1988 PLP 1373 (CLC)

3. In support of the above first submission Mr. Shaikh Nasimuddin, learned counsel for the defendant has referred to section 230 of the Contract Act which provides that in the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal nor is he personally bound by them. It further provides that such a contract shall be presumed to exist in three cases, namely; (i) where the contract is made by an agent for the sale of purchase of goods for ,a merchant resident abroad: (ii) Where the agent does not disclose the name of his principal (iii) Where the principal, though disclosed, cannot be sued It has been contended by him that since the present two cases are not covered by any of the three exceptions the Corporation has no right to file the present suit. In support of the above submission he has referred to the following four unreported judgments given by a learned Single Judge of this Court: (i) Judgment dated 18‑8‑1987 given in Suit No. 343 of 1971 (Pakistan Insurance Corporation v . Pakistan National Shipping Cor poration) (ii) Judgment dated 29‑11‑1987 given in Suit No.118 of 1969 (Pakistan Insurance Corporation v. National Shipping Corporation) (iii) Judgment dated 29‑11‑1987 given in Suit No.218 of 1973 (Pakistan Insurance Corporation v. Messrs United Liner Agencies and another). (iv) Judgment dated 9‑12‑1987 given in Suit No. 195 of 1974 (Pakistan Insurance Corporation v. The Vice‑Chairman (Commercial) PWR Headquarters). In the above cases a learned Single Judge of this Court Ali Ahmed U . Qureshi, J. , inter alia, after referring to the provisions of the Pakistan Insurance Corporation Act, 1952 (hereinafter referred to as the Act) and National Co‑InsurAnce Scheme Regulations, 1970 (hereinafter referred to as the Regulations) has held that the Corporation has no right to sue in respect of right of subrogation arising out of an insurance policy issued by the Scheme. Whereas Mr. Abdul Rauf; learned counsel for the Corporation has referred to the background of the framing of the Scheme and has submitted that ordinarily the Scheme was framed on the basis of an administrative order of the Federal Government with the object to save the foreign exchange and to promote in Pakistan the insurance business but subsequently in 1967 the Scheme was given the cover under the Act inasmuch as clause (bbb) was enacted which contemplates subject to the provisions of the Act to cause arrangement and management, on such conditions as the Central Government may impose, of the general insurance business of the Government and statutory Corporations. He has also referred to the Regulations to point out that the same have been framed in pursuahce of powers contained under section 46 of the Act and the same provide a complete Scheme. It has also been submitted by him that the admission made by the Corporation's witness and the statement made by the counsel for the Corporation in the aforesaid suits on the point that the Scheme is a registered body is contrary to factual position inasmuch as the Scheme is not a registered body .

4. In this regard it may be pertinent to point out that section 22 of the Act gives the detail of the business activities of the Corporation which it is supposed to take upon itself which, inter alia, include under clause (aa) which was incorporated in 1967, conducting, subject to the direction of the Central Government and rules made in this behalf, the .business relating to any Scheme whereas the Scheme has been defined in clause (g) of section 2 of the Act as means any Export Credits Guarantee Scheme prepared by the Central Government, the principal object of which is to give credit guarantees for the purpose of any business connected with the export of goods from Pakistan or any manufacture,, treatment or distribution of goods, or rendering of services or other matters conducive to the export trade of Pakistan.

5. It may be observed that the Scheme in question is not covered by the above clause (aa) of section 22 read with clause (g) of section 2 of the Act. There is no other provision in the Act expressly providing the framing of the Scheme in question. It seems that the same has been framed in pursuance of the powers contained in the aforesaid clause (bbb) of section 22, whereas the Regulations have been framed under section 46 of‑the Act which empowers the Board of the Corporation to make regulations with the previous sanctions of the Central Government not inconsistent with the Act for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act and particularly without prejudice to the generality of the above power, on the items mentioned in clauses (a) to (q) of subsection (2) of section

46. It may be observed that a perusal of the above Regulations indicates that it provides detailed provisions for the framing and running of the Scheme: The objects of the Scheme are given in Regulation No.3 which reads as follows: "

3. Objects: The objects of the Scheme shall be‑ (a) To bring on the portfolio of the Scheme all Fire, Marine, Miscellaneous, Accident, Marine and Aviation (Hull). Bid and Performance Bond, Contractor's All Risks, Erection and Machinery Breakdown etc. i.e. all classes of general insurance business: (i) Emanating from all Government Ministries, Departments, Statutory Corporations and any other Bodies and Institutions under the Control of the Central and Provincial Governments, as may be determined by the Management Committee. (ii) and such other business as may be allocated to the Scheme by the Central Government. (b) To enter into reinsurance agreements with the Corporation as the Management Committee may deem necessary in respect of business falling under purview of the Scheme. (c) To decide and take action in matters affecting the common interest and welfare of the members in respect of business falling within the scope of the Scheme. (d) To unite in the Scheme the Pakistani Insurance Companies registered and incorporated in Pakistan; which are members of the Insurance Association of Pakistan and eligible to be or to continue to remain members of the a Scheme. (e) To take other actions, including training of employees, for the benefit and growth on healthy and sound lines of, the general insurance business in Pakistan."

6. It may further be observed that Regulation No.6 deals wit the eligibility of membership and inter alia, provides that ever Pakistani Insurance Company registered and incorporated in Pakistan being a member of the Insurance Association of Pakistan will be eligible for the membership of the Scheme whereas Regulation No. contemplates the distribution of the business of the Scheme amongs its members as may be approved by the Government from time to time on the advice of the Management Committee of the Scheme which is constituted in terms of Regulations Nos.9, 10 and 11 for running of the Scheme. It may also be stated that Regulation No.14 contemplates constitution of a claims committee for settlement of claims whereas Regulation No.16 provides for remunerations to the Corporation to be paid to it as may be determined by the Management Committee for operating the Scheme. It may further be stated that Regulation No.18 contemplates preparation of an annual budget of the Scheme; whereas Regulations Nos.19 and 20 deal with the responsibilities of the Corporation. It may be pertinent to reproduce the same which read as follows; "19 Responsibilities of the Corporation.‑ The Corporation shall ensure that‑ (a) Cover is provided immediately at reasonable rate; (b) Losses are settled expeditiously, (c) Maximum possible foreign exchange is saved in respect of business falling within the Scheme. (20) The Corporation shall‑‑ (a) Issue cover notes and policies on behalf of the members. (b) Settle all claims, including disposal of salvage, on behalf of the members. (c) Be responsible for the regular collection of premium in respect of the business underwritten by the Scheme. (d) Incur expenditure for running the Scheme, on behalf of members. (e) Maintain proper accounts and render such quarterly statements of accounts to the members as may be decided by the Management Committee from time to time."

7. It may also be observed that the other Regulations provide for maintaining of accounts, holding of general meeting, disabilities of members, election to the Management Committee etc. However, it may be pertinent to mention specifically Regulation No.27 which provides that the Scheme shall not be wound up except at the instance of the Corporation with the prior approval of the Central Government and in the event in such form or manner as may be determined by Corporation with the approval of the Central Government.

8. It seems to be an admitted position that though the Insurance Covers in question were issued .by the Corporation acting as the Secretaries to the Scheme but the insurance policies contained the names of the insurance companies and their share as to the risk undertaken by them. The question, therefore, arises whether the Corporation was acting as the agent of the Scheme or as agent of the insurance companies which under‑wrote the risk under the insurance covers. The first question cannot be answered without first determining the status of the Scheme, namely, whether the Scheme is a corporate body which can sue and be sued or is it non‑corporate body. As mentioned hereinabove that the Corporation's witness in some of the suits pertaining to above cited unreported judgment had stated before the learned Single Judge that the Scheme was a registered body. The same stand was taken by the counsel appearing for the Corporation in suit No.343 of 1971. However, in suits Nos.118 of 1969 and 218 of 1973, Mr. Abdul Rauf, Advocate, who had appeared for the Corporation took a contrary stand, namely, that the Scheme was not a body corporate but the learned Single Judge on the basis of the statement of DW Muhammad Teemaz examined in suit No.118 of 1969, in which he had stated that the Scheme was a limited company did not accept Mr.Abdul Rauf's above contention. In the instant cases there is no such statement of any witness of the Corporation nor there is any document on record to indicate that the Scheme was corporate body and, therefore, I have to examine the above question with reference to the provisions of the Act. A Corporation can be constituted /incorporated by a statute like K . M . C . Act, Karachi Port Trust Act, National Shipping Corporation Ordinance or a Corporation can be incorporated in pursuance of a provision in E a statute or it can be incorporated either under the Companies Act or similar Act like Societies Registration Act. The Scheme has not been incorporated by any Act or by registration under Companies Act or under any other similar Act, It is, therefore, to be examined, whether it has been incorporated in pursuance of a provision in the Act. I may again observe that clause (aa) of section 22 contemplates framing of the Scheme as defined in clause (g) of section 2 of the Act referred to hereinabove, which was to be run by the Corporation as its own Scheme and not as a corporate body. Reference in this regard may be made to the case of Pakistan Insurance Corporation v. Grindlays Bank Ltd and 3 others (1987 C L C 2164) in which Mr. Abdul Rauf, Advocate who had appeared for the Corporation had contended that the Corporation was managing the aforesaid Export Credit Guarantee Scheme as the agent of the Federal Government but the above contention was rejected and it was held that the said Scheme was managed by the Corporation as its own Scheme. I may again also observe that there is no express provision in the Act for framing of the Scheme but if it is to be held that the Regulations which constituted the Scheme have been framed in pursuance of the powers contained in clause (bbb) of section 22 read with section 46 of the Act, in that event it can be urged that the Scheme has been incorporated in pursuance of the provisions of the Act and, therefore, it has a corporate status. Even if I were to subscribe to the above view, the Corporation could not have filed the above suits in its own name but the same were to be filed in the name of the Scheme, though the Corporation could have signed the plaint as the Secretary in terms of the Regulations. However, if I were to hold that the Scheme is not a corporate body the Corporation was acting as the agent of disclosed members of the Scheme, namely, the insurance companies of which names were mentioned in the insurance policies and the respective shares of the risk under‑wrote by them were specified, in that event the suits were to be filed in the names of the companies concerned and the Corporation could not have filed the suit in its own name. I may point out that the Regulations not provide for filing of suit by the Corporation nor they provide that the Scheme will be a corporate body, which can sue and ..e sued though they provide for the issuance of insurance policies, settlement of claims and distribution of profits etc. among the insurance companies.

9. The irresistible conclusion keeping in view the clear provision of section 230 of the Contract Act seems to be that the Corporation is not competent to sue on the basis of right of subrogation in respect of the insurance covers issued by the companies who were members of the Scheme. The mere description in one of the paras of the plaint that the Corporation was acting as the Secretaries of the Scheme Would not change the above legal position,

10. It was also contended by Mr. Shaikh Nasimuddin that factually the Scheme has been dissolved by a notification dated 27‑12‑1973 referred to, inter alia, in the above one of the cited unreported judgments and, therefore, even otherwise the suits cannot be prosecuted. In my view, it is not necessary to examine this contention.

11. Reverting to the additional submission of Mr. Shaikh Nasimuddin that in suit No.4~.8 of 1972 the consignee was the Pakistan Tea Board and not the Trading Corporation and, therefore, the letter of subrogation given by the Trading Corporation in respect of the said consignment is of no value it may be observed that Mr. Abdul Rauf has submitted that because of the fall of Dhaka the outstanding transactions in relation to the Pakistan Tea Board were entrusted to the Trading Corporation and, therefore, it was competent to receive the compensation for the short‑landing and to issue the letter of subrogation. It will suffice to observe that nothing has been brought on record to indicate that the above transfer was done in pursuance of some legal cover. Be that as it may, since I am sustaining the above first ground it is not necessary to decide the above second ground in the above suit.

12. For the aforesaid reasons I hold that the Corporation is not competent to sue the defendants. With the result the suits are dismissed as being incompetent but there will be, however, no order as to costs, . A.A. /P‑51/K Suits dismissed.