SABIHUDDIN AHMED, J.--- These four appeals arise out of a common judgment of a learned Single Judge of this Court, dated 22-12-1987 in Suits Nos.781 of 1981 and 32 of 1982 whereby each of the suit was decreed against the common defendant No,1 in the sums of Rs,1,230,000 and Rs,158,328 respectively, and was dismissed against the common defendant No,2. The facts of the two suits were almost identical and may be briefly mentioned.
2. The plaintiffs in the two suits (hereinafter referred to as owners) imported certain goods which were stored in the bonded public warehouse of the defendant No,1 (hereinafter referred to as the warehouse keeper) who had insured all the goods stored in their warehouse (including those belonging to the owners) with the defendant No,2 (hereinafter referred to as the insurers).
Apparently this was done pursuant to a Circular No,2 of 1979, dated 22-1-1979 issued by the Collector of Customs which reads as under:-- "All the Bonders holding public/private Bonded warehouses are advised to furnish a comprehensive Insurance Cover for the goods lying in their warehouses. This should include protection against fire, theft, pilferage and damage due to floods and pledged with the Collector of Customs, Appraising. The Insurance Policy should be for C&F value of the goods warehoused including element of Customs duty and other taxes and should be deposited in the Bond section of this Customs House within thirty days from the date of issue of this Circular. Failure to do so within the specified period will result in the cancellation of their licenses without any further notice."
Though copies of the Insurance Policies have not been placed on record, they seem to cover, as contended by the owners and not disputed by the other parties "the property of the insured or held in trust by them. Admittedly premium was initially paid by the warehouse keeper but subsequently the owners were charged the premium by warehouse keeper for the value of their goods so insured.
3. On 21-5-1981 a fire broke out in the warehouse as a result of which all the goods belonging to the owners were destroyed. According to the owners they lodged their respective claims with both the warehouse keeper and the insurer and upon failing to receive satisfactory response, filed these two suits. The above facts are not seriously disputed. In the two suits declaration to the effect that the plaintiffs were entitled to recover specific sums of money, jointly and severally from the two defendants (warehouse keeper and insurer) was prayed for and costs and interest was also claimed. In Suit No,32 of 1982 it was also prayed that the insurer be restrained from making payment of the amount claimed by the owner to the warehouse keeper.
4. Apart from rising certain technical objections as to maintainability of the suits, the warehouse keeper mainly contended that the fire was only accidental and not on account of their negligence and as such they were not liable for the loss sustained by the owners under section 116 of the Customs Act. The main thrust of the insurers contention was that there was no private of contract between them and the owners and as such no liability could be attached to them. It may be stated here that admittedly the warehouse keeper have also filed a Suit bearing No,123 of 1982 for recovery of the same insured in respect of goods covered by the insurance policy.
5. Both these suits were consolidated and tried together though Suit No,123 of 1982 filed by the warehouse keeper against the insurer proceeded separately. The following issues were framed:--
(1) Whether the suit is incompetent and not maintainable as against the defendants?
(2) Whether the suit is barred by and under sections 21, 42, 54 and 56 of the Specific Relief Act?
(3) Whether the plaintiff's claim is untenable and exaggerated?
Evidence was led by the plaintiff/owner, but the defendants ice, the warehouse keeper and the insurer only preferred to rest their case on legal pleas. The learned Single Judge decided the case by an elaborate judgment, dated 27-2-1988, after discussing the arguments of the parties decreed Suit No,32 of 1982 for the amount of Rs,1,58,328 and Suit No,781 of 1982 for Rs,12,51,525 against the warehouse keeper. As against the insurer, both suits were dismissed on the ground that there was no private of contract between the owner and the insurer and that matter does not fall within the exceptional categories of cases where even a stranger to a contract could sue for the benefit reserved for him under the contract.
6. The owners as well as the warehouse keeper appear to be aggrieved by the aforesaid judgment.
In H.C.As. Nos.64 of 1988 and 73 of 1988, the owners have assailed the finding of the learned Single Judge to the extent to which the suit against the insurer was dismissed. In H.C.A. Nos.88 and 89 of 1988, warehouse keeper has called in question the respective decrees against him in the two suits contending that he was not liable.
7. Mr. Amanullah Khan, learned counsel for the appellant/owners in the first two appeals has argued that the insurance policy in question was obtained to protect the insurable interest of the owners of the goods held in trust by the warehouse keeper. Even the premium relating to the extent of the value of the goods had been charged by the warehouse keeper from the owners. They being beneficiaries of the contract of insurance were entitled to sue upon it irrespective of the fact that technically they were not parties to such contract. Moreover, he contended that instead of insuring the goods themselves the appellants allowed the warehouse keeper to insure such goods and therefore, the latter would be treated as an agent. He referred to para.12 of the impugned judgment, wherein the learned Single Judge himself, after referring to certain Indian precedents summed up the correct legal position in the following words:-- "In a case reported in AIR 1942 Cal. 251 it is held, that there are two exceptions to the general rule that a stranger to contract which reserves a benefit for him cannot sue upon it. The first exception is where the contract between the parties is so framed as to make one of them as trustee for other.
In such case latter may sue to enforce the trust in his favor and no objection can be taken to his being stranger to the contract. The other exception covers those cases where promise, between whom and the stranger, no private exists, by his conduct and by acknowledgement or otherwise constitutes himself as agent of the third party. It was held, that in the case coming in the first exception, the third party is allowed to sue entirely on the footing that the instrument created a trust in their favor. Similar view was taken in AIR 1973 Cal. 401 wherein it was held, that though the common law principle is generally applicable in India with the effect that only the party to the contract is entitled enforce the same, but where an obligation in equity amounting to trust arising out of contract exists, the beneficiary has a right to sue."
8. Learned counsel, nevertheless, contended that the learned Single Judge went wrong in law in proceeding to hold further that warehouse keeper was neither an Agent nor a trustee of the owner so as to bring the case within the recognized exceptions to the general rule whereby even a stranger to a contract has a right to sue. Indeed the legal proposition so ably stated in the above quoted excerpt from the impugned judgment is entirely unexceptionable. The question whether the warehouse keeper/defendant No,1 could be considered an agent or a trustee however, requires a somewhat detailed examination.
9. On the question of agency the learned Single Judge has very rightly observed that the relationship of principal and agent need not be expressly constituted but can be brought about by implication of law on a particular situation arising or from the necessity of the case. He has further referred to the contention that implied authority of the warehouse keeper to both insurance of the goods can be inferred from the fact that the owners actually paid or agreed to pay the premium to the extent of the value of their goods and, therefore, the owners could enforce the contract of insurance under section 226 of the Contract Act. The learned Single Judge, however, was persuaded to hold that the warehouse keeper did not insure the goods under instructions from the owners but only pursuant to a circular from the Collector of Custom (quoted in para.2 above). He, therefore, concluded that the warehouse keeper charged the premium from the owners only by way of consideration for keeping the goods in an insured warehouse.
10. To examine the import of the above circular it may be pertinent to keep into consideration the statutory obligations of a warehouse keeper in respect of safe custody of goods under section 116 of the Customs Act, which reads as under:-- "116. The warehouse keeper in respect of goods lodged in a public warehouse, and the licensee in respect of goods lodged in a private warehouse, shall be responsible for their due receipt therein and delivery therefrom, and their safe custody while deposited therein, according to the quantity, weight or gauge reported by the officer of customs who has assessed such goods, allowance being made, if necessary, for deficiency in quantity on account of natural loss as provided in section 110: Provided that no owner of goods shall be entitled to claim from the appropriate officer or from any keeper of a public warehouse, compensation for any loss or damage occurring to such goods while they are being passed into or out of such warehouse, or while they remain therein, unless it be proved that such loss or damage was occasioned by the willful act or neglect of the warehouse keeper or of an officer of customs."
It is quite clear from the above quoted provision that a warehouse keeper is not required to insure the goods entrusted to him by the Act and it is evident from the proviso that to keeper of a public warehouse is only liable for loss or damage to goods arising out of his own act or negligence.
Evidently he is not required to indemnify the owner against accidental losses occurring while the goods were in his custody.
11. It, therefore, appears that the circular in question might have been issued by way of an advice in the general public interest to protect property stored in bounded warehouse but it was not, strictly speaking relatable to the statutory obligations of warehouse keeper. Obviously, when the law only makes the latter liable to the extent of loss caused by own negligence, the Collector could not through a circular direct him to obtain an insurance cover in respect of goods in which he had no interest, at his own cost and seek indemnity for the owner against accidental losses.
12. It may also be pertinent to refer to the standard No Objection Certificate issued by the warehouse keeper filed as Armature's "A" to "C" in H.C.A. No,88 of 1988. These certificates contained the condition of storage and inter alia, provide that the goods would be stored at the sole risk of the owners and that the owners have represent that they are fully insured. The facts nevertheless remain that the terms of the circular were adhered and honored by all parties. The warehouse keeper despite being under no legal liability obtained an issuance cover for the goods in which the owner and not the keeper had an insurable interest against accidental losses as well. The premium was paid by the owner himself. Therefore, even if, there was no specific direction by the owner to obtain such policy, by agreeing to pay the premium the act of the warehouse keeper was apparently ratified. Such ratification by the owner of something done to protect his own bona fide interests could also create the principal agent relationship in terms of section 196 of the Contract Act. It appears that this aspect of the case escaped the attention of the learned Single Judge.
13. With reference to the second exception the learned Single Judge proceeded to hold that the warehouse keeper was a bailey and not a trustee of the owners of the goods. In doing so he relied on the definition of bailment as contained in section 148 of the Contract Act and that of trustee in section 3 of the Specific Relief Act and went on to hold that a trustee was only a person in whom the trust property is absolutely vested. Since the title to the goods in the instant case was not expressly or impliedly transferred to the warehouse keeper, the latter could not be considered as trustee and, therefore, the exception of the general rule was not attracted.
14. with profound respects to the learned Single Judge we find ourselves unable to subscribe to the above view. In the first instance, it is settled law that unless a particular expression is defined in a statute it must be given its ordinary dictionary meaning. If authority is needed one may refer to a Division Bench judgment of this Court in the case of Kazi Abdul Majeed v. Province of Sindh PLD 1976 Kara. 600. Moreover, the definition of an expression as contained in one statute can be used for the purpose of interpreting that expression in another law unless the two statutes are in pair material. It would, therefore, be entirely inappropriate to refer to the definition of the expression trust as occurring in the Specific Relief Act for the purpose of construing a principle of Contract Law.
Moreover it appears that the learned Single Judge overlooked the fact that the definition of the expressions "Trust" and "Trustee" occurring in section 3 of the Specific Relief Act are contained in the following language:-- "Trust includes every species of express, implied or constructive fiduciary ownership; trustee includes every person holding expressly, by implication, or constructively a fiduciary character".
(Underlining by us)."
It is evident from the bare reading of the above that the word "includes" as distinguished from the word "means" signifies that the definition is not - exhaustive. Moreover, the expression "trustee" includes any person holding a fiduciary character whether expressly or constructively.
15. If resort to provisions of some statute was necessary to determine the import of the expression "trust", perhaps the only relevant law was the Trusts Act, 1882, which inter alia deals with the creation of private trusts and rights and obligations of trustees. Sections 5 and 6 of the Act prescribe the mode in which trusts are created. Chapter 9, however, deals with obligations in the nature of trust and sections 94 and 95 appearing in this 'Chapter reads as follows:-- "94. In any case not coming within the scope of any of the preceding sections, where there is no trust, but the person having possession of property has not the whole beneficial interest therein, he must hold the property for the benefit of the persons having such interest, or the residue thereof (as the case may be),to the extent necessary to satisfy their just demands.
95. The person holding property in accordance with any of the preceding sections of this Chapter must, so far as may be, perform the same duties, and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefits he holds it:"
16. A reading of the aforesaid provisions would demonstrate that even where there is no trust in the strict technical sense, the mere possession of a property by a person not having the entire beneficial interest therein creates a constructive trust and the person holding such property is, by the mandate of section 95 subject to the same liabilities as if he were a trustee of the property for the person for whose benefit he holds it.
17. In the case of Allah Wasaya v. Sardar Shah PLD 1984 Lah. 59, there was a dispute over some property between the respondent Sardar Shah and one Mst. Amna Bibi. Litigation at the level of second appeal before the High Court was terminated through a compromise whereby the respondent's ownership as to the property was acknowledged by the legal heirs of Mst. Amna Bibi, but the respondent was bound to sell the entire land to the applicant Allah Wasaya who was a relative of Amna Bibi for an agreed amount. Upon failure of the respondent to affect such sale, the applicant filed the suit for specific performance and injunction, but the plaint was rejected on the ground that the applicant was not a party to the compromise agreement and had no locus standi to file the suit. After surveying the law relating to the doctrine private of contract and trust, the learned Single Judge held that though no trust in terms of strict requirements of sections 5 and 6 was created, the applicant, though not a party to the compromise, had clear beneficial interest in the property and an obligation in the nature of trust had been created in terms of section 94 of the Trust Act. In favor of the applicant and the respondent was a trustee thereof. His case, therefore, "clearly fell under recognized exception to the doctrine of private and he could. file a suit to enforce his rights of purchasing the land upon payment of the agreed amount.
18. In the above-context it may also be pertinent to refer to a couple of English cases. In Waters v.
Monarch Fire and Life Insurance Company 1856 VE&B 890 where the plaintiff was a warehouse keeper and had stored in his warehouse goods belonging to him as well as those belonging to his customers. He obtained a policy of insurance covering "goods in his warehouse and goods entrusted to or on commission therein". No charges were made to the Customers for insurance nor were they informed of the existence of such policy. The goods were destroyed by fire and while defendant-insurance company agreed to compensate the plaintiff for the loss of his own goods, they declined to do so as far as the goads of other customers were concerned. However, the Queen's Bench held that even though no charges for insurance were paid, a kind of voluntary trust had been created and equity will enforce such a voluntary trust. It was further observed that the expression "trust" was not used in a technical sense of passing legal interest in the property, but in the mercantile sense i,e, that the plaintiffs were accountable to the owners. One may pause here to mention that in the present case even premium for the insurance has been charged to the plaintiff/owner which makes the case better. The view taken in Waters case was approved by the House of Lords in the relatively recent decision in Hapbum v. A. Tomlinson (Hauliers) Limited 1966 A.C. 451. In this case the respondents were carriers of goods belonging to certain cigarette manufacturer and had insured them with the appellant, they were brought to the warehouse of the owner at night time, but the gates of the warehouse were not properly secured by the owners employees and resultantly they were stolen away during night before being unloaded. The respondent sued for the value of the goods but the appellant pleaded that under the policy they were only liable to indemnify the respondents to the extent of their own loss and since no loss had accrued to the respondents they were not liable to pay anything. Approving the above decision and holding that the policy in question covered goods and not, merely the liability of the respondent, the House repelled this contention.
19. In view of the above, we are of the view that the expression "trust" as used in the doctrine enunciated in para.7 above, enabling a beneficiary to sue without being a party to contract has been used in a broad liberal and not a technical sense. It covers obligations in equity amounting to trusts which are treated as constructive trusts even in the Trust Act. Otherwise, it would be highly inequitable to hold that while a person who transfers title to his property but only reserves certain benefits therein for himself may be able to enforce an obligation created by the other for his benefit, but would not be able to do so when he retains ownership rights for himself. In the circumstances we are inclined to hold that when the goods in question were in the possession of the warehouse keeper but beneficial interest remained vested with the owner an obligation in equity amounting to a trust was created and the matter was covered by one of the recognized exceptions to the private rule.
20. The learned Single Judge appears to have arrived at the opposite conclusion upon the consideration that the contract between the owner and the warehouse keeper was one of bailment. Indeed there can be no cavil with the proposition that the latter was a bailee of the goods in question. With profound respect however, we are unable to share the view that the concept of bailment are inconsistent with that of trust. The concept of bailment has been explained in Halsbury's Laws of England, Fourth Edition, Vol.!! page 1501, where bailment has been defined in the following words:-- "A bailment, properly so-called, is a delivery of personal chattels on trust, usually on a contract, express or implied, that the trust shall be duly executed, and chattels redelivered in either their original or an altered form, as soon as the time or use for, or condition on, which they were bailed shall have elapsed or been performed."
It would thus, appear that an obligation in equity amounting to a trust is implicit in every contract for bailment and a bailey of the goods is subject to the same obligations as a trustee. In view of the above we are unable to sustain findings of the learned Single Judge to the effect that the appellant/owner had no locus stand to sue respondent No,2. However, the extent of liability of such respondent would depend upon terms of the issuance policy and the question whether the contract of issuance was duly performed which is sub juice in Suit No,123 of 1982.
21. Coming to H.C.As. Nos.88 and 89 of 1992 preferred by the warehouse keeper, Mr. Iqbal Akhtar has mainly contended that under proviso to section 116 of the Customs-Act the appellant was only liable to compensate the owner of the goods for losses arising out of the appellants own negligence and not from Any accidental loss to the goods. He relied upon the proviso to section 116 of the Customs Act which reads as under:-- "Provided that no owner of goods shall be entitled to claim from the appropriate officer or from any keeper of a public warehouse, compensation for any loss or damage' occurring to such goods while they remain therein, unless it be proved that such loss or damage was occasioned by the willful act or neglect of warehouse keeper or of an officer of customs."
The learned counsel contended that the liability of the warehouse keeper having been defined by special law the learned Single Judge erred in deciding the question of liability on the basis of obligations arising under the ordinary law of bailment. He further submitted that in the absence of any specific allegation and evidence to the effect that the goods were destroyed owing to negligence of the warehouse keeper, the learned Single Judge erred in holding that the burden was upon the warehouse keeper to prove absence of negligence or that such negligence could be assumed to exist.
22. Mr. Iqbal Akhtar Khan is indeed correct to the extent that when a special law, i,e, Customs Act limited the liability of the warehouse keeper to a particular extent, the question could not be decided on the basis of the ordinary law of bailment. We have indeed noticed that the question of application of section 116 has not been examined by the learned Judge.
23. The matter, however, does not end here. Despite there being no statutory duty to compensate the owner for loss of goods owing to accidents during the period of bailment or to insure the goods against such risks, the fact remains that the appellant/warehouse keeper did obtain an insurance policy to cover, not only his own goods but also those held "in trust" by him, against accidental losses. The owner also agreed to pay his share of the insurance premium. This arrangement was made quite independently of the duties of a statutory bailee under the Customs Act. It arose out of a contract between the parties which was legal and enforceable. Assuming that the goods were destroyed through pure accident, the owner having paid the insurance premium covering such risk is indeed entitled to be indemnified. The warehouse keeper was indeed committed to compensate the owner in case the amount is disbursed by the insurer. He could have invoked the third party procedure under Rule 168 for determination of the liability of the latter. However, he chose to file Suit No,123 of 1992 for recovery of the total amount of sum assured against the respondent No,2/insurer.
Mr. Yawar Farooqui states that certain defenses have been taken up by the insurer and it is inter alia contended that the Insurance Company is not liable to pay on account of certain breach of the conditions of the contract of insurance on the part of the warehouse keeper. The record of the case is not before us and we are unable to comment. However, in case this is so, the insurance company may be absolved but the warehouse keeper might be liable to compensate the owner for breach of contract in failing to remit the premium received. It would, therefore, have been proper to try both the suits simultaneously so that the question of liability of the warehouse keeper or insurer could be finally decided.
24. In view of the above we would allow all the four appeals and remand the two suits to be tried by a learned Single Judge along with Suit No,123 of 1982. The learned Single Judge shall be free to allow parties to lead additional evidence in case he considers it necessary for disposal of the suits.