PAKISTAN INSURANCE COPROPRATION Versus UNITED LINER AGENCIES

In view of the decision of this Court in Suit No. 343/1971, it was by consent decided, that the legal question "whether the plaintiffs have right to sue" shall be decided first. As the legal as well as factual questions involved for the decision of this issue are similar in both the suits, I intend to dispose of this issue in both the suits by this order.

2. In Suit No. 118/1969, specific issue No.l, is framed to the effect, "Whether the plaintiffs have right to sue". However, no such specific issue is framed in Suit No. 218/1973 but this issue is implied in issues Nos. 2, 5 and 8, which are to the following effect.

Issue No. 2 Whether the suit is bad for non‑joinder of the parties?

Issue No. 5 . Whether the plaintiffs are entitled to sue in respect of packages in question ?

Issue No. 8 . To what relief the plaintiff is entitled?

3. The admitted fact in both the suits appears to be, that the importers in both the suits imported their consignments under bill of ladings issued by the defendants or their agents on board the vessels owned by the respective defendants. The consignments were insured with the National Co. Insurance Scheme (hereinafter called the Scheme). Both the importers filed their claims with the said insurers with respect to the loss to their consignment which was settled by the said insurers, and after getting letter of subrogation, the plaintiffs filed suits for the recovery of the same from the defendants.

4. Both the suits have been filed by the Pakistan Insurance Corporation, which was established under the Pakistan Insurance Corporation Act, 1952. Apart from the statutory functions provided under the said Act, the Government of Pakistan by its office memorandum dated 7th April, 1955, entrusted the administrative work of National Co. Insurance Scheme to the plaintiffs. Under another letter dated 31st October, 1957, the plaintiffs were required, as secretary to the scheme, to exercise check on the rates and revise them wherever necessary. Under their letter dated 6th Dec., 1957, the Government of Pakistan directed its various departments, Government or Semi‑Government organisation to insure their goods with National Co. Insurance Scheme through the Pakistan Insurance Corporation. In 1970, in exercise of the powers under section 46 of the Pakistan Insurance Corporation Act, 1952, the Board of Directors of Pakistan Insurance Corporation with the previous approval of the Central Government made the "National Co. Insurance Scheme Regulation 1970". Clauses 19 and 20 of this Regulation which relate to the functions and responsibilities of the plaintiffs may be reproduced as under:‑

(19) Responsibilities of the Corporation.

(a) Cover is provided immediately at reasonable rates

(b) Losses are settled expeditiously

(c) Maximum possible foreign exchange is saved in respect of business falling within the scheme.

(20) The Corporation shall‑

(a) Issue cover notes and policies on behalf of the members.

(b) Settle all claims, including disposal of salvage on behalf of the members.

(c) Be responsible for the regular collection of premium in respect of the business underwritten by the scheme.

(d) Incur expenditure for running the scheme on behalf of members.

(e) Maintain proper accounts and render such quarterly statements of accounts to the members as may be decided by the management committee from time to time.

5. Admittedly, National Co. Insurance Scheme is consortium of the number of insurance companies formulated under administrative directions from the Government of Pakistan for the purpose of the insurance of the goods imported or exported from Pakistan. Initially number of insurance companies forming this consortium was three, but subsequently the number of insurance companies was increased to 24. The names of these insurance companies and their respective shares are shown in the insurance policy issued in Suit No.118/1969, which is produced as Exh.4/1 in the said suit.

6 Admittedly, the plaintff's name does not appear in the list of the insurance companies, who constitute this consortium, known as National Co. Insurance Scheme. Admittedly the plaintiffs did not share profit or loss incurred under this scheme. They are designated as authorised Secretaries of National Co. Insurance Scheme. Mr. Rauf, learned counsel for the plaintiff, submitted, that they did the administrative work of the scheme for the purpose of convenience looking to the number of insurance companies constituting this scheme.

7. It is contended by Mr. Nasimuddin, learned counsel appearing for the defendants, that status of the plaintiff is, that of an agent and the agent cannot enforce any claim which accrues to the principal, in view of the bar contained under section 230 of the Contract Act. Under the said section "In absence of any contract to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal nor is he personally bound by them." However, exception is made in cases where contract is made on behalf of merchant residing abroad, or where name of the principal is not disclosed, or where the principal cannot be sued. All these three exceptions apparently are not applicable in the instant cases.

8. Mr. Rauf submitted, that National Co. Insurance Scheme was not a body corporate and as such it could not file a suit in its own name. Witness Muhammad Tamaz, of the plaintiff examined in Suit No.118/1969 has admitted, that the National Co. Insurance Scheme was a limited company. In case of a limited company the suit is to be filed in the name of the limited company and the pleadings can be signed or verified under Order XXIX, Rule 1, C.P.C. on behalf of such limited company by any director or any other principal officer of such company. However, in case of unregistered company or firm the suit can be filed in the name of firm under Order XXX, Rule 1, C.P.C. or it can be filed in the name of all the partners constituting such firm. In either case, the suits had to be filed in the name of National Co. Insurance Scheme.

9. It is contended by Mr. Rauf, that these suits have been filed by the plaintiff in exercise of its statutory functions under the Pakistan Insurance Corporation Act. He has relied upon section 22(aa) of the Act, which reads as under:‑

S.22. "Business which are corporation transact subject to the provisions of this Act the Corporation may transact the following kind of business namely‑‑

(aa) conducting subject to the directions of Central Government and rule made in this behalf, the business relating to any scheme."

10. However, word "scheme" has been defined in this Act under section 2(g) to mean "any expert credit guarantee prepared by the Central Government "

11. The National Co. Insurance Scheme was established for the purpose of insurance of the goods and was not an expert credit guarantee and therefore cannot be considered as a Scheme under the Act. Even otherwise as pointed above, under the regulations, the plaintiffs are not authorised to file any suit for the recovery of any claim of the National Co. Insurance Scheme.

12. Mr. Rauf has also relied upon section 26 of the Act, under which every insurer shall reinsure with the plaintiffs not less than such proportion, subject to the maximum 30$ on any individual risk. However, admittedly neither the plaintiffs obtained any letter of subrogation as re‑insurer nor they have filed the suits in their capacity of re‑insurer. It may also be pointed, that the National Co. Insurance Scheme has been wound up under rule 3 of the National Insurance Funds Rules, 1973, made under section 45 of the Act, 1952. The position is, that presently the National Co. Insurance Scheme does not exist. It may also be pointed, that this scheme under rule 2(d) of said rules is shown to have been established under Government of Pakistan, Ministry of Commerce letter No.371/115‑55 dated 7th April, 1955, which letter has also been already referred to above. This also shows, that this scheme was not established under any statute but under administrative instructions of the Government of Pakistan.

13. Mr. Rauf contended, that the policy of insurance was issued by the plaintiffs and, the claim was also paid by the plaintiffs and therefore the plaintifff was entitled to file the suit to recover the claim for the benefit of the principal viz. partners in the scheme. Word "agent" is defined in section 182 of the Contract Act to mean a person employed to do any act for another or represent another fort dealing with third person. The essence of the agency is that the principal authorises the agent to represent or act for him in bringing the principals into contractual relation with a third person. The policy of the insurance is a contract between the insurer and assured and in the instant cases admittedly the plaintiffs acted on behalf of National Co. Insurance Scheme viz. insurer to bring him in contractual relationship with the assured. For all purposes, therefore, the plaintiff is an agent of the scheme. Admitteldy the claim was paid by the plaintiff from the funds of the scheme and suit has been filed for the benefit of the scheme. The regulations in respect of the functions and responsibilites of the plaintiff, which were formulated in 1970 have been reproduced above. It will be seen, that even under these regulations the plaintiffs are authorised to settle the claim but they! are not specifically authorised to file suits to recover any claim.

14. Mr. Rauf was relied upon P L D 1963 S C 663, wherein their Lordships have held the insurer having paid all the loss to assured, may file a suit in his own name under section 135‑A of the Transfer of the Property Act. In the instant case, it is seen, that the insurer is not the plaintiff, but it is the Scheme. In Suit No.218/1973 the letter of subrogation is issued in the name of M/s. National Co. Insurance Scheme. But in the Suit No. 118/1969, the letter of subrogation is issued in the name of plaintiff viz. Pakistan Insurance Corporation as Secretary to the National Co. Insurance. In suit No.118/1969 the plaintiffs have described themselves in the title of I the suit as Pakistan Insurance Corporation a statutory corporate body, established in Pakistan under Pakistan Insurance Corporation Act, 1952, also acting as Secretary to the National Co. Insurance Scheme. This description of the plaintiff is the title of suits clearly show, that the suits have been filed by the plaintiffs not in their statutory entity in exercise of their functions under the Pakistan Insurance Corporation Act, 1952, but they have filed these suits as Secretary of the Scheme. This is also clear from para No.l of the plaint in Suit No.118/1969, where it is stated, that the plaintiffs acted as Secretary to the National Co. Insurance Scheme. This plaint has been verified by the Deputy Manager of the plaintiffs and the plaintiffs are described as Pakistan Insurance Corporation acting as Secretary to the National Co. Insurance Scheme. It leaves no room for doubt that even this suit has not been filed by the plaintiff in their own right but only as Secretary to the Scheme. The letter of subrogation is also issued in their names as Secretary of the Scheme. As such the person entitled to recover claim, if any, from the defendants, would be the scheme and the present plaintiff. In other suit as already pointed even the letter of subrogation does not mention the name of the plaintiffs. In Suit No. 343/1971, under the similar circumstances, it was held, that Pakistan Insurance Corporation while issuing the insurance policy acted as agent of the National Co. Insurance Scheme, and as such it had no right to file suit in its own name in view of the bar contained in section 230 of the Contract Act. I am unable to defer from the view expressed in this suit. In view of the above discussions in my opinion, the present suits are not maintainable as the plaintiffs have no right to sue and no cause of action has accrued to them. In view of this finding both the suits are dismissed but under the circumstances, the parties are directed; to bear their own costs.

The above two suits were dismissed by a short order dated 29‑11‑1987. Above are the reasons in support of the said order.

M . Y . H 'P‑41/ K Suits dismissed