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Suits Nos. 252, 329 and 359 of 1973, decided on 21st August, 1986.
‑‑‑Ss. 2(f)(g) (h) & 8‑‑Terms, "good" "goods in transit" and "goods or property insurable under Ordinance" defined‑‑Such goods, held, would be compulsorily insurable.
‑‑‑S. 2(f)(g) & (h)‑‑Despatch of goods‑‑Goods booked on 3rd and 5th December, 1971, held, could not be deemed to have been despatched prior to December 3, 1971. [p. 68] C
‑‑‑S. 2(h)(ii)‑‑War Risks (Goods) Insurance Scheme, dated December, 1971‑‑Instruction No.l‑‑"Goods transit by ship" not covered by Ordinance XXXII of 1971‑‑Exclusion of "goods transit by ship", was based on consideration that ships carrying goods to Pakistan and sailing before date of Ordinance XXXII of 1971, would generally be insured against War Risks under General Insurance‑‑Pakistani goods in transit in same province were not excluded from operation of War Risks Scheme.
Saleh Muhammad v. Traffic Manager P L D 1961 (W.P.) Kar. 349; Qazi Abdul Kafil Khan v. Faqir and another P L D 1962 (W.P.) Pesh. 51 and Hirjina Salt & Chemicals Pak. Ltd. v. The Union Council Gharo and another P L D 1972 Kar. 145 rel.
‑‑‑ Rule of construction‑‑Where statute conferred power to make Rules, Bye‑Laws, or issue instructions, such Rules, Bye‑Laws of instructions, held, were to be consistent with provision of statute and not repugnant to statute itself or any other law in force.
Saleh Muhammad v. Traffic Manager P L D 1961 (W.P.) Kar. 349; Qazi Abdul Kafil Khan v. Faqir and another P L D 1962 (W.P.) Pesh 51; Hirjina Salt & Chemicals Pak. Ltd. v. The Union Council, Gharo and another P L D 1972 Kar. 145; The Province of West Pakistan v. Din Muhammad and others P L D 1964 S C 21 and Miss Naseek Kausar Arbab v. Government of Pakistan and 3 others P L D 1972 Kar. 563 ref.
‑‑‑S. 2(h)(ii)‑‑War Risks (Goods) Insurance Scheme, dated 5th December, 1971,, para. No.l‑‑Para. No.l of War Risks Insurance Scheme‑‑Vires of‑‑War Risks Insurance Scheme, para. 1 relating to goods other than goods imported into Pakistan which were in transit by a ship that sailed from port of shipment before coming into force of Ordinance XXXII of 1971, held, was inconsistent with S. 2(b)(ii) of Ordinance.
‑‑‑Ss. 2, 8, 9, 10, 11 & 13‑‑Insurance against risk‑‑Comparison with general insurance‑‑Mode of payment stated‑‑Insurance being contract of indemnity its consideration, held, was to be paid before loss takes place due to risk covered under Insurance Policy‑‑Goods, when already destroyed or lost, there could be no insurance, as there remained nothing which was insurable‑‑Such principle, however, would apply to cases under general law of insurance‑‑War Risks Insurance Ordinance being a temporary and special law would cover only a specified field‑ Basic idea of Ordinance was to establish War Risks Insurance Funds, so that in case of war casualties, claims could be paid out of such funds‑‑Where a person having taken policy of insurance failed to pay any instalment of premium thereon, he would be liable to pay, in addition to premium due from him, a specified surcharge.
‑‑‑Ss. 2(h)(i) & 20‑‑Unpaid premium‑‑Mode of realization‑‑Unpaid premium, held, could be realized by coercive method as arrears of land revenue‑‑General Law of Insurance would not be attracted in such cases.
‑‑Preamble‑‑Mode of interpretation of Ordinance‑‑War Risks Insurance Ordinance being in nature of beneficial legislation, held, should be interpreted liberally and in favour of public as far as possible. [Interpretation of statutes]
‑‑‑S. 2‑‑War Risks Insurance Policy‑‑Validity of‑‑War Risk Insurance Policy taken having been taken before loss had taken place and being a valid contract between parties, held, would be valid and binding on Insurance Corporation.
Hall and another v. Wilson and another (1939) 4 All E R 85; Moorgale Estates Ltd. v. Trower and Barstow (1940) 1 AKER 195; Oulu Osakayetio of Oudu, Finland v. Arnold Laver & Co and others (1940) 2 All ER 243; Eichengreen v. Mond and others (1940) 3 AUER 148; Rickards v. Forestal Lands, Timber and Railways Co. Ltd. Robertson v. Middows Ltd. Kann W.W. Howard Brothers & Co. Ltd. (1940) 3 All ER 62; John Barker & Co. v. Littman (1941) 2 ABER 537; J. Wharton (shipping) Ltd. v. Mortleman and another (1941) 2 All ER 261; Clan Lines Steemers, Ltd. v. Liverpool and London War Risks Insurance Association, Ltd. (1942)2 All ER 367; Re Jacone and Stedman's Contract (1942) 2 All ER 104; Larrinaga Steamship Co. Ltd. V.R. (1943) 1 All ER 450; Greenfield v. London's North Eastern Railway Co. (1944) 1 All ER 696; Billings v. Reed (1944) 2 All ER 415; Re Saffell (1945) 1 321; Akhal Line, Ltd. v. The liverpool and London War Risks Insurance Association Ltd. (1945) 2 All ER 694; Robinson and others v. Minister of Town and Country Plannings (1947) 1 All ER 851 and Pakistan Chrome Mines Ltd. Karachi v. The Enquiry Officer, War Risk Insurance and another P L D 1976 Kar. 673 ref.
‑‑‑S. 2(h)(ii)‑‑War Risk policy, payment of‑‑Where claims in suit found support from reports of surveyors appointed by Insurance Corporation and no evidence in rebuttal thereof was produced, suits were decreed in principal amounts as claimed with costs and interest from date of judgment till its realization.
Lari & Co. for Plaintiffs.
Khalilur Rauf & Co. and Ali Murtaza Hussain for Defendants.
Dates of hearing: 19th, 31st March; 14th April; 4th, 5th, 6th and 7th August, 1986.
These are three suits filed against the defendants by two different plaintiffs. These suits, though varied on points of facts in some respect, relate to common question of law and, thus, are disposed of by this judgment.
2. These suits relate to the recovery of certain amouns of claims under the War Risks Insurance Ordinance, 1971, (hereinafter called "the Ordinance"), making it obligatory for owners of goods insurable under its provision to take out policies of insurance against War Risks. The said Ordinance was promulgated on 5‑12‑1971, but was subsequently made effective from 3‑12‑1971 by War Risks Insurance (Amendment) Ordinance, XXXVII of 1972, promulgated on 12th August, 1972. By Notification No.SRO‑583(1) of 1971, dated 5‑12‑1971 issued under section 17 of the Ordinance, the Central Government of Pakistan appointed a number of Insurance Companies, including Cooperative Insurance Society of Pakistan Limited and Habib Insurance Company Limited, as its agents for purposes of issuing policies under the Ordinance. The Central Government by a further Notification No.SRO‑584(1)/71, dated 5‑12‑1971 issued under section 24 of the Ordinance delegated its powers under the Ordinance, including powers to meet its liability under the Ordinance, to the Pakistan Insurance Corporation the defendant No.2 in all these suits. The facts of these suits are briefly stated as under:
3. Suit No. 252 of 1973.‑‑ Plaintiff No.l was the consignee of two consignments each of 100 bales of Raw Cotton, booked by plaintiff on 3‑12‑1971 under Railway Receipt Nos. 821947 and 821950 for carriage by rail from Bahawalnager to Karachi. Plaintiff No.2 insured the said consignments, alongwith other consignments, against loss of damage by fire and lightening, with the Cooperative Insurance Society of Pakistan Limited (hereinafter called as "the Society") under their Fire Cover Note No. 2017, dated 4‑12‑1971, for a sum of Rs.3,30,000. Plaintiff as consignor being interested in the said consignments took out War Risks Policy No. B‑07624 in respect thereof from the Society, as agent of defendant No.l and paid primium for it. The said consignments, covered by Railway receipts, referred to above, were loaded in Wagon Nos. 61476 and 90846, which were attached to a Train for carriage to Karachi. When the said wagon reached Rohri Railway Station they were destroyed as a result of air raid by Indian warplanes, resulting in complete of the said consignments. The plaintiffs on receiving information of the losses of the consignments in suit informed the Society, who advised them to lodge the claim for the losses with defendant No.l. Accordingly, plaintiff No. 1, being the consignee and endorsee, lodged a claim for the said losses with defendant No.l alongwith the relevant documents. The claim was, however, repudiated by defendant No.l on the plea that the goods having been despatched from the factory of plaintiff No.2 before 5‑12‑1971 could not be covered under the War Risks (Goods in Transit) Insurance Scheme prepared under section 4 of the Ordinance.
4. Suit No. 329 of 1973.‑‑ The plaintiffs own and possess a factory at Dhoronaro, District Tharparkar, Sind, for ginning and pressing cotton. The plaintiff, as alleged, kept huge stocks of ginned and/or unginned cotton (Phutty) loose and or in bags and/or in Boras, cotton fully pressed bales and/or Bardana and/or cotton seeds in and outside the compound of the said factory and/or in process in Roller Gin House and/or Sawgin House and/or openers and/or Bhandis and/or Press House. The stocks wee insured by the plaintiffs against loss or damage by fire and lightening with the Habib Insurance Company Ltd. (hereinafter referred to as the 'Insurance Company' under various policies issued by them. The plaintiffs, being owners of the said stocks, also insured the same for Rs.35,80,000 with defendant No.l through Habib Insurance Company Ltd., as agent of defendant No.l against War Risks and the War Risks (Goods) Policy No. BO‑12505 dated 23‑12‑1971 was issued to them.
5. On 6th and 14th December, 1971 the Indian War planes raided the factory and the areas surrounding it including the said Railway Plots and caused heavy loss to the said insured stocks. The plaintiff, on receiving information of the said losses, informed the Insurance Company as well as defendant No.2 about the said losses and lodged their claim under the said policy for Rs.12,91,197.53. Messrs Ishrat & Co. and Mustafa Hyder & Co. Licenced Surveyors were appointed by defendant No.2, or request of the plaintiffs, as surveyors to survey the said losses, who, as per their joint report assessed the losses at Rs.12,79,792.72. The said claim was, however, repudiated by the defendants.
6. Suit No. 359 of 1973.‑‑ The plaintiffs as alleged out of the goods stored, despatched 100 bales of cotton on 29‑11‑1971 under R.R. No. 777609 and 50 bales on 3‑12‑1971 under R.R. No.777623 for delivery at Karachi, and 50 bales of cotton on 5‑12‑1971 under R.R. No.777629 for delivery at Hyderabad. The plaintiffs had insured the said goods against loss or damage by fire and lightening with the Habib Insurance Co. Ltd., under the Fire Policy No.71/37797. Thereafter, the plaintiffs took out a policy No. B‑2189 issued by the Habib Insurance Co. Ltd., as agents of defendant No.l under the said Ordinance. The said consignments covered under several railway receipts were loaded in wagon Nos.2626, 2630, 2674 and 1815, which were there after a tached to a train for carriage to Karachi. When the said wagon reached Mirpur Khas Railway Station, they were destroyed during the night of December 9/10, 1971, as a result of air raid by Indian war planes, resulting in total loss except that 26 bales which were salvaged. The plaintiff, on receiving information about the destruction of the said consignments, informed the Insurance Company, as well as defendant No.2 about the losses and also lodged claim for the said losses with defendant No. and submitted all the information and relevant documents to them. Messrs Ishrat & Co. and Mustafa Hyder & Co., Licensed Surveyors were appointed by defendant No.2, on the request of the plaintiffs, as surveyors to survey the said losses, who as per their joint report assessed the losses at Rs.1,16,246.57. The plaintiffs, however, after making allowance for the realization of the amount of the salvaged 26 bales, claimed a sum of Rs.99,634.37 from the defendants, who however, repudiated the same.
7. Issues were framed separately in each suit and the evidence, oral as well as documentary was led by the parties. However, on 31‑3‑1986 learned counsel for the parties made a statement at the bar that the issues framed in Suit No. 329 of 1973 will be deemed to be the issues framed in the other two suits, namely, Suit Nos. 252 of 1973
and 359 of 1973 except that issues Nos. 1, 4 and 5 were amended by consent. The issues in three suits, as consolidated and amended by consent of the parties are as under:‑
The issues are as:
"(1) Whether the goods in suit were insured against fire as alleged in Suit No.329/73 and whether the goods in Suit Nos. 252/73 and 359/73 were insured and 'goods in transit'
(2) Whether the goods in suit were compulsorily insurable under the War Risk Ordinance
(3) Whether the War Risk Policy was obtained after the loss had taken place, and is the policy invalid on that account
(4) Whether the War Risk Policy in suit was obtained by misrepresentation
(5) Whether the goods in suit suffered losses on account of bombardment by Indian War Planes
(6) Whether the plaintiff contravened any provision of the War Risk Ordinance
(7) Whether the War Risk Policy in suit is not binding contract between the parties
(8) What amount, if any, is the plaintiff entitled to recover from the defendants or any of them "
My findings on the above issues are as under:‑
This issue is not contested by the defendants as per statement of the learned counsel for them. My finding, therefore, is in the affirmative.
The provisions of section 8 of the War Risks Insurance Ordinance, 1971 providing for compulsory insurance of goods, reads as follows: ‑
(1) On or after such date as the Central Government may, by Notification in the official Gazette, specifiy, every owner of any goods or goods in transit insurable under this Ordinance shall take out a policy of insurance against war risks issued in accordance with the Scheme relating to such goods of goods in transit.
(2) The provisions of subsection (1) shall not apply.
(i) to goods insurable under this Ordinance, other than goods in transit referred to in sub‑clause (ii) of clause (h) of section 2, if and so long as the value of such goods does not exceed such amount as the Central Government may, by notification in the official Gazette, specify in this behalf, or
(ii) to goods of any description which the Central Government may by notification in the official Gazette, specify in this behalf."
The "goods" have been defined under section 2(f) of the said Ordinance' as any materials, commodities or articles which are insured against fire with any insurer registered in Pakistan. "The goods in transit" have been defined under section 2(g) as such goods as are being imported into Pakistan or are shipped or otherwise despatched from one Province to another or are in transit in the same province by Railways, inland steamer, barge or a goods vehicle. The provisions of subsection (h) of section 2 in relation to "goods or property insurable under this Ordinance" provides as under:‑
(i) in relation to any goods, means goods which are for the time being insured against fire with an insurer registered in Pakistan and includes‑‑
(a) any spares and stores and other consumable material kept in the premises of a factory for the unkeep, maintenance and running of the factory provided such material are insured against fire with an insurer registered in Pakistan;
(b) any materials, commodities or articles lying within the precincts' of a port or on barges or on ships and are intended either for export or for movement outside the port area in Pakistan for final disposal and are insured against fire with an insurer registered in Pakistan;
(ii) in relation to any goods in transit, means all goods which are imported into Pakistan or shipped or otherwise despatched from one Province to another or are in transit in the same Province by railways, inland steamer, barge or a goods vehicle, but does not include goods which are in transit by a ship that sailed from a port of shipment before the coming into force of this Ordinance:
Provided that no insurance cover shall be extended to goods carried in goods vehicles, barges and inland steamers unless a notification in this behalf is issued by the Central Government. (iii) In relation to any building ..........
(iv) in relation to any ship ............
(v) in relation to any ship .........
From reading the above provisions it is abundantly clear that the goods in Suit No. 329 of 1973 are goods within the meaning of subsection (f) of section 2 of the Ordinance and the goods in Suit No. 252 of 1973 and 359 of 1973 are "goods in transit" within the meaning of subsections (g) and (h) of section 2 of the Ordinance, which are compulsorily insurable under section 8 of the said Ordinance. Learned counsel for the defendants have also not seriously contested this position. My finding, therefore, on this issue is in the affirmative.
10. Issues Nos. 3, 6 and 7.‑‑ These issues are taken up together as they are interlinked. Learned counsel for the defendants has raised the following two contentions:‑
(i) firstly, that the plaintiffs are not entitled to claim any compensation for the loss alleged to have occurred in Suit Nos. 252 of 1973 and 359 of 1973 as the goods in transit were despatched before the Central Government put into operation the War Risks (goods in transit) Ordinance Scheme, i.e. 5th December, 1971; and
(ii) Secondly, that war Risks Policies were obtained after the loss had taken place and as such the loss is not covered by the said Policies.
11. In order to examine the above submissions it is deemed necessary to state first relevant facts of the above suits. In Suit No. 252 of 1973 two consignments, each of 100 bales of raw cotton, were booked by the plaintiff No.2 on 3‑12‑1971. The said consignments were attached to two wagons Nos.61476 and 90846, which were destroyed on 6‑12‑1971 at Rohri Railway Station as a result of air raid by Indian war planes. In Suit No. 359 of 1973, 100 bales of cotton were booked by railway by the plaintiffs on 29‑11‑1971 under Railway Receipt No.777609 and 50 bales of cotton on 3‑12‑1971 under Railway Receipt No.777623 for delivery at Karachi and 50 bales of cotton on 5‑12‑1971 under Railway Receipt No.777629 for delivery at Hyderabad. The consignment covered under Railway Receipt No.777609 was loaded in wagons Nos.2626 and 2630 and the consignment covered by Railway Receipt No.777623 was loaded in wagon No.2674 and the consignment covered by Railway Receipt No.777629 was loaded in wagon No.1815 which were thereafter attached to a train for carriage to Karachi. When the said wagons reached Mirpur Khas Railway Station, the goods were destroyed during the night of 9th and 10th December, 1971, as a result of the air raid by Indian war planes, except that of 26 bales. In Suit No. 329 of 1973 part of the goods was destroyed as a result of air raid on 6th December, 1971 and the remaining on 14‑12‑1971. In fact, the position regarding the loss, as admitted by the learned counsel for the plaintiff, is that except to the extent of the loss as occurred on 14‑12‑1971 in Suit No. 329 of 1973, all the goods had been lost prior to their making applications during December, 10‑14, 1971 for taking out insurance policies and paying premiums therefore. The policy in Suit No. 252 of 1973 bears the date as 29‑3‑1972, whereas in the other two Suits viz. 329 of 1973 and 259 of 1973 both policies bear the date as 23‑12‑1971. Thus, the policies were, of course in all the three suits had been issued much after the loss having occurred to the goods.
12. Now, reverting to the first contention, learned counsel for the defendants placed his reliance on paragraph No.l of the "Instructions" as contained in War Risks (Goods) Insurance, Scheme, published in the Gazette of Pakistan Extraordinary, 5th December, 1971, which reads as follows:‑
"1. The Central Government have put into operation as from the the War Risks (goods in transit) Insurance Scheme whereby the Government undertake to insure all goods in transit which are imported into Pakistan or shipped or otherwise despatched from one Province to another or are in transit in the same Province by railway, inland steamer, barge or a goods vehicle. The goods in transit which have been shipped or otherwise despatched before the aforementioned date shall not be covered. Goods in transit by inland steamer, barge or goods vehicle shall be covered only after a notification in this behalf is issued by the Central Government."
13. Looking to the factual side of the suits it appears that the goods in all the suits except the 100 bales in Suit No. 359 of 1973, could not be despatched prior to 3rd December, 1971, as the Railway Receipts denote that the goods were booked on 3rd and 5th December, 1971. It is only in respect of 100 bales in Suit No. 359 of 1973 that the said goods appear to have been booked on 29‑11‑1971 as per Railway Receipt but it seems difficult to say that the train carrying the said goods was started its journey before the promulgation of the Ordinance, i.e. on 3‑12‑1971. No record could be produced by the Railways as was stated by the Chief Train Clerk (Exh.l6) that relevant more than three years has been destroyed by Railways under the law.
14. However, the contention does not seem to be tenable in law. Section 2(h)(ii) of the Ordinance specifically provides that "in relation to any goods in transit" the definition as given in section 2(g) "does not include goods which are in transit by a ship that sailed from a port of shipment before coming into force of this Ordinance". This exception seems to be based on the consideration that the ship carrying goods to Pakistan and sailing before the date of the Ordinance, are generally speaking, insured against War Risks, as it may happen under General Insurance. Para. 1 of the Instructions will, therefore, be read as excluding the goods which are in transit by a ship that sailed from a port of shipment before coming into force of the Ordinance i.e. the 3rd of December, 1971. Admittedly "the goods in transit" in two Suits bearing No.252 of 1973 and 359 of 1973 are not the goods which have been imported into Pakistan or shipped or otherwise despatched. These are Pakistani goods. If the Pakistani goods in transit in the same province by railway are intended to be excluded from the operation of the said Scheme, on the railway starting its journey before the aforementioned date, the said paragraph will be liable to be struck down as repugnant to the main provision of law contained in section 2(h) (ii) of the Ordinance. Reliance has been placed by the learned counsel for the plaintiff on the cases reported as Saleh Muhammad v. Traffic Manager P L D 1961 (W.P.) Kar. 349, Qazi Abdul Kafil Khan v. Faqir and another P L D 1962 (W.P.) Pesh. 51 and Hirjina Salt & Chemicals Pak. Ltd. v. The Union Council Gharo and another P L D 1972 Kar. 145. In the first named case, it was, inter alia, observed by a Division Bench of this Court that bye‑laws framed under a Statute may be treated as ultra vires that they are repugnant that Statute under which they were made. In the second named case, it was observed by a Division Bench of Peshawar High Court that Rules and Bye‑Laws are to be consistent with relevant Statutes and not to be repugnant to other laws in force. In the 3rd named case it was observed by a Division Bench of this Court that "there may be no doubt that Rules cannot prevail on the provisions of the Statute by simply providing that the Rules shall be deemed to be part of the Statute and in case of inconsistency between them, the Statute must prevail but this is subject to the rule that after efforts having been made to reconcile them, the conflict is incapable of resolution".
15. On the other hand, the defendant's counsel placed his reliance on the cases reported as The Province of West Pakistan v. Din Muhammad and others P L D 1964 S C 21 and Miss Naseek Kausar Arbab v. Government of Pakistan and 3 others P L D 1972 Kar. 563.
16. I am afraid, both the authorities relied on by the defendants, counsel are of no avail, as at the moment, there is no avail that the administrative Instructions containing in the Memorandum issued by the authorities competent to alter or amend the rules are as effective and binding as statutory Rules, as observed by the Honourable Supreme Court P L D 1964 S C 21 and that Instructions regarding the admission conveyed in Prospectus cannot be disregarded as held in the Karachi case P L D 1972 Kar. 563. The question as involved in the present case relates to the inconsistency of the Instructions to the main provision of law which finds support from the cases relied on by the other side referred to above. Where the Statute confers the power to make Rules, Bye‑Laws, or issue Instructions, such Rules, Bye‑Laws or the Instructions must be consistent with the provisions of the Statute and not repugnant to the Statute itself or any other law in force. Para. 1 of the instructions in so far as it relates to the goods other that the goods imported into Pakistan which are in transit by a ship that sailed from a Port of shipment before coming into force of this Ordinance, is held to be inconsistent with section 2(h)(ii) of the Ordinance.
17. As regards the second contention, learned counsel for the defendants submitted that the Ordinance requires the plaintiff to make written application and also to pay the premium and that the goods must exist at the time of making an application for the issuance of Insurance Policy and pay the premium in full to enable the defendants to cover the risk. In other words, for an insurance to be effective, the subject‑matter of insurance must exist and that for assuming the risk the consideration i.e. the premium must be paid first. Applying the said principles, counsel for the defendants submitted that in Suit No. 252 of 1973, a letter from Railways, Exh.5/6 shows that the loss of goods took place on 6‑12‑1971, whereas the Insurance Policy Exh.C/3 Exh.13 shows that the premium was paid on 10‑1‑1972. Likewise in Suit No.359 of 1973 the goods were damaged between the night of 9th and 10th December, 1971, whereas the premium was paid on 13‑12‑1971. In Suit No. 329/73 admittedly the loss took place on two dates i.e. 6‑12‑1971 and 14‑12‑1971 but the premium was paid on or after 14‑12‑1971. In support of his contention that the subject matter of insurance must exist before the insurance policy is obtained, the counsel for the defendants relied on the case reported as Trans‑Ocean Asia v. Alpha Insurance Co. Ltd. P 'L D 1975 Kar. 33. Reliance was also placed by him on several passages from "General Principles of Insurance Law by E.R. Hardly Ivamy, Second Edition, appearing at pp. 23 and 146. The relevant passages read as under:‑-------
P. 23. Although the assured must have some interest in the subject matter to entitle him to effect an insurance in respect of it, it is not, as a general rule, necessary that he should specify in the contract, or even disclose to the insurers, either the nature or the extent of his interest."
"P. 146 The premium is the consideration which the insurers receive from the assured in exchange for their undertaking to pay the sum insured in the event insured against.
Any consideration sufficient to support a simple contract may constitute the premium in a contract of insurance. Thus, in the case of a mutual insurance association, the assured is, by the terms of the contract, liable to contribute towards making. good any losses which his fellow‑members may sustain, either instead of or in addition to a fixed periodical payment, and is entitled in his turn to have his own losses made good by them. His liability towards his fellow‑members in, therefore, the premium for his own insurance.
In the usual course of business, however, premiums are payable in money, and it is unnecessary to consider in detail any other form of premium."
He referred to MacGillivrary & Parkington on Insurance Law, Seventh Edition; page 361 paragraph 860, which reads as under:‑--------
"The premium is the consideration required of the assured in return for which the insurer undertakes his obligations under the contract of Insurance. It need not necessarily be a money payment. Thus, in the case of a mutual insurance society it may consist of the liability to contribute to a fund to indemnify other members of the society for their losses. The amount or adequacy of the premium in relation to the risks run is a matter for the insurer rather than a Court, but it has been said that the amount of the premium charged might be of assistance in determining what risks the insurer intended to run if the premium was assessed on a fix scale commensurate with the scope of the risk."
He also referred to a passage appearing at page 67 of the Law of Insurance by Raoul Colinvaux, Fourth Edition which reads as under:‑------
"Loss" of subject‑matter, insured. ‑‑Another limitation on the protection given by all insurance policies is the principle that the insurers are only liable for loss of, or damage to, the subject‑matter of the insurance.
Thus, the protection given by insurances on goods only extends to loss of, or damage to, the goods insured. Where goods were insured under a marine policy and they were held up in Paris while it was besieged, it was held that the assured was entitled to recover. It is well‑established that there may be a loss of the goods by a loss of the voyage during which the goods are being transported, if it amounts, to use the words of Lord Ellenborough, to a destruction of the contemplated adventure. But under a marine policy the adventure is insured, the insurance is not only an insurance of the goods but also an insurance of their safe arrival. Such cases have no application to non‑marine policies on goods. Thus, where the owner of timber, insured against war‑risks was unable to bring it to allied territory because it lay, in the hands of his agent, in enemy territory, it was held that there was no loss under the policy.
It follows that to establish a loss of goods insured against fall losses' it is not enough to show that they are in enemy territory and the owner cannot regain possession of them. Some evidence of seizure is necessary. But if a pearl necklace appears prima facie to be lost, with no real hope of recovery, then there is a loss within the terms of such a policy, and the fact that it is subsequently recovered does not change the position, it simply means that the insurer will be entitled to it, if he has already paid, by way of salvage. Mere unlikelihood of recovery does not constitute a loss under a non‑marine policy, though it would constitute a constructive total loss under the Marine Insurances Act 1906, for the doctrine has no application, at any rate in this respect, outside marine insurance law."
18. It is true that Insurance being contract of indemnity its consideration has to be paid before the loss takes place due to the risk covered under the Insurance Policy. If the goods are already destroyed or lost, there can be no insurance, as there remains nothing which is insurable. But this applies to cases under general law of insurance. The Karachi case P L D 1975 Kar. 33 and the several passages cited from the above text books on Insurance Law are not applicable to the facts of the present cases as the law which is involved in these cases does not pertain to the General Law of Insurance. The War Risks insurance Ordinance, 1971 as amended by Ordinance XXXVII of 1972, is a temporary and special law which covers only a specified field. The basic idea of the said Statute is to establish War Risks Insurance funds, as evident from section 15 of the Ordinance, so that in case of War casualties the claims could be paid out of the said funds. The insurance under War Risks was made compulsory as provided in section 8, already referred. It has also been provided under section 13 of the Ordinance that "whoever contravenes the provisions of section 8, section 9, section 10 or section 11 or, having taken out a policy of insurance, fails to pay any instalment of premium thereon which is subsequently due shall be liable to pay, in addition to the premium due from him, a surcharge equal to twenty per cent, of the premium so due as also interest at the rate of one per cent, per annum above bank rate calculated at monthly rates:----- The unpaid premium can be realised by coercive method as arrears of land revenue as provided in section 20 of the Ordinance. In view of this legal position the incidents of General Law of Insurance, such as submitted by the learned counsel for the defendants, are not attracted to the present cases. The only condition for covering the War Risks, as provided in section 2(h)(i) of the Ordinance, is that the goods must be for the time being "insured against fire with an insurer registered in Pakistan". There is no cavil that the goods in question were on the date of promulgation of the Ordinance existed and were duly insured against fire with the Insurance Society of Pakistan in one case and with Messrs Habib Insurance Company Ltd. in the other two cases.
19. The agents of defendant No.2, despite their knowledge of the fact that the goods for which the policies were being issued had already been destroyed due to the air‑raid by the Indian war planes, not only accepted the premium and provided insurance cover to the plaintiffs in respect of the same, making effective from 5th December, 1971, but continued to accept the same every month till July, 1972.
20. The plaintiffs have acted with all reasonable diligence in applying for the issuance of the Insurance Policies under the Ordinance and paying premiums therefore, after the promulgation of the Ordinance, and the procedure was made known to them. It is interesting to note the detailed circular (Exh.3/54) as to procedure was received by the Insurance companies acting as agents of defendant No.1 under the Ordinance, not earlier than 13th December, 1971, as admitted in evidence. It cannot, therefore, be said that the plaintiff have contravened provisions of the Ordinance so as to render the insurance policies issued to them as ineffective. Moreover, the Ordinance is in the nature of beneficial legislation and should be interpreted liberally and in favour J of the public, as far as possible. For this, reliance is placed on the following observation made by a Division Bench of the Peshawar High Court in the case already referred to, which reads as follows:‑--------
"It is a fundamental principle of law that statutes which encroach on the right of the subject, whether as regards person or property, are to be strictly construed and that if any doubt exists as to their scope, they should be interpreted if possible, so as to respect such rights."
The policies are, therefore, held as valid and binding on the defendants. Findings on Issues Nos.3, 6 and 7 accordingly.
21. Before parting with the above issues it may be mentioned that on 30‑4‑1986 when these suits were fixed for arguments they were adjourned to a date in office to enable the learned counsel for the parties to do some research work and produce some case‑law, as the present suits seemed to be the case of first impression. After the summer vacations the suits were again fixed for arguments on 4‑8‑1986, when Mr. Lari, learned counsel for the plaintiff submitted that in spite of search he was unable to find out any case law, on the point at issue, decided by any Court of law, either in the sub‑continent or the U.K. and U.S.A. The learned counsel for the defendant, however, referred to a number of cases as under:‑---------
Hall and another v. Wilson and another (1934) 4 All ER 85; Moorgale Estates Ltd. v. Trower and Barstow (1940) 1 AKER 195; Oulu Osakayetio of Oudu, a Finland v. Arnold Lever & Co. and others )1940) 2 All ER 243; Eichengreen v. Mond and others (1940) 3 AUER 148; Rickards v. Forestal Land, Timber and Railways Co. Ltd. Robertson v. Middows, Ltd. Kann‑W.W. Howard Brothers & Co. Ltd. (1940) 3 All ER 62; John Barker & Co. v. Littman (1941) 2 All ER 537; J. Wharton (Shipping Ltd. v. Mo ' rtleman and another (1941) 2 All ER 261; Clan Lines Steemers, Ltd. v. Liverpool and London War Risks Insurance Association, Ltd. (1942) 2 All ER 367; Re Jacone and Stedman's Contract (1942) 2 All ER 104; Larrinaga Steamship Co. Ltd. V.R. (1943) 1 All ER 450; Greenfield v. London's North Eastern Railway Co. (1944) 1 All ER 696; Billings v. Reed (1944) 2 All ER 415; Re Saffell (1945) 1 321; Akhal Line, Ltd. v. The Liverpool and London War Risks Insurance Association Ltd. (1945) 2 All ER 694 and Robinson and others v. Minister of town and Country Planning (1947) 1 All ER 851.
22. These cases are, no doubt, under War Risks Insurance, but as frankly conceded by the counsel for the defendants during the course of argument, none of them is at all relevant to the facts of the instant cases. Lastly, counsel for the defendants cited a D.B. judgment of this Court in the case of Pakistan Chrome Mines Ltd., Karachi v. The Enquiry Officer, War Risk Insurance and another P L D 1976 Kar. 673 and decision of the Hon'ble Supreme Court in appeal against the said judgment but these judgments are on a totally different point. Refer Civil Appeals Nos. K‑56, 57, 58 and 77 of 1977.
23. Issue No.4.‑‑ Learned counsel for the defendants submitted that the plaintiffs concealed from the defendants the fact of loss of the goods having already taken place before making an application for the issuance of Insurance Policy and so the plaintiffs obtained the policies in suit by misrepresentation. The submission seems to be devoid of any force. The plaintiffs have, in fact, lost no time in intimating the Insurance Society of Pakistan and Habib Insurance Company Ltd, with whom the goods were already insured against fire who were also acting as agents of defendant No.2. In this respect the plaintiff addressed letters, dated 7‑12‑1971, Exh.7/1 and letters dated 14‑12‑1971 and 23‑12‑1971 Exhs.7/2 and 7/3 to the said Insurance Companies about the losses who in turn advised the plaintiffs to intimate defendant No.2 and accordingly the plaintiffs intimated to the defendant No.2 about the said losses through their letters Exhs.5/6 and 5/7 without any delay. Incidentally the same Insurance Companies who had first insured the goods against fire in normal course were also acting as agents of defendant No.2 and issued policies under the Ordinance to the plaintiffs. It cannot, therefore, said that there was suppression of any material fact which could amount to misrepresentation. My finding, therefore, is in the negative.
24. Issue No.5.‑‑ This issue was not contested by the defendants' counsel as per his statement recorded on 31‑3‑1986. Finding accordingly.
24. Issue No.8.‑‑ The claims in. the suits find support from the reports of the Surveyors appointed by the defendants, which have been produced by the plaintiffs. There is no evidence in rebuttal to this effect from the side of the defendants. Suits Nos.252, 329 and 3591 of 1973 are, therefore, decreed in the principal amounts as claimed in the suits viz. Rs.1,32,000 Rs.12,79,792.72 and Rs.99,634.37 respectively, with costs and interest from the date of judgment till its realization, at the rate claimed in the suits, against both the defendants, jointly and severally. Since the difficult questions of law were involved in the suits. I do not think it proper to award interest pendente lite.
A.A. Suits decreed.
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