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1968 Supreme(Bom) 23
IN THE HIGH COURT OF BOMBAY
(M. G. Chitale and J. L. Nain JJ.)
ORIENTAL FIRE AND GENERAL INSURANCE CO. LTD. -Appellant
v.
AMERICAN PRESIDENT LINES LTD. -Respondent.
Advocates appeared
Note:-Sections 130-A and 135-A of the Transfer of Property Act have been replaced by Marine Insurance Act XI of 1963 and re-enacted as sections 52, 53, 79 and 90 of the latter Act.
For appellants-C. N. Daji and V. C. Kotwal in C. R. A. No. 161 of 1964 and F. A. No. 510 of 1964.
Ashok M. Desai and V. C. Kotwal in F. A. No. 509 of 1964.
For respondents-J. I Mehta in C. R. A. No. 161 of 1964 and 1. M. Chagla in F. A. O.
Nos. 509 and 510 of 1964.
Headnote:
INSURANCE - MARINE INSURANCE - SUBROGATION - RIGHT OF INSURER TO SUE IN HIS OWN NAME - TRANSFER OF PROPERTY ACT, S. 135-A - MARINE INSURANCE ACT, 1963, S. 52, 53, 79, 90 - ENGLISH LAW - COMMON LAW DOCTRINE OF SUBROGATION - CODIFICATION IN 1906 - INTERPRETATION OF S. 135-A - SUBROGATION BY OPERATION OF LAW - NO RIGHT TO SUE IN OWN NAME - ABSENCE OF ASSIGNMENT - INCONVENIENCE TO INSURER - AVOIDABLE - ABSURD RESULTS - DISTINCTION BETWEEN SUBROGATION UNDER S. 92 AND S. 135-A - S. 69, INDIAN CONTRACT ACT - NOT APPLICABLE - S. 41, INDIAN CONTRACT ACT - NOT APPLICABLE - RIGHT OF ACTION FLOWS FROM TORT, NOT PROMISE.
Fact of the Case:
The petitioners, an insurance company, paid the claim of the Punjab Cotton Company for damage to a consignment of cotton insured with them. The petitioners then abandoned a part of the claim and filed a suit for recovery of Rs. 3,000 in the Bombay Small Causes Court. The claim was based on the right of subrogation claimed by the petitioners under section 135-A (3) of the Transfer of Property Act. The lower Court dismissed the suit holding that the suit was not maintainable by the petitioners in their own name.
Finding of the Court:
The Court held that an insurer of goods carried by sea and covered by a policy of marine insurance, who on payment for partial loss is subrogated to all the rights and remedies of the insured person to the extent of the payment, is not entitled to sue the carrier of goods in his own name to recover compensation for partial loss or damage to the goods. This is because subrogation by operation of law would not give the insurer a right to sue in a Court of law in his own name.
Issues: Whether an insurer of goods carried by sea and covered by a policy of marine insurance, who on payment for partial loss is subrogated to all the rights and remedies of the insured person to the extent of the payment, is entitled to sue the carrier of goods in his own name to recover compensation for partial loss or damage to the goods.
Ratio Decidendi: The Court held that the insurer is not entitled to sue in his own name because: * Subrogation by operation of law would not give the insurer a right to sue in a Court of law in his own name. * The insurer is only subrogated to the rights and remedies of the assured in respect of the subject matter insured. * The insurer has no independent rights of his own and cannot sue in his own name.
Final Decision: The Court dismissed the revision application and upheld the decision of the lower Court.
NAIN J.-This revision application involves an interesting point of law as to whether an insurer of goods carried by sea and covered by a policy of marine insurance, who on payment for partial loss is subrogated to all the rights and remedies of the insured person to the extent of the payment, is entitled to sue the carrier of goods in his own name to recover compensation for partial loss or damage to the goods. This depends on the interpretation of section 135-A of the Transfer of Property Act, which is applicable to the suit transaction. Sections t30.A and 135-A were inserted in the Transfer of Property Act by Transfer of Property (Amendment) Act VI of 1944 and have since been repealed by the Marine Insurance Act XI of 1963 and have been reenacted in sections 52, 53, 79 and 90 of the Act.
2. The facts leading to this matter are that the petitioners are a company carrying on the business of insurance. Respondents No.1 are a shipping company who carryon business of carriers of goods by sea. They have their registered office in the State of California in U. S. A. and carryon business through their agents in Bombay. Respondents No.2, Messrs Cotton Trading Corporation of San Francisco shipped a consignment of 466 bales of cotton per S. S. Taylor belonging to respondents No.1 from the port of San Francisco in California. Respondents No.1 issued two bills of lading dated January 23, 1959. The goods were to be discharged at the port of Bombay to the order of the shippers or to the ultimate endorsees of the bills of lading. The shippers negotiated the bills of lading and other documents of title to the Punjab Cotton Company through a bank Punjab Cotton Company thus became the owners of the cargo on the documents of title being endorsed in their favour. When the consignments landed in Bombay, they were found to be damaged. On an application by Punjab Cotton Company a general survey was made and a certificate of damage was issued in favour of Punjab Cotton Company. It was alleged that the consignment was damaged on account of negligence, misfeasance and nonfeasance on the part of respondent No.1. The damage was assessed at Rs. 3,639.15) P. The consignment was insured with the petitioners under a policy for marine risk. Punjab Cotton Company claimed from the petitioners the loss arising from the said damage. The petitioners paid the said loss. They then abandoned a part of the claim and filed a suit for recovery of Rs. 3,000 in the Bombay Small Causes Court. Obviously a part of the claim was abandoned to bring the suit within the jurisdiction of the said Court. The claim was based on the right of subrogation claimed by the petitioners under section l35-A (3) of the Transfer of Property Act. We are not aware whether there was an assignment of the claim in favour of the petitioners, but in any case none was pleaded in the lower Court. In the lower Court a preliminary same was raised as to whether the suit was maintainable by the petitioners in their own name. The lower Court answered the said issue in the negative and dismissed the suit. An application for fresh trial to a Bench of the Small Cause Court was also dismissed. Thereafter the petitioners have filed the present revision application.
3. The doctrine of subrogation in relation to marine insurance was developed in England as a part of the Common Law. In England it was codified in 1906. The Common Law doctrine, however, continued to be applicable to India till 1944 when it was introduced in the Transfer of Property Act by sections 130-A and 135-A and has since been re-enacted in the Marine Insurance Act, 1963. In order, therefore, to appreciate it scope in its application to the right of insurers and underwriters to sue in their own name the wrong-doer" and tort-feasors ill respect of the subject-matter of insurance in the place of the assured, it is necessary briefly to trace the history of the doctrine in England and in India.
4. In English Common Law both before and afte
