Case: N.R. Srinivasa Iyer Vs. New India Assurance Co., Ltd

Plaintiff whose car was destroyed in fire way back in July, 1953, and claimed a paltry sum of Rs. 7, 000 from the respondent ("insurance company", for short) is knocking at the doors of courts of justice since the last three decades and the mirage of justice is still eluding him, and in his chase presumbly he must have spent double the amount than prayed for in the plaint because this is the second round when the matter has reached the apex court. Plaintiff, who is the appellant, was the owner of Austin 16 H.P. motor car, which he had insured with the original first defendant, Vanguard Fire and General Insurance Co. Ltd. ("insurer" for short) in respect of accident, loss or damage. The period covered by the policy of insurance, Ext. P-1, dated March 4, 1952, was from March 1, 1952, to February 28, 1953. This car suffered damage in an accident which occurred on December 21, 1952. The car was taken to the car repairing workshop of P.S.N. Motors Ltd., Trichur, and left there and an intimation of the accident was sent to the insurer requesting it to discharge its obligation under the policy of insurance. The repairer to whom the car was handed over prepared an estimate of the repair charges in the amount of Rs. 2, 010 and forwarded the same to the insurer. After some protracted correspondence, the insurer accepted the estimate of repair charges in the amount of Rs. 1, 910 and the insurer by its letter dated, Ex. P-13 dated March 25, 1953, wrote to the plaintiff and the repairer as underhave pleasure to inform you that the revised estimate of M/s. P.S.N. Motors Ltd., Trichur, has been approved by our head office, and they have been advised to proceed with the repairs and send us their final bill together with the discharge voucher duly filled in and signed by you, for making the payment.Assuring you of our best servicethe date of the accident, the car was in the custody of the repairer for the purpose of repairs. On July 10, 1953, a fire occurred in the workshop of the repairer in which the motor car of the plaintiff was destroyed. The plaintiff called upon the insurer to indemnify him for the loss as per the terms of the policy of insurance alleging that the motor car was in the possession and custody of M/s. P.S.N. Motors Ltd. on behalf of the insurer and was being repaired at the sole responsibility of the insurer under its instruction and since the insurer had entrusted the motor car for repairs to a workshop in which several automobiles with inflammable materials like oil, petrol, tyres, etc., were lying without ascertaining whether the workshop was insured against fire and other risks, the insurer was liable to make good the loss. The plaintiff claimed the value of the motor car on the footing that the respondent-company was a bailee of the motor car and had failed to take such care thereof as a person of ordinary prudence would under similar circumstances take of his property of the same quality and value as the motor car bailed. This last submission alleging a contract of bailment is seriously disputed by the respondent-insuranceinsurer contested the claim, inter alia, contending that the suit is not maintainable in view of condition No. 7 of the policy of insurance, an aspect of the matter which is concluded against the respondent-company, and, therefore, it is not necessary to set out in extenso the contention under this head. The contract of bailment was seriously disputed and it was submitted that the car was handed over to the workshop by the plaintiffs son and the insurance company had only agreed to reimburse the loss and the workshop owner was not the agent of the insurer nor was the insurance company a bailee, nor could it be said that the agent of the bailee was in possession of the car.The trial court held that the motor car was entrusted to the repairer for and on behalf of the insurer and the insurance company was liable for the loss of the motor car as it was in the possession of the agent of the insurance company. The suit was held to be maintainable, despite condition No. 7 of the policy of insurance. Accordingly, the suit was decreed with costs.An appeal was preferred to the High Court of Kerala at the instance of the insurer. The High Court held that condition No. 7 of the policy of insurance precluded the plaintiff from filing the suit before obtaining the award and on the short ground allowed the appeal of the insurer and dismissed theplaintiff preferred Civil Appeal No. 142 of 1965, by special leave to this court. Shah J., speaking for the court, in the judgment rendered on October 31, 1967, held that the High Court was in error in coming to the conclusion that condition No. 7 precluded the plaintiff from filing the suit. This court held that condition No. 7 of the policy of insurance had no operation in the case since the difference between the insured and the insurer arose not out of the policy but out of the claim of the plaintiff that the motor car was delivered to the respondent-company for repairs. Accordingly, this court reversed the decision of the High Court and remitted the appeal to the High Court requesting the High Court to deal with the following questions which arise in the appeal1. Whether the respondent-company was a bailee of the motor car of the plaintiff as alleged by the plaintiff ?2. Whether the respondent-company failed to take as much care of the motor car as a person of ordinary prudence would in similar circumstances take of his own motor car of the same quality and value ? and3. the value of the motor car destroyed.the matter went back to the High Court, the appeal was heard by a Division Bench of the Kerala High Court. The Bench hearing the appeal had some doubt whether in view of the pleadings the plaintiff can claim any relief on the basis of a contract of bailment. After expressing this doubt, the High Court proceeded to observe that in view of the scope of remand the High Court has to decide the question whether or not the insurer was a bailee of the plaintiff ? After referring to the correspondence, the High Court reached the conclusion that the motor car was entrusted to M/s. P.S.N. Motors Ltd. by the plaintiffs son on behalf of the plaintiff for repairs, that it was done without reference to the defendant, that all that the defendant agreed was to pay to the plaintiff or to M/s. P.S.N. Motors Ltd., on his behalf, " the amount which was settled as the charges for carrying out all the repairs ". In this view of the matter, the High Court held that the insurer was not a bailee of the motor car of the plaintiff and the plaintiffs claim as founded on a contract of bailment cannot succeed. The High Court, accordingly, allowed the appeal of the insurance company and dismissed the suit of the plaintiff directing the parties to bear their respective costs. Hence this appeal by the plaintiff by special leave.

Court's reasoning:
The High Court did not make any reference to the terms of the contract of insurance between the parties before rejecting the plaintiffs case that the insurer was the bailee and the repairer was the sub-bailee who had custody of the car on the entrustment of the custody for the avowed object of repair by the bailee to the sub-bailee. For us, it is a bit surprising that the High Court should have rejected the plaintiffs case out of hand without the slightest reference to the contract of insurance evidenced by the policy, Ex. P-1. A bare persual of some of its conditions would unmistakably lead to the conclusion that the insurer was a bailee of the motor car inthe present case, the trial court held that the repairer, the sub-bailee, failed to take that much care as a prudent man would take of his own thing in respect of the car. The High Court has not touched this aspect while reversing the decision of the trial court. There is no evidence on behalf of the insurer on the question as to what amount of care has been taken by the repairer, the sub-bailee. One R. Rajaram, D.W. 1, was examined on behalf of the insurer, and there is not one word in his examination-in-chief as to what degree of care was taken to keep the car in safe custody by the sub-bailee. No one was examined on behalf of the sub-bailee. The burden was on them to establish to the satisfaction of the court as to what degree of care was taken in respect of the damaged car. Plaintiff has led some evidence in this behalf as to the careless manner in which the car was kept in the workshop where inflammable material was kept. Without doubt the burden being on the bailee and the sub-bailee and the same having not been discharged, the learned trial judge was perfectly justified in accepting the evidence of the plaintiff and in recording the finding that the bailee and the sub-bailee had not taken such care of the car as was expected of a prudent man in respect of his own goods of the same quality and value. Therefore, the bailee is liable for the loss suffered by the plaintiff, the bailor.The last point which this court directed the High Court to determine was about the value of the destroyed car. The plaintiff has given the value of the motor car at the time of its loss at Rs. 7, 000, and that is the measure of the loss suffered by the plaintiff on account of the loss of the car. The trial court had decreed plaintiffs suit to the extent of Rs. 7, 000. The finding is confirmed.