1. B. G. N. KAZI, J.-The appellants are a Partnership Firm, registered under the Partnership Act, carrying on business inter alia of import of goods from abroad. They imported Khopra worth about Rs, 55,00,000 from Indonesia to Pakistan on s. s. "Amen" an old vessel. The consignment was provided insurance cover by the respondent-firm. The appellant filed Suit No, 459 of 1969, claiming a refund of insurance premium amounting to Rs, 1,81,842.75 from rerpondent Insurance Company.
2. ' It is the case of the appellant that they were required to provide insurance cover, from the date of loading the cargo in September, 1966, and therefore, approached the respondent-Company in February, 1967 and obtained Marine open cover No, 6506-A dated Ist February, 1967. The premium was to be charged according to tariff and the cover note was subject to extras if any for overage vessels. According to the appellants they were given to understand that overage extra would be 1.5 per cent. Of the sum assured. However on 28th February. 1967, they were sent a bill for premium charging overage extra at 4 per cent. They protested stating that they had agreed to 1.5 per cent.
3. Overage extra and they should not be burdened with the demand for 4 per cent. Only because the reinsurers had raised the overage extra from 1st March, 1967. The respondent-Company had cancelled the open cover and since the appellants failed to get the cargo ensured from other Insurance Companies and the cargo according to Bank's requirement had to be insured they had paid the premium with the overage extra at 4 per cent. As demanded by the respondent who had agreed to charge premium at late lower than 4 per cent. If their reinsurers agreed to charge premium at lower rates.
4. ' The respondents in their written statement contended that in the cover note the rate of overage extra had been left open and the bill had been sent only after ascertaining the rate from the insurers. It was their case that as the appellants had avoided to pay or to furnish Bank guarantee, the cover note was cancelled. Since appellants could not get insurance cover from other companies they had again started negotiations and had made payment of premium with overage extra at 4 per cent. They further contended that no refund of premium could be made after the voyage when the company had remained at risk throughout the period of voyage.
5. ' The learned Single Judge, who tried the suit adopted the following consent issues :
(1) Whether the plaintiff is registered firm ?
(2) Whether the cover note was subject to extras ?
(3) Whether the rates of extra premium for overage vessel on or about 1st February. 1967 was 1.5 per cent and on or about 1st March 1967 was 4 per cent. ?
(4) Whether the plaintiff was liable to pay the extra premium for overage vessel at 1.5 per cent. Or 4 per cent. ?
(5) Whether the plaintiff paid 4 per cent. Extra premium under pro. Test ?
(6) Whether the defendant is liable to refund to the plaintiff Rs, 1,37,500 or any other sum ?
6. ' The learned Judge, decided Issue No. 1 in favour of the appellants and Issues Nos. 2 to 6 against them holding that the respondents were entitled to extra premium at 4 per cent. As the rate of overage extra and he dismissed . The suit.
7. ' The findings of the learned Judge in respect of Issues Nos. 2 to 6 are assailed mainly on the following grounds :--
(1) That the contract was complete on 1st February, 1967 and the rate of overage extra premium was 1.5 per cent. On the date and was en, hanced to 4 per cent. With effect from 1st March, 1967.
(2) That the rate of extra premium of overage Vessels had net been ascertained subject to the rates quoted by the reinsurers.
(3) That the cover note could only be cancelled after 30 days' notice to appellants.
(4) That the policy was issued in lieu of open cover No, 6506-A, dated 1st February, 1967.
8. It is admitted position that open cover No, 6506-A dated 1st February 1967 was issued without the premium being paid or even the usual Bank guarantee for such payment being furnished. It is well established practice which in this country is requirement of law that payment of premium is made a condition precedent of liability under a contract of insurance. Reference has been made to paragraph 464 at page 255 of Halsbury's Laws of England (4th Edition) which reads as under :- "464. Payment as a condition precedent.-In practice, payment of the premium in advance is usually made a condition precedent to liability, not only in the case of the first premium but also of the renewal premium. The assured is then precluded from recovering for a loss which happens before the premium is paid unless the circumstances are such that insurers are estopped from denying that they have received payment, or have by their conduct waived the condition. There may for example, be a waiver by an agreement to give credit or by giving of an ante-dated receipt, but there is no waiver where an insurance agent accepts premiums in arrear unless be has authority from the insurers to do so."
9. ' Reference has also been made to paragraph 661, Chapter 5, section 7 of Mac Gillivray on Insurance Law which reads as under :- "661. "Held covered".-In an English case a thirty days' cover note had been issued on a proposal for fire insurance, and before its expiration the company intimated to the proposer that a policy would be sent on receipt of the first premium, but that no insurance would be in force until the first premium was paid. The words "held covered" were written the margin of the. Letter of intimation, but it was held that they referred only to the cover note and that there no completed insurance until the first premium was paid and that the duty to disclose continued up to that time."
10. ' The open cover note mentions as under :- "No insurer shall assume in Pakistan any risk in respect of any insurance business unless and until the premium is received or is guaranteed to be paid by such person in such manner and within such time as may be prescribed."
11. ' It is reproduction of subsection (4) of section 3-C of the Insurance Act, 1938 inserted by the Insurance (Amendment) Act, 1958 (XXVII o 1958). In view of the aforesaid clause in the open cover note since Cher was no payment of premium and no guarantee of such payment there wa no contract as the precondition remained unfulfilled. Any agreement violative of the provisions of aforesaid section 3-C of the Insurance Act, would not be enforcible.
12. ' The open cover note on the face of it provides that amount mentioned would be subject to extras if any or overage vessels. Undoubtedly s. s. "Amen" was an overage vessel and therefore the rate which was shown to be "Marine as per Tariff-, was subject to extras for the overage vessel. If as is contended on behalf of the appellant the overage extra was known to be 1.5 per cent. There was no necessity of ascertainment and there should have been no delay in submitting the bill immediately by the insurers and there would have been no reason for not furnishing Bank guarantee for payment of premium by the' appellant at the rate of 1.5 per cent. For the overage extra.
13. ' There is also no explanation as to why if the rate of 1.5 per cent. Was known on the day when the open cover note was issued why it was stated on it that the amount would be subject to extras if any for overage vessels. Mr. Javed Piracha partner in the appellant-firm admits that they had prior dealings with Queensland Insurance Company and South Insurance Company and for the instant business too they had contacted both the above-mentioned companies but they had declined to accept the business. He has further admitted that the respondent-Company had agreed to insure the cargo at extra rate for overage vessel. He further admits that letter of 1st March, 1967 cancelling the open cover note was received by them on the same date and when they wrote the second letter dated 1st March, 1967 they had already got knowledge of the cancellation of the cover note dated 1st February, 1967. He also admitted that they could not get insurance cover from any other company on the same terms after receipt of letter of cancellation of cover . Note on failure to furnish required Bank guarantee.
14. ' It has been argued by the learned counsel for the respondent that cheque for Rs, 2.82,586.44 was issued and sent to the respondent-firm without any condition and on the same day the Insurance Company issued their policy. They had from the start made it clear that they would have to refer the matter to their reinsurers for rating and reinsurance cover. This is clear from the deposition of Mr. Velentine Jon Consalirs who stated that at the first approach the rate of premium.And overage extra could not be fixed because he had to consult his reinsurers as approximately 98 per cent.
15. Had to he reinsured. He has pointed out that the amount of premium paid to the Pakistan Insurance Corporation for reinsuring 30 per cent. Of the risk was also at 4 per cent. Extra overage charges. He has asserted that in mid-February, 1967 the overage extra charges were enhanced by reinsurers. He has further explained that the claim for over charging was not received up to 31st December, 1967 and the appellant-Company had filed claim for amount of Rs, 14 lakhs as compensation for damages to cargo on arrival of the vessel but the loss was not covered and therefore they did not pay the claim.
16. ' The learned Single Judge, accepted the contention on behalf of the respondent-Company that for overage extra there was no tariff and the extra had to be ascertained by reference to the reinsurers since the risk to the extent of 55 lakhs could not be borne by them alone and that under the Insurance Act, reinsurance was compulsory and they had been advised by reinsurers in England in reply to their letter dated 15th February 1967 that overage extra charges had been enhanced by the reinsurers.
17. ' On the facts stated, therefore, there is no reason to differ from the finding of the learned Single Judge. There is no other material on record except the statement of the respondent-firm that if the re-insurers accepted less than 4 per cent. Rate of overage extra a refund to that extent could be possible. The only plea that could therefore be raised is that the London reinsurance was for less than 4 per cent. But no such assertion has been made by the appellant.
18. ' In the circumstances we do not find any reason for disagreeing with the learned Single Judge and the appeal is accordingly dismissed but under the circumstances the parties are left to bear their own costs.