1. AMANULLAH KhAN YASINZAI, J.---This 2nd appeal is directed against judgment and decree dated 29-8-1996 passed by learned Majlis-e-Shoora Khuzdar whereby the judgment and. Decree dated 24-5-1995 passed by Qazi Uthal was upheld.
2. The facts in brief are that the respondent Fahim-ul-Haq Proprietor Cancan Enterprises filed a suit in the Court of Qazi Uthal against the Eastern Federal Union Insurance Company Ltd. For recovery of Rs.48,60,000 on account of loss, suffered due to heavy rains and floods in Lasbela district on 23-11- 1989. It is averred in the plaint that the respondent has Manganese ore mines in Sanjero district Lasbela. The respondent received an order from Korea for export of manganese ore. For the said purpose he obtained a loan on 5th November from Habib Bank, Cloth Market Branch, Karachi and as a surety the mines and Manganese ore was mortgaged with the bank. On the direction of the Bank the mortgaged property was insured with the appellant to the extent of Rs.60,00,000 on 5-11- 1989 vide Insurance Policy No.54303232/I1/89.
3. It is alleged that there were heavy rains in District Lasbela on 23-11--1989 and the flood water washed the Manganese ore which had been excavated and dumped at the store of the respondent. The respondent informed the appellants about the said loss and filed a claim.Of Rs.48,60,000. The claim was repudiated/rejected by the appellants on 10-1-1991.
4. The respondent filed a suit for recovery of Rs.48,60,000 in the Court of Qazi Uthal on 29-4-1992. The appellants filed an application challenging the jurisdiction of the Court in view of clause 21 of Insurance Policy. The said application was rejected by the learned Qazi on 17-8-1992. Thereafter, the appellants filed a w/s on 2-6-1992 challenging the jurisdiction of the Court of Qazi Uthal and raising legal objections regarding maintainability of the suit.
5. The learned Qazi after recording evidence of both the parties decreed the suit of respondents vide judgment and decree dated 19-2-1994. On appeal the case was remanded by the learned Majlis- e-Shoora Khuzadar vide judgment and decree dated 15-11-1994. After remand the learned Qazi again decreed the suit vide judgment and decree dated 24-5-1995. Being aggrieved from the same appellants filed an appeal before Majlis-e-Shoora Khuzdar on 20-6-1995. The learned Majlis- e-Shoora dismissed the appeal vide judgment and decree dated 29-8-1996.
6. The appellants have filed this sgcond appeal before this Court. Heard Mr. Muhammad A.I Saeed and Mr. Naheem Ahmed, Advocates for the appellants and Mr. H. Shakeel Ahmed, Advocate for the respondents.
7. As this is the second appeal, Mr. Muhammad A.I Saeed confined his arguments on the points of law only. The learned counsel urged the following contentions:- (1)That the suit should have been filed within three months from the rejection of the claim by the appellants in view of clause 13 of the Insurance Policy.
8. (2)That Habib Bank, Cloth Market Branch was one of the beneficiaries of the insurance policy and in absence of Haibib Bank the Plaintiff was not entitled to file the suit and receive the insurance amount alone.
9. (3)The Qazi Court at Uthal had no jurisdiction to try the suit as under clause 21 of the Insurance Policy it was agreed that all the claims will be settled in Karachi and all legal proceedings in respect of any such claim will be instituted in Karachi only.
10. Reverting to the first contention that suit should have been filed within three months from the rejection of the claim as agreed in clause 13 of the insurance policy, it is appropriate to reproduce clause 13 of the Insurance Policy: "If the claim be in any respect fraudulent or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or one any acting in his behalf to obtain any benefit under this policy; or, if the loss or damage be occasioned by the willful act or with the connivance of the insured or if the claim be made and rejected and an action or suit be not commenced within three months after such rejection or (in case of an arbitration taking place in pursuance of the 18th condition of the policy within three months after the arbitrator or arbitrators or umpire shall have made their award, all benefit under this policy shall be forfeited."
11. Mr. Muhammad A.I Saeed, learned counsel for the appellants argued that in view of the aforesaid condition the suit was not maintainable. Learned counsel urged that the respondent should have filed the suit within three months from the date of rejection of the claim. Mr. H. Shakeel Ahmed, learned counsel for the respondent argued that the said clause is in violation of sections 23 and 28 of the Contract Act. Furthermore, the learned counsel stated that the appellants rejected the claim of the respondent on 10-1-1991 but the report of the surveyors was filed later on; as such the rejection is based on mala fides. The learned counsel tried to argue that the suit is within the specified limit as the serveyors gave their report on 4-1-1992. Learned counsel for the appellant in support of his contention relied on the following case-law:-- (1)Baroda Spinning and Weaving Company Ltd. v. Satyanarayan Marineand Fire Insurance Company Ltd. AIR 1914 Bombay 225. .
12. (2)Girdharilal, Hanumanbux v. Eagle Stare and British Dominions Insurance Company Ltd. 27 Calcutta Weekly Notes page 955.
13. (3)4 Rainea & 1 v. Burma Fire and Marine Insurance Company Ltd. 3 Rangoon Series 383.
14. (4)Sargodha Central Cooperative Bank Ltd. And another v. New Hempshire Insurance Company Ltd. PLD 1982 Karachi 627.
15. (5)A.I Pipe Industries v. Universal Insurance Company Ltd. And 2 others PLD 1989 Lahore 390.
16. From the abovecited cases it is evident that in India during pre--partition as well as post partition, various Courts have consistently held that a clause limiting the period of the Insurance Companies Liability is not hit by sections 23 and 28 of the Contract Act and is legal and enforceable. It is not necessary to discuss all the cases cited above as in A.I Pipe Industries v. Universal Insurance Company, the said question was resolved by a Full Bench of Lahore High Court discussing the judgments of pre-partition and post partition. Their Lordships while resolving the said issue have also referred to English judgments. The relevant portion of the judgment at page 395 (ibid) given by Mr. Ubaidullah Khan Judge as he then was is as under:- "The question for determination before the Full Bench referred to by a Division Bench is whether or not the conditions of contract of insurance incorporated in the policy of insurance against the risk of fire or lightning providing for
(a) forfeiture of all benefits under the policy if no action or suit is commenced within three months of the rejection of the claim (if made) or (in case of an arbitration taking place) after the arbitrator or arbitrators or umpire shall have made their award" and stipulating that '(b) in no case whatever is the insurance company to be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is subject or pending action or arbitration" are void under section 28 of the Contract Act, 1872. "
17. The conclusion drawn by Mr. Ubaidullah Khan, Judge is reproduced as "When we look at the real meaning of the relevant clauses of the agreement in question, the object they intend to achieve and the intention of the parties behind them it brings us to the one and the only conclusion that the plaintiff is debarred for ever'after the expiry of the stipulated time of (three or twelve months) which falls short of the statutory time of limitation from enforcing his rights by an action in a Court of law or elsewhere. It is immaterial whether the words expressing forfeiture of benefit or rights on the expiry of three months after rejection of claim or words limiting the time within which rights can be enforced or used; the not result and effect on the either is that the plaintiff's choice to enforce his rights is limited to the period of three (or twelve) months and he cannot avail of the extended period of limitation allowed by law. The contract looked at and interpreted as a whole leads to the only conclusion that the time for enforcing plaintiff's rights has been curtailed. Forfeiture of his equivalent to fixing the period within which he can enforce his rights within the bounds of three months. The distinction between the two phrases forfeiture of benefit of rights upon the expiry of three months or limiting of time to three months within which one could enforce his rights noticed in Baroda Spinning & Weaving Company's case is just of phraseology and artificial; the two lead to the same destination of blocking the way of the plaintiff to enforce his rights in a Court of law. It is not permissible to frustrate and nullify the object of law by employment of selected phraseology in a contract because if such a course were to be allowed to be adopted it would amount to giving a licence to the parties to contract out of the Limitation Act which is otherwise forbidden by law to do. By trickery of words no one can be permitted to get at where the law forbids to tread. It would be unconscionable to rob an insured of his statutory right to bring an action within the much larger period of three years as envisaged by Article 86 of the First Schedule of the Limitation Act, 1908, and instead to force him to exercise his right within the much shorter period. A contract, like the one in hand, which essentially reduces the statutory period of limitation for enforcing one's rights in the light of section 28 of the Contract Act.
43. The decision in Baroda Spinning and Weaving Company's. Case has been frequently questioned and debated, and accepted not with absolute veneration, as is apparent from the judgments of the High Courts of Pakistan and India referred to above. Nevertheless, the all important question which now arises for consideration is whether the interpretation of the law declaring the legality of the conditions of contract of insurance under review which originating from this decision has held the field for almost three quarters of a century should be disturbed.
18. Successive affirmations by judicial pronouncements have made it assimilate in the main stream of the law of insurance and have reinforced the business community's belief in its correctness. The people involved in the fire and lightning insurance business, insurers as well as insured acceptably of above average means knowledge -and intelligence and generally have ready access to legal advice. They can very well be presumed to be aware of the implications and effects of various clauses of insurance contract laying restrictive time limits for making claims and limitating actions.
19. They have been entering into contracts, settlement and fiscal arrangements on the basis of the law propounded by the Courts. No serious inconvenience or injustice would flow from allowing the law to stand rather its overruling would be productive of inconvenience. In order to ensure certainty and consistency in the law and to preserve the sanctity of precedent as a good source of law it would be eminently just and proper to follow the principle of stare decisis as in such cases the Superior Courts to quote just a few of the distinguished pronouncements Joh Barin v. Richard Fothergill LIZ 7 HL 158. The London Street Tramways Company Ltd. v. The London County Council (1898) AC 375) Manager Jammu and Kashmir State Property in Pakistan v. Khuda Yar PLD 1975 SC 678; Pir Bakhsh v. The Chairman Allotment Committee PLD 1987 SC 145 have done. Consequently despite the views expresses above I would be reluctant to cause the least disturbance to the prevailing state of law. "
20. "It is equally important not only to keep secure and intact the contracts but also to sanctify the covenants entered into by the parties with their consent freely and independently. It would, therefore, be seen that the judgment delivered and holding the field for the last 75 years upholding the clauses contained in Fire Insurance Policies was real, sound and cogent. Moreover, the added reasons viz. Non-applicability of therelevant article of the Limitation Act to the policies in question put the matter beyond controversy."
21. From the perusal of above cited judgments relied upon by the learned counsel for appellant it is revealed that there has been a judicial consensus on this point. Adopting the doctrine of stare decisis we see no reason to deviate A from the said view. We hold that clause 13 was valid and it did not contravene the provisions of sections 23 and 28 of the Contract Act. In the case in hand the claim of the respondent was rejected on 10-1-1991 and the suit was filed on 3-5-1992 after more than 12 months. In view of whatever has been discussed above, the suit filed by the respondent was time-barred and not maintainable.
22. Reverting to the 2nd Contention Mr. Muhammad A.I Saeed argued that since Habib Bank was one of the beneficiaries without impleading Habib Bank the suit was not maintainable and stated that in view of section 45 of the Contract Act, the plaintiff alone was not competent to file the suit. The learned counsel relied on the case M/s Bengal Wool House and 2 others v. Standard Insurance Company Ltd. Reported in 1989 CLC 839, Mr. H. Shakeel Ahmed, Advocate appearing on behalf of the respondent argued that the bank was not a necessary party and even other-wise the representative of the Bank appeared -as a witness in the said case. As such non-impleading the Bank was not fatal to the suit.
23. Perusal of the case of Messrs Bengal Wool House would show that Insurance Policy was issued in favour of M/s. Bengal Wool House and Standard Bank Ltd. But the suit was filed only by Bengal Wool House. It was held by his Lordship Mr. Saleem Akhtar Judge as he then was, as under:- "In the present case the defendant No. l had issued the policies in the. Joint names of the plaintiff No. 1, and Standard Bank Ltd. The policy was subject to Bank mortgage clause. By virtue of 'Bank' mortgage endorsement any amount payable under the policy was to be paid to the Standard Bank Ltd. The plaintiffs have not alleged in the plaint nor any evidence has been produced to prove that the mortgage debt has been satisfied or that the Bank has assigned the right to claim benefits under the policy to them. No explanation has been offered by the, plaintiffs for not joining the Bank as a party. D.W., Muhammad Ilyas has produced two letters Exhs.6/1 and 6/2 by which the Bank had claimed the amount payable under both the policies. These documents have been exhibited without any objection. In these facts and circumstances the plaintiffs are not entitled to file the suit in their name alone. My finding is in the affirmative. "
24. Now coming to the 3rd proposition of the learned counsel for the appellant that it was agreed in respect of settlement of claims and filing of suits as under:- 'It is hereby declared and agreed that in the case of any claim arising in respect of the property hereby insured, the same shall be settled and paid in Karachi and the entire cause shall also be deemed to rise in Karachi and further that all legal proceedings in respect of. Any such claim shall be instituted in the competent Court in the city of Karachi only.'
25. The learned counsel stated that in view of the aforesaid clause the learned Qazi had no jurisdiction to try the suit; the learned counsel argued that where two or more Courts have jurisdiction to try a suit and if the parties agree that disputes between them should be tried at one place rather than the other, such agreement is legal and in no way contrary to any provision of law or public policy.
26. Mr. H. Shakeel Ahmed, Advocate stated that no objection was taken regarding jurisdiction of the Court. Appellants have waived their right and submitted to the jurisdiction of the Learned Qazi. In support of his contention learned counsel for the appellants relied upon the following two cases: (1)State Life Insurance Company v. Muhammad Saleem 1987 SCMR 393.
27. (2)M/s. Kadir Motors (Regd.) Rawalpindi v. National Motors LtdKarachi 1992 SCMR 1174.
28. "We have considered the arguments of the learned counsel for the parties. Under section 9 of the Code of Civil Procedure the Civil Courts have jurisdiction to try all suits of a civil nature excepting the suit of which their cognizance is either expressly or impliedly barred. Under section 20 of the Code of Civil Procedure every suit is to be instituted in a civil Court within the local limits of whose jurisdiction the defendant resides or carries on business or where the cause of action wholly or in part arose. Under section 28 of the Contract Act any agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract by the usual legal proceedings in the ordinary Tribunals or which limits the time within which he may thus enforce his rights, is void to that extent. It is evident from a plain reading of these provisions that there is no absolute exclusion of jurisdiction under section 9 or section 20 of the Code of Civil Procedure nor there is any violation of the provisions of section 28 of the Contract Act when two or more Courts have jurisdiction to try a suit and the parties mutually agree to choose or take their dispute to one of them. The Civil Courts try their jurisdiction under the Code of Civil Procedure. If they do not possess such jurisdiction under the Code it cannot be conferred on them through a mutual agreement of the parties to a dispute. But in a situation where two or more Courts have jurisdiction to try a suit under the Code of Civil Procedure then an agreement between the parties that any dispute arising between them shall be tried only by one of such Courts could not be considered contrary to public policy as it would neither contravene the provisions laid down in section 28 of the Contract Act nor would it violate in any manner the provisions of section 9 or section 20 of the Code of Civil Procedure. "
29. "To wriggle out of this agreement, the learned counsel for the appellant placed reliance on section 28 of the Contract Act which provides that every agreement in restraint of legal proceedings is void. We have minutely read the said provision of law and could not find anything therein to restrain the parties from entering into an agreement to get their disputes decided by a particular Court of competent jurisdiction for their convenience and avoidance of necessary objections to - the territorial jurisdiction of Courts. The intention behind the said provision of law is that all those agreements which restrain a person to enforce his rights under a contract by usual legal proceedings in the ordinary Tribunals are void. It obviously implies that a party cannot be restrained to enforce his rights in ordinary Court of law but if by mutual agreement between the parties a particular Court having territorial or pecuniary jurisdiction is selected for the determination of their dispute, there appears to be nothing wrong or illegal in it or opposed to public policy. "
30. Since we have held already that the suit filed by the plaintiff-respondent was not maintainable so it will be futile to direct the plaintiff-respondent to approach a Court of competent jurisdiction at Karachi.
31. For the above mentioned reasons the appeal is accepted and the judgments and decrees dated 24-5-1995 and 29-8-1996 passed by Qazi Uthal and Majlis-e-Shoora respectively are set aside. The suit filed by the respondent is dismissed. However, parties are left to bear their own cast.