1. ' ZIA PERWAZ, J.---This appeal is directed against the judgment and decree dated 30-7-1991 and 18-8-1991 respectively passed by II-Additional District Judge, Karachi South in Suit No,3 of 1976.
2. ' Brief facts of the case are that the respondent instituted the suit for recovery of balance amount of insurance premium against Cover Note No,AAG/437/76 dated 22-6-1976 providing insurance cover to Vessel M.V. Marei Ann purchased by the appellant under an L.C. Through Habib Bank Limited. After arrival of the Vessel the aforesaid cover note was issued to cover the losses from Karachi to the Gadani Beach under the aforesaid cover note. The premium was worked out at 0.50% of the total cost of the vessel amounting to Rs,58 lacs. The amount of premium worked out to net total sum of Rs,29,000 as per details set forth in the cover note Exh.7. This amount was initially paid by the appellant to the respondent by three cheques, two in the sum of Rs,7,000 each of dated 29 -6-1976 and 14-7-1976 and the third one for Rs, 15,000 of dated 10-8-1976. While beaching the vessel capsized and the respondent claimed for recovery of balance amount of premium amounting to Rs,15,000.
3. ' The appellant filed written statement denying the liability for payment of the amount under third cheque on the ground that they had intimated the insurance company that no insurance cover note was required as the Vessel was already covered under the terms of LC and in addition to this fact there were serious discrepancies in the shipping documents on account of which the documents had been returned by the negotiating bank viz. Habib Bank Limited to the corresponding bank i,e, Citibank.
4. ' After recording of the respective evidence the suit was decreed in favour of the respondent.
5. Present appeal preferred by the appellant was admitted on the legal plain to examine the present case with reference to judgment in the case of Trans Ocean Asia v. Alpha Insurance Company Ltd.
6. 1981 CLC 1028 .
7. ' Contention of the appellant Mr. Muhammad Anwar, appearing in person, is that the impugned judgment and decree are liable to be set aside being violative of provisions of section 3-C(4) of the Insurance (Amendment) Act, (XXVII of 1958) as the insurance cover note was issued in violation of the statutory provisions of law. The appellant has laid much stress on the fact that the realization of the amount of premium is mandatory requirement for constituting a valid and enforceable contract of insurance and any transaction in violation thereof is void under the law. As such the respondents are not entitled to recover the amount under the open marine cover note. Relying upon the case of Trans Ocean Asia (supra) the appellant has argued that the Division Bench of this Court declined to award any relief to the importer for damage to the consignment of "Khopra" worth about 55 lacs imported from Indonesia to Pakistan on the ground that no valid contract of insurance enforceable under the law had come into existence as the mandatory conditions precedent for making payment under the law has not been complied with. Appellant further contended that after the return of documents covering the import of vessel there was no question of any insurance cover to be required and the Bank acted without instructions by forcing the appellant to issue cheques.
8. ' Mr. I.H. Zaidi, learned counsel for the respondent, has opposed the appeal. His contention is that the appellant issued three cheques, one to be paid immediately and two post-dated cheques to cover the amount of premium. Out of the said sum the earlier first two cheques for Rs,7,000 each were encashed without any objection. It was at the time of encashment of the third cheque that the amount covered by the cheque could not be collected as the same was dishonoured. He contended that section 3-C(4) of the Insurance Act, 1938 inserted by the Insurance (Amendment)
9. Act, 1958 (Act XXVII of 1958) is applicable to the facts of the present case as the cheques issued provide sufficient compliance of the aforesaid provision.
10. ' Before proceeding further it may be of relevance to reproduce the provisions of subsection (4) of section 3-C of the Insurance Act, 1938:-- "(4) No insurer shall assume in Pakistan E ny risk in respect of any Insurance business unless and until the premium payable is received by it or is guaranteed to be paid by such person in such manner and within such time as may be prescribed."
11. A plain reading of the case-law and the aforesaid section shows that the requirement for payment of premium is not restricted to payment of cash at the time of issuance of policy but provides for the conditions set forth in the aforesaid section to be complied with and one of the conditions therein is that guarantee for such payment constituted a valid condition of enforcement of contract. The guarantee or the manner of tendering of such guarantee has not been specified and has been left open to the parties to the transaction to be determined according to their own satisfaction. In the instant case the insurer accepted to issue the Guarantee in consideration of the premium being paid in three instalments out of which first was realized by cheque at the time of issue of cover note or immediately thereafter and the remaining two cheques provided sufficient guarantee for recovery of balance amount of premium. This being the position the present case is entirely distinguishable from the facts of the case of Trans Ocean Asia (supra) cited by the appellant where no payment or guarantee had been tendered and therefore, is not attracted to the present case. Furthermore the dictionary meaning of guarantee as appearing in Chambers 20th Century Dictionary Edition of 1983 is as, "person who makes a contract to see performed what another has undertaken: such a contract: surety or warrant: one responsible for the performance of some action, the truth I some statement etc." v. t. To undertake as surety for and then to secure: to engage, undertake": and in the instant rase the cheques issued constitutes sufficient undertaking to make the payment for the contract on the basis of which the insurance company was satisfied and the cover note was issued.
12. ' In view of the above I am of the view that the present appeal has no merit and is accordingly dismissed 'with costs. The surety already furnished by the appellant before this Court be encashed and the decretal amount may be paid to the respondent.
13. ' The appellant has also pointed out about the pendency of application under section 151, C.P.C.
14. (C.M.A. 1367 of 2001), the same has no bearing on the merits of the present case and in view of dismissal of the main appeal, this application is also dismissed as having become infructuous.