P L D 1982 Karachi 627
Before Ajmal Mian and B. G. N. Kazi, JJ
SARGODHA CENTRAL CO‑OPERATIVE BANK LTD.
NEW HAMPSHIRE INSURANCE Co.‑Respondent
Letters Patent Appeal No. 159 of 1971, decided on 7th October, 1981.
Mansoorul Arfin for Appellant.
J. H. Rahimtoola for Respondent.
Dates of hearing : 2nd, 3rd and 27th September, 1981.
AJMAL MIAN, J.‑This appeal is directed against the judgment and decree dated 25‑8‑1981 passed by Dorab Patel, J. (as he then was) in Suit No. 154/1965 dismissing the suit of the appellants/plaintiffs inter alia on the ground that the respondent/defendant were not liable in terms of clause 19 of the Policy of the Contract of Insurance after the expiration of 12 months from the happening of the loss, which occurred on 23‑5‑1962. However, on merits the learned Single Judge found that the appellants had suffered loss to the extent of Rs. 2,20,766,50 as per survey report of the surveyor appointed by the respondent. The appellants being aggrieved by the above judgment and decree have filed the above appeal.
2. In support of the above appeal Mr. Mansoorul Arfin the learned counsel for the appellants has urged the following contentions
(i) That clause 19 of the Insurance Policy in fact curtails the period of limitation for filing of a suit and, therefore, it is hit by sections 23 and 28 of the Contract Act.
(ii) That the respondent had not raised any pica to the effect that appellant No. 2 Choudhry Muhammad Hussain was a benamidar for his brother Choudhry Wali Muhammad in the written statement and therefore, the learned Single Judge erred in permitting the respondent to adduce evidence on the above plea;
(iii) That even otherwise the respondents failed to discharge the burden of proving that appellant No. 2 was a benamidar for his brother.
(iv) That the policy in question being‑ a composite policy covering two separate interests of appellants Nos. 1 & 2, the alleged fraud on the part of appellant No. 2 could not have prejudiced appellant No. 1’s interest.
(b) On the other hand Mr. Rahimtoola, learned counsel for the respondent has made the following submissions
(i) That clause 19 of the Insurance Policy does not in fact curtail the period of limitation for filing of a suit but the same provides the agree ment between the parties that on the expiry of one year, the respondent shall stand discharged from their liability under the Insurance Policy, which was in consonance with the long list of decisions of the High Courts of pre‑Partitioned India, which view has been maintained in India even after Partition of India.
(ii) That the respondent in their written statement had pleaded sufficient facts entitling them to raise the plea of benami.
(iii) That the respondents were able to discharge the burden of proof of the above plea by bringing on record sufficient evidence.
(iv) That the suit was filed and proceeded on the basis of that appellants Nos, 1 and 2’s interest was joint and not on the basis that the two appellants had distinct interest, and, therefore, this plea cannot be examined at the appellate stage.
3.‑(a) Reverting to the first contention of Mr. Mansoorul Arifin that in fact clause 19 of the Insurance Policy curtails the period of limitation for filing of a suit, and, therefore, it is hit by sections 23 and 28 of the Contract Act, it will be pertinent to refer to the above section. Section 23 of the Contract Act defines consideration and objects which are lawful. It provides that the consideration or object of an agreement is lawful unless it is forbidden by law or is of such a nature that, if permitted it would defeat the provisions of any law or is fraudulent or involves or implies injury to the person or property of another, or the Court regards it as immoral or opposed to public policy. It further provides that in such cases (i.e. in the cases referred to hereinabove) the consideration or object of an agreement is said to be unlawful and that every agreement of which the object of consideration is unlawful is void. Whereas section 28 provided that every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceeding in the ordinary tribunals or which limits the time within which he may thus enforce his right is void to that extent, Exceptions I and 11 provided to above section save the award of the arbitration agreement etc.
(b) Mr. Mansoorul Arfin, learned counsel for the appellants has candidly conceded that all the rulings of Indo‑Pak Sub‑Continent commencing from 1912 onwards relating to insurance policies are against the appellants. However, he submitted that the cases in which identical clause to clause No. 19 in question were the subject matters of interpretation were decided on the basis of the cases in which the relevant clauses of the insurance policies were couched in different language. His further submission was a Division Bench of the erstwhile High Court of West Pakistan, Peshawar Bench has taken a contrary view in respect of a contract relating to the supply of goods. It may be pertinent to refer to the cases referred to by both the learned counsel of the parties, namely, the cases of Hirabhai Nare tamdas v. the Manufacturers Life Insurance Company 14BLR741, the case of Baroda Spinning & Weaving Company Limited v. Satyanarayan Marine & Fire Insurance Co. Ltd. AIR1914Bom,225, the case of Gindharl Lal Hanoman Bux v. Eagle Star & British Dominn Insurance Co. Ltd. A I R 1924 Cal. 186, the case of G. Rainey and another v. Burmah Fire arid Marine Insurance Co. Ltd. A I R 1926 Rang. 3, the case of A. N. Ghese v. Reliance Insurance Co. and another A I R 1934 Rang. 15, the case of Daud Tar Muhammad brothers v. Queensland Insurance Co. Ltd. A I R 1949 Cal. 390, the case of Rubi General Insurance Co. Ltd. v. Bharat Bank Ltd. and others A I R 1950 E. Punj. 352, the case of Pearl Insurance Co. v. Atmaram A I R 1960 Punj. 236, the case of Islamic Republic of Pakistan v. Nozardfn Khattak & Sons P L D 1969 Pesh. 313.
(i) In our view it will be appropriate to deal with the above Peshawar case of 1969 first as according to Mr. Mansoorul Arlin a D. B. of the erstwhile High Court of West Pakistan, Peshawar Bench, had taken a different view than the view found favour with the learned Judges in the above other cited cases. In the above Peshawar case the facts were that the plaintiff/respondent were approved contractors for the army supply. They submitted tender for the supply of firewood to certain Army Units. The tender was converted into the agreement which was for a period of one year commencing from 1st April, 1956 to 31st March, 1957. During the course of the performance of the above contract certain disputes arose as to the quality and quantity and because of this the Officer Commanding, the Station Supply Depot started procurement of supply of firewood, under clause 7 of the agreement as risk purchases at much higher rates than the control rates, the plaintiff conveyed their protest to the Commander concerned, but with no avail. Ultimately on 19‑1‑1957 the Commander concerned rescinded the contract and, thereafter, recovered the cost of risk purchases from the plaintiff’s other contracts. Thereupon, the plaintiff filed suit for recovery of the various amounts. The above suit was resisted by the defendant/appellant inter alia it was pleaded that the plaintiff had no cause of action. However, the learned Senior Sub‑Judge decreed the suit to the extent of Rs. 25,381.‑8‑6. The appellant/defendant aggrieved by the aforesaid judgment and decree filed the appeal which was heard by a Bench. It was urged before the High Court that in view of clause 33(1) of the Contract read with section 3 of the Limitation Act the suit of the plaintiff was barred. It was also urged that the aforesaid plea being a pure question of law could be raised first time in the appeal.
Clause 33(i) of the Contract provided as follows :‑
“33(i). I/We hereby agree that the Governor‑General in Pakistan shall be discharged from all liabilities under this contract or in relation to the subject‑matter thereof unless an arbitration or suit, where such suit lies, is commenced within three months from the expiry of the contract period mentioned in clause (i) hereof or any extension thereof.”
It may be noticed that the above clauses provided that the Governor General in Pakistan shall be discharged from all his liabilities under the contract or in relation to the subject‑matter thereof unless arbitration suit (where such suit lies) is commenced within three months from the expiry of the contract period mentioned in clause (i) or any explanation thereof.
It was urged by the learned counsel for the appellants/defendants in the aforesaid case that since the suit contract was for a period commencing from 1st April, 1966 up to 31st March, 1957, the suit could have been commenced within 3 months ‘from the expiry, of the contract period in addition to a period of 2 months of the notice under section 80, C. P. C. and that as the suit was filed on 26‑11‑1957, it was barred by 8 months. The above contention was repelled by the D. B. and upon relying the case of Nathemal Ramdas v. B. D. Ram Sarup & Co. A I R 1932 Lah. 169, the case of Ehrael and another v. Rubairam A I R 1925 Pash. 502 and the case of Gobardhandas v. Daud Dayal A I R 1932 All. 273, it was held that by, the agreement to the extent of limiting the time within which rights could be enforced contained in the aforesaid clause 33(i), was void and that the plaintiff under the Limitation Act had the right to institute a suit within 3 ye4rs from the date when the contract was rescinded or was to be completed. It is true that in the above case a clause which purported to discharge the defendant from his liability after the expiration of 3 months if a suit was not filed or arbitration not commenced was held void to that extent. However, it was urged by Mr. Rahimtola that since in the above case the subject‑matter of the suit/appeal was a contract of supply of goods and not a contract of insurance, the principle enunciated in the above case cannot be pressed into service in the instant case. It was further urged by him that the other cases referred to hereinabove deal with the insurance policies and, therefore, on all the fours they are applicable to the instant case.
(ii) Reverting to 14 B L R 741, it may be observed that in the above case the insurance policy relating to life contained a clause to the effect that “No suit shall be brought against the company in connection with the said policy later than one year after the time when cause of action accrues”. In the aforesaid case a suit was filed on the insurance policy after the above period of one year but within 3 years as was provided by Article 86 of the First Schedule to the Limitation Act. It was contended by the plaintiff that the condition curtailing the period of limitation was void under section 28 of the Contract Act. However, the above contention was rejected by 0. B. of Bombay High Court comprising of Sir Narain G. Chand Varkar, Acting Chief Justice and Mr. Justice Batchalor and it was held that the condition was valid as the parties agreed thereby in substance that if no suit was brought within a year, neither party should be regarded as having any right against other.
(iii) With reference to A I R 1914 Born. 225, it may be stated that the subject matter in the above case was a claim arising out of a fire insurance policy, which contained a clause to the effect that if claim is rejected and a suit is not commenced within 3 months after rejection all benefit would be forfeited. The suit was filed after the expiry of the above period and it was urged by the plaintiff that the above clause, namely, clause 12 was hit by section 28. Beaman, J. held that in view of the case of Hirabhai v. Manufacturers Life Insurance Co., referred to hereinabove, he was bound to hold that the above clause was not hit by section 28. Against the above judgment and decree, the appeal was heard by a D. B. comprising of Scott, C. J. and Batchelor, J. Whereas Scott, C. J. doubted the correctness of the above decision given in the case of Hirabhai as the clause was worded in such a way that in fact it purported to curtail the period of limitation for filing a suit, but in view of the difference in the wordings employed in the clause which was the subject‑matter before Scott, C. J., he came to the conclusion that the aforesaid clause was not hit by section 28 of the Contract Act. Whereas Batchelor, J. while concurring with the conclusion arrived at by Scott, C. J. pointed out distinction between curtailment of the period of limitation for filing of a suit and the agreement of the party to get his right forfeited by the expiry of certain period. It may be advantageous to reproduce hereinbelow the relevant passage;
“The question is whether the agreement in Cl. 12 of the conditions is void under this section. As I understood the argument for the appellants, the learned Advocate‑General, while admitting what has;’ often been decided, that the Indian Limitation Act operates in such a case as this not to extinguish rights but only to bar remedies, contended that for the purposes of this appeal we should look rather to the substantial effect intended by the section than to the precise form of words which legislature has used. The argument was that, however valid and important in law the distinction between the barring of a remedy and the extinguishment of a right, yet to the man of business it is much the same thing whether his right be gone or the remedy for enforcing that right be barred, and it was urged that in substance and effect there was no appreciable distinction between saying `I agree that upon the expiry of three,, months after the rejection of my claim, my rights shall be forfeited,’ as is said here, and saying `as to the time within which I may enforce my right, I agree to limit it to the period of three months, after the rejection of my claim.’ and this letter covenant would undoubtedly be void under the section. In my opinion, however, the distinction, which beyond question exists, is vital in the construction of the section. As I understand the matter, what the plaintiff was forbidden to do was to limit the time within which he was to enforce his rights; what he has done is to limit the time within which he is to have any rights to enforce; and that appears to me to be a very different thing. This seems to have been the view which was tacitly accepted by the Calcutta High Court in the South British Fire and Marine Insurance Co. v. Brojo Nath Shaha, though it must be admitted that that decision is of no direct assistance, since the question of the effect of section 28, Contract Act, or such agreement was not expressly considered.”
(iv) Reverting to A I R 1924 Cal. 186, it may be observed that in the above case also the subject matter of the suit were the two fire insurance policies. In the above case also the suit was filed after the expiry of the period mentioned in clause 13 of the insurance policies. Clause 13 provided as follows;
“If the claim be made and rejected and an action or suit be, not commenced within 3 months after such rejection or in case of arbitra tion taking place in pursuance of the 18th condition of this policy within 3.months after the arbitrator or arbitrators or Umpire shall have made their award, all benefit under this policy shall be forfeited.”
A D. B. of the Calcutta High Court while construing the above clause held that the same did not infringe the provision of section 28 of the Contract Act. Reliance was placed inter alia on the above two Bombay cases.
(v) Referring to A I R 1926 Rang. 3, it may be stated that in the above case the subject‑matter was again fire insurance policy. In the aforesaid case the suit was filed after the expiry of the period provided for in clause 12 of the insurance policy which provided: that if a claim be made and rejected, an action or suit is not commenced within 3 months after such rejection or in case of arbitration taking place in pursuance of the 17th condition of the policy, within 3 months after the arbitrator or arbitrators or umpire shall have made their award, `all benefit under this policy shall be forfeited’. It was held by a D. B. of the Rangoon High Court in that the above clause did not violate section of the Contract It was also observed that a man made contract to the effect that on the happening of certain event, he shall lose all his rights, which covenant does not constitute curtailment of the period of limitation.
(vi) Reverting to A I R 1934 Rang. 15, it may be stated that in the above case also the subject‑matter was a policy of fire insurance containing identical clause, which is in the instant case, providing that in no case whatsoever shall be company liable for any loss or remedy after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject‑matter of pending action or arbitration. Lech, J. held that the above clause did not contravene section 28 of the Contract Act or Article 85 of the Ist Schedule to the Limitation Act and that the same was enforceable. Reliance was placed on the earlier case of Rangoon High Court as well as on the case of the Bombay and Calcutta High Courts referred to hereinabove, namely, A I R 1926 Rang. 3, A I R 1914 Bom. 225 and A I R 1924 Cal. 186.
(vii) With reference to A I R 1949 Cal. 392, it may be observed that in the above case as well the subject‑matter was fire insurance policy containing identical clause which is the subject‑matter of the instant appeal. It was urged by the plaintiff in the suit that the above clause was hit by section 23, but Me Nair, J. held that the clause was not void and that it did not operate so as to defeat the provision of law of limitation. It was further held that the plaintiff was not limiting as to the time within which he might bring a suit, but the restriction was on the time during which the company would accept liability for loss.
(viii) Reverting to A I R 1950 East Pun. 312, it will suffice to observe in the aforesaid case also the subject‑matter was a fine insurance policy containing identical clause. It was held by Kapore, J. that the above condition was not void.
(ix) With reference to A I R 1960 Pun. 236, it may be observed that in the above case the question for consideration before the Full Bench of the Punjab High Court at Delhi was, whether section 36(b) of the Displaced Persons (Debts Adjustment) Act, 1951 gave fresh right to a plaintiff to file a suit on an insurance policy containing the identical clause limiting the liability of the Insurance Company within a period of one year. It was held that the effect of above section 36(b) was to nullify the effect of the above aforesaid clause of the Insurance Policy. In the above case most of the case law on the subject was referred to and discussed and the Court proceeded on the assumption that a clause in a fire insurance policy limiting the period of liability of a Company was not hit by section 23 or 28 of the Contract Act. It may be advanta geous to refer to paras. 5 and 6 of the above judgment which read as follows;
“5. It appears that the law in England is that a limitation of the period within which action can be brought after loss is valid notwithstanding that it gives a shorter period than the Limitation Act, 1939 vide MacGillivary on Insurance Law Fourth Edition, page 1794, It may, however, be mentioned that it is difficult to draw any assistance from the law as it prevails in that country. There is no bar thereto parties curtailing the period of limitation in the absence of any provision analogous to section 28 ofjhe Contract Act.
(6) In the United States of America a similar condition in a policy against the maintenance of any action to recover a claim unless commenced within twelve months after the loss has been held to be valid. Riddlesharger v. Hartford Fire Ins. Co. Ltd. (1872) 19 Law Edn. 257. With regard to the policy of the statute of limitation it was stated that it was to encourage promptitude in the prosecution of remedies. Such statutes prescribe what is supposed to be a reason able period for this purpose, but “there is nothing in their language or object which inhabits parties from stipulating for a shorter period within which to assert their respective claims.
It is clearly for the interest of insurance companies that the extent of losses sustained by them should be speedily ascertained and it is equally for the interest of the assured that the losses, should be speedily adjusted and paid”. This reasoning is similar to the one adopted in some of the decisions mentioned before and Kapore, J. in A I R 1950 E P 352 has observed at page 353 that there seems to be a great deal of sense in it particularly in the case of fire insurance or insurance. against accident where the liability to the extent of damage caused, when the matters are fresh, can be measured with a certain amount of accuracy. Lapse of time in such cases may result in all kinds of claims which are not capable of determination with any amount of exactitude and when memories of man may become rather hazy.”
4. (a) From the above‑cited and discussed cases, it is evident that in India during pre‑Partition as well as post‑Partition days the various High Courts have consistently held that a clause limiting the period of an insurance company’s liability is not hit by sections 23 or 28 of the Contract Act and is legal and enforceable. It may be pertinent to observe that in the instant case clause 19 of the insurance policy does not provide that no suit can be filed for any loss or damages after the expiration of 12 months, but what has been provided is that “in no case whatsoever shall the company be liable for any loss or damage after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration”. If the wordings of the above clause would have been in the former form, we would have no hesitation to hold that it is hit by section 28 of the Contract Act. But since it is not so, we are not inclined to hold that it contravenes section 28. In our view, the distinction pointed out by Batchelor, J. in the aforesaid Bombay case, namely Baroda Spinning & Weaving Co. Ltd. seem. to be correct, namely, that if a clause imposes an embargo on the filing of an action after the expiry of a lesser period than what has been provided for in the Limitation Act, it would be hit by section 28 of the Contract Act, but if a clause provides a limit within which the plaintiff would have` any right to enforce, it would not be hit by the aforesaid section of the Contract Act. In our view the case of Mirabhai v. Manufacturers Line Insurance Co. was not correctly decided as admittedly the clause of the insurance policy, which was the subject‑matter of the above case was directly in violation of the provisions of section 28 of the Contract Act by providing that no suit shall be brought against the company in connection with the policy later than one year after the time when the cause of action accrues. Since as we have pointed out here in above that the language employed in the insurance policy in the instant case is different from the above Bombay case and is identical to the cases, reported in A I R 1934 Rang. 3, A I R 1949 Cal. 390 and A I R 1950 E P 352, we are inclined to follow the latter decision. It may be observed that in our view there is a distinction between providing that no suit or action can be brought after the expiry of one year or any other lesser period than provided for in the Limitation Act on the one hand the clause providing that the company shall not be liable for any loss or damage after the expiration of 12 months from the happening of loss or damage unless the claim is subject of a pending legal action or an arbitration.
(b) Since the High Courts in India have for about 70 years have con sistently taken the view that a clause in the insurance policy limiting liability of the insurance company for a certain period does not hit section 23 of the Contract Act in our view, it will not be just and proper to upset the above view after the expiry of such a long period. It may be pertinent to refer to the case of Mehr Allahditta and another v. Muhammad All an another P L D 1972 S C 59, in which a Full Bench of the Supreme Court while considering the question of procedural defect in a pre‑emption suit, namely, whether a pre‑emptor will lose his right to claim the pre‑emption if in a suit to enforce his right he joins with him a stranger, it was held that since the case of Sharaf and another v. Pirbux and another 83 P R 1893, held the field for the last 78 years and has been followed without dissent by the Courts in Punjab, on the principle of “stare decisis”, it is not desirable to change this view unless it is so held that it cannot be followed in the circumstances. Since for the last 70 years the clauses identical with the clause of insurance policy have been construed as having not violated section 23 or 28 of the Contract Act and, therefore, are enforceable, in our view the parties to the insurance contracts are presumed to have known the above legal position. It will, therefore, will not be just and proper to hold now that the clause in question violates sections 23 or 28 of the Contract Act. The appellants/ plaintiffs while entering into the contract of insurance are presumed to have understood that the respondent/defendant would be liable for a period of 12 months.
5. Reverting to the second and third contentions of Mr. Mansoorul Arfin that the respondent had not raised any plea in the written state ment to the effect that appellant No. 2 Ch. Mohd Hussain was a bena midar for his brother Ch. Wali Muhammad and, therefore, the learned Single Judge erred in permitting the respondent to adduce evidence on the above plea and that even otherwise they failed to discharge the burden of proving that appellant No. 2 Ch. Muhammad Hussain in fact was a benamidar for his brother Ch. Wali Muhammad, it may be observed that strictly speaking, it may be true that the word ‘benami’ or ‘benamidar’ has not been used in the written statement by the respondent, there are sufficient facts disclosed/pleaded in the written statement which indicate that Ch. Wali Muhammad had personal interest in the business carried on in the name of appellant No. 2 Ch. Muhammad Hussain. It is pertinent to point out that the conclusion arrived at by the learned Single Judge is not that Ch. Muhammad Hussain was a benamidar for his brother Ch. Wali Muhammad but is to the following effect:
“In all the circumstances discussed, I hold that the defendant has proved that the second plaintiff’s brother Ch. Wali Muhammad either owned the factory and/or stocks or had a substantial interest in the same, therefore, the question for consideration is whether the suppression of these facts by the plaintiffs entitled the defendant to repudiate the liability under its policies.”
We are inclined to hold that the conclusion arrived at by the learned Single Judge in any case to the extent that the evidence on record has proved that Ch. Wali Muhammad had substantial interest either in the factory and/or in the stock is in accord with law. It may be pointed out that the finding of the learned Single Judge that previously there had taken place three fires in the businesses either owned by the appellant No. 2’s brother Ch. Wali Muhammad or in which he had interest as a partner. It has also been proved that previously he had made claims and recovered compensation for the loss on account of fire. From the evidence on the record, it is evident that in fact Ch. Wali Muhammad was running the business in question, inasmuch as in the agreement of pledge dated 24‑11‑1961 Exh. 10/l, he signed as a witness and his address given was the same as of appellant No. 2, Ch. Muhammad Hussain. The lease agreement dated 18‑10‑1961 in respect of Hariana Cotton Factory, Phulawam (i.e. the factory in which fire had taken place) was signed by Ch. Wali Muhammad as the attorney for Ch. Muhammad Hussain, the proposal form for obtaining the insurance policy in question was also signed by Ch. Wali Muhammad as the attorney for Ch. Muhammad Hussain. The statement of account in respect of the account maintained by Ch. Muhammad Hussain commen cing from November, 1961 with appellant No. 1 bank indicates that in the month of December, 1961 about Rs. 1,24,000 were withdrawn in the name of Ch. Wali Muhammad against the total withdrawal of about Rs. 1,25,320. Similarly in the month of January, 1962 about Rs. 2,80,000 were withdrawn in the name of Ch. Wali Muhammad against the total withdrawal of about Rs. 3,25,000. Furthermore, in the month of February, 1962, most of the amount was withdrawn in the name of Ch. Wali Muhammad. The cheques drawn in favour of Ch. Wali Muhammad have also been brought on record as Exh. 12/1. It may be pertinent to refer to the statement of defendant’s witness Ch. Muhammad Ali on the point in issue, which reads as follows;
“Ch. Wali himself told and this was also confirmed my inquiries from the police and other sources that the factory business was his, but was being run in the name of Ch. Muhammad Hussain, his brother as Ch. Wali Muhammad had loans to pay to Sargodha Co‑operative Bank.”
The effect of the above documentary evidence coupled with the above oral statement, was to shift the burden to the appellants to explain, as to how Ch. Wali Muhammad was associated with the business of Ch. Muhammad Hussain. It is true that the statement of Ch. Mahmood Ali to the effect that he made inquiries from the police and other sources and discovered that in fact Ch. Wali Muhammad was carrying on business in the name of his brother Ch. Muhammad Hussain is hearsay and is not admissible in evidence, the statements of the other witnesses on the basis of inquiries without disclosing the source of inquiry and without examining the persons from whom these inquiries were made are inadmissible being hear say. However, the statement of Ch. Mahmood Ali, to the extent that he was told by Ch. Wali Muhammad himself that the business was his admissible. It was vehemently urged by Mr. Mansoorul Arfin that it was for the respondent to examine Ch. Wali Muhammad as a witness in order to prove the above statement. In our view, if Ch. Wali Muhammad would not have been operating the business in question for all intents and purposes, this might have been correct position. However, since from the record, it is evident that for all intents and purposes Ch. Wali Muhammad was operating the business in question and signing the docu ments including the lease in respect of the factory in question, where the loss had taken place. He also signed the proposal form in respect of insurance policies in question etc. The burden was on the appellants to examine Ch. Wali Muhammad to explain the reason as to why he was operating the aforesaid business on behalf of appellant No. 2 or in any case appellant No 2 should have examined himself. It is signifi cant to note that even appellant No. 2 Ch. Muhammad Hussain did not come to examine himself e respondent’s inter of their witness Ch. Mahmood Ali. inclined to hold that it is not necessary to conclude that Ch. Muhammad Hussain was a benamidar for Ch. Wali Muhammad. It is sufficient to hold that from the documentary evidence on record coupled with the or d evidence of Ch. Mahmood Ali that it has been proved that Ch. Wali Muhammad had substantial interest in the business of the factory and/or in stock in question.
It may be pertinent to observe that the learned counsel for the parties have cited a number of cases on the question of burden of proof in respect of a benami transaction. In our view, it is not necessary to examine the above case law, because of our above conclusion that it is not necessary to hold that Ch. Muhammad Hussain was a benamidar for 1 Ch. Wali Muhammad, but it will suffice to hold that Ch. Wali Muhammad had substantial interest in the factory and/or stock in question. From the above conclusion, it follows that there was supperession of material facts from the respondents at the time of obtaining the insurance policies in question warranting the repudiation of liability by them.
6. Reverting to Mr. Arfin’s contention, that in any case there was a composite insurance policy in favour of appellant No. 1 bank as a pledgee and appellant No. 2 as the pledger, and that the suppression of material facts by appellant No. 2 or his brother Ch. Wali Muhammad would not disentitle the appellant bank to maintain its claim for the loss to the extent of its interest, it may be observed that in support of his above contention Mr. Arfin has referred to Halsbury’s Laws of England 4th Edn. Vol. 25, para. 640 and 641, and also the case of General Accident, Fire and Life Assurance Corporation Lid and another v. Midland Bank Ltd. Scoffin & Willmott Ltd. and another (1940) 3 All E R 252. Whereas, Mr. Rahimtoola has contended that the suit as framed disclosed a joint interest and that no such plea was raised in the plaint indicating separate interest. He also referred to the case of Central Bank of India Ltd. v. Guardian Assurance Co. Ltd. (1936) 54 Lyds. L R 247, and J. Rustomji. It will suffice to observe that there cannot be any cavil to the proposition that there can be a composite policy, in which two or more persons may have their respective rights and interest and that the fraud on the part of one party would not prejudice the interest/right of an innocent party. However, from the plaint it seems that the suit was not framed on the basis that appellants Nos. 1 and 2 were claiming separate interest nor any plea was raised to the effect that the alleged suppression of material facts on the part of appellant No. 2 would not prejudice appellant No. 1’s interest. We, are, therefore, not inclined to examine the merits of the above contention at the appellate stage.
7.‑(a) Reverting to Mr. Rahimtoola’s contention that the finding of the learned Single Judge on the question of quantum of damages is not sustainable, it may be pertinent to observe that the respondent has not filed any appeal or cross objections in the above appeal in order to assail the above finding. However, Mr. Rahimtoola has urged that in view of the provisions of Order XLI, rule 22, C. P. C. the respondents are entitled to urge the above ground in support of the conclusion arrived by the learned Single Judge. It may be advantageous to reproduce Order XLI, rule 22(1), C. P. C. which reads as follows:
“Order XLI, rule 22 : Upon hearing, respondent may object to decree as if he had preferred separate appeal.‑(1) any respondent, though he may not have appealed from any part of the‑‑decree, may not only support the decree on any of the grounds decided against him in the Court below, but take any cross‑objection to the decree which he could have taken by way of appeal, provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow.”
It may be noticed that under clause (1) to rule 22 of Order XLI a respondent without filing an appeal has the right to support the decree even on a ground decided against him.
Mr. Rahimtoola has also referred to the case of Mhand and 2 others v. Mst. Amautul Hafeez P L D 1954 Lah. 278, the case of Robbert Colton Association Ltd. v. Firm Inayatullah Co. P L D 1959 Lah. 178, the case of Henry Stanley Ramsden and 2 others v. S. M. Fazail & Co. P L D 1964 Kar. 290, and the case of Messrs Yusuf & Co. v. Mst. Rashida Begum P L D 1.975 Kar. 684, in support of his above contention. It will suffice to observe that in the above cases inter alia it was held that a respondent is within his rights to support the decree granted in his favour even on any of the grounds decided against him by the trial Court before the Court of appeal without filing any appeal or cross‑objections. In view of the above legal position, we have allowed M. Rahirotoola to make his submission on the above ground.
(b) His main contention was that the surveyor was biased and, therefore, his survey report could not have been relied upon, and secondly, there was no reliable evidence produced by the appellants to prove the actual loss. In support of his above contention he has submitted that the surveyor in his cross‑examination admitted that he had acted as a surveyor in respect of claim made by Messrs Insaf Cotton Factory, in which Ch. Wali Muhammad was a partner. It may be observed that at no stage prior to the institution of the suit, it was alleged by the respondent that the survey report was not binding because of the bias on the part of the surveyor. nor the liability was repudiated by the respondent on the above ground. He also find no such plea in the written statement.
Reverting to the second limb of his arguments that there was no reliable evidence on record to prove the actual loss suffered by the appellants, it may be pertinent to observe he has invited our attention to the evidence of P. Ws. Muhammad Afzal and Nazar Hussain in order to show that there is variation in the number of the bales which were allegedly stored at the factory at the time of the fire, inasmuch as Muhammad Afzal had given figure of 1,700 bales, whereas Nazar Hussain has mentioned 1,400 bales. It will suffice to observe that before the learned Single Judge the stock registers maintained under the Cotton Control Act were attempted’ to be produced by appellant No. 2, but the same were not brought on record on account of objections raised by the learned counsel for the respondent. In our view, the conclusion arrived at by the learned Single Judge that it is not open to the respondent to repudiate the survey report of their own surveyor in the absence of any fraud or bias on his part seems to be correct. The survey report is based not only on the stock register Exh. 52/1, but also on statements of sale in the factory. Any discrepancy in the oral testimony of the witnesses of the appellants would not nullify the above report. It may also be pertinent to observe that the surveyor in his report had assessed the amount of damages on the assumption that the stock consisted of 500 bales of ginned and pressed cotton, 850 mds. of loose cotton. For the aforesaid reasons we are not inclined to disturb the finding of the learned Single Judge on the above issue.
8. Since we have concurred with the findings of the learned Single Judge on the aforesaid two points, namely, on the legality of clause 19 of the insurance policies and also on the question of suppression of material’ facts, the judgment/the decree is to be maintained. We, therefore, dismiss
the appeal, but there will be no order as to costs.
S. A. H. Appeal dismissed.