1972 (9) TMI 145 - SC - Indian Laws

Court upholds respondent mill's right to sue Railway Admin despite insurance assignment. Negligence found.

UNION OF INDIA Versus SRI SARADA MILLS LTD.

The court held that the respondent mill retained the right to sue the Railway Administration despite assigning rights to the insurance company. The ... - Issues Involved:1. Whether the respondent mill, after recovering from the insurance company and assigning all rights against the Railway Administration to the insurance company, was competent to institute and maintain the suit against the Railway Administration.2. Whether the Railway Administration was negligent in dealing with the goods.3. Whether the suit was maintainable under the provisions of the Transfer of Property Act and the Marine Insurance Act.Issue-wise Detailed Analysis:1. Competence of the Respondent Mill to Institute the Suit:The primary issue was whether the respondent mill, having recovered Rs. 32,254-6-9 from the Indian Globe Insurance Co. Ltd. and assigning all rights against the Railway Administration to the insurance company, could still maintain a suit against the Railway Administration. The court agreed with the reasoning that subrogation does not confer any independent right on underwriters to maintain an action in their own name without reference to the persons assured. The right of the assured is not incident to the property insured. The court referenced decisions in King v. Victoria Insurance Company Limited and Compania Colombiana De Seguros v. Pacific Steam Navigation Co., which supported the view that subrogation allows the insurer to step into the shoes of the assured but does not grant an independent right to sue in the insurer's name. The court held that the respondent mill retained the right to sue the Railway Administration, and the insurance company could not enforce the claim independently.2. Negligence of the Railway Administration:The trial court and the High Court found that the Railway Administration was negligent in handling the goods. The liability of a Railway is that of a bailee, and the burden of proof lies on the Railway Administration to show how the goods were handled during transit. The court held that the Railway Administration failed to provide satisfactory evidence of how the goods were dealt with, leading to a presumption of negligence. The fire that caused the damage was found to be due to the negligence of the Railway Administration.3. Maintainability of the Suit:The court examined whether the suit was maintainable under the provisions of the Transfer of Property Act and the Marine Insurance Act. The trial court initially dismissed the suit on the grounds that the insurance company had paid the total loss and was subrogated to all the rights and remedies of the assured. However, the High Court reversed this decision, holding that the respondent mill could still maintain the suit. The court discussed Section 135-A of the Transfer of Property Act, which deals with the assignment of marine insurance policies and subrogation. Subrogation allows the insurer to be subrogated to all the rights and remedies of the assured but does not grant an independent right to sue in the insurer's name. The court referenced several cases, including Yorkshire Insurance Co. Ltd v. Nisbet Shipping Co. Ltd and Castellain v. Preston, which supported the view that subrogation does not allow the insurer to sue in its own name. The court concluded that the respondent mill's cause of action did not perish upon giving the letter of subrogation, and the suit was maintainable.Dissenting Opinion:Mathew, J. dissented, arguing that the assignment of all rights, including the right to sue, to the insurance company precluded the respondent mill from maintaining the suit. He referenced Section 135-A of the Transfer of Property Act and argued that the insurance company, having been subrogated to all the rights and remedies of the assured, should have the right to sue independently. He cited cases like King v. Victoria Insurance Company Ltd and Compania Colombiana De Seguros v. Pacific Steam Navigation Co., which supported the view that an assignment of rights, including the right to sue, is valid and enforceable. He concluded that the respondent mill had no cause of action after the assignment and the insurance company should have been the proper party to sue.Conclusion:The majority opinion held that the respondent mill retained the right to sue the Railway Administration, and the suit was maintainable. The appeal was dismissed with costs, and the decision of the High Court to decree the suit was upheld. The dissenting opinion argued that the insurance company should have been the proper party to sue, but this view did not prevail.