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TMI Blog1983 (7) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 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 ₹ 2010 and forwarded the same to the Insurer. After some protracted correspondence, the Insurer accepted the estimate of repair charges in the amount of ₹ 1910 and the Insurer by its letter dated Ext. P-13 dated March 25, 1953 wrote to the plaintiff and the repairer as under: We have 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 services always. Since the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the suit. 6. The plaintiff 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 has no operation in the case since the difference between the Insured and 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 appeal : 1. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy of insurance is decreed in favour of the plaintiff by us. 8. Since the High Court had to decide the appeal within the scope of order of remand made by this Court, it is necessary to confine attention only to the questions which this Court directed the High Court to determine. We have already extracted the three questions framed by this Court in its judgment rendered on October 31, 1967. 9. The first question is whether the respondent-insurance Company was a bailee of the Motor Car of the plaintiff as alleged by the plaintiff ? 10. Section 148 of the Indian Contract Act defines a contract of bailment as under: A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person to whom they are delivered is called the "bailee". There is an explanation appended to the section which provides that if a person already in possession of the goods of another contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, althou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y accidental external means. The next important condition is that in the event of the Motor Car being disabled by reason of loss or damage covered under the policy of insurance, the Insurer will bear the reasonable cost of protection and removal to the nearest repairers and of redelivery to the insured but not exceeding in all ₹ 150 in respect of any one accident. One other condition worth noting reads as under : The insured may authorise the repair of the Motor Car necessitated by damage for which the Company may be liable under this Policy provided that : (a) the estimated cost of such repair does not exceed ₹ 300 (b) the Company is furnished forthwith with a detailed estimate of the cost and (c) the Insured shall give the Company every assistance to see that such repair is necessary and the charge reasonable. The next condition to which reference may be made is condition No. 4 which reads as under : Notice shall be given in writing to the company immediately upon the occurrence of any accident or loss or damage and in the event of any claim and thereafter the Insured shall give all such information and assistance as the Company shall require. A further cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was discharging an obligation under the contract of insurance, for and on behalf of the Insured because he could have legitimately claimed the cost of removal not exceeding ₹ 150 from the Insurer. This would imply that the Insurer took charge of the damaged car from the scene of accident and got it moved to the nearest repairer. The car virtually came into the custody of the Insurer and the repairer took the custody for and on behalf of the Insurer. The .material aspect has been wholly overlooked by the High Court. 16. Secondly, the High Court observed that the Insurer merely agreed to pay to the Plaintiff incurred or to the repairer on his behalf the amount which was settled as the charges for carrying out all the repairers. At this stage High Court overlooked another important condition of the contract of insurance which has been extracted hereinabove. The Insurer may at its own option either can repair, reinstate or replace the Motor Car, once the car was damaged in accident. The obligation to repair the damaged car arose under the contract of insurance. The Insurer had an absolute discretion either to repair, reinstate or replace the Motor Car. When the Insurer has the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions, of which the furrier knew. The defendants knew that the fur belonged to a customer of the fourier, but did not know to whom it belonged. M, an employee of the defendants, was given the task of cleaning the fur. While the fur was in M's custody, he stole it. The plaintiff sued the defendants for damages. The suit was dismissed. In an appeal by the plaintiff, the Court of Appeal reversed the decision and decreed the plaintiff's suit. Lord Denning quoted with approval the following passage from Pollock and Wright on Possession : If the bailee of a thing sub-bails it by authority...and there is no direct privity of contract between the third person and the owner it would seem that both the owner and the first bailee have concurrently the rights of a bailor against the third person according to the nature of the sub-bailment. It was accordingly held that if the sub-bailment is for reward, the sub-bailee owes to the owner all the duties of a bailee for reward; and the owner can sue the sub-bailee direct for loss of or damages to the goods; and the sub-bailee is liable unless he can prove that the loss or damage occurred without his fault or that by his servant. 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-bailee. This inference is further strengthened by the correspondence that ensued between the Insurer and the repairer. The obligation to get the car repaired was of the Insurer. It had a right to take the car into its custody. It did formally take the car into the custody when it expected the repairer to whom the custody was given as the one acceptable to them and entered into negotiations about the repair charges and finally agreed to pay the repair charges to the repairer. Unquestionably, the Insurer would be the bailee and the repairer would be the sub-bailee. 21. The second point which this Court directed the High Court to decide was whether the respondent-company failed to take as much care of the Motor Car as a person of ordinary prudence would in similarly circumstances take of his own Motor Car of the same quality and value? When the car was in the custody of the sub-bailee, it was destroyed by fire that occurred in the repairer's workshop. The sub-bailee was bound to take the same care as a man of ordinary prudence would take in regard to his own goods of the same quality and value as was expected of the bailee. Now no evidence has been led by the defendants to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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