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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: M/S.  SOHANLAL SAMPATLAL

DATE OF JUDGMENT: 27/10/1970

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SHAH, J.C. HEGDE, K.S.

CITATION:  1971 AIR  432            1971 SCR  (2) 706  1970 SCC  (3) 165

ACT: Indian  Post  Office Act, 1890, s. 6-Rule  81(g)-Gold  coins sent  by parcel post-Value deckred Rs. 2500-Parcel  lost  in transit-Suit for compensation-Burden is on insurer to  prove that  value  declared way not the market value at  date  and place of posting-Slight difference does not absolve  insurer from liability.

HEADNOTE: The  respondent  firm sent a parcel  containing  gold  coins which  been purchased for Rs. 2465-14-0 by post from  Bombay to  Bikaner.   After   adding Rs. 9-1-6  for  insurance  and profit at 1% the value came, according to the respondent, to Rs. 2499-11-6.  The parcel was insured for the round  figure of  Rs.  2500.  When it was lost in transit  the  respondent filed a suit ’for Rs. 2474-15-6 to be paid by the Union  of India  represented  by its posal department.  The  Union  of India  resisted the claim on the ground what under s.  6  of the  Indian Post Office Act, 1898 read with r. 81  (g)  made thereunder  the  liability to pay compensation  could  arise only  if the plaintiff had declared the actual value of  the contents  on the date of the insurance.  It was pointed  out that in the present case neither the admitted purchase price of  the  coins nor the claim in the plaint amounted  to  Rs. 2500  and  thus there was a discrepancy  between  the  value declared  and the actual or market value of the goods.   The contract was therefore not enforceable.  The Single Judge as well as the Full Bench of the Court of Small Causes accepted the argument on behalf of the Union of India.  However,  the High Court took the view that the burden of proving that the market  ,value  of  the  gold on  the  day  of  posting  was different  from the value declared was on the insurer  which in  the  present case the insurer had failed  to  discharge. The  Union  of  India, by special leave,  appealed  to  this Court. HELD:     The statutory provisions of the Act and the  rules have  to be construed and read in a reasonable manner.   The rules  seem  to ensure that the insured should  not  make  a declaration  in  excess of the market value so as  to  avoid frauduent   dealings.    Nor  can  the  insured   get   more compe

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nsation than the market value.  But this does not  and cannot mean that any innocent and insignificant misstatement by  the  insured  of the actual value which has  to  be  the market  value  on  a particular date and  at  the  place  of posting  can  lead to the startling result that  he  becomes wholly disentitled to receive any compensation.  The  market in articles like gold and bullion exists only in large towns and  the value fluctuates from day to day and from  hour  to hour. it may be sometimes impossible for any person  sending gold  or  bullion  by,post  after  getting  it  insured   to ascertain  the exact value on a particular date.  This  does not   mean   that  he  is  completely  absolved   from   the responsibility  of ascertaining it but if he gives  a  value which  is  approximately the same as the  market  value  the insurer cannot  take  up the position  that  owing  to  an insignificant  difference  the insured  cannot  recover  the compensation. [709 F-710 B] In the present case the High Court found that no evidence of any kind regarding the market rate of gold prevailing on the date of posting was on record.  On general principles  which were rightly relied on by the High                  707 court, it was for insurer to lead evidence On that point and show  that according to the market rate prevailing  on  that date  the value could not be Rs. 2500.  The mere  fact  that the respondent was under the impression or had  stated  in the plaint that value of the gold was less than Rs. 2500 was not sufficient to absolve the insurer from proving that  the value  which was declared Rs. 2500 was not the market  value on  the date and at the place of posting.  The  appeal  must accordingly be dismissed. [710 C-E]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2223  of 1966. Appeal  by special leave from the judgment and  order  dated August  31, 1965 of the Bombay High Court in Civil  Revision Application No. 1263 of 1961. L.   M.  Singhvi,  Ram  Panjwani and S. P.  Nayar,  for  the appellant. G. L.   Sanghi and Janendra Lal, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from a judge- ment  of  the  Bombay High Court made  in  exercise  of  its revisional jurisdiction. On  June 15, 1955 the respondent firm purchased  gold  coins for an aggregate price of Rs. 2465-14-0 as commission agents for  transmission  and  delivery to  their  constituents  at Bikaner.   On  the following day the  parcel  containing.the gold coins was handed in at Ramwadi Post Office, Bombay  for transmission  to the addressee.  The parcel was insured  for Rs.  2500/.  It  was lost in the  course  of  transit.   The respondents  filed  a suit for recovery of about  2475/-  as compensation  under the insurance effected by the  Union  of India, the present appellant, represented by its postal department.   The  appellant denied its  liability  for  the claim on the ground that under s.6 of the Indian Post Office Act, 1898, hereinafter called the "Act", read with Rule 1(g) of  the rules framed thereunder, its liability  could  arise only  if the plaintiff had declared the actual value of  the contents  on  the  date  of  the  insurance.   As  a   wrong declaration had been made there was no valid and enforceable contract.   The case of the plaintiffs in evidence  however,

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was that in addition to the-price paid for the gold coins  a sum  of Rs. 9-1-6 had been spent as postal charges  and  the cost  of  insurance,  packing ,  commission  and  brokerage. Profit  was added to this at 1% and the total value came  to Rs. 2499-11-6 and it was for that reason that the parcel was got  insured for Rs. 2500/-.  A learned single judge of  the Small  Causes  dismissed the I suit.  The matter  was  taken before  the  Full Court of Small Causes  by  the  respondent firm.   While  conceding that the difference in  the  actual value  and the value declared was small the Full Court  held that  the  rules  had not been complied  with  properly  and upheld 708 the dismissal of the suit.  After examining all the relevant provisions  of the Act and the rules the High Court  was  of the  view that it was for the insurer to prove that  it  had been  discharged  from  the  liability  because  of  fraud,, misrepresentation,  mistake or incorrect statements made  by the insured and the burden had to be strictly discharged  by the  insurer.   As it had not been proved by  the  Union  of India that the value declared by the plaintiffs on June  16, 1955  was not the actual market value of the gold  delivered by  the  plaintiffs for transmission by means  of  a  postal parcel  the  plaintiffs were entitled to a  decree  for  Rs. 2474-15-6 with interest at 6% per annum from the date of the suit. Section 6 of the Act provides that the Government shall  not incur any liability by reason of the loss, misdelivery  etc. of any article in the course of transmission by post  except in  so  far  as  such liability  may  in  express  terms  be undertaken  by  the  Government.  Section  3  Oprovides  for insurance  of  postal  articles.   Section  33  is  in   the following terms :               "Subject  to such conditions and  restrictions               as  the  Central  Government  may,  by   rule,               prescribe  the  Central  Government  shall  be               liable to pay compensation, not exceeding  the               amount  for  which a postal article  has  been               insured, to the sender thereof for the loss of               the postal article or its contents, or for any               damage caused to it in course of  transmission               by post :               Provided  that  the  compensation  so  payable               shall  in  no  case exceed the  value  of  the               article  lost  or  the amount  of  the  damage               caused". The  relevant rules may also be referred to.   According  to rule  44(1)  gold  coin or bullion of  value  exceeding  Rs. 2500/shall  not be transmitted by post.  The value  for  the purpose  of  this sub-rule, the second proviso  to  rule  72 clause  (g),  the second proviso to rule 81  and  rule  83-A shall  be the market value on the date and at the  place  of posting.   Part  IV  of the rules deals  with  insurance  of postal articles.  The second proviso to rule 72(1) lays down that  articles containing government currency notes or  gold coin  or bullion shall be insured for’ the actual  value  of the  contents.  Rule 74 gives the additional fee  chargeable for the insurance.  Under rule 81 -the Compensation payable to  the  sender of an insured article shall not  exceed  the amount  for which the article has been insured for the  loss of the postal article or any of its contents.  According  to the  first proviso the compensation shall in no case  exceed the  value  of  the article or any  of  its  contents  lost. Clause  (g) of the second proviso is to the effect  that  no compensation shall be payable where

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              709 the insured article contains gold coins or both and has  not been insured for the actual value of the contents.  Rule 83A makes it obligatory for the sender to declare on the article the  value of the contents where gold coin, bullion etc.  is dispatched.   Thus  under the rules whenever  gold  coin  or bullion  is sent by parcel post it must be insured  for  the actual value of the contents.  If the articles are lost  the amount  of compensation cannot exceed the amount  for  which the  article have been insured and no compensation shall  be payable  where  the articles have not been insured  for  the actually value.  By reference to rule 44 the value has to be the market value on the date and at the place of posting. The argument which has been raised on behalf of the Union of India  is  that the respondent firm had purchased  the  gold coin for Rs. 2465-14-0 on June 15, 1955.  Its actual  market value, therefore, on respondent’s own admission was not  Rs. 2500/.  It has, further, been pointed out that in para 2 of- ’the  plaint  it has been stated that on or about  June  16, 1955  the plaintiffs despached 26 to las gold valued at  Rs. 2474-15-6 under insured parcel which was lost in transit and even the decree was claimed for that amount and not for  Rs. 2500/-.   As  there  was a  discrepancy  between  the  value declared and the actual or market value the respondent  firm was  not entitled to any compensation.  The plea in  defence substantially was that the respondent ought to have declared the  actual value of the contents on the date of  insurance, namely,  June 16, 1955 which it failed to do  and  therefore there was no contract of insurance between the parties. Now  the statutory provisions of the Act and the rules  have to  be  construed and read in a reasonable  manner,  If  the interpretation  sought  to  be  placed  on  behalf  of   the appellant  is  accepted it would mean that  where  a  person declares  a  value which varies even by one raise  from  the market  value  on the date and at the place of  posting  the insured  would be deprived of the compensation for the  loss of  the  article.   That  could  never  have  been  in   the contemplation  of  the  legislature  and  the  rule   making authority.   The  rules  seem to, ensure  that  the  insured should not make a declaration in excess of the market  value so as to avoid fraudulent dealings.  Nor can the insured get more compensation than the market value.  But this does  not and   cannot  mean  that  any  innocent  and   insignificant misstatement by the insured of the actual value which has to be the market value on a particular date and at the place of posting  can  lead to the startling result that  he  becomes wholly disentitled to receive any compensation.  It is  well known  that  the market in articles like  gold  and  bullion exists  only in large towns and the values  fluctuates  from day  to  day  and from hour to hour.  It  may  be  sometimes impossible  for any person sending gold or bullion  by  post after getting it insured 7 10 to ascertain the exact value on a particular date.  Take for instance  the case of a person who is illiterate and has  to despatch  gold from a’ place in the vicinity of which  there is no market from where the market value can be ascertained. He cannot in the very nature of things be absolutely precise and  accurate  about  the market  value  prevailing  at  the material  time.   This does not, however, mean  that  he  is completely absolved from the responsibility of  ascertaining it  but  if he gives some value which is  approximately  the same  as  the market value the insurer cannot  take  up  the position  that  owing  to an  insignificant  difference  the insured cannot recover the compensation.

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The  High Court referred to Article 429 in Halsbury’s  Laws. of England III Edition, Vol. 22, at page 227 and to  certain other text books on the law of insurance according to  which the  burden is on the insurer of showing that the policy  is no longer subsisting or that there had been a broach of such a  condition which relieves the insurer from liability.   It has not been shown that these general principles will not be applicable  when  an insurance has been effected  under  the provisions  of  the Act and the rules.  The finding  of  the High  Court  was  that there was no  evidence  of  any  kind regarding  the  market rate of gold prevailing on  June  16, 1955 on the record.  It was for the insurer to lead evidence on  that  point and show that according to the  market  rate prevailing  on that date the value could not be Rs.  2500/-. The  mere fact that the respondent was under the  impression or  had stated in the plaint that the value of the gold  was less  than  Rs.  2500/- was not sufficient  to  absolve  the insurer  from the responsibility of proving that  the  value which  was  declared,’ i.e. Rs. 2500/- was  not  the  market value on the date and at the place of posting. There  is  no  merit  in this  appeal  which  fails  and  is dismissed with costs. G.C.                      Appeal dismissed. 711