Case: Union Of India Vs. M/S. Sohanlal Sampatlal

83-A shall be the market value on the date and at the place of posting. Part IV of the rules deals with insurance of postal articles. The second proviso to rule 72 (1) lays down that articles containing government currency notes or gold coin or bullion shall be insured for the actual value of the contents. Rule 74 gives the additional fee chargeable for the insurance. Under rule 81 the compensation payable to the sender of an insured article shall not exceed the amount for which the article has been insured for the loss of the postal article or any of its contents. According to the first proviso the compensation shall in no case exceed the value of the article or any of its contents lost. Clause (g) of the second proviso is to the effect that no compensation shall be payable where the insured article contains gold coins or both and has not been insured for the actual value of the contents. Rule 83A makes it obligatory for the sender to declare on the article the value of the contents where gold coin, bullion etc., is despatched. Thus under the rules whenever gold coin or bullion is sent by parcel post it must be insured for the actual value of the contents. If the articles are lost the amount of compensation cannot exceed the amount for which the articles have been insured and no compensation shall be payable where the articles have not been insured for the actual value. By reference to rule 44 the value has to be the market value on the date and at the place of posting.4. The argument which has been raised on behalf of the Union of India is that the respondent firm had purchased the gold coin for Rupees 2465-14-0 on June 15, 1955. Its actual market value, therefore on respondents own admission was not Rupees 2500/-. It has, further, been pointed out that in para 2 of the plaint it has been stated that on or about June 16, 1955 the plaintiffs despatched 26 tolas gold valued at Rs. 2474-15-6 under insured parcel which was lost in transit and even the decree was claimed for that amount and not for Rs. 2500/-. As there was a discrepancy between the value declared and the actual or market value the respondent firm was not entitled to any compensation. The plea in defence substantially was that the respondent ought to have declared the actual value of the contents on the date of insurance, namely June 16, 1955 which it failed to do and therefore there was no contract of insurance between the parties.5. Now the statutory provisions of the Act and the rules have to be construed and read in a reasonable manner. If the interpretation sought to be placed on behalf of the appellant is accepted it would mean that where a person declares a value which varies even by one paisa from the market value on the date and at the place of posting the insured would be deprived of the compensation for the loss of the article. That could never have been in the contemplation of the legislature and the rule making authority. The rules seem to ensure that the insured should not make a declaration in excess of the market value so as to avoid fraudulent dealings. Nor can the insured get more compensation than the market value. But this does not and cannot mean that any innocent and insignificant misstatement by the insured of the actual value which has to be the market value on a particular date and at the place of posting can lead to the startling result that he becomes wholly disentitled to receive any compensation. It is well known that the market in articles like gold and bullion exists only in large towns and the value fluctuates from day to day and from hour to hour. It may be sometimes impossible for any person sending gold or bullion by post after getting it insured to ascertain the exact value on a particular date. Take for instance the case of a person who is illiterate and has to dispatch gold from a place in the vicinity of which there is no market from where the market value can be ascertained. He cannot in the very nature of things be absolutely precise and accurate about the market value prevailing at the material time. This does not, however, mean that he is completely absolved from the responsibility of ascertaining it but if he gives some value which is approximately the same as the market value the insurer cannot take up the position that owing to an insignificant difference the insured cannot recover the compensation.6. The High Court referred to Article 429 in Halsburys Laws of England III Edition, Vol. 22, at page 227 and to certain other text books on the law of insurance according to which the burden is on the insurer of showing that the policy is no longer subsisting or that there had been a breach of such a condition which relieves the insurer from liability. It has not been shown that these general principles will not be applicable when an insurance has been effected under the provisions of the Act and the rules. The finding of the High Court was that there was no evidence of any kind regarding the market rate of gold prevailing on June 16, 1955 on the record. It was for the insurer to lead evidence on that point and show that according to the market rate prevailing on that date the value could not be Rs. 2500/-The mere fact that the respondent was under the impression or had stated in the " plaint that the value of the gold was less than Rs. 2500/- was not sufficient to absolve the insurer from the responsibility of proving that the value which was declared i.e. Rs. 2500/- was not the market value on the date and at the place of posting

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. Now the statutory provisions of the Act and the rules have to be construed and read in a reasonable manner. If the interpretation sought to be placed on behalf of the appellant is accepted it would mean that where a person declares a value which varies even by one paisa from the market value on the date and at the place of posting the insured would be deprived of the compensation for the loss of the article. That could never have been in the contemplation of the legislature and the rule making authority. The rules seem to ensure that the insured should not make a declaration in excess of the market value so as to avoid fraudulent dealings. Nor can the insured get more compensation than the market value. But this does not and cannot mean that any innocent and insignificant misstatement by the insured of the actual value which has to be the market value on a particular date and at the place of posting can lead to the startling result that he becomes wholly disentitled to receive any compensation. It is well known that the market in articles like gold and bullion exists only in large towns and the value fluctuates from day to day and from hour to hour. It may be sometimes impossible for any person sending gold or bullion by post after getting it insured to ascertain the exact value on a particular date. Take for instance the case of a person who is illiterate and has to dispatch gold from a place in the vicinity of which there is no market from where the market value can be ascertained. He cannot in the very nature of things be absolutely precise and accurate about the market value prevailing at the material time. This does not, however, mean that he is completely absolved from the responsibility of ascertaining it but if he gives some value which is approximately the same as the market value the insurer cannot take up the position that owing to an insignificant difference the insured cannot recover the compensation.6. The High Court referred to Article 429 in Halsburys Laws of England III Edition, Vol. 22, at page 227 and to certain other text books on the law of insurance according to which the burden is on the insurer of showing that the policy is no longer subsisting or that there had been a breach of such a condition which relieves the insurer from liability. It has not been shown that these general principles will not be applicable when an insurance has been effected under the provisions of the Act and the rules. The finding of the High Court was that there was no evidence of any kind regarding the market rate of gold prevailing on June 16, 1955 on the record. It was for the insurer to lead evidence on that point and show that according to the market rate prevailing on that date the value could not be Rs. 2500/-The mere fact that the respondent was under the impression or had stated in the " plaint that the value of the gold was less than Rs. 2500/- was not sufficient to absolve the insurer from the responsibility of proving that the value which was declared i.e. Rs. 2500/- was not the market value on the date and at the place of posting