VASUDEV MUDALIAR Vs. CALEDONIAN INSURANCE CO

JUDGEMENT

(1.) THIS second appeal raises an important question as to the rights of an insurer to sue in his own name to recover damages from a third party, by whose negligence the assured's car met with an accident and was totally damaged, but who was fully indemnified by the insurer under a comprehensive policy. On that question, the courts below have differed, the lower appellate court, in a reversing judgment, holding such a suit to be maintainable and decreeing the suit. One G. H. Morley had insured his car MSP 2228 with the Caledonian Insurance Co. the plaintiff, against comprehensive risks for Rs. 4000. On 6-2-1955, on the Madras bangalore road, a lorry MDJ 1099, coming from opposite direction and after overtaking a bus, collided with the car causing serious damage to it. The insurer settled the claim of the assured at Rs. 3030, treating the case as a total loss and itself taking over the damaged car. The insurer later sold it on 16-4-1955, for Rs. 1500 and brought the suit to recover the balance of Rs. 1530 from the second defendant, the owner of the lorry, as loss and damages it had sustained by the wilful, gross, rash and negligent driving of the lorry. The assured did not figure as a party to the suit either as a plaintiff along with the insurer or as a defendant. The basis of the insurer's claim in the suit was that it was subrogated to the rights of the assured against the defendants, including the right to sue and recover damages from them, and that, in any case, it held an assignment from the assured of all his rights. The factum of negligence by the second defendant's driver, which was in issue, is now concluded by the concurrent findings of the courts below, against the defendants, and this question is no longer reiterated in this court. The second assistant Judge of the city Civil Court, who tried the suit was of the opinion that, though plaintiff had armed itself with a letter of subrogation from the assured to the latter's rights and remedies in respect of damages caused to his vehicle, such a right was not assignable and the latter did not validly clothe the insurer with the right to recover damages. On that view, he held that the suit was not maintainable. If it was, he added, that second defendant would be liable for the suit claim. The plaintiff, however, successfully appealed against that judgment. the Principal Judge, City Civil Court, who disposed of the appeal, thought that a formal assignment of the kind by the assured of his rights and remedies to the insurer was prohibited by S. 6 (e) of the Transfer of Property Act, but held that the general principle of S. 69 of the Indian Contract Act together with the principles applicable to contracts of insurance under which in England, the insurer was able to get an assignment from the assured and institute a suit should help the plaintiff. His further view was that though S. 96 of the Motor Vehicles Act only enabled a third party, who had been injured by the insured car, to have his remedy against the insurer, the rights of the insurer should be treated as complementary to such rights of third parties against the insurer. He, therefore, decreed the suit against the second defendant.

(2.) ON behalf of the second defendant, who is the appellant in this court, it is not contended that he is not liable, as held by the Principal Judge of the City Civil court, if it be found that the plaintiff was entitled to maintain the suit in its own name. But, it is argued that, under the Indian Law, as evident from S. 6 (e) of the transfer of Property Act, there can be no valid assignment or transfer of a mere right to sue which was all the assured in this case had. The argument is sought to be reinforced by reference to S. 130-A of the Transfer of Property Act, which expressly provides for transfer or assignment of a policy of marine insurance either before or after loss and by pointing out that this implied that in the absence of an express statutory provision as in the case of a policy of a marine insurance, other policies of non-marine insurance cannot validly be assigned after the loss. On the other hand, for the insurer, it is urged that in cases of total loss, where the insurer had indemnified the assured, the insurer is subrogated to the rights and remedies of the assured against third parties by whose negligence the damage is caused, by reason of which the insurer is entitled to sue in his own name to recover damages from such third party, that on this view, as a matter of fact, no assignment from the assured of his rights and damages to the insurer will be necessary and that under the English law if an insurer could not sue in his own name on the basis of subrogation but he could do so only on the basis of an assignment, it was because of the special rules of pleading there.

(3.) IT is rather surprising that on a question so important as that, there appears to be not much of Indian authority directly bearing on it. But I think, on principles of english authority and having regard to the peculiar nature and effect of a contract of insurance providing cover for motor vehicles against risks, the view of the principal Judge of the City Civil Court as to maintainability of a suit such as this brought by an insurer, is correct. But his judgment can be sustained, not on ground of subrogation, which is its basis, but on ground of assignment by the assured of his rights to the insurer.