The cost of derusting would clearly depend on the extent of rust, the cost of the derusting materials, the labour engaged and similar other factors. As I have said, the evidence led by the Plaintiff on this score is not acceptable to me. I fail to see, however, what percentage I can determine to be the reasonable cost of derusting the coils in the facts and circumstances of the present case.

The question was canvassed before me as to whether it is a fit case where nominal damages should be awarded in favour of the Plaintiff. Mr. Banerjee submitted that this was a case where the Plaintiff was entitled to substantial damages and not nominal damages. Reference was made in this connection to a decision in the case of Biggin and Co. Ltd. v. Permanite Ltd. (1951) 1 K.B. 422. That case concerned a certain specialised product from bitumen prepared as an adhesive called premise for use in laying of felt roofs which was to be capable of being applied cold owing to scarcity of fuel at that time in Holland where it was to be used. A claim was made for breach of warranty against the suppliers of those goods. Devlin J. came to the conclusion that the material was specially compounded for the job and it was passed on by the Defendants to the Plaintiffs and was never given a fair commercial trial. As such, it was difficult, if not impossible, to assess the market value of these goods as a basis for assessment of damages. Nonetheless, Devlin J. came to the conclusion that the claimants were entitled to substantial damages which was assessed at 50 per cent of the value as, to quote his Lordships own words, ''a very rough guide'' Supra (437-440).

This controversy as to whether the Plaintiff is entitled to nominal damages or substantial damages need not be discussed in any further detail. This is because the Defendant itself has led evidence to show what according to the Defendant would be the cost of derusting of these materials. In fact, Mr. Majumdar very clearly stated before me that in view of the evidence led by his client it was not a fit case for award of nominal damages. The evidence on behalf of the Defendant on this point may now be discussed.

The material witness on this aspect of the matter on behalf of the Defendant is Dilip Dutt. He is a chartered engineer of the Institution of Electrical Engineers, London. He was previously employed with the Calcutta Electric Supply Corporation and is now engaged in the work of consulting engineers. He is also connected with the manufacturing of transformation resistance and miscellaneous electrical equipments. The answers to Qs. 28 to 30 would show that if the "sulphuric acid method is used, the cost of derusting would come to Rs. 8 per hundred kgs. of coil". Although he has no experience of electrodes he has stated in answer to Qs. 57 to 59 that the sulphuric acid method would not cause any putting on the wares as no putting can be allowed in the resistance wire which is in his line of manufacture. From this it may be inferred that this method is not unsuitable for derusting coils which are to be used in the manufacture of electrodes. As I have already said, the Plaintiff has entirely failed to establish that this method is not suitable for electrode work.

It was commented on behalf of the Plaintiff that Dilip Dutt has not produced any records to corroborate his oral evidence as to the cost of derusting. This comment is justified. Mr. Dutt stated that he had the necessary bills and vouchers, but he had not brought them to Court. This witness, however, impressed the Court as one whose oral evidence could be relied upon.

The evidence on the question of damages is not satisfactory on either side. Having regard to the fact, however, that it is a duty of the Court to assess damages, I prefer to depend on the evidence of Mr. Dutt on the question of derusting.

It is on evidence that each coil weighs 150 kgs. Therefore, it follows that the Plaintiff is entitled to Rs. 12 as to cost of derusting of one coil. On this basis the claim of the Plaintiff on account of derusting of 620 coils would come to 620 � 12 = Rs. 7,440. The cost of 7 coils as claimed in the plaint and it has not been seriously disputed, is Rs. 1,156. The report of the Surveyor shows that the Plaintiff has paid the Surveyor Rs. 64 which it is entitled to recover.

In the result, there will be a decree for Rs. 8,655 being the aggregate of the above amounts. The Plaintiff is entitled to interest on judgment @ 6 per cent and costs.

Having regard to the complexity of the various legal questions, which were canvassed before me, the costs are certified for two counsel.