NATIONAL INSURANCE COMPANY LTD vs Mehboob Khan

NATIONAL Insurance Company Ltd., Petitioner herein which was the opposite party before the District Forum, has filed this Revision Petition against the order dated 15.5.2006 passed by the State Consumer Disputes Redressal Commission, Rajasthan (in short, ''the State Commission'') in appeal No 1960/97 whereby the State Commission upholding the order of the District Forum, has directed the Petitioner to pay a sum of Rs. 75,468.10 along with interest @ 12% p.a. from 2.12.1996 till realization to the Respondent towards loss of goods, Rs. 2,210 towards survey charges and Rs. 300 towards the litigation expenses within the period of 30 days. Facts: Respondent, Mehboob Khan had taken a Carrier''s Legal Liability Policy for the vehicle being tanker No. RJ-19G-4800 for the period 28.9.1995 to 27.9.1996 for a sum of Rs. 2 lakh. Under the said policy of insurance, subject to the terms, exclusions, exceptions and conditions of the policy of insurance, the company agreed to indemnify the insured against legal liability for actual loss or damages to the goods in vehicle No. RJ-19 G-4800 caused by fire or accident while being transported in the said vehicle. The said vehicle while carrying HSD oil from Jodhpur to Baitalpur in U.P. met with an accident near Dausa and the oil in the tanker spilled out. On receipt of the intimation from the Respondent, Petitioner appointed Engineer Sanjeev Kumar Saxena to conduct the spot survey. Spot survey was conducted and the report was submitted by the Surveyor on 2.7.1996. After receipt of the report from Sanjeev Kumar Saxena, Petitioner appointed M/s. Crystal Visions (P) Ltd., Surveyor to conduct the survey and assess the loss. The survey report clarified that though the policy was taken by Mahboob Khan, the owner of the tanker No. RJ G19-4800 but he was not the Carrier of the Indian Oil Corporation Ltd. and that one, Mr. Mohinuddin Khan was the Carrier registered under contract with IOC Ltd. The Carrier''s Legal Liability Policy obtained by Mehboob Khan covers the legal liability of the insured as a Carrier arising out of the loss of petroleum products being transported. The policy did not cover the liability of the owner of the vehicle which was being used by the Carrier. Since the Carrier, Mohinuddin Khan was not insured, the company was not liable to indemnify the loss under the policy of insurance.

AFTER considering all the facts and circumstance of the case, terms and conditions of the policy of insurance and the survey report, the claim of the Respondent was repudiated. A communication to this effect was sent to him on 10.3.1997. Petitioner was of the view that the policy of insurance being a Carrier''s Legal Liability Policy covers the legal liability of the insured, Mahboob Khan where he was acting as a Carrier and not the Mohinuddin Khan who was the Carrier registered under the contract with IOC Ltd. to carry the HSD oil.

AGGRIEVED by the letter of repudiation, Respondent filed the complaint before the District Forum claiming the sum of Rs. 75,468.10 towards the loss on account of the oil besides claiming compensation for mental and physical discomfort and litigation expenses.

PETITIONER, on being served, filed the written statement and contested its liability to pay the amount. It was submitted that the insured had taken the Carrier''s Legal Liability Policy of insurance for fulfilment of his liability as a Carrier under the Carriers Act, 1865. It was submitted that according to the policy of insurance, if during the carriage of the goods by the insured as a Carrier, any damage was caused to the goods due to any accident and any legal liability is fastened on the insured as a Carrier, such liability is covered under the Carrier''s Legal Liability Policy. It was submitted that .at the time of accident, the insured was not carrying the goods in the vehicle in question as a Carrier and, therefore, the claim of the insured/Respondent was not admissible under the Carrier''s Legal Liability Policy. That Mohinuddin was registered as Carrier with IOCL and the oil was entrusted to him-by IOCL for transportation. That the insured was not the Carrier and as per terms of the policy of insurance obtained by the insured, no legal liability as a Carrier had arisen. That the claim of the Respondent had been repudiated after due consideration.

DISTRICT Forum, overruling the objections raised by the Petitioner, allowed the complaint and directed the Petitioner to pay a sum of Rs. 75,468.10 to the Respondent along with interest @ 12% p.a. w.e.f. 2.12.1996 till payment.

AGGRIEVED by the order of the District Forum, Petitioner filed the appeal before the State Commission which has been dismissed by the impugned order.

LEARNED Counsel for the Petitioner contends that the policy of insurance in question was a Carrier''s Legal Liability Policy. Mehboob Khan who was the owner of vehicle registered as RJ-19G-4800 had taken the policy. The said policy of insurance covered the legal liability of the insured, Mehboob Khan as Carrier subject to policy terms and conditions. At the time of accident, insured was not acting as a Carrier. Carrier registered with IOCL was Mohinuddin Khan. Policy covered the legal liability of the insured, Mehboob Khan as Carrier arising out of the accident to the vehicle and the company was not responsible for the liability, if any, of the owner of the vehicle which was being used by somebody else as a Carrier. Mohinuddin Khan was not insured with the company and as such the company was not liable in respect of said loss. As against this, learned Counsel for the Respondent contents that the Petitioner is liable to indemnify the Respondent as the policy in question is a policy in respect of vehicle and cannot be limited to a situation where only the Respondent is using the vehicle or has directly suffered the loss. Without prejudice to the aforementioned submission, in the alternate, it is submitted by the learned Counsel for the Respondent that the Respondent by virtue of being a partner of M/s. Mohinuddin and Co. which was using the vehicle in question at the time of accident, is entitled to be indemnified for the entire loss in question. That the Respondent is a partner of the Partnership Firm, M/s. Mohinuddin and Co. by virtue of Partnership Deed dated 11.9.1995 entered between the parties. That the Indian Oil Corporation Ltd. had recovered the amount of loss caused to the goods by deducting the Bills payable to M/s. Mohinuddin and Co. Counsel for the parties have been heard at length.

RESPONDENT, Mehboob Khan had taken a Carrier''s Legal Liability Policy for the vehicle, a tanker registered as RJ 19G-4800 for the period from 28.9.1995 to 27.9.1996. The said policy of insurance provided as under: "Whereas Mehboob Khan (hereinafter called ''the Insured'') carrying on the business of Common Carriers and none other for the purposes of this insurance has by a proposal and declaration applied to National Insurance Co. Ltd. (hereinafter called ''the Company'') for the insurance hereinafter set forth and has paid or agreed to pay to the company the premium set as consideration for sure insurance for the period from 28.9.1995 to 27.9.1996 (both days inclusive). Now this policy witnesseth that during the currency of this Policy or any further period for which it may be in force subject to limits terms provisions exclusions, exceptions and conditions contained herein or endorsed hereon the Company hereby agrees to indemnify the insured against his legal liability for actual loss of or damages to the goods or merchandise directly caused by fire and/or accident to the vehicle registered under No. RJ-19-G-4800 whilest such goods or merchandise are directly transported in the said vehicle provided that fire or accident has arisen on account of negligence of the insured or the negligence or criminal act of his servants and further provided that the vehicle is damaged by such fire or explosion or accident and a claim in respect of thereof is admitted under the motor comprehensive insurance policy covering the vehicle. The cover will commence with the loading of the cargo on the vehicle and will be in force until unloading of the cargo at the discharging point of expiry of 3 days after the first arrival of the vehicle at the destination town whichever may first occur."

"Exclusions- Provided always that the company shall not in any circumstances be liable under this policy in respect of- 1. Liability under any contract or agreement unless such liability would have arisen and the insured would have been liable at law notwithstanding such agreement under the Carriers Act, 1865. 2. Liability in respect of damage to property- (a) belonging to the insured or to any servant, agent or sub-contractor of the insured or the third parties unless such property is covered by a contract of carriage entered into by the insured in an approved form. (b) In the control of the insured or any servant, agent or sub-contractor of the insured unless such property is covered by a contract of carriage entered into by the insured in an approved form."

THE vehicle met with an accident on 18.6.1996 while it was carrying goods of LOCL from Jodhpur to Baitalpur in U.P. The Carrier of the goods was Mohinuddin Khan. The Carrier''s Legal Liability Policy obtained by the insured, Mehboob Khan covered the legal liability of the insured as a carrier arising out of the loss of petroleum products being transported. The policy of insurance did not cover the liability of the owner of the vehicle which was being used by somebody else for hire or reward or otherwise. Since, Mohinuddin Khan was not insured, the company was not liable to indemnify the loss, under the policy of insurance. Policy of insurance was taken by the Respondent. At the time of accident, the insured was neither acting as the carrier nor any legal liability had been incurred by him under the Carriers Act.

RESPONDENT''s case is that the contract of carriage was entered into between IOCL and M/s. Mohinuddin Khan. It is alleged by the Respondent that M/s. Mohinuddin Khan was a partnership firm wherein Mohinuddin Khan, Mehboob Khan and Ameen Khan were partners and the firm had incurred legal liability. Policy of insurance was taken by Mehboob Khan. No policy of insurance was taken by the firm, M/s. Mohinuddin Khan. Petitioner Insurance Company never agreed to indemnify the legal liability of the firm, M/s. Mohinuddin Khan. So much so that the insured had never intimated the Petitioner about the existence of any such firm at the time of taking insurance policy. Allegation that the Carrier was M/s. Mohinuddin Khan being a partnership firm, seems to be an afterthought.

CARRIER''s Legal Liability Policy of insurance was taken by the insured, for fulfilment of his liability as a Carrier under the Carriers Act, 1865. As per terms and conditions of the policy, Petitioner Insurance Company had agreed to indemnify the insured against his legal liability. When admittedly, the insured was not acting as Carrier and no legal liability had been incurred by the insured under the Carriers Act, Insurance Company was not liable to indemnify the insured of any loss suffered to the goods being carried by somebody else acting as a Carrier in the tanker owned by the Respondent.

AT the time of accident, the insured was not carrying the goods in the tanker as a Carrier and, therefore, the claim of the insured/Respondent was not admissible under the Carrier''s Legal Liability Policy. Mohinuddin Khan was registered as Carrier with IOCL and the oil was entrusted to him by IOCL for transportation. Insured was not the Carrier and in terms of the policy of Insurance obtained by the insured, no legal liability as Carrier had been incurred by the insured and as such the insured had no right or claim against the Petitioner.

A perusal of the Partnership Deed clearly shows that the profits as well as losses of the firm were to be shared by the partners in the ratio indicated in para 9 of the said Partnership Deed. The payment advice dated 17.9.1997 given by the IOC shows that the amount of loss of Rs. 75,468 was adjusted by the IOC from the account of M/s. Mohinuddin Khan. It is thus clear that the insured/Respondent had not incurred any liability under the Carriers Act. Petitioner Insurance Company is not liable to indemnify for any liability incurred by the firm, M/s. Mohinuddin Khan as Carrier. There is no contract of insurance between the Petitioner and M/s. Mohinuddin Khan, the alleged partnership firm.

HONBLE Supreme Court in the case of United India Insurance Co. Ltd. v. Kanika Colour Lab and Ors., reported as III (2010) CPJ 14 (SC)=V (2010) SLT 36, has held that contracts of insurance are generally in the nature of contracts of indemnity and happening of any event against which insurance cover has been taken, does not by itself entitle the insured to claim the amount insured in the policy. It is only upon proof of actual loss that the insured can claim reimbursement of the loss to the extent it is established but not exceeding the amount stipulated in the contract of insurance. In the present case, Petitioner had agreed to indemnify the insured against his liability for actual loss or damages to the goods being carried in the vehicle No. RJ G19 4800. Petitioner was liable to indemnify the Respondent/Insured only if he had had incurred any legal liability. In the present case, Respondent had not incurred any legal liability to pay the IOCL for the loss caused to the goods being carried in the tanker No. RJ G19 4800. Mohinuddin Khan was acting as a Carrier of the IOCL. It is he who had incurred the liability and the IOCL can recover the amount from him alone. The IOCL could not recover any amount from the Respondent as he had not incurred any liability towards it. Since the Respondent had not incurred any legal liability as a Carrier, Petitioner Insurance Company was not liable to reimburse the loss caused to the goods which were being carried in the vehicle No. RJ G19 4800 by someone else as a Carrier.

HON''ble Supreme Court in the case of Oriental Insurance Co. Ltd. v. Sony Cheriyan, reported as II (1999) CPJ 13 (SC)=VI (1999) SLT 565=II (1999) ACC 196 (SC)=(1999) 6 SCC 451, has held that the terms of the policy have to be construed strictly and the contract of insurance would be governed by the terms of the policy entered into between the parties. Para 17 of the said judgment reads as under: "17. The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of insurer. The insured cannot claim anything more than what is covered by the insurance policy."

IN the present case, as per terms and conditions of the policy, the Insurance Company was liable to reimburse the Respondent for any loss suffered by him while acting as a Carrier. Since, the Respondent had not incurred any loss acting as a Carrier, the Petitioner Insurance Company was not liable to reimburse the loss suffered to the goods being cased by somebody else acting as a Carrier in the tanker owned by the Insured/Respondent.

FOR the reasons stated above, the orders passed by the Fora below cannot be sustained and the same are set aside. Revision Petition is allowed and the complaint is ordered to be dismissed. Parties are directed to bear their respective costs.

OFFICE is directed to release the amount deposited by the Petitioner under the order of this Commission dated 16.10.2006 along with accrued interest to the Petitioner. Revision Petition allowed.