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PATNA HIGH COURT
S.C.Misra and Tarkeshwar Nath JJ.
New Asiatic Insurance Co.Ltd.
Versus
Bihar State Co-operative Bank Ltd.
Letter Patent Appeal No. 128 of 1959 ;
Decided On : FEBRUARY 10, 1965
INSURANCE - Policy - Risk - Duration - Notice of loss - Essential condition - Onus of proof.
Fact of the Case:
The plaintiff, a cooperative bank, insured a bale of cotton with the defendant insurance company under a policy that covered the risk of loss or damage during transit and for three days after the arrival of the train at the destination. The bale was stolen from the railway godown at Bikramganj. The plaintiff claimed compensation from the defendant, but the defendant denied liability on the grounds that the risk had expired and that the plaintiff had not given notice of the loss within 10 days of the expiry of the risk.
Finding of the Court:
The court held that the condition in the insurance policy limiting the risk to three days after the arrival of the consignment at the railway station of destination was an essential condition. The court also held that the condition requiring the plaintiff to give notice of the loss within 10 days of the expiry of the risk was an essential condition. The court further held that the onus of proof lay on the plaintiff to prove that the notice was given within the stipulated time, and that the plaintiff had failed to discharge this burden.
Issues: 1. Whether the condition in the insurance policy limiting the risk to three days after the arrival of the consignment at the railway station of destination was an essential condition? 2. Whether the condition requiring the plaintiff to give notice of the loss within 10 days of the expiry of the risk was an essential condition? 3. Whether the onus of proof lay on the plaintiff to prove that the notice was given within the stipulated time?
Ratio Decidendi: 1. The condition limiting the risk to three days after the arrival of the consignment at the railway station of destination was an essential condition because the object of the insurance was to cover the risk in transit of goods. Once the goods are delivered at the station of destination, beyond a reasonable period (that being three days from the date of receipt of the goods in this case) as stipulated, the insurer cannot make himself liable for the loss of goods. 2. The condition requiring the plaintiff to give notice of the loss within 10 days of the expiry of the risk was an essential condition because the object of this condition was to enable the insurer to institute an enquiry as to the circumstances of the loss and the date of loss. 3. The onus of proof lay on the plaintiff to prove that the notice was given within the stipulated time because these facts were specially within the knowledge of the plaintiff.
Final Decision: The court allowed the appeal, set aside the judgment and decree of the second appeal, and dismissed the plaintiff's suit.
Trakeshwar Nath, J.
1. This letters patent appeal by the defendant is directed against the judgment in Second Appeal No. 886 of 1956 decreeing the suit of the plaintiff as was done by the trial Court and reversing the judgment and decree of the lower appellate court.
2. The facts giving rise to this appeal are shortly these. The plaintiff (Bihar State Co-operative Bank Ltd.) instituted the suit giving rise to this appeal for recovery of Rs. 1398-14-9 as the price of a bale of cotton and Rs. 32 for the expenses incurred in serving a notice. The plaintiff was a registered Society having its registered office at Patna. The defendant (The New Asiatic Insurance Co. Ltd.) also was a registered company having its registered office at New Delhi. The plaintiff used to make purchases of cloths at Bombay and distribute them through its local agents to different societies in the Stale of Bihar. According to the directions of the plaintiff, its commission agent Messrs Ganesh Narain Mahadeo. Lal of Bombay despatched one bale of cotton bearing No. 869 of "Hirjee Mill", to Messrs. Nasriganj Co-operative Development and Cane Marketing Union Ltd., Bikramganj, under Railway receipt No. 4040/45 dated 1-5-1951 ex Wadi Bunder to Bikramganj. These goods were insured with the defendant under policy No. P/60/4/1T dated 2-8-1950 and according to the terms of the said policy, the defendant was liable to reimburse the plaintiff for the loss in case of rail accident, theft, pilferage, including risk of non-delivery of the said bale. This bale was not delivered to the plaintiffs agent at Bikramganj in lime and the plaintiffs agent was informed by the Station Master, Bikramganj, on 9-6-1951 that the said bale was stolen from the railway godown at Bikramganj. On receiving this information, plaintiff lodged a claim with the Railways and sent a copy of it to the defendant. The district Traffic Superintendent, Arrah-Sasaram Light Railway Calcutta, informed the plaintiff by his letter dated 22-8-1951 that a gang of armed dacoits entered the Bikramganj station, overpowered the chaukidar on duty, opened the station godown and decamped with the said consignment along with other goods. The Stalion Master lodged a first information at the Bikramganj Police Station on 8-6-1951 and a case was instituted under Sec. 457/380 of the Indian Penal Code. The Superintendent of Police, Shahabad, informed the plaintiff by his letter dated 14-3-1952 that four bales of cloth kept in the goods shed were stolen by cutting sendh in the godown and the case was investigated but no clue of the stolen articles having been found, final report was filed in that case. The plaintiff pressed the claim against the Railways, but the District Traffic Superintendent refused to entertain it. The plaintiff served a notice on the defendant about its claim, but the latter gave an evasive reply on 22-9-1952 and subsequently refused to accept the claim in another letter dated 14-12-1952. The said policy covered the risk of theft as well and hence the defendant was liable to pay the price of that bale amounting to Rs. 1398-14-9. The plaintiff claimed Rs. 32 more as being the expenses incurred in serving a notice and accordingly the total claim came to Rs. 1430-14-9. The plaintiff instituted the suit on 29-4-1954.
3. The defendant look several pleas, but for the purposes of this appeal it is necessary to mention only one of the grounds of objection. The defendant asserted that the risk was to last only for three days after the arrival of the train at the destination and notice had to be given to the defendant within 10 days of the expiry of the said risk, but the plaintiff not having given the said notice within the time stipulated it was not entitled to claim any loss.
4. The Munsif decreed the plaintiffs suit holding that the defendant was liable for the loss incurred by the plaintiff according to the terms of the policy exhibit 1(a). On appeal by the defendant, the learned Additional Subordina
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