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Civil Revision Application No. 270 of 1984, dated 7th April, 1987.

‑‑‑OAX, R. 13 & S. 115‑‑Suit decided ex parte‑‑Record showing that appellant was given opportunity to produce evidence, which neither he availed of, nor did he move any application to the Court for adjournment on the ground that his counsel was out of country‑‑Objection to such ex dismissal, held, could not validly be raised in revision.

‑‑‑S. 15 & Sched. II, Art. 34‑‑Transfer of Property Act (IV of 1882), S.135‑A‑‑Suit for recovery of damages for loss caused to the consignment, which was shipped on Board the vessel of appellant‑‑Right to recover such loss/damages accrued to the consignee under term of bill of lading read with The Hague Rules and under provisions of Carriage of Goods by Sea Act which was subrogated by consignee to respondent on settlement of his claim by respondent under S. 135‑A, Transfer of Property Act, 1882‑‑Suit for damages for loss caused to consignment, held, could not be considered to be barred by Sched. II, Art. 34 of the Small Causes Courts Act, 1887.

‑‑‑Ss. 135‑A & 6‑‑Contract Act (IX of 1872), S. 69‑‑Provincial Small Causes Courts Act (IX of 1887), S.15‑‑Scope and application of 5.135‑A, Transfer of Property Act, 1882‑‑Suit filed by insurer by virtue of their being subrogated under S. 135‑A, Transfer of Property Act, 1882‑‑Rights having been transferred by way of assignment or subrogation, held, would not be hit by the prohibition contained in S.6(e) and suit by insurer would be maintainable.

Queens Land Insurance Company Limited v. British India Steam Navigation Co. P L D 1958 (W.P.) Kar. 389 and Queens Land Insurance Co. v. Pakistan International Airlines P L D 1959 Kar. 275 ref.

‑‑Preamble & Ss. 135‑A & 6‑‑Purpose and scheme of the provisions.

‑‑‑S. 15‑‑Transfer of Property Act (IV of 1882), 5.135‑A‑‑Rights of assured /consignee of goods with respect to the loss that may be caused to his goods either due to short‑landing or other damage‑‑When assured had recovered loss from the carrier the insurer, who is subrogatee, would have right to receive same amount for the assured‑‑Embargo on transfer of right to sue having been removed by S. 135‑A(4) of Transfer of Property Act, 1882, rights that the subrogatee had acquired under S. 135‑A(2)(3) of Transfer of Property Act, 1882 would not be limited by prohibition contained in S. 6(e) of the Transfer of Property Act, 1882‑‑Subrogatee, therefore, by no law, was prohibited from suing in his own name in circumstances.

Assured /consignee has the right under the bill of lading, as well as under the Carriage of Goods by Sea Act to file a suit to recover such loss from the carrier. As an assured person he has also got the right to recover the same from the Insurance Company. In the instant case the consignee has exercised his right against the insurer and has recovered the loss from the insurer. However, this recovery from insurer, does not deprive him of his right to recover the same loss from the carrier. Under the ordinary doctrine of subrogation, in case the assured had recovered the loss from the carrier the insurer, who is the subrogatee, would have the right to receive the same amount from the assured. However, under subsection (2) of section 135‑A the assured has transferred by way of subrogation all his rights and remedies in and in respect of subject‑matter to the subrogatee. These rights also include right to sue the carrier for the loss, which right also, under the operation of this law and act of the party viz. deed of subrogation by the assured, has been transferred to the subrogatee. The embargo on the transfer of right to sue has been removed by subsection (4) so far the provisions of this section are concerned. Thus, the rights that the subrogatee has acquired under subsection (2) or subsection (3) of this section would not be limited by the prohibition contained in subsection 6(e) of the Act. He is, therefore, by no law, prohibited from suing in his own name.

‑‑‑5. 15‑‑Transfer of Property Act (IV of 1882), Ss. 135‑A, 130, 6, 91 & 92‑‑Subrogatee's right to sue in his own name.

Queens Land Insurance Company Ltd. v. British India Steam Navigation Co. P L D 1958 (W.P.) Kar. 389 and Queens Land Insurance Co. v. Pakistan International Airlines P L D 1959 Kar. 275. dissented from.

It was argued, that under the subsections (1) of section 135‑A the assignee has specifically been conferred the right to sue, whereas no such right has specifically been allowed to subrogatee under subsections (2) and (3). In this connection, it will be relevant to note the difference of the nature of rights, which are transferred by the assignment under subsection (1) and by the subrogation under subsections (2) and (3). Under subsection (1) rights under the Marine Insurance Policy are transferred. However, under subsections (2) and (3) the assured does not transfer the rights under the Insurance policy but transfers his rights as a consignee with respect to his damaged goods against the carrier and his agent. Under the insurance policy, the consignee has no right to recover the damages from the carrier. Section 130 of the Act, provides the method for transfer of actionable claim and the effects of such transfer including the right to sue. However, exception to this section specifically provides "that nothing in this section applies to the transfer of a marine or fire insurance policy". Thus, the assignee of a marine insurance policy, was under the original law barred from filing the suit or action under section 6(e) as well as under exception to the section 130 of the Act. Such transfer was not considered as a valid transferable claim. However, the only prohibition which operated against the subrogatee to sue on the basis of subrogation was section 6(e). Bar under section 6(e) which was common to the transfer of rights of action under subsections (1), (2) and (3) has been removed by the introduction of subsection (4), whereas the bar contained in exception to section 130 so far assignee of the policy of marine insurance is concerned has been specifically removed by giving assignee specific right to sue under subsection (1). Therefore, by omitting to specifically provide right to sue in subsections (2) and (3) cannot be interpreted to mean, that the legislature did not intend to give the right to subrogatees to sue in their own name. The language of subsection (2) is very clear. It, in unequivocal terms provides that all the rights and remedies of the transferred to the subrogatee. It cannot be doubted that one of the remedies of rights insurer, who in this case is the consignee are available to such consignee, is a right to sue the carrier and his agent for loss, that may have been caused to his consignment. It will not be proper interpretation to say, that all the remedies are transferred to the insurer/subrogatee except the remedy to sue in his own name. It may be relevant to refer to sections 91 and 92 of the Act. Under section 91 right is conferred upon certain persons to file suit for redemption of the mortgaged property. Under section 92 those persons are authorised to subrogate their rights under section 91 to any other person. It is not disputed, that a subrogatee under section 92 has got right to sue in his own name, though the section does not specifically so provide. It will be fallacious to argue, that a subrogatee under section 92 can sue to enforce rights of the person, entitled under section 91 to sue, whereas the person who is subrogatee under subsections (2) and (3) of section 135‑A cannot exercise such right o the subrogator and file a suit in his own name.

It is not disputed that the respondents have established the facts which are required under the law to be proved by them to be entitled to the interest of the insured person. Therefore, the subrogatee under section 135‑A of the Transfer of Property Act has got the right to sue in his own name.

Queens Land Insurance Company Limited v. British India Steam Navigation Co.. P L D 1958 (W.P.) Kar. 389 and Queens Land Insurance Co. v. Pakistan International Airlines P L D 1959 Kar. 275 dissented from.

Messrs Jubilee Insurance Company Dacca v. The United Oriental Steamship Co. and another P L D 1975 Kar. 647 ref.

Hassan Zafar for Petitioner.

Jameel Khan for Respondent.

Date of hearing: 10th March, 1987.

This revision application is directed against the judgment and decree passed by the learned Judge of Small Causes Court, Karachi on 18‑7‑1984 in Civil Suit No. 452 of 1982, whereby he decreed the suit of the respondent against the appellant.

I have heard the learned counsel for the parties and also perused, the record and proceedings of the trial Court.

The brief facts leading to this revision application are, that a consignment of 12 cartons containing knitting needles duly marked and numbered as SW‑Dean RT 14292‑R‑Karachi‑1‑12 was imported by Roomi Traders, Tariq Road, Karachi. It was shipped on board of the defendant's /appellants vessel Sarfraz Rafiquee at Liverpool for delivery at Karachi. The appellant also issued a bill of lading No. 076, dated 10‑7‑1981. The said consignment was insured with the respondent under Marine Insurance Policy No. KM; 56192/8/81. The vessel arrived at Karachi on 1‑9‑1981 and discharged its cargo at the Port. The consignment was discharged in damaged condition against Index No.72. It was subjected to joint survey held by Messrs Bhomibal' and Company surveyor on behalf of the respondent and by J.N. Creddock surveyor on behalf of appellant. Both the surveyors reported shortage of 1752 pairs of needles out of invoice quantity. The consignee lodged their claim which was settled by the respondent, who, then having been subrogated notified their claim to the appellant, which was not paid and, therefore, suit was filed which was decreed. The appellant in his written statement admitted the shipping of the consignment, but contended, that the said consignment was discharged in full as it was received at the time of shipment. Further, he, contended, that the surveyors report was not binding on the carrier.

The learned Judge framed the following issue:‑--

"Whether the plaintiffs are entitled to amount claimed in the suit "

The respondent examined their witness, P.W. Akhtar Ali Baig, who produced the relevant documents in evidence, viz. insurance policy, bill of lading, invoice report, reports of the surveyor, bill of entry and letter of subrogation etc. He also proved the contents of the plaint. His evidence was not challenged in the cross‑examination and the appellant examined no witness in defence. Consequently, the learned trial Judge giving finding in favour of the respondent, decreed the suit of the respondent against the appellant.

The learned counsel for the appellant firstly contended, that the suit was decided ex parte against him. He submitted that he was not present in the country, and therefore, the appellant could not proceed with the case. I find from the record, that the opportunity was given to the appellant to produce evidence, which neither he availed A of nor did he move any application to the Court for adjournment on the ground, that his counsel was out of country. This objection, therefore, has no validity at this stage in the revision application.

The learned counsel for the appellant has next assailed the judgment on two grounds. Firstly it is contended that the Small Cause Court has no jurisdiction to entertain the suit which falls within the purview of Article 34 of Schedule II to the Provincial Small Causes Courts Act, 1887. Section 15(1) of the Act provides that a Court of Small Causes shall not take cognizance of the suits specified in the Second Schedule as suits excepted from the cognizance of the Courts of Small Causes. Article 34 of the Second Schedule reads "A suit on a policy of insurance or for the recovery of any premium paid under any such policy".

This suit is not based on policy of insurance nor is it for the recovery of any premium paid under any such policy. The suit is for the recovery of the damages for loss caused to the consignment, which was shipped on Board the vessel of the appellant. The right to recover such loss/damages accrued to the consignee under the terms of bill of B lading read with The Hague Rules and under the provisions of the Carriage of Goods by Sea Act. This right was subrogated by the consignee to the respondent on settlement of his claim by respondent under section 135‑A of the Transfer of Property Act. Therefore, this suit cannot be considered to be barred by Article 34 of Schedule II to the Small Causes Courts Act.

The next objection of the learned counsel is that suit is not maintainable except in the name of insured. As already pointed, this suit has been filed by the insurer viz. the respondent by virtue of their being subrogated under section 135‑A of the Transfer of Property Act which reads as under:‑--

"135‑A. Assignment of rights under policy of marine insurance.‑ (1) Where a policy of marine insurance has been assigned so as to pass the beneficial interest therein the assignee of the policy is entitled to sue thereon in his own name; and the defendant is entitled to make any defence arising out of the contract which he would have been entitled to make if the action had been brought in the name of the person by or on behalf of whom the policy was affected.

(2) Where the insurer pays for a total loss, either of the whole, or in the case of goods, of any apportionable part, of the subject‑matter insured, he thereupon becomes entitled to take over the interest of the insured person in whatever may remain of the subject‑matter so paid for, and he is thereby subrogated to all the rights and remedies of the insured person in and in respect of that subject‑matter as from the time of the casualty causing the loss.

(3) Where the insurer pays for a partial loss, he acquires no title to the subject‑matter insured, or such part of it as may remain, but he is thereupon subrogated to all rights and remedies of the insured person as from the time of the casualty causing the loss, in so far as the insured person has been indemnified by such payment for the loss.

(4) Nothing in clause (e) of section 6 shall affect the provisions of this section."

In support of his contention the learned counsel for the appellant has relied upon the case of Queens Land Insurance Company Limited v. British India Steam Navigation Co. P L D 1958 (W.P.) Kar. 389 wherein a learned single Judge of this Bench held that a person subrogated cannot file suit by virtue of mere subrogation. While coming to this conclusion the learned single Judge was of the opinion, that in this High Court at Karachi he was governed by Rule of justice, equity and good conscience, but in a matter, in which the statutory law of land was silent, the rules applicable were those of English law, unless they were inapplicable to the condition in this Country. The learned single Judge disagreed with the judgment of Culcutta High Court, dated 26‑2‑1958 in the case of Alliance Insurance Company Limited v. Union of India wherein it was held that an insurer who had been subrogated to the rights of insured may sue in his own name.

This point also came under consideration in the case of Queens Land Insurance Co. v. Pakistan International Airlines P L D 1959 Kar. 275, It was observed:‑--

"I, therefore, cannot agree with the learned counsel for the plaintiffs that either the doctrine of subrogation, as it is known and recognised, or any provision of law enables the plaintiffs by themselves to sue the defendants for damages recoverable from the latter by the insured persons. Better protection and advancement of insurance business and the business of carriage of goods by air is not a problem which can be solved by the Courts. The problem does exist but in view of the law as I see it, I cannot decree the four suits."

In both these Karachi cases the judgment of Mukerji, J. in the case of Alliance Insurance Company Limited has been discussed. I may also refer the arguments of Mukerji, J. in the said case which have been reproduced at length in the case reported in P L D 1959 (W.P.) Kar. 275:‑--

"The Law Courts in England have come to adopt this peculiar form of procedure because the right of action of the insured is considered to be a personal right, which is not capable of being transferred to the insurer merely by legal subrogation." And:

"There is, however, no reason why the above peculiar form of English procedure should be engrafted on the procedure prevailing in our law Courts. The word 'subrogation' has not been defined in the Transfer of Property Act but it means substitution. If an insurer is subrogated to all the rights and remedies available to the insured, there is no reason why he should be deprived the right of enforcing such rights and remedies by a suit. Section 92 of the Transfer of Property Act confers a right of subrogation on the redeemer of a mortgage under certain circumstances. There is no doubt that in our law Courts such a subrogatee can enforce his right by a suit without using the name of the mortgagee whose mortgage he has redeemed. A subrogatee under section 135‑A (2) of the Transfer of Property Act should not be placed in a more disadvantageous position than a subrogatee under section 92 of the same act. If any doubt still remains about the right of suit of an insurer under section 135‑A (2) of the Transfer of Property Act, it is dispelled by subsection (4) which lays down that nothing in clause (e) of section 6 shall affect the provisions of subsection 135‑A, clause (e) of section 6 of the Transfer of Property Act provides that a mere right to sue which includes a personal right of action cannot be transferred. By removing this bar, subsection (4) of section 135‑A of the Transfer of Property Act makes a deliberate departure from the English rule of procedure which lays down that an insurer who pays for a total loss cannot sue independently in his own name.

Subsection (2) of section 135‑A is based on equitable principles of reimbursement which is contained in section 69 of the Indian Contract Act which runs in the following terms:

'69. A person who is interested in the payment of money which another is bound by law to pay, and who, therefore, pays it, is entitled to be reimbursed by the other.'

In the case of loss of insured goods the primary liability is the liability of the carrier. The insurer steps into the shoes of the insured by paying for a total loss. If a subrogatee insurer is deprived of an independent right of action his rights and remedies would be rendered useless in many cases. For instance, if the holder of a marine insurance dies without any heir or leaves the country or becomes untraced, or if being a company it ceases to exist, then the remedies of the insurer would become completely useless because it would not be possible for the insurer to sue in such cases in the name of the insured. It seems to me that our legislature has considered these contingencies and deliberately given a right of suit to the subrogatee by enacting subsection (4) of section 135‑A of the Transfer of Property Act and making clause (e) of section 6 of the same, 'Act inapplicable to all the remaining subsections of section 135‑A.'

To properly interpret the scope and the purpose of section 135‑A of the Transfer of Property Act (hereinafter called the Act) it is necessary to examine the purpose and the scheme of the Act itself. To understand the purpose of Act, the preamble to the Act is very material. The preamble to Act reads "whereas it is expedient to define and amend certain parts of the law relating to the Transfer of Property by act of parties".

Thus, the purpose of Act is to define and amend the laws relating to transfer of property by the act of the parties. All the provisions of Act, therefore, will be deemed to be in connection with the Transfer of Property. The provisions of the Act either permit or prohibit or lay down the procedure for the transfer of property or other allied matters. Section 6 in this respect is very material. It provides "Property of any kind may be transferred except as otherwise provided by this Act or by any other law for the time being in force." Clauses (a) to (r) of this section describe as to what property cannot be transferred. Clause (e) is material and relevant so far the question at issue in the present case is concerned. It lays down "A mere right to sue cannot be transferred". Reading this section as a whole, there can be no doubt, that right to sue is considered as a kind of property but its transfer is specifically prohibited under clause (e) of this section. Here we may pause to refer to subsection (4) of section 135‑A, which provides "nothing in subsection (e) of section 6 shall affect the provisions of this section". Section 135‑A provides for the transfer of the rights by way of assignment and subrogation. Thus, the rights that may be transferred by way of assignment or subrogation will not be hit by the prohibition contained in subsection (e) of section 6.

Next we proceed to see as to what are the rights of the assured/ consignee of the goods with respect to the loss that may be caused to his goods either due to short‑landing or other damage. It cannot be disputed, that he has the right under the bill of lading, as well as under the Carriage of Goods by Sea Act to file a suit to recover such loss from the carrier. As an assured person he has also got the right to recover the same from the Insurance Company. In the instant case the consignee has exercised his right against the insurer and has recovered the loss from the insurer. However, this recovery from insurer, does not deprive him of his right to recover the same loss from the carrier. Under the ordinary doctrine of subrogation, in case the assured had recovered the loss from the carrier the insurer, who is the subrogatee, would have the right to receive the same amount from the assured. However, under subsection (2) of section 135‑A the assured has transferred by way of subrogation all his rights and remedies in and in respect of subject‑matter to the subrogatee. We have already seen that these rights also include right to sue the carrier for the loss, which right also, under the operation of this law and act of the party viz. deed of subrogation by the assured, has been transferred to the subrogatee. The embargo on the transfer of right to sue has been removed by subsection (4) so far the provisions of this section re concerned. Thus, the rights that the subrogatee has acquired under subsections (2) or subsection (3) of this section would not be limited by the prohibition contained in subsection 6 (e) of the Act. He is, therefore, by no law, prohibited from suing in his own name.

It is argued, that under the subsection (1) of section 135‑A the assignee has specifically been conferred the right to sue, whereas no such right has specifically been allowed to subrogatee under subsections (2) and (3). In this connection, it will be relevant to note the difference of the nature of rights, which are transferred by the assignment under subsections (1) and by the subrogation under subsections (2) and (3). Under subsection (1) rights under the Marine Insurance policy are transferred. However, under subsections (2) and (3) the assured does not transfer the rights under the Insurance policy but transfers his rights as a consignee with respect to his damaged goods against the carrier and his agent. Under the insurance policy, the consignee has no right to recover the damages from the carrier. Here I may refer to section 130 of the Act, which provides the method for transfer of actionable claim and the effects of such transfer including the right to sue. However, exception to this section specifically provides "that nothing in this section applies to the transfer of a marine or fire insurance policy". Thus the assignee of a marine insurance policy, was under the original law, barred from filing the suit or action under section 6(e) as well as under exception to the section 130 of the Act. Such transfer was not considered as a valid transferable claim. However, the only prohibition which operated against the subrogatee to sue on the basis of subrogation was section 6(e). Bar under section 6 (e) which was common to the transfer of rights of action under subsections (1), (2) and (3) has been removed by the introduction of subsection (4), whereas the bar contained in exception to section 130 so far assignee of this policy of marine insurance is concerned has been specifically removed by giving assignee specific right to sue under subsection (1). Therefore, by omitting to specifically provide right to sue in subsections (2) and (3) cannot be interpreted to mean, that the legislature did not intend to give the right to subrogatees to sue in I their own name. The language of subsection (2) is very clear. It in unequivocal terms provides that all the rights and remedies of the insurer, who in this case is the consignee are transferred to the subrogatee. It ‑cannot be doubted that one of the remedies or rights available to such consignee, is a right to sue the carrier and his agent for loss, that may have been caused to his consignment. It will not be proper interpretation to say, that all the remedies are transferred to the insurer/subrogatee except the remedy to sue in his own name. It may be relevant to refer to sections 91 and 92 of the Act. Under section 91 right is conferred upon certain persons to file suit for redemption of the mortgaged property. Under section 92 those persons are authorised to subrogate their rights under section 91 to any other person. It is not disputed, that a subrogatee under section 92 has got right to sue in his own name, though the section does not specifically so provide. It will be fallacious to argue, that a subrogatee under section 92 can sue to enforce rights of the person, entitled under section 91 to sue, whereas the person who is subrogatee under subsections (2) and (3) of section 135‑A cannot exercise such right of the subrogator and file a suit in his own name.

I may refer to another case reported in P L D 1975 Kar. 647 Messrs New Jubilee Insurance Company Dacca v. The United Oriental Steamship Co. and another. A Division Bench of this Court set aside the orders of the Courts below dismissing the suit of appellant and decreed the suit of appellant holding that:‑--

"In order that an insurer should be entitled under subsection (2) of section 135 of the Transfer of Property Act to the interest of the insured person in the subject‑matter insured or under subsection (3) of the said section to the rights or remedies of the insured person, the insurer must establish what was the value of the goods which have been lost or damaged, either wholly or partially, and further it must be established, in cases falling under subsection (2) that he has paid for the total loss of the goods or other subject‑matter in respect of which he seeks to enforce such interest, and in cases falling under subsection (3) that the amount which he claims as a subrogatee, is the amount which he actually paid to the original consignee."

No doubt, the point at issue in this case was not directly considered in that case but the fact that the suit filed by the Insurance Company /subrogatee was decreed, impliedly shows that such suit was held to be maintainable.

In the instant case it is not disputed that the respondents have established the facts which are required under the law to be proved by them to be entitled to the interest of the insured person.

With utmost respect to the views of the learned Judges expressed in Karachi cases mentioned above for the aforesaid reasons, I am inclined to agree with the views expressed by Justice Mukerji in the Culcutta Case and hold that the subrogatee under section 135‑A of the Transfer of Property Act has got the right to sue in his own name.

The facts of the case are not disputed nor the evidence of the respondents produced before the trial Court has been challenged or rebutted. As such I dismiss this revision application with no order as to costs.

The revision application was dismissed by short order, dated 5‑4‑1987. Above are the reasons in support of the said order.

M.B.A./P‑6/K Revision dismissed.

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