' This is a suit for recovery of Rs,4,93,256.14 with interest and costs.
2. Case of the plaintiffs is that in November, December, 1971 they had delivered a number of consignments of ginned or unginned cotton at various stations for despatch to Karachi vide different Invoices numbers shown in para 5 of plaint. On 5-12-1971 War Risks Insurance Ordinance 1971 was promulgated which required all the goods in transit to be compulsorily insured. The abovementioned goods were already insured with defendant No,2 against the fire risk. On coming in force of War Risks Insurance Ordinance, 1971 defendant No,2 insured them aginst War Risk as well and asked the plaintiffs to pay the required premium. The plaintiff paid the premium to cover the War Risk on 8-12-1971 and Policy Nos. B 04084 and B. 04085 covering the risk was issued on 18-1- 1972 and 19-1-1972 and the receipt of the premium paid in the said policy was also issued. On various dates shown in para 5 of plaint these goods were completely destroyed while in transit at different Railway stations by enemy bombardment. Therefore the plaintiffs requested the defendant No,2 to settle the claim of the plaintiffs in respect of the loss suffered by them. The defendant No,2 asked the plaintiffs to submit their claim in the prescribed forms and also appoint Surveyors to assess the loss. The plaintiffs duly submitted their claim on the prescribed forms. The survey was carried out by Surveyor. The loss in respect of items (i) to (iii) of para 5 of plaint which the plaintiffs suffered was assessed in the sum of Rs,1,96,176.10, while the claim in respect of remaining items was not accepted. The plaintiffs on the direction of defendants sent vouchers for former claim but no payment was made. Defendants by a letter refused to entertain the claim of the latter on the plea that R/Rs pertaining to the consignments indicated that the goods were despatched on various dates which were the dates before the commencement of the War Risks Insurance Scheme 1971 and the goods in question could not be covered as the instructions contained in the application form for the issue of the policies provided that the goods despatched before 3-12-1971 would not be covered. Hence this suit.
3. The suit was contested by the defendants who filed a joint written statement in which 'they have admitted to have received the premium and issued the policy, but they have alleged that the same policy seems to have been issued on misrepresentation on the part of the plaintiffs.
According to them the policy could cover the risk with effect from the date of its issuance which was 18-1-1972 and 19-1-1972 or date of payment of first premium which was 18-12-1971 while the goods were destroyed before that date. It was further contended that the transit of goods had commenced before coming into operation of the War Risks Insurance Ordinace and therefore these goods were outside the scope of the War Risks (Goods in Transit) Insurance Scheme. It is admitted that Surveyors were appointed and the loss was surveyed but it is explained that the same was done under a misconception. On the pleadings of the parties the following issues were framed:-
(1) Whether this Hon'ble Court has no jurisdiction to decide the claim in suit?
(2) Whether the plaintffs insured the consignments of cotton with defendant No,2 and/or defendant No,3 as against by the defendants Nos.1 and 2 and on what terms and for what amount?
(3) Whether the Insurance Policies were issued illegally and/or contrary to Rules and in collusion with the plaintiffs?
(4) Whether 9 consignments of bales of cotton as mentioned in paras 5 (i) to (ix)of the plaint were totally damaged or destroyed while in transit due to enemy bombardment in December 1971? If so, its effect?
(5) Whether defendants Nos.1 and 2 accepted the claim of the plaintiffs for Rs,1,86,176 in respect of 3 consignments mentioned in paras No,5 (i) to 5 (iii) of the plaint? If so, its effect?
(6) Whether the defendants are not liable to pay the claim in respect of consignments mentioned in paras 5 (iv) to (ix) of the plaint?
(7) Whether the provisions in the Rules/Scheme that Insurance cover would not be effective in respect of consignment dispatched before 3-12-1971 is ultra vires of the War Risks Insurance Ordinace. 1971?
(8) Whether the defendants are estopped from denying the validity of the Insurance Policies and/or repudiating their liability to pay compensation to the plaintiffs?
(9) Whether defendant No,3 exceeded its authority in issuing the policies under War Risks Ordinance? If so, its effect?
(10) Whether the goods were not insurable under law?
(11) Whether the plaintiffs are entitled to the amount of interest claimed?
(12) What should the decree be?
My findings on these issues are as follows:- -
(1) Yes.
(2) Yes.
(3) Yes.
(4) As follows.
(5) No,
(6) As follows.
(7) No,
(8) As follows.
(9). No,
(10) As follows.
4. The plaintiffs have examined their Manager Muhammad Arshad by affidavit,. He was cross- examined by defendants' counsel. Various documents have been filed and none of these documents is disputed by either side.
Issues Nos. 1 and 2 ' The counsel for the parties did not contest these issues. It was admitted by all the parties that the plaintiffs had delivered a number of consignments of ginned and unginned cotton at different railway stations for dispatch to Karachi vide different R/Rs, shown in para 5 of the plaint. It was also admitted that the said consignments were destroyed on various dates shown in the same para by the enemy bombardment at different Railway Stations.
Issues Nos. 3 to 11 ' As already shown above the defendants have not led any evidence whatsoever. In fact the defendants' counsel Mr. A. Rauf has not contested the factual aspects of the case. He has contended that the insurance policy was issued on 19th January, 1972 and therefore it could not cover the risk prior to that date. He also stated that the receipt of the only premium paid in this case was dated 18-12-1971 and therefore under the general law of insurance so long as the first premium is not paid the coverage of the insurance does not start. In the alternative he argued that on the form of application which was prescribed under the War Risks (Goods-in-Transit) Insurance Scheme (see at page 163 of PLD 1972 Central Statute) Instruction No,1 makes it quite clear that the goods in transit which have been shipped or otherwise despatched before the aforementioned date (3-12-1971) shall not be covered. Hence these goods having been despatched on various dates before 3-12-1971 were not covered by the scheme. The plaintiffs in spite of being aware of this fact applied to the defendant No,1 and obtained an Insurance Policy by misrepresentation. Hence the same is not valid. He has relied upon PLD 1964 S.C. 21 (Province of West Pakistan v. Din Muhammad and others, PLD 1984 Karachi 503 (Karachi Pipe Mills Ltd. v. Sindh Labour Appellate Tribunal), PLD 1961 S.C. 105 (Pakistan v. Shaikh Abdul Hamid) and PLD 1972 Karachi 563, (Miss Naseem Kausar Arbab v. Government of Pakistan through Commandar-in-Chief of Pakistan Navy, Karachi). Ratio decidendi of all these rulings is that when the plain language of the statute is clear then the Court cannot interpret the same otherwise and that the instructions contained in the office memo or rules are also effective and binding. He also relied upon Section 3 (c) (4) of Insurance Act, 1938 which provides that no Insurance Company can cover the risk before payment of premium. He also cited PU 1975 Karachi 33 to support the proposition that the insurance cover cannot start before payment of premium.
5. As against this Mr. Z.A. Qureshi, Advocate contended that War Risks, Insurance Ordinance was a special and transitory law and was enacted to establish War Risk Insurance Fund. So that claims for loss of goods etc. Suffered by the owners of goods in transit by enemy bombardment or other acts of war between India and Pakistan that started on 3-12-1971 and ended on 17-12-1971 could be compensated. Hence the general law of insurance or the principles thereof would not apply to the cases under this Ordinance. Therefore, even if the goods were destroyed by an act of war of 1971 before the issuance of policy or the payment of first premium the same were to be covered by the insurance policy and the insurance company could not claim immunity in spite of the fact that the goods were destroyed before issuance of policy or payment of premium. He further contended that instruction No,1 referred to by the counsel for the defendant No,1 was inconsistent with the provisions of the statute and the scheme itself and was therefore meaningless. In his support he relied upon the judgment in the case of Star Trading Company v. Pakistan Insurance Carporation reported in 1987 CLC 61. This ruling is identical on all four corners with the present case. In this ruling Dr. Tanzil-ur-Rehman, J. Has after taking into consideration the facts of the case and law cited by the parties held that the insurance corporation was liable for these losses which were fully covered under the insurance policy referred to above although these consignments were despatched on a date prior to 3-12-1971 and had been destroyed by enemy bombardment before the issuance of the insurance policy and the payment of first premium.
6. The contention of Mr. A. Rauf that administrative instructions contained in the memorandum issued by the authorities competent to alter or amend rules are as effective and as binding as statutory rules as observed in PLD 1964 SC 21 case of Province of West Pakistan v. Din Muhammad and others and the instructions regarding admission conveyed in prospectus can be discharged as held in PLD 1972 Karachi 563 Miss Naseem Kausar's case or the other rulings relied upon by the defendants' counsel are not tenable as these rulings are quite distinguishable from the facts of this case. Instruction No,1 contained in the application form of the Wer Risk Scheme is inconsistent with Section 2 (h) (ii) of the Ordinance which provides that goods in transit do not include those goods which are in transit by a ship that sailed from the port of shipment before coming into force of this Ordinance. This exception seems to be based on the consideration that the ship carrying the goods to port of Pakistan and sailing before the date of the Ordinance are generally insured against the War Risk. Hence instruction No,1 will be read as excluding the goods which are in transit having been despatched by ship that had sailed from the port of shipment before the date of coming into force of the Ordinance and not to goods despatched from a place inside Pakistan to a place inside Pakistan. If the instruction No,1 is meant to apply to the goods despatched before 3-12-1971 by Railway from a station in pakistan to a station in Pakistan, then the very purpose of this Ordinance will be frustrated because it provides for compensation for goods in transit which were destroyed due to the 1971 War which started on 3rd of December, 1971 and ended on 17th of December, 1971 and goods in transit destroyed on 3-12-1971 or within the short span of 15 days could not be expected to have been booked after 3-12-1971. Similarly it is ridiculous to conceive that a person who had booked his goods after start of war was to be compensated under this Ordinance if his goods in transit were destroyed by an act of 1971 War but not a person who had hooked his goods before 3-12-1971 although he had not even anticipated the risk in spite of the fact that premium were being forcibly recovered from him. Such an intention cannot be attributed to the framers of War Risk Insurance Ordinance, 1971 or Scheme thereunder. Similar view was taken by Dr. Tanzil- urRehman, J. In 1987 CLC 61 (Star Trading Company v. Pakistan Insurance Corporation) referred to above wherein reliance was placed on PLD 1961 (W.P.) Karachi 349 (Saleh Muhammad v. Traffic Manager), PLD 1962 (W.P.) Peshawar 51 (Kazi Abdul Kafil v. Zakir and another) and PLD 1972 Karachi 145 (Hirjina Salt and Chemical (Pak) Limited v. The Union Council Gharo and another). In the first case (Saleh Muhammad v. Traffic Manager) it was held that Bye-Laws framed under a statute may be treated as ultra wires if they are repugnant to the statute under which they were made. In the Peshawar case it was held that the rules and Bye-Laws are to be consistent with relevant statute and not to be repugnant to it or other laws in force. In the third case it was observed that there was no doubt that rules cannot prevail on the provisions of the statute and in case of inconsistency the statute must prevail and not the rules. The rulings cited by the defendants' counsel referred to above were also taken into consideration by Dr. Tanzil-ur-Rehman, J. And were held to be distinguishable from the present case for the same reasons.
7. So far as the second contention of the counsel for the defendant No,1 it may be stated that no doubt, ordinarily, insurance being contract of indemnity its consideration has to be paid before loss takes place and therefore if the person who is sought to be insured dies before the payment of premium or if the goods which are sought to be insured are destroyed before the payment there can be no insurance as there is nothing which is insurable. But this applies to the general law of insurance and not to a special or transitory law as the War Risks Insurance Ordinance 1971 was, which covers only certain specified casualties. Consequently special provisions have been made for compulsory payment of premium and for recovery of unpaid premium by coercive methods as arrears of land revenue etc, which provisions are quite unknown to general law of insurance.
8. Similarly the issuance of policy by the defendants on 4-3-1972 that is about after 3/1-2 months of cease-fire and acceptance of premium on that date in itself shows that the defendant No,1 was accepting the premium although he would be aware that either the goods which were being insured by them at that time would have been destroyed or would have completely survived the said risk as the war of 1971 was over by then. In the alternative it could be argued that if the insurance company was not being made liable for the goods that were lost by enemy bombardment prior to payment of premium or issuance of policy. On what analogy were they entitled to recover the premium after 17-12-1971 and that too by coercive methods for the goods in transit which were not destroyed due to that war and were thus under no more risk of destruction by an act of that war after the cease-fire. It is admitted by Mr. A. Rauf from the Bar that forforced recovery of premium was being made till July 1972.
9. I am therefore in full agreement with the arguments of the counsel for the plaintiffs and in turn with the reasoning given by Dr. Tanzil-ur-Rehman, J. In the ruling referred to above.
10. The claim in this suit finds support from the report of the Surveyors c appointed by the defendants and the evidence which has been produced by the plaintiffs. There is no evidence in rebuttal on this point from the side of the defendants.
11. I therefore decree the plaintiff's suit for Rs,4,93,256.14 against the defendants jointly and severally.
I also allow interest at the rate of 10% per annum from the date of the suit till realization the decretal amount. The costs of the suit shall be borne by the defendants.