Bailee liable for fire loss unless proof of reasonable care and non-negligence is established.

The Plaintiff No. 2 (partnership firm) stored bicycle tube valves worth ₹9,93,000/- at the defendant’s (Central Warehousing Corporation) warehouse in Navi Mumbai for export

The goods were insured by Plaintiff No. 1 (New India Assurance Co.). On June 7, 2002, a major fire broke out at the warehouse, destroying the goods

The Fire Brigade attributed the fire to an electrical short circuit

Plaintiff No. 1 settled the insurance claim with Plaintiff No. 2 for ₹8,53,329/- and, under the principle of subrogation, sued the defendant to recover this amount, alleging negligence in the defendant’s capacity as a bailee

The Trial Court decreed the suit in favor of the plaintiffs. The defendant appealed, primarily contending that the fire was an "Act of God" and that the suit was defective for failing to implead their own insurer, United India Insurance Co.

1. Whether the defendant, as a bailee, exercised the degree of care required under law to prevent the loss of goods

2. Whether the fire was an "Act of God" or resulted from the defendant's negligence

3. Whether the non-joinder of the defendant’s insurer (United India Insurance Co.) was fatal to the suit

Section 151 and 152 of the Indian Contract Act, 1872, which mandates that a bailee must take as much care of the goods bailed as a man of ordinary prudence would of his own goods, failing which they are liable for loss

Section 106 of the Indian Evidence Act, 1872, which places the burden of proof on the bailee to explain facts within their special knowledge, such as the cause of a fire in their premises

Principle of subrogation under the law of insurance

Precedent in Laliteshwar Prasad Singh v. S.P. Srivastava regarding the duties of a First Appellate Court

The High Court affirmed that once goods are damaged in a bailee's possession, there is an initial presumption of negligence

The court found that the defendant failed to rebut this presumption because they did not examine the electrical engineer responsible for maintenance nor produced maintenance registers

Despite claiming the fire was an "Act of God," the court noted the Fire Brigade report suggested a short circuit, and the defendant failed to show they took "round-the-clock" precautions for combustible materials like rubber tubes

Regarding the non-joinder of United India Insurance, the court held that the contract between the plaintiffs (based on subrogation) was independent of the contract between the defendant and its own insurer; hence, the latter was not a necessary party

The High Court dismissed the appeal and upheld the Trial Court's decree directing the defendant to pay ₹8,55,329/- with 6% interest; the court ordered the disbursement of any deposited amounts to the New India Assurance Co.