High Court · 2008

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED :: 22-08-2008CORAMTHE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYAANDTHE HONOURABLE MR.JUSTICE V.DHANAPALANO.S.A.No.254 OF 2006M/s.Polyene Film Industries Ltd.,A-11 & A-12, Industrial Estate,Guindy,Chennai-600 032....Appellant-vs-1.United India Insurance Co.Ltd., New Delhi, having its Registered and Head Office at No.24, Whites Road, Chennai-600 014.2.M/s.Blue Dart Aviation Ltd., No.88-89, Old International Airport, Meenambakkam Airport, Chennai-600 027....Respondents Appeal under Order 36 Rule 1 of the Original SideRules,1956, read with Clause 15 of the Letters Patent against theJudgment and decree passed by His Lordship dated 21.4.2006inC.S.No.95 of 2001.For appellant : Mr.R.MurariFor respondent 1 : Mr.NageswaranFor respondent 2 : Mr.A.John BrittoJ U D G M E N TV.DHANAPALAN,J.Plaintiff is the appellant and he, having lost his casebefore the learned single Judge, has preferred this appeal. https://hcservices.ecourts.gov.in/hcservices/

2. The suit was one for recovery of a sum ofRs.15,44,447/- with interest at 18% per annum on the principalamount of Rs.12,16,100/- from the date of plaint till the date ofpayment.3. Appellant is engaged in the manufacture of varioussolar power utilities for use in the agricultural sector and, forthe said purpose, he imports solar panels from manufacturersabroad, on regular basis. In the course of business, he placed anorder on M/s.Solarex, Virginia, USA, for supply of 316 nos. ofsolar panels and the same were supplied. However, as the saidpanels were defective, the appellant requested M/s.Solarex toreplace such panels as they were under warranty and the same were,accordingly, replaced. The consignment was forwarded at the firstinstance to New Delhi by the consignor and the Bill of Entry wasalso prepared by the customs officials at New Delhi. The appellant,with the assistance of one M/s.Jayem Impex Pvt.Ltd., cleared theconsignment and the value of the said consignment wasRs.34,06,194/-. The consignment had to be transported from NewDelhi to Chennai and, therefore, it was insured with the firstrespondent under a Marine Insurance Policy on 12.01.1999 for theentire amount. It was agreed that in the event of loss or damages,survey was to be made by the first respondent for ascertaining theactual damage.4. Prior to the issuance of the policy, the firstrespondent caused the consignment to be inspected by its licensedsurveyor and the said surveyor, in his pre-insurance inspectionreport, certified that there was no visible damage at the time ofloading of the consignment at the Indira Gandhi International CargoTerminal. On the basis of such report, insurance policy was issuedby the first respondent. The second respondent/carrier alsoaccepted the said consignment for onward despatch to Chennai, asthere was no damage to the consignment.5. However, when the consignment arrived at Chennai anddelivery was taken on 18.01.1999, it was found that three cartonswere completely damaged and the same was recorded at the time oftaking delivery. So, pursuant to the policy and the assurancegiven therein, the first respondent was notified of the damage,requesting for survey, and the survey was also conducted throughtheir surveyor on 28.01.1999 and 29.01.1999 at the appellant'spremises. The surveyor, in his report, pointed out that out of 316panels, 114 panels had broken and could not be used and the valueof the said panels was estimated at Rs.12,10,385/-. The secondrespondent also issued a damage certificate on 22.05.1999,reflecting the fact of three cartons having got damaged. https://hcservices.ecourts.gov.in/hcservices/

6. On the basis of the damage certificate issued, theappellant preferred a claim to the first respondent and it wasprocessed. But, the first respondent later repudiated the claimstating that the shipment was handed over to the cargo agent in adamaged and broken condition and, therefore, for the damages causedprior to the transit from New Delhi to Chennai, they were notliable to pay any damages under the policy. Hence, the suit by theappellant.7. The case of the first respondent was that the suit wasbad for misjoinder of parties. On the appellant declaring that thecargo would be carried by the second respondent, the policy inquestion was issued on the information and particulars furnished bythe appellant. The pre-despatch survey was conducted by a licensedInsurance Surveyor and Loss Assessor on 12.01.1999 and a report wasalso issued. The consignment in question, which was surveyed on12.01.1999, underwent further handling and commenced its transitonly on 15.01.1999. and reached Chennai on the same date. TheAirway Bill was always prepared by the consignor or theirauthorised representatives and handed over to the Air Carrier ortheir accredited agents. Therefore, the Airway Bill could not bethe conclusive proof of commencement of transit. Though the AirwayBill was prepared on 12.01.1999, the consignment was entrusted tothe second respondent only on 14.01.1999 for being transported byFlight No.BD2001, which arrived at Chennai at 20.31 hours as perthe second respondent's certificate and, therefore, the pre-despatch survey conducted on 12.01.1999 could not be the proof thatthe cargo in question had its journey on the same date.8. It was also the case of the first respondent thatthey, without prejudice to the legal rights and contention, deputeda surveyor for assessing the damage, which was done as per thesurveyor's report, dated 25.05.1999. As per the endorsementavailable in the Airway Bill (Delivery Receipt), two packets werefound in damaged condition. M/s.New National Cargo Services werethe domestic cargo agent of the second respondent Air Carrier, whosigned the Airway Bill. It is clear from the certificate that evenat the time of taking charge of the cargo on 13.01.1999 in theircapacity as agent of the second respondent, the same was in adamaged and broken condition.9. Further, the cargo in question had suffered damagebefore the commencement of transit on account of a peril, which wasnot covered under the policy and, as such, this respondent hadrightly disclaimed the liability under the policy. Damage to thecargo having taken place prior to the transit by Air, thisrespondent was not liable to make good any loss. Though the policywas issued on 12.01.1999, it was only to cover the risks in transit https://hcservices.ecourts.gov.in/hcservices/ as understood between the contracting parties and not while in thewarehouse of the appellant or their clearing or forwarding agentsprior to commencement of transit. In view of the fact that thepolicy in question was not subject to warehouse to warehouseclause, this respondent was not entitled to pay any compensation,if any damage was caused to the consignment prior to entrustment ofthe cargo to the Air Carrier. There was no proof of the packages,which were found damaged in the Airport at Chennai before clearanceand the same packages were surveyed at the works of the insured bythe first respondent's surveyor on 28.01.1999 and 29.01.1999. Thisrespondent was not liable for the damages if any caused during theperiod between 18.01.1999 and 28.01.1999 in view of the fact thatthe appellant had committed breach of reasonable despatch clause byfailing to conduct a survey before clearance from the Airport inthe presence of a Surveyor deputed by this respondent and thesecond respondent. As such, since the policy did not cover beyondDelhi Airport to Chennai Airport, the appellant was not entitled toclaim any damages, as the goods were damaged even prior toentrustment to the second respondent. Accordingly, the firstrespondent prayed for dismissal of the suit.10. On the basis of above pleadings, necessary issueswere framed and, after analysing the materials available on record,the learned single Judge dismissed the suit, holding, that theappellant was not entitled to claim the suit amount and that thegoods despatched were not in a good order and condition at Delhiwhile entrusting the same to the second respondent. The said orderis under challenge in this appeal.11. Learned counsel for the appellant would contend thatthe first respondent organised a pre-insurance inspection on12.01.1999, which took place outside the IGI Cargo Terminal, NewDelhi; in the report, the Surveyor stated that the consignment wasinspected and no visible damage was noticed at the time of loadingof consignment; based on such report, the first respondent issued aMarine Cargo Cover Note on 12.01.1999, on which date M/s.JayemImpex Pvt.Ltd., who were the clearing agents of the appellanthanded over the consignment to the second respondent and it wasreceived by their agents M/s.New National Cargo Services, whoaffixed their signature on the handing over letter; simultaneously,on 12.01.1999, an inspection took place and the insurance policywas issued and the said policy was a transit policy from New Delhito Chennai by rail, road or air and the goods were handed over tothe second respondent and, therefore, from such handing over, theconsignment was at the risk of the respondents. It is also thecontention of the learned counsel that on arrival of theconsignment at Chennai, it was noticed that three cartons werecompletely damaged and a Damage Certificate vide Ex.D-1 was alsoissued by the second respondent to that effect; however, in that https://hcservices.ecourts.gov.in/hcservices/ Damage Certificate, a notation was sought to be added to the effectthat vide their letter 30.09.1999, the second respondent's bookingagent had declared that the shipment was handed over to the secondrespondent in a damaged and broken condition; the said statementwas sought to be made on the basis of a unilateral and self-servingnote issued by New National Cargo Services, which was dated13.01.1999; the entrustment with the carrier had taken place on12.01.1999 and not on 13.01.1999; what was entrusted was a totalof 16 cartons whereas the damage was confined to three cartonsalone; therefore, the reference to "shipment being damaged" wouldbear reference to all 16 cartons which make up the shipment andthat a unilateral document from the second respondent's cargo agentwhich did not surface until the second respondent issued a damagecertificate would clearly establish that such certificate had beengot up purely in an attempt to avoid liability. 12. The further contention of the learned counsel for theappellant is that after the goods had arrived at Chennai, the firstrespondent caused an inspection to be carried out to the damagedpanels on 28.01.1999 and 29.01.1999 and, in the said report, it hadbeen stated that the consignment was handed over by Jayem ImpexPvt. Ltd. to the second respondent on 12.01.1999; since the damageoccurred after entrustment of the goods, the question of theappellant explaining how they were damaged before the entrustmentwould not arise and that any signature in the Airway Bill couldnever amount to acknowledgement that the goods were entrusted in adamaged condition when the entrustment letter contained noreference to any such damage.13. The bottomline of the learned counsel is that theamount claimed in the suit was in terms of the survey report of thefirst respondent's surveyor and the damage occurred afterentrustment and, therefore, the said damage occurred in transitwithin the meaning of the policy. Accordingly, he prayed forallowing the appeal. 14. Conversely, learned counsel for the first respondentwould contend that the contention of the appellant that theconsignment entrusted to the second respondent in the Indira GandhiInternational Cargo Terminal is not duly supported by eitherdocumentary or oral evidence; the first respondent is responsiblefor the liability only if the insured could prove that the damagewas subsequent to the sound entrustment of the consignment; thepolicy of insurance, as evidenced by Ex.P-4, was for transit fromDelhi to Chennai by Blue Dart Aviation; after clearance fromcustoms duty, the cargo was moved out of IGI Cargo Terminal forfurther conveyance and at such point of time, cargo was foundapparently sound, which would not establish entrustment or loadingupon the air carrier at IGI Cargo Terminal for carriage because the https://hcservices.ecourts.gov.in/hcservices/ cargo should necessarily be shifted to the domestic terminal forcarriage between Delhi and Chennai; there is no endorsement inEx.D-4 confirming the fact of handing over the cargo in goodcondition to Blue Dart Aviation Ltd., whereas Exs.P-7 and P-12 willestablish the fact that the consignment was delivered to Blue Dartor their collecting agent, namely, New National Cargo Services in adamaged and broken condition on 13.01.1999; in view of thecertificate issued by New National Cargo Services, Ex.D-5, dated13.01.1999, it is established that at the time of commencement oftransit under the policy, the consignment was in a damagedcondition; hence, the first respondent disclaimed the liability;since there is no proof of damage to the consignment during thecontemplated transit, the appellant is not entitled for any remedyas against the first respondent under the contract of insuranceEx.P-4 and, therefore, the appellant, having failed to dischargehis burden of proof that the consignment was damaged during transitas contemplated under the policy, is not entitled to the reliefsought for. In support of his contentions, the learned counsel hasrelied upon the following decisions :(i) Rhesa Shipping S.A. v. Edmunds (H.L.(E.)) 1985 AII ER948 : " The only way to see whether a judge applied at thepoint of decision a principle of law which he correctlyenunciated earlier is to examine his judgment and seewhat he has said in it. Having regard to the way inwhich Bingham J. expressed the view that he wascompelled to choose between the ship owners' submarinetheory on the one hand and underwriters' wear and teartheory on the other, and having regard further to thefact that, when he neared the point of decision in hisjudgment, he did not discuss or consider the thirdpossibility which was open to him, of simply finding theship owners' case not proved, I am driven, reluctantlybut inescapably, to the conclusion that on this occasioneven Homer nodded."(ii) M/s.Bihar Supply Syndicate vs. Asiatic Navigationand others, AIR 1993 SC 2054 :"20.We have gone through the evidence onrecord including the four cables mentionedearlier. We are in complete agreement with theDivision Bench of the High Court that thecables do not show that sea water had enteredthe engine room and it was not a case of lossof goods due to perils of the sea. The Judgesof High Court took the view that the expression"warehouse to warehouse" in the policy merely https://hcservices.ecourts.gov.in/hcservices/ denotes the time during which the policy wouldremain in force and by no stretch ofimagination can be interpreted as covering eachand every risk. We are also in agreement withthe Division Bench of the High Court thatexpression "warehouse to warehouse" merelyindicates the period during which the policywould remain in force and has nothing to doabout the type of the risk policy covered."15. The contention of the learned counsel for the secondrespondent is that the appeal is not maintainable in law and onfacts; the appellant did not place any conclusive proof that hisagent booked the consignment with the second respondent's agent ina good condition; the agent of the second respondent confirmed thatthe consignment handed over to the second respondent was in adamaged condition, which was also further confirmed by the secondrespondent in the damage certificates, dated 22.04.1999, in Ex.P-7and Ex.D-1; the appellant is not clear about where and when thedamage of consignment took place after pre-survey was conductedoutside the IGI Cargo Terminal on 12.01.1999 by the surveyors; theappellant is not in a position to explain where the consignment washanded over to the second respondent and that the appellant nevercompelled the second respondent to issue damage certificate at thetime of taking delivery at Chennai on 18.01.999, which would provethat the appellant booked the consignment in a damaged condition.The further contention of the learned counsel is that the surveywas conducted by the appellant after 10 days from the date oftaking delivery of consignment on 18.01.1999 in the absence of thesecond respondent and no notice was given to the second respondentprior to survey and, hence, the surveyor's report cannot be reliedupon.16. We have heard the learned counsel for the parties;given our thoughtful consideration to the rival contentions andalso gone through the records as well as the decisions cited.17. Appellant, for the purpose of his business, importedsolar panels from U.S. and the same were shipped in 16 boxesconsisting of a total number of 316 solar panels. The said panelsarrived from U.S. to New Delhi in the first instance and had to beairfreighted from New Delhi to Chennai, for which purpose theappellant insured the goods. 18. Insurance policy was issued on 12.01.1999. Thegeneral presumption is that the risk commences from the date ofissuance of policy till the completion of the transaction.Beforeissuing policy, the first respondent caused an inspection on12.01.1999, which took place at the Indira Gandhi International https://hcservices.ecourts.gov.in/hcservices/ Cargo Terminal, New Delhi. In the inspection report, the InsuranceSurveyor certified that no visible damage was noticed at the timeof loading of consignment at IGI Cargo Terminal. He also referredto the nature of packing in the said report. Based on the saidreport only, the first respondent issued the policy against thegoods. On 12.01.1999, M/s.Jayem Impex Pvt.Ltd., clearing agent ofthe appellant, handed over the consignment to the second respondentand the same was received by their agents M/s.New National CargoServices, who have affixed their signature on the handing overletter. Therefore, from such handing over, the consignment is atthe risk of the respondents. 19. Pursuant to the request of the appellant and underthe instructions of the first respondent, M/s.K.MariappanAssociates inspected the reported damaged solar panels duringtransit at the appellant's company on 28.01.1999 and 29.01.1999.On such inspection, the Surveyor, in his report, dated 25.05.1999,has stated that the damage had occurred during transit from Delhito Chennai due to improper handling by the carrier. This reportassumes significance for the reason that it was given by thesurveyor, deputed by the first respondent. When the said report,dated 25.05.1999, is categorical to the effect that the damage hadoccurred during transit from Delhi to Chennai due to improperhandling by the carrier, the same cannot be gainsaid by the firstrespondent to avoid liability. The Surveyor has also stated thatM/s.Jayem Impex Pvt.Ltd., Delhi, handed over the consignment toBlue Dart Aviation Limited in good condition, to be booked toChennai. Thus, the said survey carried out at the instance of thefirst respondent would further establish the case of the appellant.The second respondent also issued a Damage Certificate, dated22.05.1999, stating that three cartons were damaged. No mention ofany external damage has been mentioned by the second respondent,who has carried the consignment from New Delhi to Chennai, at thetime of loading the consignment. If any damage was caused, thesecond respondent would never accept the same for transportationwithout any endorsement in the Airway Bill issued by them.Therefore, it can be presumed that the consignment had been pickedup by the second respondent for transportation to Chennai by Air ingood condition and that the damage had occurred only duringtransit. After entrustment of the goods to the second respondent atIGI Cargo Terminal, the appellant had no access to the goods tillthey reached Chennai. In Ex.D-4, a letter written by M/s.JayemImpex Pvt.Ltd., dated 12.01.1999, while handing over the cargo toM/s.Blue Dart Aviation, there was a caution that the items werefragile in nature and they needed adequate care. Therefore, thecontention of the learned counsel for the first respondent thatthere is no endorsement in Ex.D-4 confirming the fact of handingover the cargo in good condition to Blue Dart Aviation Ltd. isdispelled. Had there been any damage to the consignment, the https://hcservices.ecourts.gov.in/hcservices/ authorised person on behalf of the respondents, namely, BanwarilalRathore would have objected for the same and his signature in Ex.D-4 while receiving the goods is a res ipsa loquitor for the goodcondition of the consignment. The provisions of The Carriage byAir Act,1972, are not applicable to this case, as it is a contractbetween the insured and the insurer. In view of the report of theInsurance Surveyor of the first respondent, dated 25.05.1999, therespondents cannot avoid the liability, fastened on them. If therespondents are discharged of their liability, the very purpose oftaking the insurance policy will be defeated. At the same time, itcannot also be the case of the respondents that the policy is atransit one and not of warehouse to warehouse. The decisions citedby the learned counsel for the first respondent are not applicableto the facts of this case.20. The learned single Judge, while considering theevidence of P.W.1 and also Exs.P-4 and P-5 Insurance Policy andCover Note respectively to the effect that the cargo at the time ofhanding over to the agent of the second respondent was in a goodcondition, arrived at a conclusion that the policy covers fromDelhi Airport to Chennai Airport. The very purpose of insuring thegoods starts from the point of handing over of the cargo to theagent of the second respondent on 12.01.1999 and the coverage ofthe policy could be construed from then and there. Hence, theconclusion of the learned single Judge that the transit starts fromDelhi Airport to Chennai Airport cannot be supported by a logicalreasoning when the goods have been insured for the purpose ofprotection from any damage due to vis major. Further, while dealingwith the surveyor report in Ex.P-9, the learned single Judge hascome to the conclusion that the damage is noticed on the date ofinspection and since it is not proved that during the transit fromDelhi to Chennai due to improper handling by the carrier the damagemight have been occurred, it is certain that the insurer is notliable to pay the damage. The learned single Judge ought to havetaken note that the cargo was handed over to the agent of thesecond respondent in a good condition and, at that time, there wasno visible damage, as evidenced from the pre-insurance surveyreport. That being the position and when the object of the policyfor insuring the goods is to save from the damage, the conclusionof the learned single Judge that the insurer is not liable to paythe damage is without any appreciation of the insurance policy.Therefore, the findings rendered by the learned single Judge arenot supported by any sound reasoning to dismiss the suit, as thedocuments in questions are not properly considered to meet the veryobject of the insurance policy. In addition, the learned singleJudge has held that the cause of damage as stated in Ex.P-9 cannotbe the finding of the surveyor and the cause of damage noted inEx.P-9 must be as represented by the plaintiff. The said finding,in our considered opinion, has no basis. https://hcservices.ecourts.gov.in/hcservices/

21. For all the foregoing reasons, this O.S.A.is allowed,setting aside the judgment and decree of the learned single Judgeand allowing the suit, but in the facts and circumstances of thecase, the interest shall be at 12% per annum instead of 18% perannum prayed for on the principal amount. No costs.dixit Sd/- Assistant Registrar / True Copy / Sub. Assistant RegistrarToThe Sub Assistant Registrar,Original Side,High Court, Madras.1 cc to Mr.R.Murari, Advocate, SR.472641 cc to M/s.Nageswaran & Narichania, Advocates, SR.469751 cc to Mr.A.John Britto, Advocate, SR.47127ssn (co)dv/2.9. O.S.A.No.254 OF 2006