NEW INDIA ASSURANCE CO. LTD. UNIT ORISSA CO-OPERATIVE INSURANCE SOCIETY LTD. Vs. FOOD CORPORATION OF INDIA

JUDGEMENT

(1.) DEFENDANT No. 2 is the appellant against a decree for payment of money.

(2.) PLAINTIFF is a statutory body instituted under the Food Corporation Act, 1964. Defendant No. 1 was a purchaser -cum -milling agent of the plaintiff for the year 1968 -69 in respect of which there was a written agreement dated 11.3.1969. On the basis of policy of insurance, defendant No. 2 agreed to cover the risk in respect of loss sustained by plaintiff under the agreement with defendant No. 1 as per the terms in the policy. Defendant No. 1 had taken advance of Rs. 5,64,000/ - on different dates showing procurement of paddy but has delivered stocks on different dates in respect of Rs. 5,29,246.69 paise and has failed to deliver 263 Quintals 30 Kilograms of rice and 113 Quintals 70 Kilograms of paddy. Therefore, defendant No. 1 was liable to the extent of Rs. 34,753.31 paise. Added to it, defendant No. 1 was liable for the penalty and purchase tax. Relying upon terms of the policy, plaintiff issued notice to defendant No. 2 to pay the amount. Defendant No. 2 paid only Rs. 17,000/ - on 16.12.1970. Hence, suit was filed claiming Rs. 76,858.53 paise.

(3.) TRIAL Court decreed the suit in part against defendant No. 2 finding that there was an outstanding balance of Rs. 34,753.31 paise against defendant No. 1 from the amount advanced to it. Defendant No. 2 admitted liability of this amount and paid Rs. 17,000/ -. Defendant No. 2 is liable to pay Rs. 46,677/ - which is the penalty on defendant No. 1 for the loss sustained on account of deliberate and fraudulent act of defendant No. 1 and defendant No. 2 is liable to pay interest at 6 per cent pendente lite and future. Defendant No. 2 is aggrieved by this decree.