The Nagpur Bench of the Bombay High Court recently dismissed a commercial appeal involving a $31 million claim by New India Assurance Company and four other insurers of Indigo Airlines against an airport ground handling company [New India Assurance Co. Ltd. and others v. Janus Aviation Pvt. Ltd.].
The insurance companies had argued that ground handler, Janus Aviation Pvt. Ltd. was liable to reimburse the insurers for compensation awarded to Indigo over a 2018 incident at Nagpur's Dr. Babasaheb Ambedkar International Airport.
The insurers (plaintiffs) blamed Janus (defendant) for failing to secure a flyaway passenger ladder which ended up damaging an Indigo airplane's wing leading to the insurance claim.
The Court, however, ruled that the insurers failed to prove that they had a direct contractual relationship with Janus, leading to the dismissal of their $31 million claim against Janus.
The Court explained that the plaintiffs had failed to demonstrate any privity of contract with the defendant.
The Court, therefore, upheld a commercial court's dismissal of the insurers' suit, ruling that it did not qualify as a commercial dispute under the Commercial Courts Act, 2015.
“There is no privity of contract between the defendant and Interglobe Aviation Limited (Indigo) ... In the wake of the above, since the present proceedings that is in the form of the suit do not arise of the agreement of insurance or reinsurance, as contemplated under 2(1)(c)(x) of the Act of 2015, we find no fault with the impugned order," the High Court's order stated.
The dispute originated from an incident from May 26, 2018, when an ATR-72-600 aircraft of Indigo Airlines was parked at the airport, preparing for a flight to Hyderabad. During this time, a passenger ladder owned by Janus Aviation was reportedly blown by the wind, striking the aircraft and causing substantial damage.
The insurers claimed that they were entitled to recover damages for the losses incurred after compensating Indigo for the aircraft damage due to Janus's alleged negligence.
They sought damages totalling USD 31,777,696.98, (equivalent to ₹24,69,07,055) asserting that the incident was a direct result of the ground handling service provider's failure to secure its equipment properly.
The plaintiffs argued that their suit was rooted in a subrogated recovery of damages following an insurance agreement with Interglobe Aviation (Indigo). They contended that the case qualified as a commercial dispute because it arose from their role as insurers of the damaged aircraft.
However, the defendant raised several objections, asserting that the plaintiffs could not classify the suit as a commercial dispute.
Janus argued that the plaintiffs relied on an indirect relationship with Indigo, stating that any claim for damages should originate from a direct contract between Indigo and Janus, which did not exist.
The defendant maintained that the underlying cause of action was based on tort rather than contract, further disqualifying the case from being heard as a commercial suit.
Ultimately, the judges agreed with the defendant's objections, concluding that without a direct contractual link between Janus and the insurers, the suit could not be classified as a commercial dispute.
The High Court proceeded to uphold the lower court's reasoning for dismissing the suit under Order VII, Rule 10 of the Civil Procedure Code, which deals with the return of a plaint when a court finds it lacks jurisdiction to hear a case.
Advocate Ritesh Dawda appeared for the insurance companies.
Advocates Deoul Pathak, and Ishaan Chhayya appeared for Janus aviation.
[Read order]