Decided on April 10,1970

Sitarama Rice Mill Co. Respondents


Sadasivam, J. - (1.) SRI Sitarama Rice Mills Company are the owners of the factory building wdh godowns at Dosapadu, Krishna District. On 19 -1 -1960, they insured the factory and machinery with the Jupiter General Insurance Company Ltd., the first defendant in the suit, against loss or damage that, may result by fire or lightning for one year between 1 -1 -1960 and 1 -1 -1961. One Kodali Venkatasubba Rao took a lease of the factory with the machinery from the plaintiffs and sub -leased the same to one Venkineni Venkataratnam. Venkineni Venkataratnam in his turn sub -leased the property to one Kotes -wara Rao, the third defendant in the suit. The plaintiffs filed O.S. No. 44 of 1958 on the file of the Subordinate Judge's Court, Gudivada, against their lessee, Venkatasubba Rao and others, and obtained an injunction against the lessee from sub -leasing the property. The plaintiffs' case is that their lessee, Venkatasubba Rao, had no right to sub -lease or assign his interest and more so after they had obtained an injunction order in O.S. No. 44 of 1958, on the file of the Subordinate Judges' Court, Gudivada. The third defendant also insured the factory and machinery against loss or damage as a result of fire or lightning with the General Assurance Society Ltd., on 11 -11 -1959 for one year. On 31 -1 -I960, the plaintiffs' factory was destroyed by a fire accident and the plaintiffs claimed the assured amount of Rs. 50,000 under the policy taken by them from the first defendant. The surveyor of the first defendant -company estimated the damage at Rs. 17,500 and this is admitted as correct by all the parties. The first defendant -company relied on Clause 16 of the policy, exhibit A -1, granted by it in support of its contention that it is not liable to contribute more than the rateable proportion of such loss or damage as estimated by the surveyor in view of the fact that there was a valid and subsisting insurance on the date of the fire accident, namely, the insurance effected by the third defendant with the second defendant. The plaintiffs have alleged in paragraph 10 of their plaint that the insurance effected by the third defendant, Koteswara Rao, with the second defendant -company was without their knowledge or consent and that the third defendant had neither power nor authority to make any contract for and on their behalf. They denied having had any benefit of the insurance effected by the third defendant. They claimed to recover the entire amount from the first defendant or in the alternative from both defendants 1 and 2.
(2.) THE third defendant remained ex parte in the suit. The second defendant pleaded that the third defendant had no insurable interest and that the insurance policy obtained by him had been brought about by misrepresentation and suppression of facts and that therefore they were not liable on the insurance policy, that there was no privity of contract between them and the plaintiffs and that there could be no claim for contribution against them. The parties did not adduce any oral evidence in the trial court and the documents were marked by consent. The trial court accepted the plaintiffs' case that they never authorised the third defendant to insure their property and that there was no privity of contract between them and the second defendant. But it did not accept the contentions of the second defendant that this was not a case of a double insurance in which the first defendant could claim any contribution from the second defendant and that even if the first defendant had any such right of contribution, they should have pursued their remedy by following the third party procedure under Order VIII -A, C.P.C. In the result, the trial court granted decree to the plaintiffs for a sum of Rs. 9,722.22 with proportionate costs against the first defendant and Rs. 7,777.78 with proportionate costs against the second defendant.
(3.) THE General Assurance Society Ltd., the second defendant, have preferred Appeal No. 776 of 1963 against the decree and judgment passed against them. The plaintiffs have preferred Appeal No, 168 of 1964 against the decree and judgment of the trial court refusing to give a joint decree against both defendants. They have restricted the claim to a sum of Rs. 7,777.78 inasmuch as the first defendant has admitted liability for payment of the balance.;

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