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Civil Revision No. 163 of 1957, decided on 22nd January 1960.
S. 72, Sub‑cl. (3); Responsi bility of Railway Administration for goods lost etc.‑Railway a bailee‑Responsibility towards transferee or asignee of goods.
Section 72, sub‑clause (3), Railways Act, 1890 excludes the responsibility of the Railway Administration under the common law of England or the Carriers Act of 1865 which may be in addition to and different from the responsibility of a bailee under sections 151, 152 and 161 of the Contract Act, as provided by sub‑clause (1) of section 72. Sub‑clause (3) is not concerned with the form of an action or the question, in whose name it is to be brought.
As a bailee the Railway Administration is not merely responsible to the original bailor, but also to his successor in interest either for the return of the goods or for the value thereof and upon an assignment which can be made of the right of the consignor the assignee would be entitled to bring an action in his own name for the recovery of the value of the goods. The benefit of a contract can be assigned though not the burden, unless the contract was one which was induced by personal qualifications.
Ss. 130 (2) 135‑A (1) & 191‑Despatch of goods by Rail‑Short delivery to consignee Consignee recovering loss from Insurance Company‑Insurance Company filing suit against Railway for recovery of amount paid No assignment in favour of Company‑Suit not competent.
The insurer in the absence of an assignment can only bring an action in the name of the insured and not in his own name.
Sections 130 (2) and 135‑A (1), Transfer of Property Act expressly provide for the right to bring an action. Even section 91, expressly states who has the right to institute a suit for redemp tion. Wherever the Legislature had intended to confer a right of action upon a person, such as a person in the position of a subrogee or assignee, it had expressly stated so.
Held, that the suit brought by the Insurance Society in its own name was bad.
But an action by the Insurance Society on the basis of a formal assignment would have been maintainable.
Assignment of a claim is an assignment of an actionable claim and not the transfer of a mere right to sue. Such a case would be clearly distinguishable from those where the benefit Sought to be assigned was coupled with liability.
A I R 1925 Lah. 548 ; Federation of Pakistan v. Co‑operative Insurance Society of Pakistan Ltd. Lahore P L D 1956 Lah. 878 ; Simpson v. Thompson L R 3 A C 270 =1878 L T R Vol. 38, 1 ; Simpson v. Thompson I L R 14 Born. 299 ; (King v. Victoria Insurance Co. Ltd. 1896 A C 250 ; James Melson v. Melson Line (1906) 2 K B 217 ; A I R 1957 Cal. 190 ; Queensland Insurance Co. Ltd., v. Pakistan International Airlines P L D 1959 Kar. 275 Queensland Insurance Co. Ltd. v. British India Steam Navigation Co. Ltd. P L D 1958 Kar. 389 ref.
Hassan Akhtar for Petitioner.
Said Ali Shah for Respondent.
Dates of hearing : 12th and 28th October 1959.
This is ,a revision application by the Co‑operative Insurance Society of Pakistan Limited, whose suit for the recovery of Rs. 237‑0‑6 against the Federation of Pakistan was dismissed by the Judge of the Small Causes Court, Lahore.
2. Shortly stated the facts are these. Fifty five bales of cotton yarn had on 20‑2‑1954 been consigned at Karachi for transport by rail to Rawalpindi. These were insured with the petitioner. The consignment reached Rawalpindi on 3‑3‑54 when it was discovered that eleven packets of the yarn of the value of Rs. 237‑0‑6 were missing from one of the bales of the said consignment. Delivery of the rest of the stock was given by the, railway authorities to the consignee, the Rawalpindi Central Co‑operative Bank Ltd., and a short delivery certificate was granted in respect of the eleven packets. A claim having been made the petitioner‑Society had to pay a sum of Rs. 237‑0‑6 to the endorsee of the consignee being the value of the eleven packets which had been short delivered. Having thus paid this amount, the petitioner brought an action in its own name in the Court of Small Causes Judge, Lahore for the recovery of the said sum of money, from the Federation of Pakistan through the General Manager, North Western Railway, Lahore. The learned Judge, though he found that the amount claimed was due and payable by the defendant on account of the loss of the eleven packets, dismissed the suit on the ground that the plaintiff had no locus standi to institute it in its own name. A similar suit had been previously decreed by this Court, but on a revision application, that judgment was set aside by the High Court, which held that the Insurance Society was not entitled to bring the action in its own name. This judgment is reported in Federation of Pakistan v. Co‑operative Insurance Society of Pakistan Ltd. Lahore (P L D 1956 Lah. 878). The learned Small Causes Judge in dismissing this suit relied entirely upon the above case.
3. Mr. Hassan Akhtar the learned advocate for the petitioner, based his argument in support of the petition almost entirely upon the ground that the right of the Insurance Society to bring an action in its own name arose from the fact of subrogation and that this was an equitable right which was not excluded by section 72 of the Railways Act. This argument was advanced for the reason that in the judgment of the High Court referred to above, which was delivered by my learned brother, Changez, J., it had been held that section 72, sub‑clause (3) of the Railways Act excluded the application of the principles of the common law of England. The argument was that even though the above section excluded the applications of the principles of the common law of England, the right of the Insurance Society to bring an action as a subrogee was an equitable right which was not excluded by section 72, sub‑clause (3).
4. If this had been the only point for consideration in this case, I would have had no difficulty in dismissing this revision application because as I will presently show, the Courts of England have never recognised the right of an insurer to bring an action in his own name. And, further‑more, an abstract principle of equity cannot be pressed into action to give the right of suit to a party unless that principle has been given some statutory recognition in this country.
5. Before going on to deal with other points which occur to me in this case, and which have troubled me for some time, I would briefly deal with the ratio of the decision quoted above which was attempted to be distinguished by the learned counsel in the manner indicated above. But let me first reproduced section 72 of the Railways Act.
"72. (1) The responsibility of a railway administration for Measure of the loss, destruction or deterioration of general responsibility animals or goods delivered to the adminis tration of a railway administration to be carried by railway, shall, as a carrier of subject to the other provisions of this Act animals and goods be that of a bailee under sections 151, 152 and 161 of the Indian Contract Act, 1872 (IX of 1872).
(2) (Omitted)
(3) Nothing in the common law of England or in the Carriers Act, 1865, regarding the responsibility of common carriers with respect to the carriage of animals or goods, shall affect the responsibility as in this section defined of a railway adminis tration".
In the judgment of Changez, J. it was assumed upon the basis of two cases cited before him, namely, Simpson v. Thompson (L R 3 AC 270=1878 LTR Vol. 38,1) and (which relied upon Simpson v. Thompson) (I L R 14 Bom, 299) that the equitable principle of subrogation as known to English law entitled the insurer, after having paid for the loss, to bring an action in his own name. The learned Judge, however, declined to apply that principle, in view of the provisions of section 72, sub‑clause (3) of the Railways Act. This is what the learned Judge observed at p. 881:
"It will be noticed that this authority did not deal with the responsibility of the railway administration which is governed by the Railways Act and section 72 (3) of this Act excludes the application of the principles of the common law of England.
Both these authorities are, therefore, not a sure guide for the decision of the point involved. The learned counsel for the respondent could not point out any authority in any textbook or in any decided case that such an action could be maintained by the insurer in spite of the provisions of section 72 of the Railways Act".
It appears to me, however and I say so with great respect to the learned Judge that it is not section 72, sub‑clause (3) of the Railways Act which bars such an action as the present one. "What section 72, sub‑clause (3) excludes is the responsibility of the Railway Administration under the common law of England or the Carriers Act of 1865 which may be in addition to and different from the responsibility of a bailee under sections 151, 152 and 161 of the Contract Act as provided by sub‑clause (1) of section 72. In my opinion therefore, sub‑clause (3) is not concerned with the form of an action or the question as to in whose name it is to be brought.
6. Let us now see whether such an action could be brought in English Courts by the insurer in his own name.
In the case of Simpson v. Thompson itself the Court of Appeal set aside the judgment of the Court of Sessions mainly upon the ground that the underwriters could not assert the right of action in their own name and that it could be done only in the name of the person ensured. This is what was observed by Lord Chancellor at page 2, column 2, of the Report as it appears in Volume 38, L. T. R.:‑--
"I know of no foundation for the right of underwriters except the well-known principle of law that where one person has agreed to indemnify another he will, on making good the indemnity, be entitled to succeed to all the ways and means by which the person indemnified might have protected himself against or reimbursed himself for the loss. It is on this principle that the underwriters of a ship that has been lost are entitled to the ship in specie if they can find and recover it and it is on the same principle that they can assert any right which the owner of the ship might have asserted against a wrongdoer for damage for the act which has caused the loss. But this right of action for damages they must assert, not in their own name but in the name of the person insured."
This case, therefore, could not be an authority for the proposition that the insurer could bring an action in his own name. And the Bombay case reported in I L R 14 Bom. 299, which followed the above English case, could also for that reason be of no assistance.
7. There is another case reported in King v. Victoria Insurance Co. Ltd., (1896 A C 250) wherein it was held that payments honestly made by insurers in satisfaction of a claim by the insured entitled the insurers to the remedies available to the insured, but the insurers could not by mere force of subrogation sue in their own name. The action was, however, held to be maintainable on the ground that the insured had made an assignment of the claim. The same, though not directly, is the effect of the decision reported in James Nelson v. Nelson Line ((1906) 2 K B 217). Therefore, as far as the English Courts are concerned the position is that the insurer in the absence of an assignment can only bring an action in the name of the insured and not in his own name. In the case before me no assignment has been pleaded and, therefore, this petition can succeed only if it could be shown that the insurer had the right to bring an action in his own name on principles of subrogation or by some other law or statutory provision. As I have shown the Courts in England have not countenanced this right. Let me now examine such case law as there is (and it is not very much on this point of the Courts here and in India.
8. The question directly arose in a Calcutta case reported in A I R 1957 Cal. 190, where a consignment of jute despatched by railway was the subject matter of insurance and the goods were damaged in transit by fire, but there was no total loss of either of the whole of the goods or any apportionable part thereof. It was held in that case, after consideration of the provisions of section 135‑A of the Transfer of Property Act that the mere fact of subrogation did not entitle the insurers to enforce the rights in their own names; to enable them to do so, it was necessary‑that a statute should confer upon them a right of action or the assured should make a formal assignment to them of his right of action in respect of the subject matter. It will be of some interest to reproduce the various clauses of section 135‑A of the T. P. Act to fully appreciate the point:
"135‑A. (1) Where a policy of marine insurance has been assigned so as to pass the beneficial interest Assignment of rights‑ therein, the assignee of the policy is entitled under policy of marine to sue thereon in his own name ; and the insurance defendant is entitled to make any defence arising out of the contract which he would have been entitled to make if the action had been brought in the name of the person by or on behalf of whom the policy was effected.
(2) where the insurer pays for a total loss, either of the whole, or in the case of goods, of any apportionable part, of the subject‑matter insured, he thereupon becomes entitled to take over the interest of the insured person in whatever may remain of the subject matter so paid for, and he is thereby subrogated to all the rights and remedies of the insured person in and in respect of that subject matter as from the time of the casualty causing the loss.
(3) where the insurers pays for a partial loss, he acquires no title to the subject matter insured, or such part of it as may remain, but he is thereupon subrogated to all rights and remedies of the insured person as from the time of the casualty causing the loss, in so far as the insured person has been indemnified by such payment for the loss.
(4) Nothing in clause (e) of section 6 shall affect the provisions of this section."
The learned Judge considered the provisions of sub‑clause (3) which according to him applied to the case and that the insurer had become subrogated to the rights of the insured in respect of the goods but this did not entitle it to bring a suit in its own name.
9. There is, however a latter unreported decision of Mukherjee, J. of the Calcutta High Court in Civil Rule No. 3020 of 1955 and Civil Rule No. 954 of 1956. This decision has been noticed in two cases of this Court to which I shall refer presently. In this case the learned Judge held that the insurer could bring an action in its own name having been subrogated to all the rights and remedies which were available to the insured. A. portion of the judgment, which has been reproduced in the judgment of Qadeeruddin, J. in the case reported in Queensland Insurance Co. Ltd. v. Pakistan International Airlines (P L D 1959 Kar, 275) is as follows:--
"The law Courts in England have come to adopt this peculiar form of procedure because the right of action of the insured is considered to be a personal right which is not capable of being transferred to be (sic) the insurer merely by legal subrogation."
And
"There is, however, no reason why the above peculiar form of English procedure should be engrafted on the procedure prevailing in our law Courts. The word subrogation' has not been defined in the Transfer of Property Act but it means substitution. If an insurer is subrogated to all the rights and remedies available to the insured, there is no reason why he should be deprived the right of enforcing such rights and remedies by a suit."
Qadeeruddin, J. in the judgment referred to above had declined to apply the provisions of section 135‑A of the Transfer of Property Act upon the ground that that section dealt only with cases of Marine Insurance and did not cover the case of carriage of goods by air. He did hold, however, as was held by Mittar, J. in 1957 Calcutta referred to above, that Marine insurance included the carriage of goods by land, in view of the definition of marine insurance business contained in section 2, sub‑clause 13 (1) of the Insurance Act. Having thus declined to apply the provisions of section 135‑A on the ground that it did not apply to carriage of goods by air, the learned Judge came to the conclusion that in the absence of a formal assignment the insurer could not maintain an action in his own name, and in doing so he differed from Mukherjee, J. in the unreported Calcutta case referred to above by me. I cannot definitely say what would have been the finding of Qadeeruddin, J. if the case before him related to a carriage of goods by land such as the one before me. What he observed at page 278 is this:
"If section 135‑A of the Transfer of Property Act does not apply to these suits, then there is no statutory law, and none was suggested by the learned counsel, to enable the plaintiffs to sue the defendants for the recovery of damage as the substitute of the insured persons."
It appears that the attention of Qadeeruddin, J. was not drawn to an earlier decision of Constantine, J. reported in Queensland Insurance Co. Ltd., British India Steam Navigation Co. Ltd., (P L D 1958 Kar. 389) where the learned Judge had noticed the judgment of Mukerjee, J. in the unreported case and had held‑ that section 135mA did not entitle the subrogee to bring an action in his own name.
10. The words of subsection (2) of section 135‑A, viz., "and he is thereby subrogated to all the rights and remedies of the insured person in and in respect of that subject matter as from the time of the casualty causing the loss", did, I must confess, trouble me for a while, because it appeared to me that if the insurer was subrogated to all the rights and remedies, the bar that he could not bring an action in his own name might appear to be artificial. But after anxious consideration I have come to the same conclusion as Constantine, J. in the case referred to above, particularly in view of the fact that in the provisions of the Transfer of Property Act such as section 130 (2), Section 135‑A (1), the right to bring an action has been expressly provided. Even section 91 of the Transfer of Property Act expressly states about the right to institute a suit for redemption. It therefore does appear that wherever the Legislature had intended to confer C a right of action upon a person, such as a person in the position of a subrogee or assignee, it has expressly stated it. Upon this finding must hold that the present suit, which was brought by the Insurance Society in its own name must be held to be bad.
This concludes the matter as far as this case is concerned, but I must observe that an action by the Insurance Society on the basis of a formal assignment would be maintainable and on this point I do not agree, though with great respect, with Changez, J. in his judgment referred to above. In all the cases referred to by me above, it has been conceded directly or indirectly that an action could be brought upon the basis of assignment though not purely upon the incidence of subrogation. I do not want to refer to them here because in the present case assignment has not been pleaded. I am, however, of the opinion that the assignment of a claim such as the present one is an assignment of an actionable claim and not the transfer of a mere right to sue. Such a case would be clearly distinguishable from those where & the benefit sought to be assigned was coupled with liability as was the case in 1925 Lah. 548, which was relied upon by Changez, J. It appears to me that as a bailee the Railway Administration is not merely responsible to the original bailor, but also to his successar in interest either for the return of the goods or for the value thereof and upon an assignment which I have indicated can be made of the right of the consigner, it appears to me that the r assignee would be entitled to bring an action in his own name for the recovery of the value of the goods. It is well settled that the benefit of a contract can be assigned though not the burden, unless the contract was one which was induced by personal qualifi cations. Since, however, the case of assignment does not directly arise for consideration in this case, I do not think it necessary to pursue this point any further.
For the foregoing reasons I dismiss this revision application with costs.
K.M.A Application dismissed.
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