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Petitioner: NATIONAL BANK OF PAKISTAN VS Respondent: MUHAMMAD MOBIN SIDDIQUI AND 2 Other
Court Name: Sindh High Court Judge(s): Ghulam Rasool K. Shaikh Title: NATIONAL BANK OF PAKISTAN vs MUHAMMAD MOBIN SIDDIQUI AND 2 Other Case No.: Suit No. 199 of 1967 Date of Judgment:1972-03-06 Reported As: PLD 1973 Karachi 107 Result: Suit decreed
JUDGMENT
JUDGMENT This suit has been filed for the recovery of Rs. 25,994.55 under a marine policy dated 25-3-1966 for one year issued by defendant No. 3 for the benefit of the plaintiff and defendant No. 1 to cover the loss by perils of sea etc. Of fishing trawler A.I Naveed belonging to defendant No. 1 and mortgaged with the plaintiff in consideration of the cash credit facility to the limit of Rs. 20,000 granted to defendant No. 1. The defendant No. 2 offered the guarantee. The necessary documents were executed. The mortgage bond executed by defendant No. 1 is dated 20 April 1964. The letter of guarantee executed by defendant No. 2 December 1964. The defendant No. 1 also execut--ed a promissory note dated 16th December 1964, in favour of defendant No. 2 who, then endorsed ft in favour of the plaintiff. It is said that the trawler left the fish harbour and went to sea for fishing on 24th July 1966 and since there has no trace either of it or the crew. The defendant No. 1 finding that the trawler had not returned although it had gone out for a day, lodged report with the police as well as sent intimation to the Mercantile Marine Department and other authorities on 27th and 28th July 1966. The plaintiff and defendant No. 3 were also informed. There was correspondence between the parties inter se and also with the various authorities and some efforts were also made to trace the trawler and the crew but there was no success. The plaintiff called upon the defendant No. 3 by a notice dated 25- 8-1967 to pay the entire amount o--- rupees one lag on the basis of the total loss of the trawler. The defendant No. 3 denied the liability on the ground inter alia that the trawler had not been lost due to the perils of sea or any other risk covered by the policy. This reply was sent by letter dated 8th September 1967. Consequently this suit was filed.th
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The defendants Nos. 1 and 2 did not appear to contest the suit and ex parte decree was passed against them. The defendant No. 3 has contested the suit on various grounds. It was pleaded that the suit was not maintainable and it was bad for misjoinder of parties and causes of action. The execution of the insurance policy was admitted but it was denied that the trawler was totally lost between 24th and 28th July 1966 or at any time whatsoever while out in the sea or anywhere else. For the loss of the trawler he put the plaintiff to strict proof. The liability to pay the insured amount was denied. It was admitted that the plaintiff had filed the claim for the alleged loss of the launch bat the plaintiff and defendant No. 1 avoided and failed to establish the loss by perils as were covered by the policy or otherwise. An allegation was also made that they did not co-operate in the investigation of the claim and furnish true and complete information in order to take up the matter with the concerned authorities for the investigation of the alleged loss or the recovery of the trawler and in general to act in confirmity with the principle of uberima fides. The insurance for an amount of Rs. One lag was taken out as a result of misrepresentation of the plaintiff and defendant No. 1 as regards the value of the trawler which in fact was worth far less than rupees one lag. Consequently the defendant No. 3 was not bound to indemnify the plaintiff or defendant No. 1 on the basis of the policy. The: claim filed by the plaintiff was, therefore, rejected. Furthermore, no cause of action had arisen to the plaintiff as against the: defendant. On the basis of the pleadings following issues were framed: "(1) Against what risks was the fishing launch `Al-Naveed` insured by defendant No. 3? (2) Whether the fishing launch was totally lost? (3) Whether the plaintiff and the defendant No. 1 mis--represented the value of the launch to the defendant No. 3? If so, to what effect ? (4) Whether suit is bad for misjoinder of parties and/or the causes of action ?' Both the parties examined a number of witnesses and produced several documents. The plaintiff examined Abdul Sattar, Survey Clerk in Mercantile Marine Department, Government of Pakistan Exh. 5, Mohd. Ilyas, Inspector Marine Fisheries Department, Government of Pakistan Exh. 6, Abdul Rehman, Head Constable Police, Dock Police Station Exh. 7, Mohd. Agha Kazi, Preventive Officer Sea Customs, Karachi Exh. 8. All Mohd. Memon, Sub---Accountant, National Bank of Pakistan, Fish Harbour Branch, Exh. 10, A.I Akbar Baloch, S. H. O. Dock Police Station Exh. 48, Nisar A.I, Sub- Accountant, National Bank of Pakistan, Nazimabad Branch, Exh. 53 and Hakimuddin. Manager, National Bank of Pakistan, Karachi Exh. 54 while the defendant No. 3 examined Z. A. Ansari from the office of the Assistant Director-General Shipping, Ministry of Defence Exh. 9, Ahmad Fasih, Accountant, Fishermen Co-operative Society Exh. 50, Sarwat A.I Insurance Surveyor Exh. 56, Mahboob Mooraj Insurance Surveyor Exh. 57 and Aziz Salimuddin Haider, an Insurance Surveyor Exh. 58. No effort was made by either party to examine defendant No. 1 who was the owner of the launch. The reproduction of the evidence of the various witnesses need not detain me as the evidence does not throw much light on the cause of loss or the disappearance of the trawler although some witnesses were examined at length. Even the learned counsel conceded that there was not much to depend upon. I will, however, review the main points of evidence on one side and the other to which reference had been made by the learned counsel for the parties. The bare facts have not been disputed. The trawler belonged to defendant No. 1 and it was mortgaged with plaintiff in consideration of the cash credit facility granted to him to the extent of Rs. 20,000. The insurance policy of the trawler for an amount of rupees one lag to cover the risk against perils of sea, barratry etc. For a period of one year commencing from 15-3-1966 was taken out in favour of plaintiff as mortgagee and defendant No. 1 as mortagagor. The necessary documents were executed. So according to this the plaintiff was one of the original parties to the
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insurance policy. The insurance premium as revealed by the bank account of the defendant No. 1 was also paid by the plaintiff and debited in his account. It is said that on 24th July 1966 the trawler went out for trawling and did not return nor there was any trace of it. The, intimation of the alleged loss was sent by the defendant No. 1 on 27th and 28th July 1966 to the various authorities as well as the plaintiff and defendant No. 3. He also lodged report with the police. Nothing so far is known about the incharge of the trawler as well as its crew. There was --some correspondence between the parties inter se as well as with the authorities but as is indicated by the evidence the authorities held no inquiry into the cause of the loss of the trawler as there was no report of any crime or casualty. The defendant No. 1 informed the defendant No. 3 on their query that the name of the captain (incharge) was Yousif son of Ahmad, Baldia Colony, Karachi, while he did not know the particulars of the driver and the members of the crew and as a matter of practice in the fisheries, they were appointed by the Tindal (Captain) himself. This letter is Exh. 10/15 dated 19th September 1966. Here it may be pointed out that the name and address of the Tindal shown in the Fishing Permit Exh. 6/1 dated 7-2-1966 is Faqir Mohd./Ibrahim Kanasi, Bhutt village, and the number of crew permitted is ten including driver, greaser, deckhand, watchman etc. The evidence also shows that in case Tindal is not available the trawler is manned by the next incharge who is usually the driver and in that event the port clearance is given in the name of the alternate person but no such change was intimated to wlarine Fisheries Department. The fishing season is from 1st September to 31st March nevertheless there is no prohibition if the fishing trips are made during the off season but the trawlers move about in the proximity of the coast. The permit remains valid so long the Tindal is not changed. Since the defendant No. 1 was not examined, it is not possible to ascertain whether he himself made any effort to contact the Tindal or the members of the crew or they or any of them was available or survived in case the trawler was lost by perils of sea or otherwise. Even no other witness was produced to show whether the Tindal or any of the members of the crew was seen or heard of or not since that time. Sarwat A.I who is an insurance surveyor who was examined by defendant No. 3 stated in his evidence that he checked up from all the port agencies from which information could be gathered regarding the movement of ,the trawler but no evidence was forthcoming regarding its alleged disappearance. He also checked up from customs authorities, police authorities, mercantile marine department, fisheries department and crew of other trawlers as well as made a search for the Tindal for about a month but no clue was found as, according to him, his address was vague. He simply came to know from the custom authorities that the trawler bad a port clearance and It was also confirmed by them that the trawler had left and had not come back. He was further inform--ed that they had no record of declaration that Yousif was Tindal of this voyage nor there was declaration of Faqir Mohammad Tindal. He also stated that the attitude of defendant No. 1 was not helpful but at his request the wife of defendant No. 1 deputed one bank employee to show the house of the Tindal but no tangible information was received. Some ladies in the locality were contacted but they seemed very agitated and told him to contact their men who would return in the evening. However, one old man told him that if he wanted to see Yousif, he should come late in the evening or early in the morning, but he did not go there. He had also obtained the name of Tindal shown in the Permit but he made no inquiry about him. Aziz Saleemuddin Hyder surveyor who is another witness for the defendant No. 3 stated that he made inquiries about both the Tindals Namely, Faqir Mohd. Shown in the permit and Mohd. Yousif shown by defendant No. 1 but there was no trace of any of them. Upon these facts and circumstances I now proceed to treat the issues. Issue No. I.-There is no dispute in respect of this issue. The relevant portion of the policy covering the terms and risks reads as under:
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"Terms.-To cover T. L. O. As per T. L. O. (Hulls) clauses attached. Warranted that during the period 1st June to 30th August the vessel will be moored at Karachi Harbour. Warranted trading within West Pakistan Waters only. Risks.-During the Adventures and Perils which the Insurance contended to bear and do take upon themselves in this Voyage they are of seas, Men of War, Fire, Enemies, Pirates, Rovers, Thieves, Jettisons, Letters of Mart and Countermart, Surprisals, Takings and Sea, Arrest, Restraints and Detainments of all Kings, Princes and people, of what Nations, Conditions, or Quality, so ever, Barratry of the Master and Mariners ; and of all other perils, Losses and Misfortunes, that have or shall come to the Hurt, Detriment or Damage of the subject-matter of this insurance ; and in case of any Loss or Misfortune; it shall be lawful to the insured, their Factor, Servants and Assigns to sue, labour and travel for, in and about the Defence, Safeguard and Recovery of the said subject- matter of Insurance without Prejudice to this Insurance ; to the Charges, whereof the Insurers will bear in proportion to the sum hereby Insured. And, it is especially declared and agreed that no acts of the Insurers or Insured in recovering, saving, or preserving the property insured, shall be considered as a waiver or acceptance of abandonment and the Insured shall contribute ratably towards any expenses incurred by the Insurers in recovering saving or preserving the property aforesaid. Warranted free of capture, seizure, arrest, restraint or detrainment, and the consequences thereof or of any attempt thereat ; also from the consequences of hostilities or warlike operations, whether there be a declaration of war or not ; but this warranty shall not exclude collision contact, with any fixed or floating object (other than a mine or torpedo) standing heavy, weather or fire unless caused directly and independently of the nature of the voyage or services which the vessel concerned or, in case of collision any other vessel involved therein inform--ing by a hostile act by or against a belligerent power ; and for the purpose of this warranty "power" includes any authority maintaining naval, military or air forces in association with a power. Further warranted free from the consequences of civil war, revolution, insurrection, or civil strife arising therefrom, or piracy." It is clear that the policy among others covers the risks or perils of sea and barratry which are material to determine the entitlement of the plaintiff to their claim under the policy. Issue No. 2.-This, in fan is the vital Issue in this case. I have already outlined the facts and circumstances as well as the relevant evidence and it is clear that considering the case in its factual aspect, the material brought on record is inconclusive. In other words, it is not possible to determine as a fact as to what is the cause of loss or disappearance of the trawler. Only this much is settled that the trawler left the harbour on 24th July 1966 and since then neither the trawler has been heard of nor it is known what became of the Incharge and the crew of the trawler. The efforts to trace them in the circumstances proved futile. It is to the credit of the learned counsel that they made no pretensions about the state of affairs. Being conscious of the inconclusiveness of the evidence, they proceeded to present their arguments on the basis of the presumption which can be drawn in such cases It was emphasised by the learned counsel for the plaintiff that since the trawler left the harbour for trawling and had not returned and had not been heard of, the presumption arose that she was lost by perils of sea and it was for the defendant No. 3 to prove the negative. On the other hand the learned counsel for defendant No. 3 conceded that in such circumstances the presumption was in favour of the loss by perils of sea covered by the policy but urged that in order to rebut the presumption the defendant was required to explain that it could not have happened in that manner. To support these contentions the learned counsel invoked in aid the principle propounded by the Courts in England. With the concession made by the learned counsel for defen--dant No. 3, my task has been pat in a narrow compass and I need not pursue it further and analyse the authorities sought in aid but a
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counsel on a point of law is not binding on the party whom hr represents and it is equally the duty of the Court to satisfy itself about the soundness and propriety of the concession so made. A further consideration which has weighed with me is that it is a new point of considerable importance. The research made by the learned counsel has revealed no precedent in Pakistan nor I have been able to find any. In Pakistan there is also no statute dealing with Marine Insurance. Although there is Insurance Act of Pakistan but it deals with different subjects. Consequently it is of no help in determining the main questions which arise in cases of Marine policy. As in England, the precedents in Pakistan have binding force To put it in the words of our eminent jurist, Mr. A. K. Brohi in his treatise on Fundamental Laws of Pakistan at p. 595 (Para 183) "The authority of the precedents in our system of law I commensurate with the status of the tribunal that renders the judgment. The rule is that every Court binds the lower Courts and that some Courts even bind themselves". The legality and principles of the judicial proceedings have been fully discussed by him in paras. 182 and 183. The Insurance Law in England is divided into Marine and Non-Marine Law. The Marine Law was the first to develop and its development continued for a long time since 1776 when Lord Mansfield became Lord Chief Justice, His judgments, principally in Marine cases, now form the back-bone of English, American and Dominion Insurance Law. A large volume of case-law, English, American, and Dominion is available for ascertaining the principles of Marine Law, whereas the decisions of those Courts are not binding on the Courts in Pakistan, nevertheless the English decisions, having judicial background and history, apart from their persuasive value, have been invariably consulted and mostly followed in absence of any statutory provision, precedent to peculiar circumstances prevailing in Pakistan. PLD 1951 FC 73), may be noted: "The Common Law signifies rules, customs and recognized principles, which are not set down in writing fn Acts of Parliament. The binding powers of the Common Law as a law emanate from long and immemorial usage and universal acceptance throughout the realm. The authenticity of these customs, rules and maxims, rests entirely upon reception, and usage as declared by the Judges. There are, therefore, only two sources of law which is applicable to Great Britain and the Colonies, namely, precedents and Statute Law." It was held by the Supreme Court of India in the case of Builders Supply Corporation v. Union of India (AIR 1965 SC 1061), that the rules of Common Law relating to substantive rights which had been adopted by this country and, enforced by judicial decisions, amount to law in force in the territory of India at relevant time within the meaning of Article 372 (1) of the Constitu--petition. It was further held that the relevant expression law in force includes not only Statutory Law, but also custom or usage having the force of law and as such, it must be interpreted as including the Common Law of England which was adopted as the law of this country before the constitution came Into force. Consequently, in the absence of any Statute on the subject, the Common Law doctrine of priority of State debts was applied. There is one authority of the Privy Council dealing with Marine Insurance case from British Columbia. It is the case of Capt. J. A. Cates Tug and another v. The Franklin Fire Insurance Co. (AIR 1927 P C 188), to which the provisions of section 60 (2) of the Marine Insurance Act, 1906 with regard to total loss and notice of abandonment were applied. Thus, it can be safely concluded that the principles of common law, so far they are not repugnant to our laws, can be applied in Pakistan, as customs, practice and usage are alsoincluded under Article 225 of the Constitution of Pakistan (1962), in the definition of law includes, as it does, practice, usage and custom having the force of law.
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The Marine Insurance Act contains definitions, rules of interpretation and numerous provisions governing the rights of parties. This Act cannot, of course be applied to Pakistan, but so far as we have to interpret the policies, the meaning attached to the words and the expressions in the Act and in the English judgments, on Marine Insurance whether before or after 1906, as also the usages relating to interpretation of expressions employed in insurance policies, will be quite relevant. Thus so far as matters apart from the interpretation of English policies are concerned, English judgments and the Marine Act can be of help only in determining that is consistent with equity, justice and good conscience. We cannot, however, be affected by any technical provisions in the Marine Insurance Act and the decisions of the English Courts in respect of those provisions. In the Marine Insurance Act, the vital provisions in respect of missing ship is embodied in section 58. It reads: "where the ship concerned in the adventure is missing and after the lapse, of reasonable time no news of her has been received, an actual total loss may be presumed". Since this is special rule of evidence laid down by the Act !t cannot, as such, be applied to Pakistan but, nevertheless, if the principle is consistent with justice, equity and good conscience, a serious thought can be paid to it, of course, subject to the condition that it does not violate the rule laid down by the Evidence Act in force in Pakistan. All that he needs to do is to establish a prima facie case. When p he has done this, the onus shifts to the insurers to show on the balance of probabilities that the loss was not caused by a peril insured against. A total loss in insurance law is one on account of which the assured is entitled to recover from the under-writer the whole amount of his subscription it may be actual or constructive. The meaning of the expression actual total loss is reasonably clear on the face of it while in case of constructive total loss it is less clear and it covers a state of affairs intermediate between actual total loss and a partial loss. According to Lord Abinger as expressed in the leading case of Roux v. Salvador ((1836) 3 Bing. N C 286), an actual total loss means that if in the progress of the voyage the object becomes totally destroyed or annihilated, or if it be placed, the reason of the perils against which he insures, in such a position that it is wholly out of the power of the assured or of the under-writer to procure its arrival. Another observation may be noted as under: "Every effective deprivation of the spes recuperandi amounts to an actual total loss: if the thing insured be in the hands of strangers, not under the control of the assured ; if by any ,circumstances over which he has no control, it can never, or within no assignable period, be brought to its original destination-in such cases the fact of its remaining in specie at any forced termination of the risk is of no importance. The loss is in its nature total to him who has no means of recovering his property, whether his inability arise from its annihilition or from any other insuperable obstacle." A constructive total loss means, where the thing insured has been reduced to such a state. Or placed in such a position, by the perils insured against, as to make its total destruction or annihilation though not inevitable, yet highly imminent, or its ultimate arrival under the terms of the policy, though not utterly hopeless, yet exceedingly doubtful. For constructive loss the insurer is equally liable. Considering the facts of the present case, the total loss may .Be placed in two alternatives (a) Perils of Sea and, (b) Barratry. "Perils of the Sea" means that damage be done by the unexpected and fortuitous action of the Sea. It does not include the ordinary action of the winds and waves. "Barratry" is any fraudulent or criminal conduct against the owner of the shop or goods by master or mariners in breach of the trust reposed in them, and to the injury of the owner, which obviously will be without the consent, knowledge or connivance of the owner. After having dealt with some of the vital points, I now, proceed to examine the authorities referred to by the learned counsel for the parties.
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The learned counsel for defendant No. 3 quoted two authorities (1) La Compania Martiartu v. The Corporation of the Roay Exchange Assurance ((1923) 1 K B 650) and Banco De Barcelona and others v. Union Marine Insurance Company Limited ((1926) 134 L T R 350). "In an action by a ship owner against underwriters on a policy of marine insurance there is a presumption of a loss by perils of the sea, when the insured ship having sailed out of portion an intended voyage has never been heard of against Green v. Brown 1774 Sta. 1199. But when the insured ship having been lost the owner gives some evidence of a loss by perils of the sea and the underwriters offer a reasonable explanation of the loss and show that it was probably due to an event not insured against, for example the scutling of the ship with the connivance of the owner, then, if the evidence leaves the Court in doubt to which cause the loss is attributable, the plaintiff fails to prove his case and the defendants are entitled to judgment." As is observed, the rule as Maid down in the case of Green v. Brown was approved. I, therefore, referred to the authority which is also reported in the English Reports Volume XCIII, 1909 at page 1126. It is a short judgment and so I reproduce it in extenso as under: "The ship "Charming leggy" was insured in 1739, from North Carolina to London, with a warranty against captures and seizures. And in an action the loss was said to be by sinking at sea.…
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