Case Summary & Legal Holding

This judicial decision was delivered by the KARACHI-HIGH-COURT-SINDH. The matter involves proceedings between QUEENSLAND INSURANCE CO., LTD. and BRITISH INDIA STEAM NAVIGATION CO., LTD, officially reported as 1958 PLD 389. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.

Full Judgment Text & Judicial Ruling

P L D 1958 (W

P L D 1958 (W. P.) Karachi 389

Before G. B. Constantine, J

QUEENSLAND INSURANCE Co., LTD.‑Applicant

Versus

BRITISH INDIA STEAM NAVIGATION Co., LTD. ‑Opponent

Civil Revision No. 100 of 1955, decided on 24th May 1958.

(a) Civil Procedure Code (V of 1908), O. VII, r. 1 (e)‑Cause of action‑Right of subrogation under S. 135‑A, Transfer of Property Act (IV of 1882)‑Plaintiff to plead facts giving rise to operation of law as part of cause of action.

(b) Karachi Small Causes Court Act (IV of 1929), S. 14 (1) Suit based on policy of insurance‑Right of subrogation under S. 135‑A, Transfer of Property Act (IV of 1882)‑Suit comes under mischief of S. 14 (l j, Karachi Small Causes Court Act (IV of 1929)

(c) Karachi Small Causes Court Act (IV of 1929), S. 14 Rights and liabilities of ship‑Suit by insured merchant to recover from insurance company for goods short delivered‑Ship necessary party.

(d) Practice‑High Court‑Guided by rules of justice, equity and good conscience‑Statutory law silent‑Rules of English law applicable, consistently with conditions in Pakistan.

(e) Transfer of Property Act (IV of 1882), S. S‑"Transfer of property"‑Transaction inter partes‑Does not extend to transfers arising by operation of law.

(f) Transfer of Property Act (IV of 1882), S. 135‑A (4) Does not refer to subrogation‑Person subrogated cannot file suit by virtue of mere subrogation.

Asghar Ali for Applicant.

Patel for Mr. Lobo for Opponent.

Date of hearing: 16‑5‑1958.

JUDGMENT

One out of various cases of goods on board the defendant Company's ship was alleged to have been short‑delivered. The plaintiff Insurance Company paid the insured as for a total loss, and in its own name sued the defendant company in the Karachi Small Causes Court in respect of the short delivery. This revision application arises since the learned Chief Judge of the Karachi Small Causes Court upon the following two issues (which were the only issues argued before me) held against the Insurance Company, the present petitioner:‑

(1) In the cognizance of the Karachi Small Causes Court barred by clause (1) of S. 14 of the Karachi Small Causes Court Act, and

(2) Whether the Insurance Company is entitled to sue in its own name by virtue of subrogation. Section 14 (1) of tile Karachi Small Causes Court Act reads as follows :‑

"14. The Court shall have no jurisdiction in . . . . (1) suits for a general average loss and suits on policies of insurance on sea‑going vessel."

Though the Insurance Company is seeking to enforce a cause of action vested in the insurer which does not fall within the above words; yet it also, as part of its cause of action, has to rely upon the policy of insurance, for it claims that it has been subrogated to the rights of the insurer, and one of the facts essential to the establishment of its claim, is that the policy of insurance has been effected. No assignment of the right to sue has been pleaded or proved ; the plaintiff relies upon the statutory right of subrogation contained in section 135‑(A) of the Transfer of Property Act. This right arises by operation of law, and it is incumbent on the plaintiff to plead the facts giving rise to the operation of law as part of his cause of action. Thus the suit is founded on a policy of insurance and, therefore, in my opinion would come within the mischief of clause (1) of section 14, if that clause applied to the policy in question.

The learned Chief Judge thought that the appropriate preposition would have been "of" and not "on" if the legislature had intended by clause (1) to confine the bar of jurisdiction to policies insuring the ship itself. I do not think that this is borne by current English usage. One says "I have an insurance on my house "or" on my life," and a ship owner would say "I have an insurance on my ship." On the other hand, the merchant who insures his goods on a ship could hardly say "I have an insurance on the ship."

Secondly, the first part of clause (1) deals with rights and liabilities of the ship, and (noscitur a sociis) one would expect the second part of the clause to have a necessary connection with the rights and liabilities of the ship. But according to the construction for which the defendant contends a suit by the insured merchant to recover from the insurance company for goods short delivered a suit to which the ship is not a necessary party‑would n2 barred. This second argument, comparatively weak though it be reinforces what I think is the normal meaning of the language used by the Legislature.

Turning to second question, there is no ruling on this subject of any of the Courts in Pakistan or their predecessors. There is however the ruling of the Privy Council in King v. Victoria Insurance Co. (1896 A C 250). In that case from Australia, Lord Hobhouse observed :‑

"It is true that subrogation by act of law would not give the insurer a right to sue in a Court of law in his own name.

It is worth referring to the report of the arguments where the appellant contended that if there was subrogation the only right was to sue in the name of the assured. The respondents did not in their arguments assail this position, but relied upon an assignment, and their Lordships of the Privy Council endorsed this argument. This case is consistent with the House of Lords case Simpson v. Thomson (A I R 1957 Cal. 193). After stating the well known principle of law "that where one person has agreed to indemnify another, he will on making good the indemnity, be entitled to succeed to all the ways and means by which the person indemnified might have protected himself against or reimbursed himself for the loss," Lord Cairns proceeded to say that on this principle underwriters "can assert any right which the owner of the ship might have asserted against a wrongdoer for damage," and then continued, "but this right of action for damages they must assert, not in their own name, but in the name of the person insured . . . . ."

In Indian T. & G. 1. Co. v. Union of India (3)AG. K. Mitter, J. said :‑

"The question remains; does such subrogation either in law or on the terms of the deed before me entitled the plaintiff to sue in his own name." He held in the negative.

In a judgment dated the 26th February 1958, in Civil Rule No. 3020 of 1955 and Civil Rule No. 954 of 1956, Alliance Assurance Co. Ltd., v. The Union of India R. Mukherjee, J. of the Calcutta High Court, held that an insurer who has been subrogated to the rights of the insured may sue in his own name. He quoted the English authorities, but stated that there was no reason why the peculiar form of English pro cedure should be engrafted on the procedure prevailing in our law Courts.

Pausing here, it appears to me that in this High Court at Karachi I am governed by the rules of justice, equity and good conscience. In a matter in which the statutory law is silent, the rules applicable are those of English law, unless they are inappli cable to the conditions in this country.

The learned Judge relied upon subsection (4) of section 135‑A of the Transfer of Property Act. He held that this subsection made a deliberate departure from the English rulings which lay down that an insurer who pays for a total loss cannot sue independently in his own name. It is, however, to be observed that this subsection (4) which provides `nothing in clause (b) of section 6 shall affect the provisions of this section, merely removes the bar to the transfer of a mere right to sue, and the learned Judge, with due respect, has omitted to bear in mind that `transfer of property' is defined in section 5 as an act inter partes, and does not extend to transfers arising by operation of law. Section 135‑A contains provisions not merely regarding subrogation, but regarding assignment (which is a transfer of property by act of parties), and we find in section 130‑A which deals merely with assignments, and not with subrogation, a similar subsection (4) stating that nothing in clause (e) of subsection (6) shall affect the provisions of this section. With due respect I do not think that subsection (4) in section 135‑AH has any reference to subrogation. Secondly, the learned Judge, with due respect, has omitted to note that where the Transfer of Property Act deals with assignments, if expressly empowers the assignee to maintain a suit in his own name (vide subsection (2) of section 130 and section 135 and subsection (1) of section 135‑A), whereas I can find no instance whereby a person may sue in his own name by virtue of subrogation apart from sections 91 and 92 of the Transfer of Property Act which must be read together and confer the right to institute a suit to subro gated persons. Section 135‑A is silent upon the point whether the person granted the right of subrogation may sue in his own name.

I therefore, hold that neither section 135‑A of the Transfer of Property Act, nor any other provision of law, empowers a person 1 subrogated under that section to sue in his own name by mere virtue of his subrogation.

The result is that the revision application is dismissed with costs.

K. M. A Revision dismissed.

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