AUTO STEERING INDIA PRIVATE LIMITED IN LIQUIDATION Vs. TOKYO MARINE AND FIRE INDUSTRIES COMPANY LIMITED

JUDGEMENT

(1.) Auto Steering India Pvt. Ltd., in liquidation, for short, "the Company", claims from the Tokyo Marine & Fire Insurance Co. Ltd., the Insurers, respondent No. 1, for short, the "Insurers", and James Finlay & Co. Ltd., the Insurers' Indian agent, for short, "the Indian agents", respondent No. 2, a sum of Rs. 1,96,370.46 p., Rs. 99,177.00 on account of principal, and Rs. 97,193.46, on account of interest, at the rate of 12% p.a. from Nov. 6, 1969 to Dec. 31,1977, by way of compensation for damage caused to a machinery imported by the Company from Japan.

(2.) The Company, which was incorporated in April, 1963, was ordered to be wound up on May 26, 1976 pursuant to a petition for its winding up filed in 1971. Before its winding up, the Company had imported one Mitsubishi Natco Plastic Injection Moulding Machine, Model 400 Exl-90, manufactured by Mitsubishi Heavy Industries Ltd., from Mitsubishi Shoji Kaisha Ltd., for short, "the manufacturers" and "the exporters" respectively. The machine was insured by the Insurers against all risks from the port of Nagoya to Bombay and then by conveyance to Faridabad, which was, at that time, the location of the Company's factory, vide Policy No. F/M 19940 of Jan. 30, 1966 for an amount of Yen 12 Million 8 hundred and 32 thousand 9 hundred only. The claim, in terms of the Policy, was payable to the Company at New Delhi or Bombay through the Indian agents. The machine was damaged while in transit from railway station to the factory of the Company. The damage was caused when the machine, while being transported, "tilted' and fell down on the ground. On April 25, 1966, the Indian agents asked their A. Vaidyanathan to carry out the necessary survey of the damaged machine and submit a report. The survey was carried out on Dec. 11, 1966 in the presence of Bombay representative of the manufacturers, two representatives of the exporters, K. C. Jain, Managing Director of the Company, and V. S. Jain, its acting director. After a careful inspection of the machine, the exporters, in consultation with the manufacturers came to the conclusion that the machine could not be repaired in India and would have to be sent to the manufacturers' works at Nagoya in Japan as the damage to the machine was quite substantial. The Company was, however, reluctant to send the machine to Japan for repair as it felt that it would suffer further losses for want of it during the period that it was bound to take for the machine to be sent to Japan and to be returned after repairs. It also pointed out that the shipment of the machine from India to Japan and back itself would involve a considerable cost, which may be of the order of a lakh and fifty thousand rupees, excluding customs duty, charges of repairs, cost at ports, etc. The Company accordingly -suggested that repairs of the machine be carried out in India itself so as to cut down the huge expenses on shipment and reshipment in common interest and the delay that is bound to be caused in the process. There was, however, no response 'to this suggestion for a considerable time. The Company accordingly got in touch with a local repairer, M/s. Standard Steel Works, who offered to carry out the necessary repair for Rs. 25,00dd- besides the cost of parts etc. required to be replaced and for other material required for the repairs. The repairer gave an estimate of Rs. 1 lakh or more depending on the cost of different components and availability of the same. The insurers, and their Indian agents were kept informed of this and the insurers eventually confirmed that they had no particular objection to the decision of the Company in having the machine repaired in India. The insurers also agreed to reimburse the Company for the reasonable cost of repairs in the final settlement of the claim and stipulated that the repairs, that are undertaken in India, should be taken as final as far as the insurers were concerned regardless of whether the result was satisfactory or not. The repairer allegedly carried out the necessary repairs and submitted a bill of Rs. 95,450.00, which the Company paid to the repairer. The Company accordingly forwarded to the insurers in May, 1969 the aforaid bill along with a bill for Rs. 3,500.00 of New India Motors (P) Ltd., for loading, unloading, transportation of the machine for repairs from the factory site. The claim was entertained by the Indian agents and accepted for Rs. 99,177.00 inclusive of the Survey fees. The Company was asked to send the receipts in duplicate duly stamped and signed along with the Insurance Policy to enable the Indian agents to remit the amount to the Company. In October, 1970, however, the Indian agents informed the Company that, on instructions from the insurers, they were unable to accept the claim on the ground that the repair charges claimed by the Company have been "made up by the Company" and are entirely groundless. The amount was not paid to the Company in spite of a legal notice in reply to which, after a protracted correspondence, a paltry sum of Rs. 5,000.00 was offered to the Company in March, 1975, in full and final settlement of the claim which the Company declined to accept. The present claim petition was filed in January, 1978.

(3.) In their joint reply to the claim petition, the insurers and the Indian agents repudiated the claim. It was, however, not denied that the aforesaid machine had been imported by the Company, as claimed by the Company, and it was insured in terms of the aforesaid policy. The respondents did not deny that the machine was damaged in transit but the allegation as to the "nature and quantum of damage" to the machine were denied. It is claimed that the bill of the repairer was "fictitious", that the Company was asked by a senior surveyor of the insurers to produce from the books for the payment alleged to have been made in cash to the repairers but no documents were ever produced before the said surveyor. It was further alleged that no payments in regard to the repairs were ever made to the repairer. It was further alleged that the claim was admitted and was in the process of being passed in the sum of Rs. 99,177.00 on account of the cost of the alleged repairs, transportation and survey fee but before the settlement could be effected, confidential information was received that no repairs as alleged in the Bill had been carried out. It is further alleged that a senior surveyor was deputed who inspected the machine in the company of a local surveyor, who confirmed that. no repair, as indicated in the bill of the repairer, had been effected to the machine except for the replacement of some minor flexible tubings which had been damaged and in fact the machine was found to be functioning quite satisfactorily at the time of the visit without any major repairs having been effected thereto. It was further alleged that the inspection revealed that the nuts of all the components and the covering panels indicated that the machine had never been dismantled and the traces of rust at number of places on the machine also indicated that even the superficial rust which could have been cleaned without opening and dismantling the machine had not been attended to and the claim was thus found to be false and fictitious. It was, however, admitted that the machine was damaged in transit from the railway station to the factory site and when the machine was originally examined, certain outward damage was noted. It was further claimed that Jaswant Singh, the repairer affirmed an affidavit before a Notary Public in Delhi on April 25, 1970 to the effect that the cost of the repairs effected to the machine amounted to Rs. 9,545.00 and in respect of which payment in the amount of Rs. 2500.00 was made by the Company by cheque, and a further cheque of Rs. 7,045.00 towards the balance bounced. It was further claimed in the affidavit that no bill in the amount of Rs. 95,450.00 was ever given by him to the Company nor any receipts for such payments executed nor were any entries in relation thereto in his books of accounts. The affidavit further claimed that the bill of Rs. 3,500.00 of New India Motors (P) Ltd. must be fictitious because the machine was never removed from the premises of the Company for whatever repair was done by the repairer. A further allegation was made in the reply that subsequent inquiries revealed that New India Motors (P) Ltd., was an "associate company'' of the Company, having their office in the same premises and having the same telephone No. and that the bill of transportation was also fictitious. It was further claimed that a sum of Rs. 5,000.00 was offered to the Company in full and final settlement of the claim without prejudice.