- (1.) The respondent no. 1 was an exporter whereas respondent no. 2 was their banker. Respondent no. 1 exported some consignment in Egypt. The appellant being a public sector undertaking in exchange of premium, guaranteed payment of 90% of the remaining export value payable by the consignee to the respondent no. 1 against certain risks covered under the said Policy. Initially the respondent no. 1 got payment of 20% of the invoice value as and by way of advance. The goods were exported on credit for the balance price of 80% which was covered to the extent of 90% by the policy of insurance and/or agreement entered into between the appellant and the respondent no. 1. The consignee duly received the goods and paid the entire consideration price by depositing the same with its banker at Egypt who was supposed to transfer the same in turn to the respondent no. 2 in India. However, because of an embargo imposed by the Egyptian Government the banker of the consignee could not transfer such amount to the respondent no. 2. Since the respondent no. 1 did not get the balance price within time from its consignee they applied to the appellant under the Policy of insurance to pay for the risk covered under the said Policy being 90% of the balance price. The appellant duly paid the said sum to the respondent no. 1. Subsequently after lifting of the embargo by the Egyptian Government the Egypcian bank transferred the money to the respondent no. 2. Disputes started at that juncture as to who would be entitled to the said sum and to what extent. The appellant contended that since they compensated the respondent no. 2 under the Policy of insurance by paying 90% of the invoice value whatever loss the bank could realize from its Egypcian counter part would be shared in the same ratio being 90:10. The respondent no. 1 was also agreeable to such distribution. Dispute cropped up because of the fluctuation in the exchange value. The price was received by the respondent no. 2 in dollars. By the time it reached India the same got appreciated meaning thereby the Indian currency got devalued and the exchange ratio of such dollar resulted in additional sums of Indian currency being available which the respondent no. 1 demanded to the exclusion of the appellant.
(2.) Respondent no. 1 filed a suit. In course of pendency of the proceeding the bank disbursed whatever sums they recovered after converting the same in Indian currency to the concerned parties at the ratio of 90:10. The learned Single Judge finally heard the suit. The respondent No. 1 contended before the learned Single Judge that the appellant should pay the excess sum that they received from the respondent no. 2 to the respondent no. 1 whereas the appellant prayed for dismissal of the suit as according to them the money was properly distributed in terms of the Policy.
(3.) The learned Single Judge after recording the rival contentions and after discussing the evidence laid by the parties came to a conclusion that the Policy of insurance did not stipulate any eventuality for fluctuation of currency. In absence of such stipulation the appellant was not entitled to the benefit of the additional sums which they received from the bank because of devaluation of Indian currency. The relevant paragraphs of the judgment of the learned Single Judge's are quoted below :- "In the present case I find that the excess amount of rupees was generated due to fluctuation of foreign exchange and such excess amount recovered due to fluctuation of foreign exchange cannot be said to be money recovered in respect of loss to which the policy (Exhibit "D") applies. Such excess amount generated by devaluation of Indian currency is a fortuitous event which cannot come within the ambit of loss in respect of which the policy applies. There is nothing in the policy (Exhibit "D") to indicate that defendant No. 2 E.C.G.C.. being the insurer ever accepted to take the risk of fluctuation of foreign exchange. So they cannot now take the benefit of fluctuation of foreign exchange. From the above factual matrix it emerges that the money received is entirely against the outstanding bills being 80% of total value of the contract with interest paid by the buyer, but the same could not be repatriated to India due to Government restrictions together with interest and at the rate of exchange on the date of remittance. There is obviously difference between the loss and the event or the occurrence. Use of the expression loss to which this policy applies' in clause 16 of the policy (Exhibit "D") no doubt signifies the ascertained loss. Had it not been so, the words referring to any sums received following on an event or occurrence which was the clause of a loss in clause 16 of the policy (Exhibit "D"). Similar observation was made by Lord Morris of Broth-y-Gest in the case of . Lucas. Ltd. and another at page 895.";