JUSTICE (RETD.) ALI AKBAR QURESHI, CHAIRMAN. Through this insurance petition filed under section 122 read with section 118 of the Insurance Ordinance, 2000, the petitioner is claiming an amount of Rs.6,284,213/- along with liquidated damages provided under section 118 of the Insurance Ordinance, 2000, under the Marine insurance Policy obtained by the petitioner from respondent No.1 to insure a shipment imported by the petitioner, The respondent in response of the notice appeared and submitted the written statement, wherein, raised two preliminary objections, one under Order VII, Rule 11, C.P.C., that the insurance petition does not disclose any cause of action against the respondent and second, that the suit is barred by limitation provided under Article 86(b) of the Limitation Act 1908 as the insurance petition has been filed after, the period of three years.
2. Roth the learned counsel for the parties time and again argued at preliminary stage and finally agreed that the following facts are admitted by the parties, therefore, the controversy involved in this insurance petition can be decided even without recording the evidence:-
(i) Admittedly, the shipping company, Mearsk line, has already compensated the petitioner by paying 35000 US Dollars (equal to Pak Rs.3,686,200/-) on 24.11.2017 on account of loss, therefore, the petitioner is not entitled to file or ask for the insurance claim on basis of the Marine Insurance Policy.
(ii) The insurance petition is barred by time and hit by Article 86(b) of the Limitation Act, 1908 as the cause of action arose on 30.04.2017, whereas, the petition was filed after the period of three years and seven months, therefore, the same is liable to be dismissed on this ground alone.
(iii) Since, the parties to the case have not only admitted the facts and moreover the learned counsel also agreed that instant case be decided in the light of the arguments and the record, therefore, the case is being decided accordingly.
3. The facts, as stated in the insurance petition are that the petitioner, who is manufacturer of PC Strands Wires, and duly incorporated under Companies Ordinance, 1984, contacted the defendant No.3 for the purpose of buying 25,000 Kgs of LEAD INGOTS and after completing the codal formalities of the contract, in order to secure the consignment, approached the respondent No.1 for Marine Insurance Coverage. The Marine Insurance policy, after completing all the formalities was issued and by this way the respondent No.1 insured the said consignment vide its Marine Policy No.2017/04/LAFMPIPDPO 1225, starting from Xingong Seaport China warehouse till the karachi warehouse.
4. That when the consignment reached at Karachi Port the Custom Department after assessing the duties and taxes handed over the consignment to the petitioner, but on suspicion, the plaintiff contacted respondent No.2 on 30.04.2017 making the request for appointment of their surveyor to inspect the container at Port Qasim Karachi. Accordingly a Joint Survey Team was constituted to conduct a joint Inspection. During Joint Inspection Seal of the container was opened in presence of all the members and found that the container was totally empty. A joint survey report was issued by the joint survey team. After issuing the survey report, the surveyors started demanding relevant documents which as per the record were not provided and the correspondence in this regard ensured remained continue for a long time. During this period the shipping company, namely, Mearsk. Line paid 35000 US Dollars (Pak Rs.3,686,200/-) on 24.11.2017 to the petitioner in response to a letter written by the petitioner dated 24.05.2017 on account of the loss occurred to the petitioner.
5. The petitioner during this period on 17.09.2017 also filed a complaint before the Federal Insurance Ombudsman, Regional Office, Lahore for the redressal of his grievances but the same was dismissed on 12.04.2019, holding therein that the loss of the petitioner has already been compensated by the shipping company in toto, therefore, the petitioner is not entitled for the double benefits. The petitioner after exhausting the remedy before the Insurance Ombudsman, filed this insurance petition on 19.12.2020.
6. Learned counsel for the respondent submitted his arguments on two points, the absence of any cause of action and the limitation provided in the Limitation Act, 1908. Learned counsel submits, that admittedly the petitioner has already been compensated by the shipping company of the loss occurred to the petitioner, therefore, the petitioner under the principle of Indemnity in the insurance matters is not entitled to take double benefits of the insurance policy. Also submits, that it is a settled principle of law in the insurance matters that where there is no loss no compensation. Even otherwise, Marine Insurance contract is always a contract of Indemnity and the Indemnity alone, the purpose of the policy is to return the policy holder to the same position as he was prior to the loss Learned counsel relied coon the following English as well as Indian Judgments. Detail of Citation; Castellain v. Preston and others (1881-85) All ER Rep 493. Mission National Insurance Company, Plaintiff v. Lowell M. Schulman, Schulman Investment Company, and United Organics Corporation, Defendants 659 F. Supp 270 (1986), (AIR 1997 Supreme Court 2671) and (AIR 1941 Lahore 68).
7. In response thereof, learned counsel for the petitioner has not denied that the loss occurred to the petitioner has already been compensated by the shipping company on 24.11.2017 but submits, that it cannot be constituted to be waiver of the claim of the insured (petitioner) as no exclusion clause in this regard is available in the entire policy or in the Insurance Laws of Pakistan. As regard, the limitation learned counsel submits, that the petitioner rightly approached the Insurance Ombudsman, who decided the claim on 12.04.2019, therefore, the instant insurance petition is well within time.
8. Heard.
9. The controversy, which requires consideration and adjudication revolve around the pivotal legal query as to whether, the petitioner after receiving the compensation of the loss occurred, froth the shipping company, is entitled to ask for insurance claim.
Marine insurance has been defined in section 2(D) of the Marine Insurance Act, 2018, which reads as under: "Marine Insurance means a contract whereby the insurer undertakes to indemnify the insured, in manner and to the extent thereby agreed against Marine losses that is say, the losses incidental to Marine Adventure."
The Cardinal Principle in the insurance matters, is principle of indemnity, which is defined and interpreted in different dictionaries and judgments.
Black's Law Dictionary 11th Edition:- INDEMNITY A duty to make good any loss, damage, or liability incurred by another. The right of an injured party to claim re-imbursement for its loss, damage, or liability from a person who has such a duty.
Reimbursement or compensation for loss, damage, or liability in tort: esp., the right of al party, who is secondarily liable to recover from the party, who is primarily liable for re-imbursement of expenditure paid to a third party for injuries resulting from a violation of a common law duty.
Indemnity that is not expressly provided for by an Indemnity clause in an agreement but is nevertheless determined to be reasonably intended by the parties, based on equitable consideration.
The Halsbury's Laws of England defines the indemnity as under:- Most contracts of insurance belong to the general category of contracts of indemnity in the sense that the insurer's liability is limited to the actual loss, which is, in fact, proved. The happening of the event does not of itself entitle the insured to payment of the sum stipulated in the policy; the event must, infact result in a pecuniary loss to the insured, who then becomes entitled to be indemnified subject to the limitations of his contract. He cannot recover more that the sum insured, for that is all that he has stipulated for by his premiums and it fixes the maximum liability of the insurers.
Even within that limit, however, he cannot recover more than what he establishes to be the actual amount of his loss. The contract being one if the indemnity, and of indemnity only he can recover the actual amount of his loss and no more whatever, may have been his estimate of what his loss would be likely to be and whatever the premiums he may have paid, calculated on the basis of that estimate.
The Insurance Indemnity has been interpreted in an English Judgment Cited by the Learned Counsel for the respondent I.E Castellain v. Preston and others (1881-85) All ER Rep 493. The Relevant Para Is As Under; "In order to give my opinion on this question I feel obliged to revert to what is the foundation of every rule with regard to insurance law, which is this: Every contract of Marine or Fire insurance is a contract of indemnity, and of indemnity only, the meaning of which is that the assured in case of a loss is to receive a full indemnity, but is never to receive more. Every rule of insurance law is adopted in order to carry out this fundamental rule, and if ever any proposition is brought forward, the effect of which is opposed to this fundamental rule, it will be found to be wrong. There are many propositions hearing on the question, and many rules may be glanced at which are well known in insurance law. The doctrine in Marine Insurance law of constructive total loss is adopted solely in order to carry out the fundamental rule. It is a doctrine which is in favour of the assured, because where the loss is not an actual total loss, but is what, as a matter of business, is treated as equivalent to a total loss, this rule is adopted to carry out the fundamental doctrine and give the assured a, full indemnity. Crafted on that doctrine came the doctrine of abandonment, which is only applicable to cases of constructive total loss, and is introduced in favour of the underwriters, so that they may have to pay no more than an indemnity. So it appears that these two doctrines were introduced in order to carry out the two limits of the fundamental doctrine to which I have referred namely, that the assured shall get a full indemnity, and that he shall get no more.
THERE IS AN INDIAN JUDGMENT (AIR 1997 SC 2871) WHEREIN THE CONTRACT OF INDEMNITY INTERPRETED AS UNDER:- "A contract of indemnity is a contract by which one party promises to save the other from loss caused to him by the conduct of any other person as contemplated in S. 124 of the Indian Contract Act. But indemnity, as applicable to marine insurance, must not be an indemnity, as contemplated by the Indian Contract Act, as the loss in such a contract is covered by the contract itself and such loss is not caused to the assured by the conduct of the insurer nor by the conduct of any other person. Brett, L. J, observed, with regard to this indemnity, thus: "this contract means that the assured in case of loss against which the policy has been made, shall be fully indemnified, but shall never the more than fully indemnified That is the fundamental principle of insurance, and if ever a proposition is brought forward which is at variance with it, that is to say, which either will prevent the assured from obtaining a full indemnity, or which will give to the assured more than a full indemnity, that proposition must certainly be wrong.
There is another doctrine namely "subrogation" interpreted in a case cited (1881-85) All ER Rep 493 in the following words:- "As I stated in the course of the argument, the doctrine as to notice of abandonment seems more difficult to support in principle than the other rules of insurance law. It was introduced in favour of the underwriters, in order that they might not by means of any fraud be obliged to pay more than a full, indemnity. It is a technical doctrine, because, if there was no notice of abandonment, although there was a constructive total loss, the assured did not recover for the loss. Probably the rule was originally adopted by merchants for the purpose of carrying on business, for otherwise it seems to me that the introduction of it by the courts would be an encroachment. The doctrine of subrogation is another proposition which has been introduced in order to carry out the fundamental rule. It was introduced in favour of the underwriters in order to prevent their having to pay more than a full indemnity, not on the ground that the underwriters were sureties, for they are not so always, although their rights are sometimes similar to those of sureties, but in order to prevent the assured recovering more than a full indemnity.
There is another case cited as MISSION NATIONAL INSURANCE COMPANY. Plaintiff v. Lowell M.
SCHULMAN, Schulman Investment Company, and United Organics Corporation, Defendants (659 F. Supp. 270 (1986) wherein it has been observed that the insured was entitled to a sum that would practically restored them to the same financial condition as before the damaged and thus the insurance company could recover the amount paid to the insured as the lessee had already compensated, the insured.
10. As regard, the subrogation it is said the insurer is entitled to be subrogated to the rights of the insured, and not to a ad contribution from other insurers where he has paid the whole of the loss or more than his I proportionate share of it. In a case titled as (Mission International Insurance Company, Plaintiff v. Lowell m. Schulman, Suhulman Investment Company and United Organics Corporation, Defendants, it is observed that the insured was entitled to a sum that would practically restore them to the same financial condition as before the damage and thus the insurance company could recover the amount paid to the insured I as the lessee had already compensated the insured.
11. The principle of indemnity has beautifully been elaborated and interpreted in the judgments supra. Finally, it has been ruled in these judgments that the insurance contract, particularly Marine Insurance Contract is always a contract of indemnity and indemnity alone and the only purpose is to return the insured to the same position as he was prior to the loss. From the interpretation of the judgments referred to in the preceding paras, it can easily be understood that the principle of indemnity in insurance contract does not permit double compensation and particularly a Marine insurance is a contract of personal indemnity and rot a contract from which profit can be realized.
Even otherwise the insurance loss is the financial damage one suffers due to insurable event and if the same is compensated the insured is not entitled to ask for the doubt benefit. This aspect of the case has beautifully been dealt with in a judgment cited as Burnand v. Rodocanachi (2) (7App Cas at p 330): "The general rule of law (and it is obvious justice) is that where there is a contract of indemnity (it matters not whether it is a marine policy or a policy against fire on land, or any other contract of indemnity) and a less happens, anything which reduces or diminishes that loss reduces or diminishes the amount which the indemnified is bound to pay; and if the indemnifier has already paid it, then, if anything which diminishes the loss comes into the hands of the person to whom he has paid it, it becomes an equity that the person who has already paid the full indemnity is entitled to be recouped by having that amount back."
12. In the present case, admittedly, the insured (petitioner has already been compensated by the shipping company and has received way back on 24.11.2017, 35,000 US Dollars (Pak, Rs.3,686,200/-).
It is pertinent to mention here, that the said compensation of the loss occurred to the petitioner was paid on the written request of the petitioner, which was made on 24.05.2017. In this way, the petitioner who has already been compensated is not entitled to ask for insurance claim, keeping in view the principle of Indemnity and "Subrogation".
14. As appears from the record the petitioner before filing this insurance petition elected to file a complaint/grievance petition before the Federal Insurance Ombudsman available in the Insurance Ordinance, 2000 and instituted the complaint/grievance petition. The same was dismissed in the following words:- 'Without going into veracity of loss or the allegation of fraud, it is observed that the whole amount of loss claimed by the complainant has duly been compensated by M/s. Maersk Shipping Line by payment of US$ 35,000/- to the complainant and it was duly admitted by the Complainant during the course of hearing though denied initially. With the receipt of the said amount there remains no other loss, which still remains unpaid to the complainant. As per record, the insurance policy was obtained by the complainant to cover up losses in transit of goods from China to Pakistan. Since the complainant has admittedly received the whole amount of loss from the shipping line, there is no other transit loss which remains yet to be compensated by the Respondent Company to the Complainant. It a settled law that no person can make multiple claims and obtain amounts from different sources simultaneously for the same loss. In the instant case the complainant opted to claim compensation from the shipping line first and succeeded in getting the same. With the exercise of this option and receipt of the whole amount, there is no other loss to the complainant which remains yet to be covered or compensated under the insurance policy.
In view of the above discussion, it is concluded than the complaint lacks merit and as such liable to be dismissed.
15. Learned counsel for the respondent vehemently argued that admittedly, the petitioner prior to this insurance petition approached learned Federal Insurance Ombudsmen by filing a complaint, which was rejected/dismissed, therefore, under the principle of "doctrine of election of remedy" this insurance petition is hot maintainable and liable to be dismissed on this score alone. Although, the Hon'ble Superior Court in order to curb the multiplicity of the litigation/proceedings have repeatedly interpreted and applied the "doctrine of election of remedy" but in this case, the Insurance Ordinance, 2000 provides in section 130(4) that a complaint is not prevented from filing of suit against an insurance company event if his complaint has been rejected by the learned Federal Insurance Ombudsman. Thus, insurance petition in view of the law enunciated in the Insurance Ordinance, 2000 is maintainable.
16. Learned counsel for the respondent also argued on the point of limitation. The record was perused with the assistance of the learned counsel for the parties and found, that the petitioner has itself admitted in para-29 of the insurance petition that the cause of action occurred on 30.04.2017, whereas, the instant petition was filed on 19.12.2020. Article 86(b) of the Limitation Act, 1908 is applicable in this case which provides the limitation of three years from the date of occurrence of cause of action. The petitioner, in the Insurance petition has not a given any explanation for this delay not the learned counsel referred any record to meet with the objection raised by the other side. The learned counsel relied upon the following judgments:- "Robina Bibi v. State Life Insurance 2013 CLD 477, 2006 MLD 619 (Lahore), 2006 MLD 622, PLD 2018 Supreme Court 828.
The ratio of the principle laid down by the Hon'ble Superior Courts in the judgments Supra provides that the remedy can only be availed within Time stipulated by the law and if delay is occurred the same has to be explained by the petitioner. Since, in this case, admittedly, the insurance petition was filed much after the statutory period given in Article 86(b) of the Limitation Act and no explanation of delay is rendered or explained, therefore, it is held that this petition is barred by time and not sustainable in the law.
17. On conclusion of this judgment, it is appropriate to mention here, that both the learned counsel for the parties, submitted that it is a case of first impression as despite putting hectic efforts, they could not find out any judgment of the Pakistani jurisdiction, therefore, they are relying upon the English as well as Indian Judgments on the issues.
18. In view of the above, this insurance petition is dismissed on the grounds of principles of indemnity and limitation provided in section 86(b) of Limitation Act 1908.