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Petitioner: PAKISTAN NATIONAL SHIPPING CORPORATION VS Respondent: PREMIER INSURANCE JUDGMENT
Court Name: Sindh High Court Judge(s): Nasir Aslam Zahid Title:PAKISTAN NATIONAL SHIPPING CORPORATION vs PREMIER INSURANCE
JUDGMENT
Reported As: PLD 1983 Karachi 550 Result: Suit decreed Judgment JUDGMENT ' This suit was filed on 21-3-1966 against Premier Insurance Company of Pakistan Ltd. For the recovery of Rs, 40,00,000 with. Interest. Originally there were 5 plaintiffs. Original Plaintiff No, I was United Oriental Steamship Company, a partnership firm, with Plaintiffs Nos. 2 to 5 impleaded as partners of Plaintiff No, I. The case of the plaintiffs was that they were registered owners of the vessel s. s. Ilyas Bakhsh which ship was insured by Premier Insurance Co. Against war risks with effect from 2-9-1965. The plaintiffs informed the Insurance Company on 16-9-1965 that according to information received by the plaintiff the vessel was seized and subsequently impounded by the Government of India at Bombay. The plaintiffs gave notices of abandonment of the ship on the ground that there was no likelihood of the plaintiffs regaining possession of the ship and claimed Rs, 40 lacs on the ground that the vessel had been covered against war risks by the Insurance Company. The defendant Insurance Company filed a written statement (Exh. 3) on 1-9-1966 denying the claim of the plaintiffs. The fact of plaintiff No, 1 being a registered partnership firm was denied. According to the defendant Insurance Company, no contract of insurance was concluded between the parties. The abandonment of the vessel was also challenged as ineffective and invalid. The value of the ship as Rs, 40 lacs was also disputed and it was averred that previously the plaintiffs had at all times declared the value of the vessel to be Rs, 15 lacs for the purposes of actual total loss and constructive total loss. 2. On the application of the defendant Insurance Company, relying upon the provisions of the War Risks Insurance Ordinance, 1965, Government of Pakistan and Pakistan Insurance Corporation were impleaded as Defendants Nos, 2 and 3 as third parties. A joint written statement was filed on behalf
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of the Defendants Nos. 2 and 3 on 3-1-1980. On behalf of the Pakistan Insurance Corporation (Defendant No, 3) the defence has been taken that the Corporation was only a delegatee of the Central Government and was not personally liable in any manner and as such no decree could be passed against the Corporation. Further, on behalf of the Defendants Nos. 2 and 3, it has been pleased that the admitted position of the plaintiff was that the vessel in question was impounded by the Indian Authorities on 7-9-1965 whereas the War Risks Insurance Ordinance, 1965 was promulgated on 9-9-1965 and as such there was no question of extending the provisions of the War Risks Insurance Ordinance, 1965, to the case of the vessel s. s. "Ilyas Bakhsh". The jurisdiction of this Court was also challenged on the ground that the Ordinance of 1965 was a special statute and a machinery was provided for the settlement of all claims arising under the 1965 Ordinance. 3. In this case, several applications for amendment of the plaint were filed, one after the other, on account of changing circumstances. As observed earlier, Plaintiffs Nos. 2 and 5 were joined as partners of Plaintiff No, 1, United Oriental Steamship Company. Later on it was averred on behalf of the plaintiffs that on an arrangement between the partners, the partnership business of United Oriental Steamship Company with all its assets and liabilities was transferred to two partners, namely Shaikh Muhammad Anwar and Shaikh Muhammad Iqbal, and as such the partnership firm was reorganised with two partners only i,e, Shaikh Muhammad 'Iqbal and Shaikh Muhammad Anwar. The original Plaintiff No, 2 (Shaikh Mian Maula Bakhsh) and Plaintiff No, 5 (Shaikh Maqbool Ahmad) were dropped as plaintiffs and the amended plaint filed on 11-10-1971 shows only three plaintiffs i,e, United Oriental Steamship Co., Shaikh Muhammad Anwar and Shaikh Muhammad Iqbal. ' By an order passed under the provisions of Pakistan Maritime Shipping (Regulation and Control) Ordinance III of 1974, the management of United Oriental Steamship Company was taken over by the Federal Government which later on acquired the whole of the proprietary interest of the partners el United Oriental Steamship Company. On 31-8-1975 Pakistan Shipping Corporation Act, 1975 came into force and a Corporation was established under this Act known as Pakistan Shipping Corporation and by an order dated 29-10-1975 all proprietary interest of United Oriental Steamship Company was transferred to Pakistan Shipping Corporation w. e. f. 31-10-1976. By Ordinance XX of 1979 Pakistan National Shipping Corporation was established which substituted Pakistan Shipping Corporation. The last amended plaint filed in this case on 17-12-1979 shows Pakistan National Shipping Corporation as the sole Pakistan with Premier Insurance Company of Pakistan Ltd., Pakistan Insurance Corporation and Federation of Pakistan as the three defendants. 4. Following consent issues were framed by order dated 14-11-1966- (1) Whether the plaintiff No, 1 is the registered partnership ? (2) Whether the ship s. s. Ilyas Bakhsh was insured by the plaintiffs with the defendants? If so for what amount and for what period the insurance was effected? (3) Wether the ship s. s. Ilyas Bakhsh was seized and impounded by the Government of India at Bombay? If so, when the said ship was seized and/or impounded and for what reasons? (4) (a) Whether the plaintiffs validly abandoned the ship s. s. Ilyas Bakhsh in favour of the defendants by their letter dated the 20th September 1965? If so, to what effect? (b) If the answer of the Issue No, 4(a) is in affirmative, did the defendants assume the ownership subsequent to the above abandonment? If so, to what effect? (5) Whether the second abandonment notice of the plaintiffs dated 9th March, 1966 is valid and/or binding on the defendants? (6) Whether the plaintiffs have refused-neglected/failed to bring the ship s. s. Llyas Bakhsh from Bombay to Karachi? If so, to what effect? (7) What is the value of the ship s. s. Ilyas Bakhsh and to what amount the plaintiffs are entitled? (8) General.
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6. On behalf of the plaintiff, three witnesses were examined in Court namely, Khan Wajahat Jamil (Exh. 9). Saleem Ahmad Aijazi (Exh. 10) and Kaleem Akhtar (Exh. 78). Apart from these three witnesses, evidence of two other witnesses on behalf of the plaintiff was recorded on commission. These witnesses were Captain A. M. Khan, Director of Shipping, Government of Pakistan, and Commander Muhammad Abdul Aziz, Principal Officer, Mercantile Marine Department, Government of Pakistan. On behalf of Defendant No, I, Premier Insurance Company of Pakistan Ltd. Muhammad Choudhary, their Secretary (Exh. 79) was examined. Defendants Nos. 2 and 3 did not lead any evidence. The witnesses who have given evidence also produced certain documents. Apart from this, various documents have been brought on record and exhibited by consent of learned counsel. Before dealing with the issues framed in this case, I may refer with some detail to the documentary evidence. Exh. 11 is a letter dated 2-9-1965 of the plaintiff Company addressed to the Insurance Company. This letter refers to the telephonic conversation of the same day between the parties and then requested the Insurance Company to insure ss. Ilyas Bakhsh against War Risks for three months effective from the date of the letter i,e, 2-9-1965. On this letter there is the following endorsement by Muhammad Choudhury (D. W. 1), Secretary of the Insurance Company "Cover will commence after we have received confirmation from London." Exh. 12 is another letter of the plaintiff-Company addressed to the Insurance Company on the subject of `War Risks Insurance of our Fleet'. The letter is dated 3-9-1965 and it was in continuation of the previous letter dated 2-9-1965 (Exh. 11). The letter reads as follows "Dear Sir, War Risks Insurance of our Fleet ' Further to our letter of yesterday's date and with reference to the telephonic conversation we had with you this morning we request you to insure our two vessels s. s. Anis Bakhsh and s. s. Anwar Bakhsh against War Risks Insurance with immediate effect for a period of three (3) months for a sum insured of Rs, 40,000 each. S. s. Anis Bakhsh is already in Chittagong and s. s, Anwar Bakhsh is due to reach Colombo today from where she will proceed for Chittagong. ' In order to enable you to assume the Risks with immediate effect we enclose a Bank Guarantee issued by the United Bank Limited, in your favour for Rs, 50,000 valid up to 20th September, 1965. Kindly advise us the premium payable for s. s. Ilyas Bakhsh s. s. Anwar Bakhsh and s. s. Anis Bakhsh enabling us to send you our cheque. Meanwhile kindly confirm that you are holding us fully covered. Yours faithfully, for United Oriental Steamship Co. (Sd.) (S. A. Aijazi), Claims Officer. ' End l : Bank Guarantee for Rs, 50,000." ' Exh. 12 shows that a bank guarantee for Rs, 50,000 was enclosed with this letter. Although this bank guarantee has not been produced but in the evidence there has been no denial on the part of the Insurance Company. ' Exh. 10/3 is a letter dated 7-9-1965 of the Insurance Company addressed to the plaintiff-Company giving notice of cancellation of all War Risks Covers granted by the Insurance Company on the various ships of the plaintiff-Company. It is further mentioned in this letter that in order to enable the Insurance Company to continue the War Risks Covers the plaintiff-Company should confirm that they agree to pay the Insurance Company premium at the revised rates to be determined in London. ' Exh. 10/4 dated 7-9-1965 is the reply of the plaintiff-Company whereby they confirmed that the rates and terms of War Risks Insurance which might be determined by London from time to time will be acceptable to the plaintiff-Company and authorised the Insurance Company to negotiate the Insurance and keep the same continued without any break.
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' Exh. 10/5 is another letter dated 8-9-1965 of the plaintiff-Company under cover of which letter, a cheque for Rs, 21,200 was enclosed as War Risks Insurance Premium for two other ships of the plaintiff-Company for a sum of Rs, 40 lacs each for a period of one month effective from 3-9-1965. As regards the ship in question, it was mentioned as follows :- "As regards ss. Ilyas Bakhsh we understand that you have arranged Insurance from London and locally effective from 2nd September, 1965 and the confirmation of the Pakistan Insurance Company to the extent of their statutory cession is still awaited. Kindlya dvice us of the premium payable for this vessel so that we may send you our cheque." ' Exh. 10/6 is also a letter dated 8-9-1965 of the plaintiff-Company addressed to the Insurance Company and it reads as follows:- "Dear Sir, War Risks Insurance ' With reference to the discussion our Partner Mr. S. M. Anwar, had with you this morning we enclose herewith our Cheque No, CAT 140874 dated 8-9-1965 for Rs, 31,800 (Rupees thirty-one thousand eight hundred only) drawn on the United Bank Limited, Karachi representing the premium for War Risks Insurance of s. s. Ilyas Bakhsh effective from 2nd September, 1965 and also for s. s. 'Anis Bakhsh' and s. s. Anwar Bakhsh effective from 3rd September, 1965 for a sum insured of Rs, 40,00,000 each. Kindly let us have your official receipt immediately and War Risks Insurance policies in due course." ' At the bottom of this letter (Exh. 10/6) there is an endorsement on behalf of the Insurance Company acknowledging the cheque for Rs, 31,800. ' Exh. 10/7 is a letter dated 9-9-1965 of the Insurance Company whereby the Insurance Company acknowledged that the plaintiff-Company had sent the premium for Ilyas Bakhsh but stating that they could not confirm the cover in regard to commencement date or the amount of insurance or duration or scope, etc. On this ship and wanted the plaintiff-Company to inform the Insurance Company whether the ship was under duress at the time plaintiff had made the proposal to the Insurance Company i,e, 2-9-1965 and whether the ship was under duress on the 3rd, 4th or 5th September, 1965. ' By their letter dated 10-9-1965 (Exh. 10/9) the plaintiff-Company informed the Insurance Company that at the time of placing the insurace on 2-9-1965 the ship in suit was not under duress and further upto the 5th of September. 1965 position remained unchanged to the best of their knowledge. It was also mentioned in Exh. 10/9 as follows :- "There is, however, no doubt whatsoever about your assumption of the risk and the dates which is 2nd September, 1965 in respect of s. s. Ilyas Bakhsh and 3rd September, 1965 in respect of s. s. Anis Bakhsh and Anwar Bakhsh." ' By letter dated 16-9-1965 (Exh. 10/13) the plaintiff Company informed the Insurance Company that the ship Ilyas Bakhsh was impounded on 7-9-1965 at noon according to the cable dated 15-9-1965 received by the plaintiff-Company from their Beirut Agents and as desired by the Insurance Company the photostat copy of the cable was enclosed. It was further stated in this letter as follows:- "You have still not sent us the cover effective from 2nd September, 1965 although you have confirmed several times verbally and in person and on telephone that we are being held covered. We do not understand the reason for you not giving us the letter confirming the cover and, therefore, we have to request you to send us the cover note or a letter confirming the cover from 2nd September, 1965. ' We trust that you will now immediately issue the required letter or cover note." ' Letter dated 25-9-1965 (Exh. 10/14) of the Insurance Company addressed to the plaintiff-Company is reproduced here :-
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"Dear Sirs, War Risks s. s. Ryas Bakhsh ' We refer to your letter of the 2nd September, 1965 asking us for War Risks Insurance Cover on ss. Ilyas Bakhsh. Although no sum insured was mentioned in your letter, we have been endeavouring to provide cover for you up to the extent of Rs, 40,00,000 (Rupees forty lacs only) on this vessel but at the same time we made it absolutely clear to you, in the course of our several conversations, that in view of the war like operations prevailing at that time, it might not be possible for us to arrange cover for such an amount without sufficient notice. We also mentioned to you that cover granted by us would be to extent for which we would be able to make adequate reinsurance arrangements and from the time and date we would be able to make such arrangements. It was also pointed to you that cover granted would be subject to the vessel being not under duress at the time of attachment of our cover or on any date between the 2nd September, and 5th September, 1965 or any date prior to that. ' In view of all the above and subject to ss. Ilyas Bakhsh not having been under duress on any date between the 2nd September, and 5th September, 1965 or any date prior to that, we are pleased to provide you provisional cover for Rs, 30 lacs (Rupees thirty lacs only), effective from the 2nd September, 1965 up to the 20th September, 1965 taking into account the notice of cancellation served by us on the 7th of September, 1965, against War Risks. If we are able to make any improvement in the sum insured we shall advise you of the same. We would, however, make it absolutely clear that we are under no obligation to increase the sum insured any further but nevertheless we will make all efforts to increase the cover. ' The cover granted for War Risks would be subject to our standard policy conditions, terms, warranties etc. And provisions of the Institute War & Strike Clauses-Hulls time." ' The plaintiff-Company replied by letter of the same date i,e, 25-9-1965 (Exh. 10/15) which letter is also reproduced here :-- "War Risk Insurance Ilyas Bakhsh. ' We are in receipt of your letter of 25th instant and have to point out that although we missed to mention the sum insured for War Risk Insurance of the above vessel you were very well aware from the telephonic negotiations that the cover required by us in the amount of Rs, 40,00,000. We also put on record that on our firm instructions you placed the reinsurance for Rs, 40,00,000 with some of the local companies of which we are aware. It is also to record that at the time of placing the insurance with you viz. 2nd September, 1965 there were no War Like operations between India and Pakistan. We must also point out that you received confirmation of reinsurance from London for their share and as verbally told by you the remaining portion of the business was subscribed by the local companies. We have also to draw your attention to the following sentences that you have written on a copy of our letter dated 2nd September, 1965 :- ' The Cover will commence after I have received confirmation from my reinsurers at London.' ' It is beyond doubt that you received the confirmation of your reinsurers from London and, therefore, there cannot be any question of reduction in the sum insured. ' In your letter under reply you have confirmed the cover effective from 2nd September, 1965 and, therefore, we do not "understand the condition placed by you regarding the duress between the period 2nd September, 1965. If the vessel was not under duress on the 2nd September, 1965 as it was the condition imposed by you stands null and void as the material date is the 2nd September, 1965 from which date you have accepted the risks. ' According to our information the vessel has been impounded by the Indian Government on the 7th September, 1965. We therefore, hereby claim the sum of Rs, 40,00,000 and abandon the vessel to you." ' It would be noticed from Exh. 10/15 that plaintiff's claim was that the ship had been insured against War Risks in the sum of Rs, 40 lacs. Further, as the ship had been impounded by the Indian
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Government on 7-9-1965, according to the information received by the plaintiff-Company, the plaintiff-Company abandoned the ship to the Insurance Company and claimed a sum of Rs, 40 lacs from the Insurance Company. ' Exh. 10/16 is a letter of the Insurance Company disputing the stand taken by the plaintiff and stating that their provisional cover in the sum of Rs, 30 lacs would be subject to the provisions, clauses and conditions etc. Stated in their letter of 25-9-1955 (Exh. 10/14). As regards the claim of the plaintiff and the notice to abandon the ship to the Insurance Company it was pointed out that 'impounding' of the ship did not constitute a claim under the Institute War Risks clauses and, therefore, the Insurance Company could not accept any liability for abandonment of the ship and denied all liabilities and declined to accept the abandonment. ' The plaintiff-Company wrote another letter dated 29-9-1965 (Exh. 10/17) reiterating their previous position. The Insurance Company replied by their letter dated 1-10-1965 (Exh. 10/18) confirming the position taken by the Insurance Company in their letter dated 25-9-1965 and stating that the deposit premium paid by the plaintiff-Company was accepted without any commitment whatsoever of the extent of cover or its commencement date. By letter dated 2-10-1965 (Exh. 10/19) the plaintiff-Company again made their claim for Rs, 40 lacs observing that since the vessel had been impounded by the Government of India and the Officers and Crew also been interned the plaintiff should get immediate settlement of their claim. ' Exh. 10/21 is a letter dated 21-10-1965 of the Insurance Company. It is reproduced here :- "s. s. Ilyas Bakhsh---War Risks Insurance ' We have received cable advices from London that it is absolutely necessary to keep `Ilyasbakhsh' covered against War Risks as per Institute War & Strike Clauses. The reason for this continuance of cover is that our reinsurers at London understand that the Indian authorities maintain that Ilyashakhsh' has been impounded and not seized. The vessal, therefore, continues to be your property and it is desirable to have the ship insured against any probable loss which may occur under the War Riks Insured perils. ' We have not as yet been advised of the Additional Premium required but we would advise you to please send us a cheque in the sum of Rs, 20,000 purely as a deposit amount. We will advise you the final premium as soon as possible when an adjustment may be made in the deposit amount either by a fresh payment from you or by refund by us." ' After this letter, another letter dated 26-10-1965 (Exh. 10/22) was written by the Insurance Company and it reads as follows:- "We refer to our letter of the 21st October, 1965 and several subsequent telephonic requests to Mr. Aijazi asking you to please remit a sum of Rs, 20,000 as Deposit Premium for continuation of War Risks Insurance on the above vessel. We have explained the circumstances necessitating the continuation of this cover and unless premium is paid without delay protection cannot be obtained." ' Under cover of their letter dated 28-10-1965 (Exh, 10/23), the plaintiff-Company sent a cheque of Rs, 10,000 as premium for the War Risks insurance of the ship in question for two months in the sum of Rs, 40,00,000 commencing from the date of expiry of the last insurance cover. The Insurance Company acknowleged the receipt of Rs, 10,000 by their letter dated 30-10-1965 (Exh. 20) but took the position that at the rate of 0.25 per cent. The amount of Rs, 10,000 was the premium for one month and not for two months. Thereafter further correspondence was exchanged between the parties. The plaintiff-Company was taking the position that the initial cover for the ship in question was in the sum of Rs, 40,00,000, whereas the stand of the Insurance Company was that it was in the sum of Rs, 30,00,000 and they were trying to get the amount of the cover increased. By letter dated 2-12-1965 (Exh. 21) the Insurance Company informed the plaintiff-Company that they had increased the cover of the ship to Rs, 35,00,000 for the period from 2-9-1965 to 20-9-1965. It may
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also be mentioned that in the correspondence on tehalf of the Insurance Company the notice of abandoment was not accepted by the Insurance Company. As observed earlier, by their letter dated 25-9-1965 (Exh. 16), while making a claim of Rs, 40,00,000 against the Insurance Company, the plaintiff-Company also gave the notice of abandonment of the vessel. Exh, 24 is a letter dated 9-3-1966 of the plaintiff-Company in which again the same claim of Rs, 40,00.000 is made. It was mentioned in this letter that the vessel was impounded and seized by the Government of India and this position continued till the writing of that letter. It was further mentioned that there was no possibility of the return of the said vessel to the plaintiff-Company and as such it was a total loss. By letter dated 10-3-1966 (Exh. 25) the Insurance Company, while acknowledging the receipt of letter dated 9-3-1966 of the plaintiff-Company, informed them that they had earlier declined to accept the abandonment by their letter dated 27-9-1966 and that they again declined to accept the abandonment. In the correspondence a further stand was taken on behalf of the Insurance Company that the vessel was likely to return to Pakistan in due course and the plaintiff-Company was advised to lodge their claim with the Government of Pakistan. Another stand taken on behalf of the Insurance Company was that impounding was in the nature of temporary detention and did not constitute a claim under the Institute War Clauses and therefore, the Insurance Company could not accept any liability. As the claim was not paid by the Insurance Company, the present suit was filed. 6. Issue No, (1) is whether United Oriental Steamship Company is a registered partnership concern. Exh. 78/2 is an extract from the Register of Firms maintained by the Registrar of Firms, Karachi and it shows that United Oriental Steamship Company was a registered partnership. Even otherwise on behalf of the defendants no argument was addressed before me on issue No, (1). Issue No, (1) is accordingly decided in the affirmative. 7. Issue No, (2) is whether the ship s. s. Ilyas Bakhsh was insured by the plaintiff-Company with the defendants and if so, for what amount and for what period the insurance was effected. On this issue the stand on behalf of the plaintiff has been that the ship in question was insured with Premier Insurance Company of Pakistan Limited w. e. f. 2-9-1965 against War Risks in the sum of Rs, 40,00,000. On behalf of defendant No,1 i,e, the Insurance Company, it was contended that no contract of insurance was concluded between the parties and as such the ship was not insured with them. It was argued that premium had been paid after the risk had already accrued; that there was no consensus between the parties as to the amount for which the…
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