UNION OF INDIA versus SRI SARADA MILLS LTD.

Citation: [1973] 2 S.C.R. 464 · Decided: 28-09-1972 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Judgment (excerpt)

464 
UNION OF INDIA 
v. 
SRI SARADA MILLS LTD. 
September 28, 1972. 
[A. N. RAY, I. D. DUA AND K. K. MATHEW, JJ.] 
Transfer of Property Act ( 4 of 1882), s~. 6 (e) ~nd 135A and 
Marine Insurance Act ( 11 of 1963), ss. 52 and !9-Co11s1g11or of. goods 
10 Railway suing Rai/1ray Administration for loss ?f .coods-~uit filecl 
after recol'ering fro1n insurance. co1npa~y and ass_ig!ung. to insi!ran.ce 
co111pany, assignor's rights agairlsr Railway 
Adn11n1strauo11-Ma1ntauz-
ability. 
The respondent consigned certain goods to the R:Ulway for dispatch. 
The goods were insured. 
They were 
damaged dunng tran.s1,t, and t~e 
Insurance company paid the total loss. 
The respondent assigned all its 
rights, including the right to sue, to the Insurance Compc.ny. 
Thereafter 
the respondent sued the appellant for damages. The appellant contended 
irtter a/ia that the 
respondent, having received the total los~ from the 
Insurance Company, was not entitled to institute the suit. 
The High Court in appeal, held the suit was maintainable because the 
assignment was of a mere right to sue which is not valid under s. 6( e) 
of the Transfer of Property Act, 1882, and that even i'f the assignment 
was valid, the right to action of the respondent had not ceased and dec-
reed the suit. 
Jn appeal to this Court, 
HELD: (per A. N. Ray and I. D. Dua, JJ.) The appeal should be 
dismissed. [471B] 
Section 6(e) of the Transfer of Property is not applicable to 
the 
facts of the case. 
Under s. 52 of the Marine In~urance Act, 1963, an 
insurance company can sue in its own name where the policy has been 
transferred by assignment, but that is not the case here. Jn the present 
case, the insurance conpany is entitled to subrogation in 
accordance 
with the provisions of s. 79 of the Marine Insurance Act. The insurance 
company and the respondent proceeded on the basis that the insurance 
company was only subrogated to the rights of the assured, and the Jetter 
of subrogation conIDins intrinsic evidence that ~he respondent wou1d give 
the insurance company facilities for enforcing rights. 
But the Jetter of 
subrogation did not divest the respondent of its cause df action against 
the appellant for loss and damages. The insurance companv has chosen 
to allow the respondent to sue and the appellant did not take· the plea that 
there was an assignment. 
If such a plea had been taken, the insurnnce 
company could have been impleaded and rights of all the parties could 
have been decided. [468H; 469A-B; 470C-D, E-H; 471A] 
The respondent will however give a valid discharge to the appellant 
and be answerab1e and accountable to the insurance company for the 
money recovered, and the decree would be a bar to the institution of any 
suit by the insurance cornpaoy. [470D-E] 
A 
B 
c 
D 
E 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
H 
UNION V. SARADA MILLS 
465 
King v. Victc ·a Insurance Co1npany Liniited [1896] A.C. 250 Co111-
pania Colombiano De Segur,s v. Pacific Steam Navigation Co. [1965] I Q.B. 
101, Torkington "Magee [1902] 2 K.B. 427 and Ertet Bieber & Co. v. 
Rio Tinto Co. [ 918] A.C. 260, referred to. 
Per K. K. Mal ""V, J. (dissenting). Th< real reason why a mere right 
to sue cannot be assigned is that such an assignment would offend the 
rule of cham.perty and maintenance. But where an insurance company 
has been subngated to all the rights and the remedies of the assured by 
virtue of s. 135-A of the Transfer of Property Act, 1882, (now incor-
porated in the Marine Insurance Act, 1963 J, the reason 
for the 
rnle 
against assignment of a mere right to sue does not obtain, because, the 
insurance company is clothed with all the rights and remedies of the 
assured and the only thing lacking is the capacity to sue in its O\\'O name. 
Subrogation is concerned solely with t'>e mutual rights and lib;lities of 
the parties to the contract of insurance; it confers no rights and imposes 
no liabilities upon third parties \!.·ho are strangers to that contract and_. 
the insurer, who has pt.id a loss gets no direct rights or remedies against 
anyone other than the assured, nor can sue such parties in his O\.Vn name. 
[472F-H; 475H; 476A; 4800-H] 
Kin11 v. Victoria 111s11re11ce Co. Ltd, [1896] A.C. 250, 255-6 
and 
Simpson v. Thomson, [1877] 3 App. Cas. 279 H.L. applied. 
Indian Trade and 
General Insurance 
Co. Ltd. v. 
Union of India, 
A.LR. 1957 Cr.lcutta 190 and Vasudevan Mudaliar v. Caledonian lnSll-
rance Co. and a11otl1er, A.LR. 1965 Madras 159, approved. 
Yorks

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