IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. OSA No.10/2001 Reserved on.17.3.2008 Decided on.8.5.2008 Himachal Pradesh Civil Supplies Corporation. …Appellant. Versus M/s Oriental Insurance Company. …Respondent Coram The Hon’ble Mr. Justice Deepak Gupta, J. The Hon’ble Mr. Justice Rajiv Sharma, J. Whether approved for reporting ?1. yes. For the appellant : Mr. K.D. Sood, Advocate. For the respondent Mr. J.S. Bagga, Advocate. Rajiv Sharma, J. This original side appeal is directed by the appellant against the judgment dated 4th December, 2000 of learned Single Judge rendered in Civil Suit No. 87/92. The brief facts necessary for the adjudication of this original side appeal are that the appellant-plaintiff (hereinafter referred to as the plaintiff for convenience sake) is a company duly incorporated under the provisions of Companies Act, 1956 having its registered office at Broad View Hotel, Sanjauli, Shimla. The plaintiff is engaged in public distribution of food grains and other essential commodities. 1 Whether the reporters of Local Papers may be allowed to see the judgment? yes. 2 It distributes levy sugar which is purchased from various sugar mills from the State of Uttar Pradesh. The distribution is carried out through transporters to various destinations in the State of Himachal Pradesh. The plaintiff had obtained a transit insurance policy from the respondent-defendant (hereinafter referred to as the defendant for the convenience sake) covering risk to the extent of 23 crores in respect of their consignments of sugar, edible oils etc. The insurance policy was valid with effect from 1st April, 1989 to 31st March, 1990. The plaintiff had entered into agreement with M/s. Shimla Truck Malik Union, Hari Niwas, Sanjauli, Shimla as its agent. The consignments of sugar sent by sugar mills were being received at Chandigarh by the Truck Union. A fire broke out on 1st May, 1989 in the office/godown of the Truck Union at Chandigarh. At that time, 5316 quintals of levy sugar belonging to the plaintiff was stored in the godown. 1850 quintal of levy sugar had been despatched to various destination. The sugar being 3466 quintals was involved in the fire. About 2519.64 quintals could be salvaged and was sold. The remaining 946.36 quintals was completely destroyed in the fire. The total value of the sugar which was gutted into fire worked out to Rs. 6,65,873.54 paisa. The plaintiff lodged a claim amounting of Rs. 7,23,703.78 paisa with the defendant. The same was repudiated by the defendant vide communication dated 9.10.1991. it is in these circumstances that the plaintiff had filed the suit in this Court for the recovery of Rs. 11,14,504/- i.e. Rs. 7,23,703.78 paisa plus interest 3 thereon @ 17% per annum with effect from 1.5.1989 to 1.5.1992 amounting to Rs. 3,90,801/-. The defendant resisted the suit filed by the plaintiff. However, the defendant had admitted that the fire broke out on 1st May, 1989. The thrust of the defendant in the written statement was that it was not liable to pay under the insurance policy on the ground that the stock of the sugar was not destroyed while in transit. In other words, the whole case set up by the defendant was that the destination of the consignment was Chandigarh and the sugar stored at Chandigarh was not covered under the insurance company. The learned Single Judge framed the following issues on the basis of the pleadings of the parties on 7th May, 1993: 1. Whether Ashok Thakur is competent to file the suit? OPP. 2. Whether the policy covers risk from anywhere in India to anywhere in India as contained in policy dated 3.4.1989 and as such the defendant is liable to pay the insured amount? OPP. 3. Whether there is any condition that policy covers only the risk from transit point to the destination point as alleged? OPD 4. Whether the agreement with the Shimla Truck Malik Union is binding on the defendant as the sugar used to be transported on consignment basis, if so, its effect? OPP 5. Whether the destination point in the policy was at Chandigarh as alleged? OPD 6. Whether defendants are liable to pay the loss suffered by the plaintiff if so, to what extent? OPP 7. To what rate of interest the plaintiff is entitled to? OPP 4 8. Whether there was no policy in force on 1.5.1989 at the time when the fire broke out in the godown of Shimla Truck Malik Union as alleged? OPD 9. Whether the suit is not competent and maintainable as alleged? OPD 10. Whether the plaintiff has no cause of action to file the suit as alleged? OPD 11. Relief. Another issue i.e. 10-A was also framed on 22.5.1997 which reads thus: 10-A. Whether the suit is not within time as alleged? OPD The learned Single Judge decided the issues No.1,2,9,10 and 10-A in favour of the plaintiff. However, issues No. 3,4 to 8 were decided against the plaintiff. Mr. K.D. Sood, Advocate had strenuously argued that the judgment of the learned Single Judge dated 4th December, 2000 is not sustainable in the eyes of law primarily on the ground that the learned Single Judge had misconstrued Clause 5 of Ex.PW-1/A i.e. original insurance policy. Mr. Sood also contended that the provisions of Clause 5 were required to be read harmoniously since according to him the insurance policy covered the risk of consignment through transit “from anywhere in India to anywhere in India”. He further contended that the destination of the consignment was when it reached its godowns in the State of Himachal Pradesh for further distribution of the sugar in the State. Mr. J.S. Bagga, Advocate had supported the judgment of the learned Single Judge dated 4th December, 2000. According to him, 5 the destination of the consignment of sugar vide Ex.PW-3/1 to Ex.PW-3/12 was Chandigarh and his client was not liable to indemnify the claim since the fire had broken out after the sugar was stacked in the godown owned by the Truck Union. We have herd the learned counsel for the parties and carefully perused the record. The core issue which has fallen for consideration before us is what construction should be given to clause 5 of Ex.PW-1/1. Clause 5 is reproduced as under for ready reference: “5. This insurance attaches from the time the goods leave the warehouse and/or the store at the place named in the policy for the commencement of transit and continues during the ordinary course of transit including customary transshipment, if any, (i) until delivery to the final warehouse at the destination named in the policy or (ii) in respect of transits by Rail only or Rail and Road, until expiry of 7 days after arrival of the railway wagon at the final destination railway station or. (iii) In respect of transits by Road only until expiry of 7 days after arrival of the vehicle at the destination town named in the policy. Whichever shall first occur. N.B. 1. The period of 7 days referred to above shall be reckoned from the midnight of the day of arrival of railway wagon at the destination railway station or vehicle at the destination town named in the policy. 2. Transit by Rail only shall include incidental transit by Road performed by Railway Authorities to or from Railway Out-Agency. 6 Clause 5 has to be read in juxtaposition with other clauses of Ex.PW-1/1 to determine what would be the end point or the destination of the consignment of goods as per the policy. Now, it is in this backdrop we have to peruse carefully clause 5 and other conditions of the policy to see whether the defendant is liable to indemnify the plaintiff or not. It is evident from Ex.PW-1/1 that the period of insurance was from 1st April, 1989 to 31st March, 1990 for “anywhere in India to anywhere in India”. The sum insured was Rs. 23 crores on the consignments of sugar, edible oils, cloth, food grains, salt and such as goods duly packed in gunny bags, tins and in bales. The insurance as per clause 5 attaches from the time the goods leave the warehouse/ store at the place named in the policy for the commencement of transit and continues during the ordinary course of transit including customary transshipment. The parties are not at variance that the sugar weighing 946.36 quintals was gutted in the fire on 1.5.1989. The important expression employed in clause 5 is that the insurance attaches the moment goods leave the warehouse for the commencement of transit and continues during the ordinary course of transit. In the present case the commencement point will be the sugar mills in the State of Uttar Pradesh and the end destination will be in the State of Himachal Pradesh. The sugar in the present case had been kept at Chandigarh godown for its onward destination in the State of Himachal Pradesh. This construction of the clause 5 is in conformity with the expression “from anywhere in India to anywhere in India”. The fire took place on 1st May, 1989 i.e. even within 7 days after 7 arrival of the goods at Chandigarh. The underlined/ wholesome principle of clause 5 is that the goods are insured from the moment they leave the warehouse or the store till they reach their final destination. The final destination as discussed hereinabove will be in the State of Himachal Pradesh and not at Chandigarh where the sugar was stored for its onwards journey to the State of Himachal Pradesh through the Truck Union. The learned Single Judge has misconstrued the clause 5 and had come to a wrong conclusion that the commencement of transit of goods was only upto Chandigarh on the basis of Ex.PW-3/1 and PW-3/12. The learned Single Judge has also erred in coming to the conclusion that once the goods have reached the godowns of Truck Union, the goods cannot be said to be in transit. The role of the Truck Union was to carry the goods from Chandigarh to warehouse in the Himachal Pradesh. The goods once they had left the premises of sugar mills and reach at the end destination i.e. of Himachal Pradesh will amount to goods continuous in transit. The stacking of sugar at Chandigarh was only for a limited period to enable the Truck Union to carry it to the State of Himachal Pradesh. The finding recorded by the learned Single Judge that once the goods have reached Chandigarh they will be deemed to have been received by the Truck Union as an agent is liable to be set aside. The agreement entered into between the plaintiff and the Truck Union is for the carriage of goods and the Truck Union cannot be treated an agent of the plaintiff to defeat the conditions of policy. The policy as we have read in totality indicates that the same will remain in operation throughout the transit when 8 the goods leave the warehouse till end destination. There is nothing in the policy which stipulates even by implication that the transit period can be truncated the manner in which the defendant has projected. What has been stipulated in the policy is that it is bound to remain in operation for the entire period irrespective of the fact whether the goods were stacked in between at various places during its transaction. The policy was alive at the time when the fire broke out in the godown and it will not cease to operate since the goods were continuous in transit for its end destination in the State of Himachal Pradesh. If the contention of Mr. J.S. Bagga, Advocate is accepted, it will mean that for each transit a separate policy has to be obtained by a customer. In the present case, the plaintiff had insured the goods to be carried by road “anywhere from India to anywhere in India”. As far as the quantification of damages is concerned, no serious dispute has been raised before us and we accordingly accept the same. The Surveyor M/s K.D. Kohli and Company Private Limited appointed by the Oriental Insurance Company had assessed the loss of damage to sugar stock amounting to Rs. 6,55,878.54 paisa. In addition thereto the Surveyor had recommended that Rs. 67,832.73 paisa spent on account of minimization and recovery operations be also granted to the insured. The report of the Surveyor was exhibited as Ex.PW-2/17. Since the transaction in question was a commercial transaction, the plaintiff is also entitled to interest on the amount which was not paid to it in time. Keeping in view the rate of interest as existed in the year 1989 9 and the rate of interest as presently payable, we deem it fit and proper to award interest @ 9% per annum from the date of filing of the suit till realization of the amount. In view of the above discussion, the appeal is allowed. The judgment and decree of the learned Single Judge is set aside. The suit of the plaintiff is decreed with costs throughout and a decree for Rs. 7,23,711/- along with future interest @ 9% per annum from the date of institution of the suit till realization of the amount is passed in favour of the plaintiff and against the defendant. Decree sheet be prepared accordingly. (Deepak Gupta), Judge ( Rajiv Sharma), Judge May 8, 2008 *Awasthi*