TMI Blog1972 (9) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... persons assured an action for damage to the thing insured. The right of the assured is not one of those rights which are incident to the property insured. Counsel for the appellant contended that by reason of the assignment to the insurance company of all rights against the Railway Administration the respondent mill did not have any cause of action against the Railway Administration. In aid of that contention the decisions in King v. Victoria insurance Company Limited [1896] A.C. 250 and Compania Colombiana De Seguros v. Pacific Steam Navigation Co., [1965] 1 Q.B. 101 were relied on. In the Victoria Insurance Company case (supra) the Bank of Australian effected an insurance with the insurance company of certain goods to be shipped to London. Before the cargo left Australia it was damaged or destroyed through the negligence of the defendant King, an employee of the Queens- land Government. The bank claimed a sum from the company which was duly paid. The company took an assignment by deed of all the rights of the bank against King subject to a stipulation that the bank's name should not be used in legal proceedings. The questions raised on appeal in that case were (1) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the future to claim reimbursement thereof from the third parties who may be responsible for loss or damage. By the second document the telephone company waived in favour of the insurance company any rights he may have or has against others possibly responsible for the damages or losses indemnified by this payment, and we agree not to carry out any act that might in any way hinder the carrying out of such rights by the insurance company . The insurance company alleged that the documents went further than a form of letter of subrogation and constituted a valid assignment by the telephone company to the insurance company of the telephone company's claim against the defendants. The Court found that the language of the documents was that of assignment. The question was whether the Court would permit the enforcement of the claim in the name of the assignee or whether the assignment would be of a bare cause of action to defeat assignment and its enforcement. The decision in May v. Lane 64 L.J.Q.B. 236 was referred to in the Pacific Steam Navigation Co. case (supra) for the proposition that a legal chose in action is something which is not in possession, but which must be sued fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a decretal debt or a right to recover the insurance money or the right to claim the benefit of a contract not coupled with any liability. Section 6(e) of the Transfer of Property Act states that a mere right to sue cannot be transferred. A bare right of action might be claims to damages for breach of contract or claims to damages for tort. An assignment of a mere right of litigation is bad. An assignment of property is valid even although that property may be incapable of being recovered without litigation. The reason behind the rule is that a bare right of action for damages is not assignable because the law will not recognise any transaction which may savour of maintenance of champerty. It is only when there is some interest in the subject matter that a,. transaction can be saved from the imputation of maintenance.. That interest must exist apart from the assignment and to) that extent must be independent of it. A chose in action for breach of contract was not assignable at law but was assignable at equity. A chose in action in tort was assignable neither in law nor in equity. A bare right of' action is not assignable. When however the right of action is one of the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Railway Administration was that the mill realised from the insurance company the damages and as such the plaintiff (meaning thereby the respondent mill) has no right to claim any sum in this action . If the specific plea of assignment had been taken in the written statement the respondent mill would have impleaded the insurance company. The Court could 'have in those circumstances been in a position to afford full and complete relief to the parties. In the present case the insurance company and the mill pro- ceeded on the basis that the, insurance company was only subrogated to the rights of the assured. The letter of subrogation contains intrinsic evidence that the respondent would give the insurance company facilities for enforcing rights. The insurance company has chosen to allow the mill to sue. The cause of action of the mill against the Railway Administration did not perish on giving the letter of subrogation. For these reasons, we regret our inability to agree with our learned brother Mathew that the respondent mill has no cause of action. We agree with the decision of the High Court that the suit should be decreed. The appeal is therefore dismissed,. with co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etent to institute the suit and hence dismissed the suit. The plaintiff appealed to the High Court of Madras. The Court reversed the decree holding that the plaintiff was entitled to maintain the suit and that, damage to the goods was on account of the negligence of the Railways. In this appeal, two submissions were made on behalf of the appellants : (1) that there was no evidence to show that the Railway Administration was negligent in dealing with the goods and (2) that the suit was not maintainable. As regards the first contention, the finding of the trial court as well as of the High Court is that the Railway Administration was negligent. The liability of a Railway is that of a bailee and it is not for the plaintiff, in the first instance, to prove, when the goods consigned were destroyed or damaged, as to how the loss ,or damage occurred. It has, no doubt, to satisfy the court that the Railway Administration was negligent but, the duty of showing how the consignment was dealt with during the transit lay on the Railway Administration as it was a matter within their conclusive knowledge. The trial court found that the fire which caused damage to the goods was due to the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l affect the provisions of this section. The section was inserted in the Transfer of property Act, 1882 by the Transfer of Property (Amendment) Act, 1944. Before the amendment, the assignment of rights under both marine and fire insurance policies was governed by s. 135. What the amendment did was to take marine insurance policies out of s. 135 and provide for them in the new section 135-A. The Bill that become the Transfer of Property (Amendment) Act, 1944, stated the objects and reasons as follows : The rules and principles governing a marine insurance policy being materially different from those governing a fire insurance policy,_ it is very unsatisfactory to accord the same treatment in the matter of assignment of both categories of policies. To take but one instance a fire insurance policy is not assignable after loss, but the nature of a marine insurance contract is such as to require that marine insurance policies should be assignable even after loss. In the United Kingdom, assignability of marine insurance policies after loss is placed beyond doubt by s. 50 of the Marine Insurance Act. But in the absence of a similar provision here, it is doubtful if Courts in Briti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the only term to be, implied to give business efficacy to the contract between the parties is that necessary to secure that the assured shall not recover from the insurer an amount greater than the loss which he has actually sustained. The insurer has contracted to pay to the assured the amount of his actual loss and if, before the insurer has paid under the policy, the assured recovers from some third party a sum in excess of the actual amount of the loss, he can recover nothing from the insurer because he has sustained no loss, but it has never been suggested that the insurer can recover from the assured the amount of the excess. Lord Blackburn in his speech in Burnard v. Bodocanachi, Sons Co. (7 App. Cas. 333, 339) said: The general rule of law (and it is obvious justice) is that where there is a contract of indemnity (it matters not whether it is a marine policy, or a policy against fire on land, or any other contract of indemnity) and a loss happens, anything which reduces or diminishes that loss reduces or diminishes the amount which the indemnifier is bound to pay; and if the indemnifier has already paid it, than, if anything which diminishes the loss comes into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty, subrogation is effected by the operation of clauses (2) and (3) of the section viz., by operation of law. Section 6 (c) is concerned with a transfer of a mere right to sue by act of parties. If this is so, it would be incongruous to say that clause (4) will have any effect on the operation of clauses (2) and (3) of the section. In Indian Trade and General Insurance Co. Ltd. v. Union of India (A. I. R. 1957 Calcutta 190.). Mitter, J. had occasion to consider the question in detail and, after referring to the English law, he come to the conclusion that, although by sub-section (2) and (3) of s. 135-A, an insurer is subrogated to all the rights and remedies of the assured in respect of the subject matter, it has no independent right of action in its own name, but can only sue in the name of the insured. The learned judge referred to the decision in M. V. F. Marakkya- yar Sons v. Banians Co.( [1877] 3 App. Cas. 279 H.L.) and said that the rule of English law which never permitted a subrogee to institute a suit in its own name has been followed in India and is a sound rule. In Alliance Insurance Company Ltd. v. Union of India (I. L. R. [1950] 1 Calcutta, 544.) it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 32,254-6-9 only in full settlement of our claim for damage by fire under Policy No. 49757 issued by you on the undermentioned goods, we hereby assign transfer and abandon to you all our rights against the Railway Company or other persons whatsoever caused or arising by reason of the said damage or loss and grant you full power to take and use all lawful ways and means in your own name and otherwise at your risk and expense to recover the said damage or loss and we hereby subro- gate to you the same rights-as we have in consequence of or arising from the said loss or damage. And we hereby undertake and agree to make and execute at your expense all such further deeds, assignments and documents and to render you such assistance as you may reasonably require for the purpose of carrying out this agreement. The High Court held that the assignment was of a mere right to sue and it was not, therefore, valid under S. 6(e) of the Transfer of Property Act. The question is, whether what was assigned was a mere right to sue or something which the law of insurance recognises as assignable. In King v. Victoria Insurance Company Ltd.( [1896] A.C. 250.), a consignment of wool was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to the said insurance company all rights which we have or which we may acquire in the future to claim reimbursement thereof from the third parties who may be responsible for such loss or damage. The insurance company alleged that the document went further than a form of letter of subrogation and constituted a valid assignment by the assured to the insurance company of the assured's claim against the defendants. For the defendants it was argued . . . . An assignment by the insured to the insurance company of the right of action is ineffective. The reason is that a bare right of litigation cannot be assigned... The only decision to the contrary is that of the Privy Council in King v. Victoria Insurance Co. Ltd. which should not be followed. (see the argument at p. 108). The Court overruled the argument and held that the decision in King v. Victoria Insurance Co. Ltd. ([1896] A. C. 250.) correctly lays down the law. After reviewing the case law on the subject, Roskill, J. speaking for the Court observed : So much, then for the authorities. What is the principle to be adduced from them ? I think it can be stated in this way. Where, before 1873, equity would have compell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the insurers can assien to the latter his right to recover damages from the owner of the vessel. The real reason why a mere right to sue cannot be assigned is that such an assignment would offend the rule of champerty and maintenance. Now, as in this case where an insurance has been subrogated to all the rights and the remedies of the assured by virtue of s. 135-A, the reason for the rule against assignment of a mere right to sue does not obtain, because the insurance company is clothed with all the rights and remedies of the assured and the only thing lacking is the capacity to sue in its, own name. If the right is capable of being assigned, and is assigned, it would (1) Twenty-third edition, edited by A.B. Guest, p. 417. (2) no longer be logical to say that the assignor can still sue for, whatever right the assignor had in the subject matter had passed to the assignee. It is impossible to understand, how, after the assignment, the assignor can still maintain a suit. This question was considered by the Madras High Court in Vasudeva Mudaliar v. Caledonian Insurance Co. and Another(A. I. R. 1965 Madras 159.) and the Court said However, an assignment or a transfer implies s ..... 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