BHURGRI COTTON GINNING AND PRESSING FACTORY Versus PAKISTAN INSURANCE CORPORATION
This is a suit for recovery of Rs.1,26,440.45 with interest and costs.
2. Case for plaintiffs is that on 28‑11‑1971 and 30‑‑11‑1971 they had delivered 200 bales of cotton at Railway Station Jamshedabad for despatch to Karachi vide Invoices Nos.51 and 54 and R/R Nos.813797 and 702653. On 5‑12‑1971 War Risk Insurance Ordinance 1971 was promulgated which required all the goods in transit to be compulsorily insured. The abovementioned goods were already insured with defendant No.2 against the. fire risk. On coming in force of War Risk Ordinance, 1971 defendant No.2 insured them against War Risk as well and asked the plaintiff to pay the required premium. The plaintiff paid the premium to cover the War Risk on 5‑12‑1971 and Policy B.No.013363 covering the risk was issued on 4‑3‑1972 and the receipt No.014157 of the premium paid in the said police was also issued. On 9/10‑12‑1971 these goods were completely destroyed while in transit at Mirpurkhas Railway Station by enemy bombardment. Therefore, the plaintiffs requested the defendant No.l to settle the claim of the plaintiffs in respect of the loss suffered by them. The defendant No.l asked the plaintiffs to submit their claim in the prescribed forms and also appointed Surveyors to assess the loss. The plaintiffs duly submitted their claim on the prescribed forms. The survey was carried out by Surveyors. The loss which the plaintiffs suffered was assessed in the sum of Rs.1,50,236.54. However, instead of paying the amount defendant No.l by letter dated 17‑5‑1971 refused to entertain the claim of the plaintiffs on the plea that R/Rs pertaining to the consignments indicated that the goods were despatched on 28th and 30th November, 1971 which was the date before the commencement of the War Risk Insurance Scheme, 1971 the 'goods in question could not be covered as the instructions contained in the form for the issue of the policies provided that the goods despatched before 3‑12‑1971 would not be covered. Hence this suit.
3. The suit was contested by the defendants who filed a joint written statement in which they have admitted to have received the premium and issued the policy, but they have alleged that the same policy seems to have been issued on misrepresentation on the part of the plaintiffs. According to them the policy could cover the risk with effect from the date of its issuance which was 4‑3‑1971 or date of payment of first premium which was 4‑3‑1972 while the goods were destroyed on 9th December, 1971. It was further contended that the transit of goods had commenced before coming into operation of the War Risk Insurance Ordinance and therefore these goods were outside the scope of the War Risks (Goods in Transit) Insurance Scheme. It is admitted that Surveyors were appointed and the loss was surveyed but it is explained that the same was done under a misconception.
On the pleadings of the parties the following issues were framed:‑
(1) Whether the plaintiffs delivered 200 bales of cotton fully pressed at the Railway Station Jamshedabad for despatch to Karachi vide R.R.No. 813797 and R.R. No.702653 on 28‑11‑1971 and 3 0‑11‑1971?
(2) Whether the said consignment of bales of cotton were destroyed on 9th/10th December, 1971, by enemy bombardment?
(3) Whether the said consignment was insurable under the War Risk Insurance Ordinance, 1971 and was lawfully insured under Policy No.013363 ?
(4) Whether the Insurance Policy covered the risk with effect from 4‑3‑1972, as stated in para. 3 of the written statement? If so, what is the effect ?
(5) Whether the defendants issued the Insurance Policy due to misrepresentation on the part of the plaintiffs ?
(6) Whether under the War Risk Goods‑in‑Transit Insurance Scheme the goods despatched before 3‑12‑1971 were not required to be insured? If so, what is the effect ?
(7) Whether the policy issued by defendant No.l was illegal ?
(8) Whether the defendants are estopped from denying that the said consignment was not lawfully covered by the said policy?
(9) Whether the plaintiffs committed any breach of the warrantees of the Insurance Policy?
(10) To what amount if any, the plaintiffs are entitled to ?
My findings on these issues are as follows:
(1) Yes.
(2) Yes.
(3) Yes.
(4) As follows.
(5) No.
(6) As follows.
(7) No.
(8) As follows.
(9) No.
(10) As follows.
4. The plaintiffs have examined their Manager Fakir Muhammad who has produced power of attorney exhibit P‑1/1, Insurance Policy P‑1/2, Receipt for payment of premium Ex.P‑1/3. R/Rs. Ex.P‑1/4 and P‑1/5, Invoices Ex.P‑1/6 and P‑1/7 and correspondent between the parties and surveyors as exhibit P‑1/8 to exhibit P‑1/35. The plaintiffs have also examined Luqman Petiwala who is Surveyor as exhibit P‑1/36. He has produced the report of assessment exhibit P‑1/37 and Assessors Certificate exhibit P‑1/38. The plaintiffs had examined then Qutabuddin Superintendent in Crescent Star Insurance Company exhibit 2 and Naimatullah Khan exhibit 3.
ISSUES NOS. 1 AND 2
The counsel for the parties did not contest these issues. It was admitted by all the parties that the plaintiffs had delivered 200 bales of cotton at the Railway Station Jamshedabad for despatch to Karachi vide R /Rs.813797 and 702653 on 28‑11‑1971 and 30‑11‑1971. It was also admitted that the said consignments were destroyed between 9th and 10th of December, 1971 by the enemy bombardment at Mirpurkhas Railway Station.
ISSUES NOS. 3 TO 9
As already shown above the defendants have not led any evidence whatsoever. In fact the defendants' counsel Mr. A Rauf has not contested the factual aspects of the case. He has contended that the insurance policy was issued on 4‑3‑1972 and therefore it could not cover the risk prior to that date. He also stated that the receipt of the only premium paid in this case was dated 4‑3‑1972 and therefore under the general law of insurance so long as the first premium is not paid the coverage of the insurance does not start. In the alternative he argued that on the form of application which was prescribed under the War Risk (Goods‑in‑Transit) Insurance Scheme (See at page 163 of P L D 1972 Central Statute), Instruction No.l makes it quite clear that the goods in transit have been shiped or otherwise despatched before the aforementioned dated 3‑12‑1971 shall not be covered. Hence these goods having been despatched on 28‑11‑1971 and 30‑11‑1971 were not covered by this scheme. The plaintiffs in spite of being aware of this fact applied to the defendant No.l and obtained an Isurance Policy by misrepresentation. Hence the same is not valid. He has relied upon P L D 1964 S C 21 Province of West Pakistan v. Din Mohammad and others P L D 1984 Kar. 503, Karachi Pipe Mills Ltd. v. Sind Labour Appellate Tribunal P L D 1961 S C 105, Pakistan v. Shaikh Abdul Hamid and P L D 1972 Kar. 563 Miss Naseem Kausar Arbab v. Government of Pakistan through Commander‑in‑Chief of Pakistan Navy, Karachi, Ratio decidendi of all these rulings is that when the plain language of the statute is clear then the Court cannot interpret the same otherwise and that the instructions contained in the office memo or rules are also effective and binding. He also relied upon Section 3(c)(4) of Insurance Act 1938 which provides that no Insurance Company can cover the risk before payment of premium. He also cited P L J 1975 Kar. 33 to support the proposition that the insurance cover cannot start before the payment of premium.
5. As against this Mr. Z.A. Qureshi, Advocate contended that War Risk Insurance Ordinance was a special and transitory law and was enacted to establish War Risk Insurance Fund so that claims for loss of goods etc. suffered by the owners of goods in transit by enemy bombardment or other acts of war between India and Pakistan that started on 3‑12‑1971 and ended on 17‑12‑1971 could be compensated. Hence the general law of insurance or the principles thereto would not apply to the case under this Ordinance. Therefore, even if the goods were destroyed by an act of war of 1971 before the issuance of insurance policy or the payment of first premium the same were to be covered by the insurance policy and the insurance company could not claim immunity in spite of the fact that the goods were destroyed before issuance of policy or payment of premium. He further contended that instruction No.l referred to by the counsel for the defendant No.l was inconsistent with the provisions of the statute and the scheme itself and was therefore meaningless. In his support he relied upon the judgment in the case of Star Trading Company v. Pakistan Insurance Corporation reported in 1987 C L C 61. This ruling is dentical on all four corners with the present case. In this ruling Dr. Tanzil‑ur‑Rehman, J. has after taking into consideration the facts of the case and law cited by both the parties held that the insurance corporation was liable for these losses which were fully covered under the insurance policy referred to above although those consignments were despatched on a date prior to 3‑12‑1971 and had been destroyed by enemy bombardment before the issuance of the insurance policy and the payment of first premium.
6. The contention of Mr. A. Rauf that administrative instructions contained in the memorandum issued by the authorities competent to alter or amend rules are as effective and as binding as statutory rules as observed in P L D 1964 S C 21 case of Province of West Pakistan v. Din Muhammad and others and the instructions regarding admission conveyed in prospectus cannot be disregarded as held in PLD 1972 Kar. 563 Miss Naseem Kausar's case or the other rulings relied upon by the defendants' counsel are not tenable as these rulings are quite distinguishable from the facts of this case. Instruction No.l contained in the application form of the War Risk Scheme is inconsistence with Section 2 (h)(ii) of the Ordinance which provides that goods in transit do not include those goods which are in transit A by a ship that sail from the port of shipment before coming into force of this Ordinance. This exception seems to be based on the consideration that the ship carrying the goods to port of Pakistan and sailing before the date of the Ordinance are generally insured against the War Risk. Hence instruction No.l will be read as excluding the goods which are in transit having been despatched by a ship that had sailed from the port of shipment before the date of coming into force of the Ordinance and not to goods despatched from a place inside Pakistan to a place inside Pakistan. If the instruction No.l is meant to apply to the goods despatched before 3‑12‑1971 by Railway from a station in Pakistan to a station in Pakistan, then the very purpose of this Ordinance will be frustrated because it provides for compensation for goods in transit which were destroyed due to the 1971 war which started on 3rd of December, 1971 and ended on 17 th of December, 1971 and goods in transit destroyed on 3‑12‑1971 or within the short span of 15 days could not be expected to have been booked after 3‑12‑1971. Similarly, it is ridiculous to conceive that a person who had booked his goods after start of war was to be compensated under this Ordinance if his goods in transit were destroyed by an act of 1971 war but not a person who had booked his goods before 3‑12‑1971 although he had not even anticipated the risk in spite of the fact that premium were being forcibly recovered from him. Such an intention cannot be attributed to the framers of War Risk Insurance Ordinance, 1971 or Scheme there under. Similar view was taken by Dr. Tanzil‑ur‑Rehman J. in 1987 C L C 61 Star Trading Company v. Pakistan Insurance Corporation referred to above wherein reliance was placed on P L D 1961 (W.P) Kar. 349 Saleh Muhammad v. Traffic Manager, P L D 1962 (W.P) Pesh. 51, Kazi Abdul Kafil v. Fakir and another and P L D 1972 Kar.
145. Hirjina Salt and Chemicals (Pak) Limited v. The Union Council Gharo and another. In the first case (Saleh Muhammad v. Traffic Manager) it was held that Bye‑Laws framed under a statute may be treated as ultra vires if they are repugnant to the statute under which they were made. In the Peshawar case it was held that the rules and Bye‑Laws are to be consistent with relevant statute and not to be repugnant to it or other laws in force. In the third case it was observed that there was no doubt that rules cannot prevail on the provisions of the statute and in case of inconsistency the statute must prevail and not the rules. The rulings cited by the defendants' counsel referred to above were also taken into consideration by Dr. Tanzil‑ur‑Rehman, J. and were held to be distinguishable from the present case for the same reasons.
7. So far as the second contention of the counsel for the defendant No.l, it may be stated that no doubt, ordinarily, insurance being contract of indemnity, its consideration has to be paid before loss takes place and therefore if the person who is sought to be insured, dies before the payment of premium or if the goods which are sought to be insured are destroyed before the payment, there can be no insurance as there is nothing which is insurable. But this applies to the general law of insurance and not to a special or transitory law as the War Risk Insurance Ordinance 1971 was, which covers only certain specified casualties. Consequently special provisions have been made for compulsorily payment of premium and for recovery of unpaid premium by coercive methods as arrears of land revenue etc. which provisions are quite unknown to general law of insurance.
8. Similarly the issuance of policy by the defendants on 4‑3‑1972 that it is about after 31 months of cease‑fire and acceptance of premium on that date in itself shown that the defendant No.l was accepting the premium although he would be aware that Yeither the goods which were being insured by them at that time would have been destroyed or would have completely survived the said risk as the war of 1971 was over by then. In the alternative it could be argued that if the insurance company was not being made liable for the goods that were lost by enemy bombardment prior to payment premium or issuance of policy, on what analogy were they entitled to recover the premium after 17‑12‑1971 and that too by coercive methods for the goods in transit which were not destroyed due to that war and were thus under no more risk of destruction by an act of that war after the cease fire. It is admitted by Mr. A. Rauf from the Bar that forced recovery of premium was being made till July 1972.
9. I am, therefore, in full agreement with the arguments of the counsel for the plaintiffs and in turn with the reasoning given by; Dr. Tanzil‑ur‑Rehman, J. in the ruling referred to above.
10. The claim in this suit finds support from the report of the Surveyors appointed by the defendants and the evidence which has been produced by the plaintiffs. There is no evidence in rebuttal on this point from the side of the defendants.
11. I, therefore, decree the plaintiffs' suit of Rs.1,26,440.45 against the defendant jointly and severally. I also allow interest at the rate of 10$ per annum from the date of the suit till realization of the decretal amount. The costs of the suit shall be borne by the defendants.
A . A . /B‑44/ K Suit decreed.