HASSANALI & COMPANY Versus FEDERATION OF PAKISTAN
1. The facts of the case are that the plaintiffs in this case had purchased hundred pressed bales of Desi ginned cotton from M/s. Shaikh Muhammad Ashraf & Brothers of Pattoki, District Lahore. The consignment which had been booked at Pattoki Railway Station on 15‑12‑1971 for onward journey to Karachi, was got insured by the plaintiffs for Rs.64,000 with the defendant No.‑3 under their Insurance Policy No.101‑F/12407/71.
2. On 5‑12‑1971 War Risks Insurance Ordinance, 1971 (hereinafter referred to as "the Ordinance") was promulgated and according to section 8 thereof, "goods‑in‑transit" were required to be compulsorily insured against war risk with the defendant No.1.
3. Thereafter, the defendant No.1 through the defendant No.3, on the 8th January, 1972, issued a policy bearing No.B 01212 covering the said goods while in transit against payment of a premium of Rs.139.52 which was paid by the plaintiffs by their cheque, dated 11‑12‑1971.
4. On 15‑12‑1971, when the said consignment, which had been duly loaded on Pakistan Railway's Wagon No.39040, was in transit, it got wholly destroyed by enemy bombardment at Pattoki Railway Station during the India Pakistan war which was duly confirmed by a certificate issued by the Station Master, Pattoki. The plaintiffs were also informed accordingly by a telegram dated 22‑12‑1971.
5. However, when the plaintiffs by their letter, dated 27‑12‑1.971, informed the defendant No.3 about the destruction of the bales it directed the former to refer the matter to the defendant No.2 and when the matter was referred by the plaintiffs to the said defendant, it first informed the plaintiffs that M/s. Indus Surveyors of Lahore had been appointed surveyors to carry, out the survey of the goods, but subsequently, after entering into a prolonged correspondence on the subject it rejected the plaintiffs' claim as untenable on the ground that the goods in question were already in transit and were not insurable under the War Risks Insurance Ordinance, and hence the suit.
6. The suit had been resisted by all the defendants. According to the joint written statement filed on behalf of the defendants Nos.1 and 2, the plaintiffs were not the owners of the goods in question, but were only acting on behalf of their clients, M/s. Muhammad Ashraf & Brothers of Pattoki and consequently they had no insurable interest in the goods. The policy had also been obtained by the plaintiffs illegally and fraudulently as the loss had already occurred before the policy was issued by the defendant No.3 and, therefore, there was nothing left to be insured. Besides that the journey of the goods had commenced before 3‑12‑1971 and, therefore, in any case the plaintiffs' claim did not fall within the purview of the said Ordinance. As far as the case of the defendant No.3 is concerned, they have completely denied their liability to the plaintiffs as according to them, they acted only as agents of the defendant No.1 and hence they did not incur any liability under the insurance policy.
7. On the basis of the respective pleadings of the parties, the following consent issues were adopted by the Court:‑‑
2. "(1) Whether the suit, as framed, is not maintainable?
(2) Whether there is no legal person by the name of the plaintiffs?
3. If so, what is its effect?
(3) Whether the plaintiffs are not the owners of the insured goods?
(4) Whether the plaintiffs obtained the insurance policy by fraud, misrepresentation, illegally and in collusion with the defendant No.3
(5) Whether the insurance policy does not cover the War Risks?
(6) Whether the insured consignment was wholly destroyed/damaged on 15‑12‑1971 at Pattoki Station by enemy action while in transit in Wagon No.39040?
(7) Whether the plaintiffs did not comply with the provisions of law and insured policy? If so, what is its effect?
(8) Whether the plaintiffs are not entitled to claim interest?
(9) To what relief, if any, are the plaintiffs entitled and against which defendant?
(10) What should the decree be?"
4. My findings on the issues are as follows:
5. ISSUES Nos. AND 2:
6. These issues were half‑heartedly pressed by Mr. Abdul Rauf, learned counsel for the defendants Nos.1 and 2. However, evidence has been produced by the plaintiffs to show that they are a Joint Stock Company registered by the Registrar of Joint Stock Companies under the Companies Act. Consequently, I find no force in the argument that there is no legal person such as Hassan Ali & Company, in whose favour the insurance policy in question had been issued. No doubt, in the insurance policy (Exh.10), M/s. Hassan Ali & Co., have not been shown as a Joint Stock Company, but such omission can hardly have any legal implications. Consequently, the issues Nos.1 and 2 are answered in the negative.
7. ISSUE No.3:
8. So far as issue No. 3 is concerned, the plaintiffs' witness Sham S.Elevia (Exh.5) has deposed that the plaintiffs had purchased the said bales of cotton from M/s. Shaikh Mohammad Ashraf & Brothers of Pattoki, District Lahore. The witness also produced a copy of the bill of Mohammad Ashraf & Brothers, dated 5‑12‑1971 in this regard. The evidence of Sham S.Elevia is further supported by that of Mohammad Ashraf (Exh.46) According to this witness the negotiations for sale of hundred bales of cotton were started in October, 1971, and the goods were supplied to the plaintiffs at Railway Station, Pattoki on 3‑12‑7971 and the booking was made on 5‑12‑1971. The "Bilty" (Exh.9) was sent to the plaintiffs through post and the same was issued on 15‑12‑1971. F3 From this evidence, it is clearly established that the goods in question had passed to the plaintiffs at the relevant time. The issue is, therefore, answered accordingly.
9. ISSUES Nos.4 & 5:
10. As far as these issues are concerned, it is pertinent to refer to certain relevant provisions of the War Risks Insurance Ordinance, 1971. The Ordinance came into force during the time when hostilities continued between Pakistan and India in 1971. The object of the Ordinance, according to its preamble, was to provide for the insurance of certain goods and properties in Pakistan against war risks. The Ordinance came into force on 5‑12‑1971 but by an amendment therein brought by War Risks Insurance (Amendment) Ordinance XXVII of 1972, the Ordinance was made effective from 3‑7‑1971. According to section 8 of the Ordinance, it was made incumbent on every owner of any goods or goods‑in‑transit insurable under the Ordinance, to take out a policy of insurance against war risks issued in accordance with the Scheme relating to such goods or goods‑in‑transit. The Ordinance also defined "goods" to mean any materials, commodities or articles which are insured against fire with any insurer registered in Pakistan. "Goods‑in‑transit" has also been defined to mean as "such goods which are being imported into Pakistan or are shipped or otherwise despatched from the one province to another or are in transit in the same Province by railways, inland steamer, barge or a goods vehicle".
11. "Goods" or "property" insurable under the Ordinance have also been specified in clause(h) of the said Ordinance and the same in relation to any goods in transit means "all goods which are for the time being insured against fire with an insurer registered in Pakistan and includes‑‑‑
(a) any spares and stores and other consumables material kept in the premises of a factory for the upkeep, maintenance and running of the factory provided such material are insured against fire with an insurer ' registered in Pakistan:
(b) any material, commodities or articles lying within the precincts of a port or on barges or on ships and are intended either for export or for movement outside port area in Pakistan for final disposal and are insured against fire with an insurer registered in Pakistan:
(ii) in relation to any goods in transit, means all goods which are imported into Pakistan or shipped or otherwise despatched from one Province to another or are in transit in the same Province by railways inland steamer, barge or a goods vehicles but does not include goods which are in transit by a ship that sailed from a port of shipment before coming into force of this Ordinance."
12. It is pertinent to note that contravention of the provisions of section 8 has been made liable to imposition of penalty under section 13 of the Ordinance. It may also be pointed out that under section 17 of the Ordinance, the Central Government issued a Notification No.SRO 583(1) of 1971, dated 5‑12‑1971 appointing a number of insurance companies including the defendant No.3 as its agents for the purpose of issuance of policy under the Ordinance. By another Notification No.SRO 584(1)/71, dated 5‑12‑1971 issued under section 24 of the Ordinance, the Central Government relegated its power under the Ordinance, including powers to meet its liabilities under the Ordinance, to Pakistan Insurance Corporation, the defendant No.2 in the case.
13. Turning once again to issue No.4, Mr. Abdul Rauf has argued that admittedly the War Risks Policy (Exh.10) was issued at the time when the loss had already occurred and the goods had been destroyed. Consequently, the policy issued by the defendant No.3 was an invalid policy and, therefore, the loss suffered by the plaintiffs was not covered by such policy. Mr. Abdul Munim Khan, learned counsel for the plaintiffs, on the other hand, has placed reliance upon two earlier decisions of this Court in Star Trading Company v. Pak Insurance Corporation (1987 C L C 161) and Bhurgri Cotton Ginning and Pressing Factory v. Pakistan Insurance Corporation (1988 C.L.C. 286), wherein it has been held that the War Risks Insurance Ordinance was promulgated for providing insurance cover to all such goods which had been destroyed by enemy action during the hostilities between India and Pakistan in 1971 and, therefore, all policies issued even when the destruction of goods insured had already taken place were valid under the said Ordinance. In the first case, which was decided by my learned brother Tanzil‑ur‑Rahman, J., it was observed that‑.‑‑
14. "18. It is true that Insurance being contract . ~of indemnity its consideration has to be paid before the loss has taken place 'due to the risk covered under the Insurance Policy. If the goods are already destroyed or lost; there can be no insurance, as there remains nothing which is insurable. But this applies to cases under general law of insurance. The Karachi case PLD 1975 Kar.33 and the several passages cited from the above textbooks on Insurance Law are not applicable to the facts of the present cases as the law which is involved in these cases does not pertain to the General Law of Insurance. The War Risks Insurance Ordinance, 1971 as amended by Ordinance XXXVII of 1972, is a temporary and special law which covers only a specified field. The basic idea of the said statute is to establish War Risks Insurance funds, as is evident from section 15 of the Ordinance, so that in case of War casualties the claims could be paid out of the said funds. The Insurance under War Risks was made compulsory as provided in section 8, already referred. It has also been provided under section 13 of the Ordinance that "whoever contravenes the provisions of section 8, section 9, section 10 or section 11 or, having taken out a policy of insurance, fails to pay any instalment of premium thereon which is subsequently due shall be liable to pay in addition to the premium due from him a surcharge equal to twenty per cent. of the premium so due as also interest at the rate of one per cent per annum above bank rate calculated at monthly rates . The unpaid premium can be realised by coercive method as arrears of land revenue as provided in section 20 of the Ordinance. In view of this legal position the incidents of General Law of Insurance, such as submitted by the learned counsel for the defendants, are not attracted to the present cases. The only condition for covering the War Risks as provided in section 2(h)(i) of the Ordinance, is that the goods must be for the time being "insured against fire with an insurer registered in Pakistan'". There is no cavil that the goods in question on the date of promulgation. of the Ordinance existed and were duly insured against fire with the Insurance Society of Pakistan in one case and with Messrs Habib Insurance Company Ltd., in the other two cases."
15. It was further observed by my learned brother that:‑‑
16. "19. The agents of defendant No.2, despite their knowledge of the fact that the goods for which the policies were being issued had already been destroyed due to the air‑raid by the Indian war planes, not only accepted the premium and provided insurance cover to the plaintiffs in respect of the same, making effective from 5th December, 1971, but continued to accept the same every month till July 1972."
17. This decision was followed by Syed Abdur Rahman, J., in Bhurgri Cotton and Pressing Factory's case.
18. Mr. Abdul Rauf has argued that the view taken by my learned brothers in the two cases is a clear deviation from the accepted principles applicable under the Insurance Law, because the insured must have insurable interest in the subject‑matter in order to entitle him to get the same insured. The contract of insurance according to the learned counsel, is in fact a contract of indemnity and there can be no valid contract unless the goods insured are in existence at the time of the execution of the contract.
19. It may be pointed out that these questions were raised before my learned brother Tanzil‑ur‑Rahman J., in the case of Star Trading Company to which I have just referred, but my learned brother was of the view that the principles of general law were not applicable to cases under the War Risks Insurance Ordinance because insurance under the Ordinance was made compulsory by section 8 thereof and non‑compliance of section 8 could be visited by penalties imposed by section 13 of the Ordinance. I have no hesitation in respectfully agreeing with the views expressed by my learned brother. It may further be pointed that in the present case, no doubt, the policy I (Exh.10) was purportedly issued on 8‑1‑1972, but the same policy indicates that a premium of Rs.139.52 in respect thereof was paid by the plaintiffs to the defendant No.3 on 11‑12‑1971. Consequently, notwithstanding the fact that the policy was issued by the defendant No.3 after 15‑12‑1971 on which date the plaintiffs' goods were destroyed by the enemy aircraft, a valid contract had already been concluded between the plaintiffs and the defendants Nos.l and 2 through the defendant No.3 on 11‑12‑1971 when the premium was accepted by the said defendant from the plaintiffs. MrAbdul Rauf, has invited my attention to two receipts, dated 25‑1‑1972 and 29‑2‑1971 for Rs.139.52 (Exhs.ll and 12) issued to the plaintiffs and consequently, according to the learned counsel, the premium in fact was paid by the plaintiffs much after the goods had been destroyed ire the air‑raid. However, this has been explained by the plaintiffs in their plaint, as, according to them, the plaintiffs paid the premium twice to the defendant No. 3 first, by cheque, dated 11‑12‑1971 and subsequently on 25‑1‑1972 for which a receipt (Ext.ll/1) was issued to them by the defendant No.2. The plaint further shows that subsequently another receipt, dated 29‑12‑1971 issued to them for the same amount by the defendant No.3 has not been denied by the defendant No.3 in his written statement, In case, the premium was paid to the defendant No.3 by the plaintiffs on 11‑12‑1972 the policy issued by the defendant No.3 (Exh.10) was a valid policy notwithstanding the fact that the same shows the date of issue as 8‑11‑1972. Merely because the policy was issued subsequently cannot by itself make the contract effective from such date. In the present case, there are circumstances to indicate that the contract between the plaintiffs and the defendants Nos.1 and 2 came into existence on 11‑12‑1971, when the defendant No.3 accepted the premium from the plaintiffs and since admittedly the goods were destroyed subsequently, the contention of Mr. Abdul Rauf, is not tenable in any case.
20. It was next contended by Mr. Abdul Rauf that the said Ordinance required the plaintiffs to also take out a fire insurance policy as is indicated by r clause (h) of section 2 of the aforesaid Ordinance. It has been further argued by Mr. Abdul Rauf that the policy issued by the defendant No.3 to the plaintiffs in this respect did not cover the risk in respect of which the, claim has been preferred. The contention of the learned counsel again appears to be fallacious. "Goods" or "property insurable under this Ordinance" have been defined by clause (h) of section 2 of the Ordinance, As separate meaning has been assigned to "goods" or property in relation to any "goods‑in‑transit", therefore so far as "goods" or "property" insurable in relation to any goods‑in -transit" were concerned, the same were not required to be necessarily insured against fire. The Ordinance being a special law, its provisions have to prevail over those of the general law. Since the goods were insurable goods under the Ordinance, for which a valid policy of insurance had been issued, no further cover was required. It may be pointed out that the use of the word "includes" in the definition of "goods" or "property insurable under the Ordinance" has enlarged the meaning thereof and such goods or property need not necessarily include such goods which were insured against fire. The contention, therefore, has no force.
21. ISSUE N0.6:
22. There appears to be hardly any serious contest so far as issue No.6 is concerned. The plaintiffs' witnesses in their respective statements have categorically stated that the consignment in question had been booked at Pattoki Railway Station on 5‑12‑1971 under a railway receipt (Ex.9). This consignment was completely destroyed at Pattoki Railway Station during the air‑raid by Indian air planes on 15‑12‑1971. The plaintiffs came to know about this through a telegram (Exh.12) received from Mohammad Ashraf. The destruction of the goods. was also confirmed by the Station Master, Pattoki Railway Station, vide Exh.13. No evidence has been produced by the defendants in rebuttal. The defendant No.2 referred the matter to its Surveyor. Although, the report of the Surveyor has not been produced, however, there is sufficient evidence to indicate that the goods of the plaintiffs got destroyed at Pattoki Railway Station by enemy action while they were in transit through Wagon No. 39040.
23. ISSUE N0.7:
24. The contention of Mr. Abdul Rauf that the plaintiff had failed to pay premium at the time of the issuance of the insurance policy (Exh.10) has already been repelled. Consequently, further contention of Mr. Abdul Rauf that, the plaintiffs had failed to strictly comply with the provisions of clause (v) of the War Risks (goods‑in‑transit) Insurance Scheme, which was put into operation on 5-12‑1971 through SRO 569(1)/71, has lost its force. Referring to the provision: of clause (v), learned counsel has pointed out that the plaintiffs were required to pay the premium in advance when any policy issued before payment of the premium was not a valid policy under the law. The argument .,d appears to be fallacious on the face of it, firstly because, as has been pointed out earlier, the factual position is contrary to what has been pointed out by Mr. Abdul Rauf. Secondly, no doubt, clause (v) of the said policy envisages payment of premium in advance, but the policy fails to provide for the consequences in case of non‑compliance with clause (v). The directions contained in clause (v), therefore, cannot be construed as mandatory and the same are simply directory. Consequently, in any case, failure to comply with such directions in no way can render the policy ineffective or invalid. The issue is, therefore, answered accordingly.
25. ISSUE N0.8:
26. So far as issue No.8 is concerned, no argument has been advanced by the either side, consequently, the issue is answered in the negative.
27. ISSUES NOS.9 AND 10:
28. The case of the plaintiffs has sufficiently been established against the defendants Nos.1 and 2.
29. As far as the defendant No.3 is concerned, admittedly it acted as agent of defendant No.2 and, therefore, it has not incurred any personal liability. This position was even conceded by Mr. Abdul Munim Khan, learned counsel for the plaintiffs, who has not pressed for any decree against the defendant No.3.
30. In the result, the suit is decreed as prayed only against the defendants Nos.1 and 2 with proportionate costs.
31. AA./H‑299/K Suit decreed.