The main legal point established in the judgment is the requirement to implead the Insurance Company as a necessary party in a suit involving insurance cover, failure of which may result in dismissal of the suit.

1. This is plaintiffs appeal filed under Sec. 100 of the Code of Civil Procedure, 1908 challenging the judgment and decree passed on 27-7-1982 by the District Judge, Gurdaspur dismissing the suit of the plaintiff appellant and also setting aside the judgment and decree dated 8-4-1982 passed by the Sub-Judge Ist Class, Batala.

2. The plaintiff-appellant which is a body corporate under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 filed Civil Suit No. 12 of 1979 on 8-1-1979 for recovery of Rs. 15255-94 paise against defendant-respondent No.1 Khazan Singh. The suit was filed through Dev Raj Khanna, their general attorney. It was asserted that on a request made by defendant-respondent No.1, loan of Rs. 11,000/- was advanced by the appellant-Bank through its Qadian Branch. The purpose of the loan was purchase of a Bajaj Tempo three-wheeler auto-rikshaw. The loan amount, on the instructions of defendant respondent No.1, was paid to M/s. Doaba Automobile, Amritsar, a firm dealing in Bajaj Tempo three-wheeler. Defendant -respondent No.1 executed a number of documents which included a promissory note in favour of the plaintiff-appellant as a token of receipt of the loan amount. He also hypothecated the three wheeler by way of security for re-payment of the loan and executed a letter of hypothecation in favour of the plaintiff appellant-Bank. Defendant-respondent No.1 also furnished a guarantee for re-payment of the loan by bringing guarantors, namely, defendant-respondents 2 and 3 who stood sureties. According to the terms of the agreement, the loan amount along with interest was to be re-paid by defendant-respondent No.1 through thirty six equal monthly instalments.

3. In their joint written statement, it was admitted that loan was obtained and defendant respondents 2 and 3 stood sureties for re-payment of the loan. The hypothecation of three-wheeler in favour of the plaintiff-appellant was also admitted. However, it was averred that the three wheeler was under a comprehensive insurance with which defendant-respondent No.1 had taken on the instructions of the plaintiff-appellant and according to the terms of the insurance policy, the liability to pay the entire premium was of defendant-respondent No.1. The sole beneficiary under the insurance policy was the plaintiff-appellant because the insurer had undertaken to indemnify the Bank in case of loss of the vehicle. It was further asserted that defendant-respondent No.1 paid insurance premium regularly till the date the vehicle was involved in an accident. According to the defendants, the insurance cover was intact and the plaintiff-appellant was entitled to invoke the indemnity clause after the three-wheeler had been involved in the accident. In the accident, the three-wheeler had caught fire in which defendant- respondent No.1 also received serious injuries. He was removed and admitted to hospital from the scene of the accident. The plaintiff-appellant took possession of the vehicle. In sum and substance, the case of the defendant respondents is that as per the stipulations between the parties, it was agreed that outstanding amount of loan was to be recovered either from the Insurance Company or by way of sale/auction of three-wheeler. Defendant-respondent No.1 was responsible only to make good any shortfall. It was further asserted that the plaintiff-appellant filed claim and received from the Insurance Company the money equal to the full value of the three-wheeler.

4. On the basis of pleadings of the parties, the following issues were framed :-

1. Whether Sh. Dev Raj Khanna is competent to file present suit : Opp

2 Whether defendants 2 and 3 stood guarantor for the repayment of the alleged loan? OPP

3. Whether the suit is within limitation? OPP

4. Whether this Court has territorial jurisdiction to try the present suit? OPP

5. Whether suit is bad for non-joinder of necessary parties ? OPD

6. Whether tempo in question was insured with Oriental Insu