Janus Aviation, the ground firm, is being sued by New India Assurance for a $31 million refund, which is rejected by Bombay HC

As the lawsuit arose out of an insurance agreement, the plaintiffs, the insurer of Indigo Airlines' aircraft, argued that the suit is for subrogated recovery of damages along with the pendente lite and future interest. The plaintiffs' claim was based on the idea that they are entitled to damages from the defendant, a company that provides ground handling services at airports, for the losses they suffered as a result of its negligence.

The division bench comprising Justice Bharati Dangre and Justice Abhay J. Mantri, noted that in the absence of privity of contract between the respondent and Interglobe Aviation Limited (Indigo) under Section 2(1)(c)(x) of the 2015 Act, the Court dismissed the appeal and determined that the impugned order was faultless because the current case did not arise from an insurance or reinsurance agreement.

Further petitioner strongly highlighted as the insured aircrafts of Indigo involved in the incident have been under policies “Airline Hull” (including spares) & Liability Insurance” and also by another policy, classified as “Aviation Hull Deductible Insurance” to the percentage of insurance shared by the five plaintiffs.

The case origins trace back to May 26, 2018, when an aircraft of Indigo Airlines (ATR-72-600) parked at Bay No. 4 at the airport in Nagpur was ready to be operated between Nagpur and Hyderabad, and at the relevant time, it is alleged that the defendant company was operating the airport in Nagpur and was responsible for providing ground handling services to Go Air and Air Asia.

The highlights of the incident state that the defendant was required to act solely in the interest of the businesses it was serving that were using the airport. The Airport Operation Command Centre (AOCC) received a warning from Air Traffic Control (ATC) due to unfavourable weather conditions. Based on the specifications, the warning caused a storm, and as the storm passed, the aircraft remained parked stationary at Bay No. 4. However, the defendant's ladder was blown by the wind and travelled about 100 meters before coming to a stop and striking the left wing trailing edge of the aircraft, causing significant damage. 

The Safety Investigation Coordinator, along with the parties, including the defendant, the representatives of the airport authorities Mihan India Limited (MIL), and Indigo’s flight safety and ramp safety representatives, carried out a detailed investigation of the incident, and a report was furnished analysing the probable cause of the incident as being the non-operational equipment in the parking area without being safely secured.

The suit for subrogated recovery was instituted in order to realise the amount owed to the appellants because the respondent was accused of wantonly neglecting its obligation and liability, resulting in a substantial loss of USD 31,77,696.98. A legal notice was served on the respondent on January 24, 2020, for failing to pay any consideration to its liability. 

The lower court observed that there is absence of privity of contract between Indigo and respondent with respect to the clauses of  insurance or reinsurance; the contractual obligations were mere absent between appellants and respondent, hence the application filed under Order VII, Rule 10 of the Civil Procedure Code, 1908 was allowed.

The learned judge, while pronouncing upon the strict construction of the provisions of Section 2 (1)(c) of the Act of 2015, in Ambalal Sarabhai Enterprises Limited, has specifically observed as under: 

“Having taken note of the submission we feel that the very purpose for which the CC Act of 2015 has been enacted would be defeated if every other suit merely because it is filed before the Commercial Court is entertained. This is for the reason that the suits which are not actually relating to commercial dispute but being filed merely because of the high value and with the intention of seeking early disposal would only clog the system and block the way for the genuine commercial disputes which may have to be entertained by the Commercial Courts as intended by the lawmakers. In commercial disputes as defined a special procedure is provided for a class of litigation and a strict procedure will have to be followed to entertain only that class of litigation in that jurisdiction. If the same is strictly interpreted it is not as if those excluded will be non-suited without any remedy. The excluded class of litigation will in any event be entertained in the ordinary civil courts wherein the remedy has always existed.”

Further, Para 14 states that “In that view it is also necessary to carefully examine and entertain only disputes which actually answers the definition “commercial disputes” as provided under the Act. In the instant case, as already taken note neither the agreement between the parties refers to the nature of the immovable property being exclusively used for trade or commerce as on the date of the agreement nor is there any pleading to that effect in the plaint. Further the very relief sought in the suit is for execution of the mortgage deed which is in the nature of specific performance of the terms of Memorandum of Understanding without reference to nature of the use of the immovable property in trade or commerce as on the date of the suit”. 

The court held that these facts must be interpreted properly in the order referred to in this case, and since there was no contract between theparties, the court dismissed the appeal, finding no error of counter order. The present case did not arise out of the agreement for insurance and re-insurance mentioned in Section 2(1)(c)(x) of the 2015 Act.

Case Details: New India Assurance Co. Ltd. v. Janus Aviation Pvt. Ltd., Commercial Appeal No. 3 of 2024 

Advocate for the Appellants: Ritesh Dawda

 Advocate for the Respondent: Deoul Pathak, i/b Ishaan Chhayya.