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Judgment
Anand, C.J.—This is the defendant's appeal against the judgment and decree of the learned single Judge dt. 8-4-1987, decreeing the suit
with costs and future interest.
The plaintiff-respondent filed a suit against the defendant-appellant for recovery of Rs. 3,75,000/- on the allegation that his truck No. 2486-
JKQ which was insured with the defendant-appellant vide Motor Insurance Policy No. 6301720/81, as renewed from time to time, for an amount
of Rs. 2,50,000/-, met with an accident on 3-2-1983 on the Jammu-Srinagar, national highway. That, as a result of the accident, the truck rolled
down from the road and resulted in total loss. That the plaintiff-respondent informed the defendant-appellant about the accident and laid his claim
in terms of the insurance policy. According to the plaintiff-respondent the truck in question had been purchased by him for an amount of Rs.
2,44,000/-. He has spent another amount of Rs. 15,000/- for preparing its body. For the purchase of the truck, the plaintiff-respondent had
obtained loan from J. & K. Bank after executing a hire purchase agreement with the Bank.
The case of the plaintiff-respondent further is that the defendant-appellant had deputed surveyor to assess the loss and even a surveyor from
Delhi was directed to make the assessment but with a view to deny the claim of the defendant-appellant, the assessment was not got made.
According to him a legal notice had been served on the defendant-appellant on 7-3-1983 to pay up the insurance claim, but despite the service of
the notice, the claim had not been paid up. The plaintiff-respondent alleged that because of the total loss of the vehicle he had suffered a loss of
more than Rs. 2,59,000/- but since the insurance liability was only to the extent of Rs. 2,50,000/- he was claiming only that amount together with
interest @ 18% from the date of notice till the filing of the suit on 4-1-1986, which was worked out at Rs. 1,25,500/-. Besides, interest pendente
lite and future interest @ 18% per annum, till the realisation of the decretal amount was also claimed.
The defendant-appellant resisted the suit and filed the written statement. It was averred that information was received by the defendent-appellant
regarding the accident on 3-2-1983 but that the circumstances surrounding the accident pointed towards a deliberate rolling of the vehicle down
the hill and the defendant-appellant got the case investigated through Shri D. R. Bhasin retired Dy.'S. P. Proprietor M/s. Star Detectives (P) Ltd.,
Old Hospital Road, Jarnmu who confirmed that the accident had been caused deliberately by pushing the vehicle down the hill. It was further
averred that the vehicle in question was not fit for plying on long distance routes for many months prior to the alleged accident and that since the
fitness of the vehicle was to expire on 13-3-1983, and it required further investment to make it road-worthy, the accident was manipulated. That
the vehicle, in any case, had no re-sale value and since the insurance policy was due to expire on 8-2-1983, the vehicle was taken to olicy was due
to expire on 8-2-1983, the vehicle was taken to the spot on the fateful day and deliberately pushed down the hill with the mala fide intention to get
a claim of total loss from the defendant-appellant. It is also stated that many accidents of the like nature involving Ford and Shok Leyland trucks
were reported in 1982 and 1983 and both the said makes had no re-sale value in the market. The right of the plaintiff-respondent to claim principal
amount and interest thereon was, therefore, controverted.
On April 4, 1986, the learned single Judge framed the following issues : --
(1) Whether truck No. JKQ-2486 deliberately thrown by the plaintiff in order to wrongly get a claim from the defendant ?.......O.P.D.
(2) In case issue No. 1 is proved in affirmative whether under the Insurance Policy, the defendant is absolved of its liability towards the plaintiff
?.......:.O.P.D.
(3) Whether the plaintiff is entitled to recover suit amount and interest from the defendant ?.......O.P.P.
(4) Relief ?
The learned Judge decided issue No. 1 against the defendant holding that it had not been established that the vehicle in question was deliberately
pushed down at the instance of the plaintiff-respondent in order to wrongfully get the claim from the defendant-appellant. Issue No. 2, in view of
the finding on issue No. 1, did not require any discussion and was accordingly disposed of. Issue No. 3 was decided in favour of the plaintiff-
respondent, who was held entitled to recover the insurance amount of Rs. 2,50,000/- besides 2,50,000/- besides interest @ 18%, as claimed by
the plaintiffrespondent, amounting to Rs. 1,27,500/-. Interest pendente lite and future interest at 12% per annum was also allowed while deciding
issue No. 4.
Mr. T. S. Thakur, learned counsel for the appellant assailing the judgment and decree, firstly; questioned the finding of the learned single Judge
on issue No. 1. He submitted that the finding was contrary to the weight of evidence on the record and that the learned trial Judge had failed to
appreciate certain tell-tale circumstances appearing in the case. He also assailed the placement of the onus of the said issue on the defendant
Secondly, he submitted that the finding of the learned Judge on issue No. 3, was erroneous and unsustainable and had been arrived at without
any discussion. According to Mr. Thakur, the trial Judge failed to appreciate that an insurance policy is only a contract of indemnity and not a
contract of -guarantee. He argued that without taking note of the terms and conditions of the policy of Insurance, the extent of the liability could not
be fastened on the appellant. He also questioned the correctness of the issue No. 3 as framed in the case and submitted that on account of the
non-framing of a proper issue, the appellant had been prejudiced.
Mr. V. K. Gupta controverted the submissions of Mr. Thakur in so far as the findings on issues Nos. 1 and 2 are concerned. Learned counsel
submitted that the onus of the issues had been rightly placed on the defendants and after having led evidence in the case, the question of onus in any
event pales into insignificance. So far as issue No. 3 is concerned, learned counsel submitted, that the issue had not been happily framed but since
the evidence led by the plaintiff in support of the issue established that he was entitled to recover the suit amount together with interest, no fault
could be found with the finding recorded by the learned trial Judge.
In support of issues 1 and 2 the defendant examined Shri D. R. Bhasin, a retired Dy. S. P. besides Shri Hari Krishan, S.I. Toll Post, Nagrota;
Joginder Singh, president of Transporter Association, Jammu; Mohinder Kumar Arora, surveyor; V. K. Bakashi and Sansar Singh besides Shri S.
K. Dhar, Divisional Manager of the defendant company. The main reliance, however, was placed on behalf of the defendant-appellant on the
statement of Shri D. R. Bhasin. The plaintiff-respondent, on the other hand, appeared as his own witness and did not produce any other oral
evidence.
The learned trial Judge has dealt with the evidence of Shri D. R. Bhasin in extenso and we need not repeat the statement of the witness except
to the extent it is absolutely essential. According to the witness, he was running a private firm under the name and style of 'Star Detectives' and had
investigated into this case at the asking of the defendant-company. He prpved his report Ex. DW/B. He admitted that the vehicle in question had
fallen to a depth of about 2000-3000 feet near river Chenab and asserted that the accident had been caused by pushing the truck down the hill
deliberately. The witness went on to add that he had. been to the spot on June 17/18, 1983, and made enquiries from various persons regarding
the alleged accident but nobody could give him any satisfactory reply. The witness conceded that he had not maintained any file. During the cross-
examination, the witness expressed his helplessness to disclose the basis for making the report, which was relied upon by the defendant-company
to reject the claim of the plaintiff-respondent. According to the witness, one of the circumstances on which the report was based was that the
vehicle had not been entered on any check-post on the national highway and that the driver of the vehicle had not appeared before him. He also
admitted in his cross-examination that he did not, in fact, record the statement of any person nor could he give the name of any person from whom
he may have made oral enquiry. The witness further stated that according to his enquiry, the vehicle in question had been sold at Baramulla. To a
specific question in the cross-examination, the witness answered that he could not come to any definite conclusion regarding the accident of the
vehicle in question.
The learned trial Judge noticed the contradictory stand taken by the witness and found that his report also was of no significance and that he
had tried to please the defendant-company by absolving the company of its liability. The evidence of the witness to our minds also does not inspire
confidence. In one breath he stated that the accident took place because the vehicle was pushed down the hill deliberately yet, at another place he
wanted the court to believe that no accident had at all taken place and that the vehicle had been sold at Baramulla. This stand of the witness shows
the most unsatisfactory nature of the enquiry allegedly conducted by him. The witness had not maintained any file of his enquiry and could not even
state the names of the persons who he examined regarding the accident during the investigation. His testimony, to say the least, is very
unsatisfactory. Again, the statement of the witness to the effect that one of the circumstances which formed basis of his report was that the vehicle
had not been entered at any check-post on the highway stands completely belied by the defendant's other witness, namely, Shri Hari Krishan, S.I.,
Toll Post, Nagrota, who deposed on the basis of the record that the vehicle bearing No. JKQ 2486 has been entered at Toll-post, Nagrota on 2-
2-1983 and that the vehicle was on its way to Ramban. The statement of D. W. Sensar Singh, Managing partner of Kailash Transport Service
belies not only the testimony of Shri D. R. Bhasin but of D. W. Jogindar Singh as well when he stated that if the vehicle had to go to Ramban
without carrying any load, it did not require any allotment and that in the month of Feb. 1983 there was enough work of carriage of timber in Doda
district and that the vehicles used to go empty from Jammu to that district for carrying out the work of transportation of timber. This averment
explains as to why the vehicle had left without any alitotment though the defendant had attempted through D. W. Joginder Singh to show that since
no vehicle could be taken away without allotment, the vehicle in question had not left Jammu at all. In para 4 of the written statement, the defendant
mainly relied upon the investigation conducted through Shri D. R. Bhasin to assert that the vehicle had been got pushed down the hill with mala fide
intention and that there was no genuine accident. In fact, it was on the basis of the report of Shri Bhasin that the defendant-appellant denied its
liability to pay the claim. As already noticed, the testimony of Shri Bhasin does not inspire confidence and is wholly inconclusive, noncommittal and
vague. So far as D. W. Varrinder Kumar, Clerk, R.T.O.'s office is concerned, he stated that the fitness of the vehicle was to expire on 13-3-1983
which does not advance the case of the defendant. D.W. V.K. Bakhshi, a surveyor deputed by the defendant-company, deposed that he had
visited the site of the accident and prepared the report. According to him, from the place where the vehicle in question had fallen, it was impossible
to retrieve it. This witness, therefore, supports the case of the plaintiff-respondent rather than that of the defendant-appellant. The testimony of Shri
S. S. Bhatia, surveyor and Shri S. K. Dhar, Divisional Manager of the defendant-company, who had no personal knowledge about the accident
does not land any support to the case of the defendant company either.
The plaintiff-respondent in his statement fully supported the case as set out by him in the plaint and asserted that the vehicle had met with an
accident when the driver was trying to reverse the vehicle in the early hours of the morning. During the cross-examination nothing was elicited from
him which could in any way destroy his testimony as regards the accident. He admitted in the cross-examination that on the date of the accident, no
conductor had gone in the vehicle with the driver and went on to add that it was so because no conductor had been employed during those days
and that the vehicle has been taken by the driver Madan Lal alone who had a hill licence. He stated that the driver had come to him in Jammu after
the accident and informed him that while he was reversing the vehicle, it left the road and rolled down and that he jumped out of ihe vehicle and
saved himself. He stated that he had not been interrogated by any private detective agency and did not know whether the defendant company had
got the accident investigated through any such private agency.
The evidence led by the defendant on whom the onus of proving issues 1 and 2 lay, is not only vague, non-committal and inclusive but also
does not support, the assertion of the defendant-company that the vehicle in question was deliberately thrown by the plaintiff in order to wrongly
get the claim from the defendant. The report Ex.DW/B as well as the testimony of Shri Bhasin, on whose testimony the defendant has heavily
relied, does not inspire confidence and is not reliable. The defendant, therefore, failed to establish that truck No. JKQ-2486 had been deliberately
pushed down the hill by the plaintiff in order to obtain wrong claim from the defendant company and the learned trial Judge in the face of the
evidence on the record was, therefore, perfectly right and justified in deciding issue No. 1 against the defendant and we affirm that finding. In view
of the finding on issue No. 1 which has been decided against the defendant, issue No. 2 does not call for any consideration and discussion.
Having found that the truck in question had met with an accident, the extent of the liability of the insurance company, under the terms of the
insurance policy, was the next crucial question requiring determination.
It appears that this issue No. 3 was framed only on the basis of the prayer clause in the plaint and not on the pleadings of the parties. While
framing an issue, it is the duty of the court to do so on the basis of the pleadings of the parties, which mean not only the plaint and the written
statement, but also the documents accompanying the same. The insurance policy which had been placed on record had certain terms and
conditions incorporated therein. Condition No, 4 of the Insurance Policy reads thus :
The Company may at its own option repair, reinstate or replace the Motor Vehicle or any part thereof and/or its accessories or may pay in cash
the amount of the loss or damage and the liability of the Company shall not exceed the actual value of the parts damaged or lost plus the
reasonable cost of fitting and shall in no case exceed the insured's estimate of the value of the Motor Vehicle (including accessories thereon) as
specified in the Schedule or the value of the Motor Vehicle (including accessories thereon) at the time of the loss or damage whichever is the less.
This condition, apparently, was not noticed by the trial Judge while framing the issue. Even the alternate plea raised by the defendant-company in
the written statement with regard to the extent of the liability of the insurance company was lost sight of, It had been stated in the said plea that the
market value of the truck in question was not more than Rs. 30,000/- (para 6 of the written statement) and, thus, plaintiff was not entitled to
recover the suit amount. The trial court held that since the accident had been established, ""the defendant-company was bound to pay insurance
amount to the plaintiff."" That is not the correct position in law. A contract of insurance is not a contract of guarantee. It is only a contract of
indemnity and an Insurance Company is liable to indemnify the assured against the actual loss suffered, subject to the extent of the liability within
the limits of the estimated value as mentioned in the policy of assurance. The issue as framed completely ignored this aspect of the case resulting in
the court recording an erroneous finding.
In Chandmull Jain and Another Vs. General Assurance Society Ltd., it was laid down that a contract of insurance is a contract of indemnity
and ""when loss occurs it is for the assured to prove the actual amount of his loss. The sums mentioned in the policy, as Mr. Dangali rightly said,
only show the outside limit of the liability of the defendant-company"".
In Major B.A.S. Chopra Vs. The New Zealand Insurance Co. Ltd., it was held : --
Although the plaintiff estimated the value of the car at the reduced figure of Rs. 9000, under the renewed policy on account of wear and tear,
during the period of issue of the insured car by himself, he is entitled to recover only the market value of the car on the date of the theft and not the
price paid for the car nor the estimated value.........
We are in agreement with the views expressed above.
Issue No. 3 was thus not properly framed for determining the extent of the liability of the Insurance Company. The essence of any indemnity
clause is that the assured must prove the actual loss. On the basis of the issue, as framed in the case, no evidence was led by either of the parties to
show the actual amount of loss suffered by the plaintiff, which was required to be indemnified by the defendant under the terms of the insurence
policy. The statement of the plaintiff was also confined to the price paid by him for the vehicle in question and how he had raised the amount to buy
the vehicle. The defendant-appellant has been definitely prejudiced by the improper frame of the issue and the erroneous approach of the trial court
to determine the liability of the Insurance Company. The view of the trial court that: --
The vehicle of the plaintiff has met with an accident and in accordance with the terms of insurance policy issued by the defendant-company, the
company is bound to pay insurance amount to the plaintff........plaintiff is, therefore, held to be entitled to insurance amount of Rs. 2,50,000/-
is, in our opinion, erroneous.
The manner in which the liability of the insurance company has been adjudged is, therefore, neither proper nor correct. The findings on issue
No. 3, as such, cannot be sustained in law and we accordingly set aside the same with the result that the judgment and decree of the learned trial
court in set aside to that extent. In our opinion, the issue regarding the extent of the liability, if any, of the Insurance Company is required to be re-
determined by the trial court in accordance with the law of indemnity as noticed above. We, therefore, recast issue No. 3 as under : --
(3) What is the actual amount of damage suffered by the plaintiff by reason of the loss of the vehicle No. JKQ-2486 by Accident ?.........O.P.P.
(4) What is the extent of the liability of the Insurance Company under the terms of the Insurance Policy ?.........O.P.P.
(5) Relief ? and remand the case to the learned single Judge to try these issues after giving the parties an opportunity to lead evidence in support
thereof and thereafter to return his finding on the same in accordance with law.
The appeal, therefore, succeeds to the extent indicated and the case is remanded for determination of the aforesaid issues as findings on issues
Nos. 1 and 2 have been affirmed by us. The judgment and decree of the trial court shall follow the findings on the issues, as recast by us.
Parties, through the learned counsel, are directed to appear before the learned trial Judge on 19-2-1988,
Costs shall follow the event.