IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :: 22-08-2008 CORAM THE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYA AND THE HONOURABLE MR.JUSTICE V.DHANAPALAN O.S.A.No.254 OF 2006 M/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 Side Rules,1956, read with Clause 15 of the Letters Patent against the Judgment and decree passed by His Lordship dated 21.4.2006 inC.S.No.95 of 2001. For appellant : Mr.R.Murari For respondent 1 : Mr.Nageswaran For respondent 2 : Mr.A.John Britto J U D G M E N T V.DHANAPALAN,J. Plaintiff is the appellant and he, having lost his case before the learned single Judge, has preferred this appeal. https://hcservices.ecourts.gov.in/hcservices/ 2. The suit was one for recovery of a sum of Rs.15,44,447/- with interest at 18% per annum on the principal amount of Rs.12,16,100/- from the date of plaint till the date of payment. 3. Appellant is engaged in the manufacture of various solar power utilities for use in the agricultural sector and, for the said purpose, he imports solar panels from manufacturers abroad, on regular basis. In the course of business, he placed an order on M/s.Solarex, Virginia, USA, for supply of 316 nos. of solar panels and the same were supplied. However, as the said panels were defective, the appellant requested M/s.Solarex to replace such panels as they were under warranty and the same were, accordingly, replaced. The consignment was forwarded at the first instance to New Delhi by the consignor and the Bill of Entry was also prepared by the customs officials at New Delhi. The appellant, with the assistance of one M/s.Jayem Impex Pvt.Ltd., cleared the consignment and the value of the said consignment was Rs.34,06,194/-. The consignment had to be transported from New Delhi to Chennai and, therefore, it was insured with the first respondent under a Marine Insurance Policy on 12.01.1999 for the entire amount. It was agreed that in the event of loss or damages, survey was to be made by the first respondent for ascertaining the actual damage. 4. Prior to the issuance of the policy, the first respondent caused the consignment to be inspected by its licensed surveyor and the said surveyor, in his pre-insurance inspection report, certified that there was no visible damage at the time of loading of the consignment at the Indira Gandhi International Cargo Terminal. On the basis of such report, insurance policy was issued by the first respondent. The second respondent/carrier also accepted the said consignment for onward despatch to Chennai, as there was no damage to the consignment. 5. However, when the consignment arrived at Chennai and delivery was taken on 18.01.1999, it was found that three cartons were completely damaged and the same was recorded at the time of taking delivery. So, pursuant to the policy and the assurance given therein, the first respondent was notified of the damage, requesting for survey, and the survey was also conducted through their surveyor on 28.01.1999 and 29.01.1999 at the appellant's premises. The surveyor, in his report, pointed out that out of 316 panels, 114 panels had broken and could not be used and the value of the said panels was estimated at Rs.12,10,385/-. The second respondent 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, the appellant preferred a claim to the first respondent and it was processed. But, the first respondent later repudiated the claim stating that the shipment was handed over to the cargo agent in a damaged and broken condition and, therefore, for the damages caused prior to the transit from New Delhi to Chennai, they were not liable to pay any damages under the policy. Hence, the suit by the appellant. 7. The case of the first respondent was that the suit was bad for misjoinder of parties. On the appellant declaring that the cargo would be carried by the second respondent, the policy in question was issued on the information and particulars furnished by the appellant. The pre-despatch survey was conducted by a licensed Insurance Surveyor and Loss Assessor on 12.01.1999 and a report was also issued. The consignment in question, which was surveyed on 12.01.1999, underwent further handling and commenced its transit only on 15.01.1999. and reached Chennai on the same date. The Airway Bill was always prepared by the consignor or their authorised representatives and handed over to the Air Carrier or their accredited agents. Therefore, the Airway Bill could not be the conclusive proof of commencement of transit. Though the Airway Bill was prepared on 12.01.1999, the consignment was entrusted to the second respondent only on 14.01.1999 for being transported by Flight No.BD2001, which arrived at Chennai at 20.31 hours as per the second respondent's certificate and, therefore, the pre- despatch survey conducted on 12.01.1999 could not be the proof that the cargo in question had its journey on the same date. 8. It was also the case of the first respondent that they, without prejudice to the legal rights and contention, deputed a surveyor for assessing the damage, which was done as per the surveyor's report, dated 25.05.1999. As per the endorsement available in the Airway Bill (Delivery Receipt), two packets were found in damaged condition. M/s.New National Cargo Services were the domestic cargo agent of the second respondent Air Carrier, who signed the Airway Bill. It is clear from the certificate that even at the time of taking charge of the cargo on 13.01.1999 in their capacity as agent of the second respondent, the same was in a damaged and broken condition. 9. Further, the cargo in question had suffered damage before the commencement of transit on account of a peril, which was not covered under the policy and, as such, this respondent had rightly disclaimed the liability under the policy. Damage to the cargo having taken place prior to the transit by Air, this respondent was not liable to make good any loss. Though the policy was 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 the warehouse of the appellant or their clearing or forwarding agents prior to commencement of transit. In view of the fact that the policy in question was not subject to warehouse to warehouse clause, this respondent was not entitled to pay any compensation, if any damage was caused to the consignment prior to entrustment of the cargo to the Air Carrier. There was no proof of the packages, which were found damaged in the Airport at Chennai before clearance and the same packages were surveyed at the works of the insured by the first respondent's surveyor on 28.01.1999 and 29.01.1999. This respondent was not liable for the damages if any caused during the period between 18.01.1999 and 28.01.1999 in view of the fact that the appellant had committed breach of reasonable despatch clause by failing to conduct a survey before clearance from the Airport in the presence of a Surveyor deputed by this respondent and the second respondent. As such, since the policy did not cover beyond Delhi Airport to Chennai Airport, the appellant was not entitled to claim any damages, as the goods were damaged even prior to entrustment to the second respondent. Accordingly, the first respondent prayed for dismissal of the suit. 10. On the basis of above pleadings, necessary issues were framed and, after analysing the materials available on record, the learned single Judge dismissed the suit, holding, that the appellant was not entitled to claim the suit amount and that the goods despatched were not in a good order and condition at Delhi while entrusting the same to the second respondent. The said order is under challenge in this appeal. 11. Learned counsel for the appellant would contend that the first respondent organised a pre-insurance inspection on 12.01.1999, which took place outside the IGI Cargo Terminal, New Delhi; in the report, the Surveyor stated that the consignment was inspected and no visible damage was noticed at the time of loading of consignment; based on such report, the first respondent issued a Marine Cargo Cover Note on 12.01.1999, on which date M/s.Jayem Impex Pvt.Ltd., who were the clearing agents of the appellant handed over the consignment to the second respondent and it was received by their agents M/s.New National Cargo Services, who affixed their signature on the handing over letter; simultaneously, on 12.01.1999, an inspection took place and the insurance policy was issued and the said policy was a transit policy from New Delhi to Chennai by rail, road or air and the goods were handed over to the second respondent and, therefore, from such handing over, the consignment was at the risk of the respondents. It is also the contention of the learned counsel that on arrival of the consignment at Chennai, it was noticed that three cartons were completely damaged and a Damage Certificate vide Ex.D-1 was also issued 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 effect that vide their letter 30.09.1999, the second respondent's booking agent had declared that the shipment was handed over to the second respondent in a damaged and broken condition; the said statement was sought to be made on the basis of a unilateral and self-serving note issued by New National Cargo Services, which was dated 13.01.1999; the entrustment with the carrier had taken place on 12.01.1999 and not on 13.01.1999; what was entrusted was a total of 16 cartons whereas the damage was confined to three cartons alone; therefore, the reference to "shipment being damaged" would bear reference to all 16 cartons which make up the shipment and that a unilateral document from the second respondent's cargo agent which did not surface until the second respondent issued a damage certificate would clearly establish that such certificate had been got up purely in an attempt to avoid liability. 12. The further contention of the learned counsel for the appellant is that after the goods had arrived at Chennai, the first respondent caused an inspection to be carried out to the damaged panels on 28.01.1999 and 29.01.1999 and, in the said report, it had been stated that the consignment was handed over by Jayem Impex Pvt. Ltd. to the second respondent on 12.01.1999; since the damage occurred after entrustment of the goods, the question of the appellant explaining how they were damaged before the entrustment would not arise and that any signature in the Airway Bill could never amount to acknowledgement that the goods were entrusted in a damaged condition when the entrustment letter contained no reference to any such damage. 13. The bottomline of the learned counsel is that the amount claimed in the suit was in terms of the survey report of the first respondent's surveyor and the damage occurred after entrustment and, therefore, the said damage occurred in transit within the meaning of the policy. Accordingly, he prayed for allowing the appeal. 14. Conversely, learned counsel for the first respondent would contend that the contention of the appellant that the consignment entrusted to the second respondent in the Indira Gandhi International Cargo Terminal is not duly supported by either documentary or oral evidence; the first respondent is responsible for the liability only if the insured could prove that the damage was subsequent to the sound entrustment of the consignment; the policy of insurance, as evidenced by Ex.P-4, was for transit from Delhi to Chennai by Blue Dart Aviation; after clearance from customs duty, the cargo was moved out of IGI Cargo Terminal for further conveyance and at such point of time, cargo was found apparently sound, which would not establish entrustment or loading upon 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 for carriage between Delhi and Chennai; there is no endorsement in Ex.D-4 confirming the fact of handing over the cargo in good condition to Blue Dart Aviation Ltd., whereas Exs.P-7 and P-12 will establish the fact that the consignment was delivered to Blue Dart or their collecting agent, namely, New National Cargo Services in a damaged and broken condition on 13.01.1999; in view of the certificate issued by New National Cargo Services, Ex.D-5, dated 13.01.1999, it is established that at the time of commencement of transit under the policy, the consignment was in a damaged condition; hence, the first respondent disclaimed the liability; since there is no proof of damage to the consignment during the contemplated transit, the appellant is not entitled for any remedy as against the first respondent under the contract of insurance Ex.P-4 and, therefore, the appellant, having failed to discharge his burden of proof that the consignment was damaged during transit as contemplated under the policy, is not entitled to the relief sought for. In support of his contentions, the learned counsel has relied upon the following decisions : (i) Rhesa Shipping S.A. v. Edmunds (H.L.(E.)) 1985 AII ER 948 : " The only way to see whether a judge applied at the point of decision a principle of law which he correctly enunciated earlier is to examine his judgment and see what he has said in it. Having regard to the way in which Bingham J. expressed the view that he was compelled to choose between the ship owners' submarine theory on the one hand and underwriters' wear and tear theory on the other, and having regard further to the fact that, when he neared the point of decision in his judgment, he did not discuss or consider the third possibility which was open to him, of simply finding the ship owners' case not proved, I am driven, reluctantly but inescapably, to the conclusion that on this occasion even Homer nodded." (ii) M/s.Bihar Supply Syndicate vs. Asiatic Navigation and others, AIR 1993 SC 2054 : "20. We have gone through the evidence on record including the four cables mentioned earlier. We are in complete agreement with the Division Bench of the High Court that the cables do not show that sea water had entered the engine room and it was not a case of loss of goods due to perils of the sea. The Judges of 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 would remain in force and by no stretch of imagination can be interpreted as covering each and every risk. We are also in agreement with the Division Bench of the High Court that expression "warehouse to warehouse" merely indicates the period during which the policy would remain in force and has nothing to do about the type of the risk policy covered." 15. The contention of the learned counsel for the second respondent is that the appeal is not maintainable in law and on facts; the appellant did not place any conclusive proof that his agent booked the consignment with the second respondent's agent in a good condition; the agent of the second respondent confirmed that the consignment handed over to the second respondent was in a damaged condition, which was also further confirmed by the second respondent in the damage certificates, dated 22.04.1999, in Ex.P-7 and Ex.D-1; the appellant is not clear about where and when the damage of consignment took place after pre-survey was conducted outside the IGI Cargo Terminal on 12.01.1999 by the surveyors; the appellant is not in a position to explain where the consignment was handed over to the second respondent and that the appellant never compelled the second respondent to issue damage certificate at the time of taking delivery at Chennai on 18.01.999, which would prove that the appellant booked the consignment in a damaged condition. The further contention of the learned counsel is that the survey was conducted by the appellant after 10 days from the date of taking delivery of consignment on 18.01.1999 in the absence of the second respondent and no notice was given to the second respondent prior to survey and, hence, the surveyor's report cannot be relied upon. 16. We have heard the learned counsel for the parties; given our thoughtful consideration to the rival contentions and also gone through the records as well as the decisions cited. 17. Appellant, for the purpose of his business, imported solar panels from U.S. and the same were shipped in 16 boxes consisting of a total number of 316 solar panels. The said panels arrived from U.S. to New Delhi in the first instance and had to be airfreighted from New Delhi to Chennai, for which purpose the appellant insured the goods. 18. Insurance policy was issued on 12.01.1999. The general presumption is that the risk commences from the date of issuance of policy till the completion of the transaction. Before issuing policy, the first respondent caused an inspection on 12.01.1999, which took place at the Indira Gandhi International https://hcservices.ecourts.gov.in/hcservices/ Cargo Terminal, New Delhi. In the inspection report, the Insurance Surveyor certified that no visible damage was noticed at the time of loading of consignment at IGI Cargo Terminal. He also referred to the nature of packing in the said report. Based on the said report only, the first respondent issued the policy against the goods. On 12.01.1999, M/s.Jayem Impex Pvt.Ltd., clearing agent of the appellant, handed over the consignment to the second respondent and the same was received by their agents M/s.New National Cargo Services, who have affixed their signature on the handing over letter. Therefore, from such handing over, the consignment is at the risk of the respondents. 19. Pursuant to the request of the appellant and under the instructions of the first respondent, M/s.K.Mariappan Associates inspected the reported damaged solar panels during transit 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 Delhi to Chennai due to improper handling by the carrier. This report assumes significance for the reason that it was given by the surveyor, deputed by the first respondent. When the said report, dated 25.05.1999, is categorical to the effect that the damage had occurred during transit from Delhi to Chennai due to improper handling by the carrier, the same cannot be gainsaid by the first respondent to avoid liability. The Surveyor has also stated that M/s.Jayem Impex Pvt.Ltd., Delhi, handed over the consignment to Blue Dart Aviation Limited in good condition, to be booked to Chennai. Thus, the said survey carried out at the instance of the first respondent would further establish the case of the appellant. The second respondent also issued a Damage Certificate, dated 22.05.1999, stating that three cartons were damaged. No mention of any external damage has been mentioned by the second respondent, who has carried the consignment from New Delhi to Chennai, at the time of loading the consignment. If any damage was caused, the second respondent would never accept the same for transportation without any endorsement in the Airway Bill issued by them. Therefore, it can be presumed that the consignment had been picked up by the second respondent for transportation to Chennai by Air in good condition and that the damage had occurred only during transit. After entrustment of the goods to the second respondent at IGI Cargo Terminal, the appellant had no access to the goods till they reached Chennai. In Ex.D-4, a letter written by M/s.Jayem Impex Pvt.Ltd., dated 12.01.1999, while handing over the cargo to M/s.Blue Dart Aviation, there was a caution that the items were fragile in nature and they needed adequate care. Therefore, the contention of the learned counsel for the first respondent that there is no endorsement in Ex.D-4 confirming the fact of handing over the cargo in good condition to Blue Dart Aviation Ltd. is dispelled. Had there been any damage to the consignment, the https://hcservices.ecourts.gov.in/hcservices/ authorised person on behalf of the respondents, namely, Banwarilal Rathore would have objected for the same and his signature in Ex.D- 4 while receiving the goods is a res ipsa loquitor for the good condition of the consignment. The provisions of The Carriage by Air Act,1972, are not applicable to this case, as it is a contract between the insured and the insurer. In view of the report of the Insurance Surveyor of the first respondent, dated 25.05.1999, the respondents cannot avoid the liability, fastened on them. If the respondents are discharged of their liability, the very purpose of taking the insurance policy will be defeated. At the same time, it cannot also be the case of the respondents that the policy is a transit one and not of warehouse to warehouse. The decisions cited by the learned counsel for the first respondent are not applicable to the facts of this case. 20. The learned single Judge, while considering the evidence of P.W.1 and also Exs.P-4 and P-5 Insurance Policy and Cover Note respectively to the effect that the cargo at the time of handing over to the agent of the second respondent was in a good condition, arrived at a conclusion that the policy covers from Delhi Airport to Chennai Airport. The very purpose of insuring the goods starts from the point of handing over of the cargo to the agent of the second respondent on 12.01.1999 and the coverage of the policy could be construed from then and there. Hence, the conclusion of the learned single Judge that the transit starts from Delhi Airport to Chennai Airport cannot be supported by a logical reasoning when the goods have been insured for the purpose of protection from any damage due to vis major. Further, while dealing with the surveyor report in Ex.P-9, the learned single Judge has come to the conclusion that the damage is noticed on the date of inspection and since it is not proved that during the transit from Delhi to Chennai due to improper handling by the carrier the damage might have been occurred, it is certain that the insurer is not liable to pay the damage. The learned single Judge ought to have taken note that the cargo was handed over to the agent of the second respondent in a good condition and, at that time, there was no visible damage, as evidenced from the pre-insurance survey report. That being the position and when the object of the policy for insuring the goods is to save from the damage, the conclusion of the learned single Judge that the insurer is not liable to pay the damage is without any appreciation of the insurance policy. Therefore, the findings rendered by the learned single Judge are not supported by any sound reasoning to dismiss the suit, as the documents in questions are not properly considered to meet the very object of the insurance policy. In addition, the learned single Judge has held that the cause of damage as stated in Ex.P-9 cannot be the finding of the surveyor and the cause of damage noted in Ex.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 Judge and allowing the suit, but in the facts and circumstances of the case, the interest shall be at 12% per annum instead of 18% per annum prayed for on the principal amount. No costs. dixit Sd/- Assistant Registrar / True Copy / Sub. Assistant Registrar To The Sub Assistant Registrar, Original Side, High Court, Madras. 1 cc to Mr.R.Murari, Advocate, SR.47264 1 cc to M/s.Nageswaran & Narichania, Advocates, SR.46975 1 cc to Mr.A.John Britto,