- (1.) The respondent is a public limited company carrying on business of publishing a newspaper "The Hindu." It purchased a Dakota aircraft at a cost of Rs. 3,31,455/- for the purpose of ensuring quicker and speedier transport and delivery of the newspaper. The aircraft was insured with the British Aviation Insurance Ltd., Calcutta for a sum of Rs. 4,00,000/-.
(2.) The terms of the insurance policy enabled the insurer to opt for replacement of the aircraft in the event of loss or damage thereto in an accident. The relevant clauses in the policy are in the following terms : "Section 1 Loss or Damage to Aircraft Subject to the terms, conditions and limits hereof the company will at their option pay or replace or make good accidental loss of or damage to the aircraft as described in the schedule hereto (hereinafter referred to as "the aircraft") including standard component parts thereof temporarily detached in connection with overhaul or repair while in the custody or control of the insured (unless other similar component parts have been substituted) whilst the aircraft is In flight Taxying On the ground Moored" Conditions 7 and 8 of the "General Conditions" read as follows : "7. In the event of the company exercising their option under S. 1 to replace the aircraft the replacement shall unless otherwise mutually agreed be by an aircraft of the same make and type and in reasonably like condition. 8. The aircraft shall at all times remain the property of the insured who shall have no right of abandonment to the Company. In the event of payment of a total loss or replacement of the aircraft by the Company under the terms of the policy the Company may at their option elect to take over the remains of the aircraft as salvage."
(3.) The respondent's aircraft met with an accident on 25-12-1967 and became a total wreck. The insurer exercised its option in terms of the policy and purchased a similar aircraft for Rs. 3,50,000/- and after incurring an additional expenditure of Rs.25,000/- made it available to the respondent, in the place of the damaged one.;