1. This is an appeal by the defendants, as kartas of a joint Hindu family, from a judgment of Mr, Justice Bhagwati, dated March 27, 1946, whereby it was ordered that the plaintiff firm, who is described in the title to these proceedings, as 'carrying on business as commission agents', was entitled to have an account taken, subject to certain allowances and to giving credit for payments made on account of:
the actual cost price of the said 45 and 47 bales in aggregate 92 bales belonging to the defendants' joint family firms of Mohanlal Sohanlal and Mohanlal Kezriwal and destroyed on account of the fire due to the explosion as mentioned in the plaint as also their commission costs charge and expenses in respect thereof rightly incurred by the plaintiffs as such commission agents of the defendants and that they are entitled to an indemnity from the defendants in respect of the said amount.
2. The defendants filed a counterclaim to the action whereby they claimed credit in respect of the amount of insurance against fire which they alleged the plaintiff firm ought to have taken out or alternatively damages. This counterclaim was dismissed by the learned trial Judge, and he ordered the defendants to pay three-fourths of the plaintiff's costs of the action and counterclaim.
3. The action and counterclaim arose out of an order given by the defendants to the plaintiff firm, on or about February 6, 1944, for the purchase of 300 bales of cloth and concerns 92 of such bales, which were in a godown rented by the plaintiff firm, and being in such godown were destroyed by fire as the result of fire caused by the explosions, which occurred in the docks of this City on April 14, 1944.
4. The whole matter was capable of being contained in the narrowed limits of a witness action which should have occupied at the most three or four days, since the vital factor is as to the terms and nature of an oral contract, made by Mr. Mohanlal Puranlal (one of the defendants) with Mr. Madhanlal Surajmal on behalf of the plaintiff firm, with regard to these 300 bales, and in particular whether it was the duty of the plaintiff firm, as agents for the defendants, to insure the bales of cloth against fire during the period, when the bales would have to remain in godowns in Bombay, pending the receipt of the necessary permit from the Textile Commissioner for their removal out of Bombay, pursuant to the permit system which had come into operation on January 1, 1944. Nevertheless, so bitterly was the matter contested in the Court below and such was the aggravation of the irrelevancies introduced, that the trial of this action has involved costs of about Rs. 60,000, has dragged on for 14 days, and resulted in a judgment by the learned Judge of some 40 printed pages in length. Costs have been wasted, and we propose in the exercise of our discretion to make a special order with regard to them at the conclusion of our judgments. But I cannot fail to observe that it is this type of proceedings which adds fuel to the fires of controversy with regard to the delays and heavy costs of litigation on the Original Side of this High Court.
5. As developed and controlled in this Court a short problem emerges, though one which in one of its aspects, is not free from difficulty. It is the case of the plaintiff firm that it was acting as an agent on a commission basis for the defendants for the purchase and despatch of these 300 bales of cloth. So that the alternative and inconsistent plea which the defendants raised in the Court below, that the plaintiff firm was their pacca adatia, does not arise at all, if the defendants' main submission, that as their agent, it was the duty of the plaintiff firm to insure these bales of cloth succeeds, as in my opinion it must succeed. The real difficulty is with regard to the measure of damages, having regard to the Bombay Explosion (Compensation) Ordinance XXXII of 1944 promulgated on July 13 of that year. But in view of his finding in the lower Court that there was no liability of the plaintiff firm to effect an insurance against fire, this question is not dealt with by the learned Judge in his judgment.
6. This finding is upon issue No. 4, which is amongst the 18 issues raised in the trial Court:
Whether it was agreed that the plaintiffs were to insure the goods in their own names and the defendants were not to be responsible for any risk to the goods as alleged in para 4 of the written statement.
7. By its plaint the plaintiff firm alleged:
The plaintiffs have been acting as the commission agents of the defendants' joint family inter alia for purchasing and consigning piece goods from Bombay for the last 8 to 10 years.
And in paragraph 8:
On or about February 6, 1944, defendant No. 1 came to Bombay and stayed for about 8 or 10 days. During his stay in Bombay defendant No. 1 in company of the plaintiffs' partner purchased piecegoods from time to time, from various merchants in Bombay in the name of the plaintiffs as defendants' commission agents. The bales purchased during the said period by defendant No. 1 personally in Bombay aggregated to about 278 bales.
And in paragraphs 10 and 11:
The plaintiffs, as commission agents from time to time, paid for and took delivery of for and on behalf of the defendats joint family firms, the aforsaid bales purchased by the 1st defendant in Bombay. The defendants, from time to time, made payments to the plaintiffs in respect of the aforesaid purchase.
The plaintiffs with the knowledge and approval of the defendants kept the aforesaid bales, as well as bales from time to time subsequently purchased for and on behalf of the defendants' said joint family firm in godowns Nos. 4 and 25 Baroda Street, Argyle Road, Bombay, occupied by Messrs. Madanlal Banwarilal and Messrs. Nandram Manmohan and in godown at Kalbadevi occupied by the plaintiffs, on account and at the risk of the defendants' said joint family firms uninsured pending obtaining the permits for consigning the same. The defendants were fully aware of the same and never raised any objection thereto.
The defendants by their written statement said:
Without prejudice to the aforesaid contentions and in the event of it being held that the plaintiffs were commission agents, the defendants say that the plaintiffs had agreed and undertaken to ensure all the bales which were to be kept in the godowns and were bound to insure the same. The defendants say that the plaintiffs were guilty of negligence and misconduct in the business of agency as in spite of the specific instructions and agreement they failed to insure the said bales. The defendants say that on account of the plaintiffs' said negligence and misconduct the plaintiffs are not entitled to be indemnified in respect of the bales destroyed by fire. The defendants further submit that in any event the plaintiffs are liable to make good the loss caused to the defendants by their failure to insure the said bales. The defendants submit that the plaintiffs are not entitled to make any claim against the defendants in respect of the said 92 bales.
8. After an exhaustive consideration of the evidence, the learned trial Judge came to the conclusion that the agreement to insure was not proved, though he came to the conclusion, with which I agree, that the plaintiffs' firm acted as the commission agents for the defendants, and further, after discussing the various additional expenses which would be incurred by reason of the introduction of the permit system, such as 8 as. per bale for transport to the godown, 8 as per bale as godown rent and, 'if insurance were effected 4 as. per bale whatever the period may be, a day or a month' the learned Judge continued:-
I am also of opinion that defendant No. 1 must have agreed to these charges as such. There was nothing to demur against this. The charges were not such as to excite any further investigation and defendant No. 1 must have agreed to pay these charges on behalf of the defendants. If the matter rested here, there would be nothing further to trouble about but both the parties have gone much further than what in my opinion they should have. Whereas Madanlal on behalf of the plaintiffs asserted that after this conversation he asked the first defendant whether he was instructing him to effect insurance of these bales defendant No. 1 told him that not much time would be occupied in obtaining the permits and that if necessary, he would give instructions to the plaintiffs from Deoria later on, the first defendant asserted as was sworn to in paragraph 4 of the written statement and counterclaim of the defendants that the plaintiffs agreed that they would insure the bales in their own name and that they would be responsible for the loss in respect of the goods and that the defendants would not be at all responsible in connection with the same.
I do not believe Madanlal when he says that he asked for instructions from defendant No. 1 when defendant No. 1 was about to leave for Deoria and the first defendant said he would send instructions later on. I also do not believe the first defendant when he said that there was such an agreement arrived at between the parties as set out in para 4 of their written statement and counterclaim. In his cross-examination, he at one time stated that there was no such talk expressly about the risk or responsibility in connection with these goods between Madanlal and himself. At another time he stated that the plaintiffs were pacca adatias and that he was not concerned with the goods up to the time the railway receipts in respect thereof had been obtained by him, that he was not concerned with what the plaintiffs did in the matter of the insurance, and that therefore there was no necessity of having any conversation between the parties, yet he said that the matter was talked about, when conversations used to take place between Madanlal and himself. I do not accept a word of what defendant No. 1 said in the witness-box in this behalf. I have already characterised the evidence of the first defendant as that of an untruthful witness, I hold that he has failed to establish the agreement which was pleaded on behalf of the defendants. As regards Madanlal also there were certain points in which he was really found to be unreliable in the witness-box.
9. It comes to this, that owing to the confusion introduced into the trial by the averments and denials with regard to pacca adatia, the learned Judge has been constrained to say that the evidence of both Mr. Mohanlal Puranmal and Mr. Madanlal Surajmal, who admittedly made such arrangements and agreements as were in fact made, is not to be believed.
10. If the matter had rested there, as the onus of proof is on the defendants to prove their counterclaim, that is to say, the obligation of the plaintiff firm to insure against fire, they would have failed to do so. But the learned Judge does not appear to have given any sufficient weight to the documentary evidence, which in my judgment is conclusive in favour of the defendants' counterclaim.
11. The whole of these 300 bales could not be despatched at the same time, and it is common ground that they had to be and were in fact sent to the defendants piecemeal. 99 of the 101 bales were despatched by rail on February 14, 1944, after an intervening period of being retained in godowns for varying periods while permits were being sought, and with regard to the 99 bales advices or invoices were sent by the plaintiff firm to the defendants. The second consignment of 91 bales which had also been similarly treated was despatched on April 10, 1944, but in the case of these bales owing to the intervention of the explosion and fire, it seems that the advices or invoices were either not sent forward, or, if sent, were not received. The third consignment was to be the 92 bales which were in fact destroyed. A permit had been applied for for these bales on March 4, but had not been received before the explosion and fire. The total of these three consignments is 284 bales, leaving 6 bales which are described as 'local pieces', and it appears that they were subject to special treatment, and we need not bother any more about them.
12. It is common ground that these three consignments, totalling 284 bales, were all of them included in the subject-matter of the agreement, relative to the 300 bales, that is to say, the oral agreement arrived at between Mr. Mohanlal Puranmal and Mr. Madanlal Surajmal on or about February 6, 1944, and the vital documents are the advices or invoices, sent by the plaintiff firm to the defendants in respect of the first consignment, and show in the case of the 99 bales of the 101 hales of the first consignment, a regular deduction at the rate of four annas per bale in respect of insurance, which is debited to the defendants' account with the plaintiff firm. But the matter does not rest there, for there has been put in evidence an advice or invoice of the plaintiff firm addressed to the defendants and dated November 18, 1943, that is to say, before the permit system was introduced and therefore before the necessity for retaining the goods for some period in Bombay arose, and although in this invoice, commission, charity, mukadamage, committee and registration charges are debited against the defendants, as well as the price of the goods consigned, there is no debit in respect of insurance. However, in the case of the ten advices or invoices, one of them dated February 9, five of them, dated February 12, and the remaining four, dated February 14, referential to 99 of the 101 bales of the first consignment, in each case there is debited against the defendants not only the customary charges for commission, charity, mukadamage and committee, but also the three new charges in respect of transporting the bales to the godown, godown rent and insurance. The insurance charge is always at the rate of 4 annas per bale. How in these circumstances the plaintiff firm can be heard to say that its dealings with the defendants with regard to the three consignments, all of which are covered by the arrangements made in respect of the 300 bales on or about February 6, 1944, did not contain the obligation to insure when the bales had to wait in a godown, I find it difficult to understand. Confronted with this position, Mr. Madanlal Surajmal under cross-examination made the surprising statement that the charge of sums for insurance in these invoices was 'a mistake', a statement still born in point of veracity, in the mouth of the witness' when what happened in the case of the remaining two bales of the 101 bales is considered.
13. These two bales were immediately broken up and despatched to the defendants by parcel post, and no insurance was charged in respect of them because there was no waiting period in godown. The learned trial Judge has found that the insurance charged on the 99 bales was due to 'stupidity', which can only mean that the advices or invoices contained a fraudulent misrepresentation that the defendants' risk against fire had been covered when in fact it had not. In my judgment it does not lie with the plaintiff firm or its witness to attempt to excuse their default in not insuring by asserting that when they in fact charged the defendants with insurance premia they did so dishonestly.
14. The inevitable and irresistible inference to be drawn from the documents is that it was the duty of the plaintiff firm to insure, and as they did not insure the 92 bales comprised in the third consignment and which were destroyed, they must bear the consequences for their breach of duty.
15. In my opinion this is a case in which what was said by Lord Simonds in delivering the judgment of the Judicial Committee in Ramdhandas Jhajharia v. Ramkisondas (1946) 49 Bom. L.R. 244. applies with equal force (p. 245):
Upon this apparently simple question oral evidence voluminous and bewildering has been given and their Lordships find themselves in agreement with Chagla J. who in the Appeal Court said: 'In a case where oral testimony is of such an unreliable and untrustworthy character, the safest policy would be to let the documents speak for themselves.' This does not mean that, when the question whether a transaction is a sale or a mortgage, form is to be perferred to substance. It is an inviolable rule that upon such a question the Court must find the substance behind the form. But where the oral evidence is unreliable and contradictory the Court cannot safely depart from the written evidence of the document.
16. In my judgment the plaintiff firm is shown by the documentary evidence to be clearly liable for the consequences of its default is not insuring these 92 bales against fire. That raises the only question of any difficulty in this case, and the one to which most of the arguments in this Court have been addressed, viz. what is the measure of the liability of the plaintiff firm to the defendants in terms of compensation or damages for the breach of duty of the plaintiff firm in not insuring these 92 bales.
17. The question arises in this way. The plaintiff firm called as a witness Mr. Shembavanekar, who is an Assistant Branch Manager of the Triton Insurance Co., Ltd., a company which amongst other business insures against fire, and he states that in Bombay a fire insurance policy, 'is on a standard form prescribed by the Bombay Fire Insurance Association', and he produced (exhibit A-13) a standard form of policy. His evidence shows that the rates for fire insurance vary greatly. But it also shows that the rate agreed between the plaintiff firm and the defendants at 4 annas per bale per month, is not an unreasonable rate, since it is common ground that a bale was taken as worth Rs. 1,000, and the rate is a quarter of 1 1/2 per cent. which works out at 4 as. 4 1/2 p. per bale per month.
18. Turning to the common form of policy, it is however apparent that it would have needed some modification, since it provides that unless otherwise expressly stated in the policy the insurance does not cover 'goods held in trust or on commission' and also there is expressly excluded by sub-paragraph (h):
Any loss or damage occasioned by or through or in consequence of explosion but, loss or damage by explosion of gas used for illuminating or domestic purposes in a building in which gas is not generated and which does not form part of any gas works, will be deemed to be loss by fire within the meaning of this policy.
19. There is also excluded by paragraph 6 of the standard form of policy, loss or damage: 'directly or indirectly, approximately or remotely occasioned by or contributed to by any of the following occurrences, or which, either in origin or extent directly or indirectly, approximately or remotely arises out of or in connection with any of such occurrences', and amongst the occurrences are, 'war or warlike operations.' So that the point taken by Mr. Somjee on behalf of the plaintiff firm is that even if an insurance had been effected, the fire caused as the result of the explosion of an ammunition ship in the docks on April 14 would have been an excepted risk, and he relies upon such cases as Stanley v. Western Insurance Company (1868) L.R. 3 Ex 71 Hooley Hill Rubber and Chemical Co. and Royal Insurance Co., In re  1 K.B. 257 and Curtis's and Harvey (Canada) v. North Britain and Mercantile Insurance Co.  1 A.C. 303.
20. What the position would have been under such a standard form of policy, having regard to the facts of the explosion which caused the fires which burnt the 92 bales, does not, in my opinion, become material. There is no evidence in this case as to what in fact occurred, because by the Bombay Explosion (Compensation) Ordinance XXXII of 1944, the Government of India passed an Ordinance: 'to provide for and regulate the payment of compensation' in respect of the explosions and fires in Bombay on April 14, 1944, and it is Clause 14 of that Ordinance which deals with the position of property insured against fire, and provides that subject to the provisions of the Ordinance, there shall be paid by the Central Government compensation for explosion damage to property, being 'damage caused by fire to property insured whether wholly or partially at the time of the explosion against fire under a policy...covering fire risk...an amount equal to the approved loss,' Clause 15 provides that the insurer of properties covered by Clause 14 may pay from his assets in such manner and at such times as may be prescribed to and for the purposes of the Central Government a contribution of such an amount as may be agreed.' Clause 10 provides for compensation for explosion damage to uninsured property and under this clause approximately 50 per cent. of the value of the 92 bales has already been received by the plaintiff firm, so that it is the difference between what has already been received from Government and the full loss which is the amount in dispute on the counterclaim.
21. Sub-clause 18(2) of the Ordinance provides:
No person shall have, or be deemed ever to have had, otherwise than under this Ordinance any right whether in contract or in tort or otherwise to any compensation or damages for any death, personal injury or damage to or loss of any property, rights or interests, due to or in any way arising out of the explosion; and no suit or other legal proceedings for any such compensation or damages shall, save as aforesaid, be maintainable in any Court against...any other person whomsoever.
22. Mr. Shembavanekar stated under cross-examination that there was a settlement between Government and the Insurance Companies whereby the Insurance Companies contributed 12 1/2 per cent. for the claims of their clients, Government contributing the other 87 1/2 per cent. He further says that the contribution by the Insurance Companies was the result of a settlement between the Companies and Government. 'The clients were thus paid the full amount of their claims.' That of course has reference to the provisions of Clause 14 of the Ordinance.
23. The contention of the defendants is, that if the plaintiff firm had effected the insurance on these 92 bales, as its duty was, full compensation would have been received and not one-half only, and accordingly that is the measure of the indemnity or damages which by their counterclaim they claim from the plaintiff firm. It is of course impossible to speculate' what would have happened if Government and the Insurance Companies had not come to the arrangement, whereby persons insured against fire were paid in full. But the fact remains that all persons whose property was insured against fire received, and in my opinion received directly as a consequence of their insurance policies, the full amount of the proved claim. In my opinion the Ordinance cannot be said to be an intervening cause or some independent volition which would make damages either unnatural or not the direct result of the breach of duty of the plaintiff firm, for whether or not the claim of an insured person would have been successful under a policy in the circumstances which happened, it is a claim which was barred by a law which itself provided for full compensation. In my opinion therefore the proper measure of the indemnity or damages which the plaintiff firm must make is the difference between what was in fact received under the Ordinance, and what would have been received if the plaintiff firm in the performance of its duty had insured these 92 bales against fire. The order of the Court below will be set aside.
24. Without prejudice to the rights of either party to appeal against this judgment to a higher Court, the parties have agreed, in order to save the costs and the delay of a reference to make inquiries and take accounts, that the result is that there will be nothing due or owing by the plaintiff firm to the defendants under the counterclaim, or by the defendants to the plaintiffs under the plaint, as the two amounts are approximately the same. So there will be on that basis no order on the plaint or on the counterclaim though in substance the defendants have succeeded. The appeal must therefore be allowed and the cross-objections dismissed.
25. With regard to costs. The only real difficulty in this case has been with regard to the indemnity or damages, and the only evidence with regard to that is the evidence of Mr. Shembavanekar, which is commendably short and occupies only two pages of the 359 printed pages of the record of this appeal. There was a shocking waste of time and expense in the lower Court caused by the defendants pursuing the alternative, though inconsistent allegation, that the plaintiff firm were pacca adatias and not their commission agents. Having given this matter our careful consideration, we have come to the conclusion that the proper order with regard to costs is to deprive the defendants of all their costs in the trial Court and to give them their costs of this appeal, no order as to costs of cross-objections.
26. I agree.
27. As we are differing from the trial Court on a question of fact, I should like to add a few words. The burden of proving the agreement to insure was undoubtedly upon the defendants, and the learned Judge has come to the conclusion that they have failed to establish the agreement. The agreement was deposed to by defendant No. 1, and if the matter rested only on the appreciation of the oral testimony of this witness, the Court of Appeal would certainly not have interfered with the decision of the learned Judge.
28. But the circumstances under which the learned Judge gave his finding are very peculiar. According to defendant No. 1, the agreement was arrived at with Madanlal, a partner in the plaintiff firm. Madanlal in his evidence denied that any such agreement was arrived at. It is not as if the learned Judge weighed up the conflicting testimony of these two witnesses and came to the conclusion that Mohanlal's evidence was to be preferred to that of Madanlal. The learned Judge has characterised both witnesses in very strong language as unreliable. With regard to Madanlal, he has gone so far as to say that he could not accept his testimony unless it was corroborated by documents which were incontrovertible. In view of this state of evidence, it is desirable to try and discover some documentary evidence which might act as a sure and clear pointer to where the truth lies. fortunately in this case that pointer is supplied by documentary evidence of the most clear and cogent character.
29. It can hardly be disputed that on February 6, 1944, defendant No. 1 gave instructions to the plaintiff to purhcase 300 bales. One hundred and one bales out of these 300 were despatched on February 14, 1944, and advices in respect of 99 bales out of these 101 bales were sent by the plaintiffs to the defendants. Now in all these invoices the plaintiffs have charged the defendants 4 annas per bale for insurance. The defendants' case is that the agreement was to charge for insurance at the rate of as. 4 per bale, and these advices to my mind clinch the matter and completely corroborate the defendants' case. It is not possible to distinguish between these 99 bales and the 92 bales which are the subject-matter of this litigation. If the plaintiffs charged as. 4 per bale for insurance pursuant to this agreement in respect of 99 bales, then they had no answer to the defendants' claim with regard to the 92 bales with which we are concerned. Madanlal, realizing how damning this documentary evidence was, tried to explain it away by suggesting that these insurance charges were not really in respect of insurance but in respect of supervision. This explanation is so patently false that the learned Judge has not accepted it and Madanlal himself went back upon it later in his tesitmony. The next suggestion which was made was that the plaintiffs charged for insurance with a view to make illicit gain although there was no agreement to insure and in fact goods were not insured, and curiously enough the learned Judge has accepted this explanation. In my opinion when there is a document which conclusively establishes a party's right, the Court should not permit the other party to put forward a case in explanation of that document which depends upon the admission of the other party that his conduct was dishonest and fraudulent.
30. But the matter does not rest here. In my opinion all the probabilities are in favour of the Court coming to the conclusion that there was an agreement with regard to insuring these goods. The permit system came into existence in January 1944 which necessitated a change in the mode of business. Goods could not be immediately despatched: they had to be brought into the plaintiffs' godown and stored there for some time. It is common ground that the defendants agreed to pay to the plaintiffs additional charges in respect of storing the goods in the godown. It seems to me highly probable that under these circumstances the defendants should also have instructed the plaintiffs to insure the goods and should have agreed to pay the insurance charges. Surprisingly enough the learned Judge himself takes the same view of the probabilities of the case, and he definitely expresses the opinion that defendant No. 1 must have agreed to pay the insurance charges on behalf of the defendants; but having come so far, he refuses to go to the logical length and hold that instructions were given to insure the goods by defendant No. 1 and that there was an agreement to pay these charges.
31. A great deal has been made by Mr. Somjee of the fact that in the written statement the agreement pleaded was not only with regard to the payment of as. 4 per bale for insurance charges but also that the plaintiffs were to insure the goods in their own name and that the defendants were not to be responsible for any risk to the goods and that the plaintiffs were to be solely responsible for all the risk in respect of the goods. During the trial Mr. M.P. Amin, counsel for the defendants, made it clear that he was only relying on the agreement to the extent that the insurance was to be effected against fire on an ordinary fire insurance policy. Really the material part of the agreement which the defendants set out to prove was an agreement to insure the goods on the part of the plaintiffs against fire and the liability of the defendants to pay as. 4 per bale. The further elaboration of the agreement was really due to the rather inconsistent case that the defendants put forward at the trial that the plaintiffs were not their commission agents but their pucca adatias. This contention was not pressed before us. A party may allege that there was an agreement in respect of three or four points and he may succeed only in establishing that there was an agreement only on one point. That does not necessarily negative his whole case with regard to the agreement. In my opinion the learned Judge has not attached that importance to the documentary evidence in the case which he should have done. If he had, I am sure he would have come to the same conclusion, namely, that the documentary evidence is only consistent with the agreement alleged by the defendants and is inconsistent with the absence of such an agreement.
32. It has been further argued by Mr. Somjee that the defendants cannot maintain this claim in respect of the loss suffered by them against the plaintiffs in view of Section 18 of Ordinance No. XXXII of 1944. That section bars any suit whether in contract or in tort or otherwise to any compensation or damages for any loss of any property due to or in any way arising out of the explosion. Now in my opinion the defendants' claim does not arise out of the explosion nor is it in any way due to the explosion. The plaintiffs have filed this suit as agents on an indemnity, and the defendants' answer is that they were entitled to a set-off against the amount due to the plaintiffs the loss incurred by them by reason of the fact that the plaintiffs as the defendants' agents did not carry out the defendants' instructions. If the plaintiffs' claim on the indemnity does not arise out of the explosion, equally so does the defendants' set-off not so arise. The defendants' cause of action is failure by the plaintiffs to carry out their instructions, and that cause of action has nothing whatever to do with the explosion.
33. It has also been argued by Mr. Somjee that the damages sought to be recovered by the defendants are too remote. It is argued that in law the liability of the plaintiffs is what the liability of the insurer would have been; or, in other words, the defendants can only recover from the plaintiffs what they would have recovered from the insurance company on an ordinary fire insurance policy if the goods had been insured. Mr. Somjee says that under the Ordinance there is no liability on the insurance company and the only liability is on the Government itself; and, therefore, the defendants are not entitled to get from the plaintiffs what they would have recovered from the Government. Mr. Somjee further says that if the Ordinance had not been passed, in view of conditions Nos. 6 and 7 of the policy, inasmuch as the goods are not insured against explosion, the insurance company would not have been liable at all. In the first place, this point does not seem to have been argued before the learned Judge below and I agree that no proper issue has been raised. But the position on the Ordinance seems to be that under Clause 14 Government takes over the liability of the insurer to pay for the loss caused to the insured property. Therefore the Government becomes the insurer and the only condition of its liability is that the goods should be insured against fire, and under Clause 18 it is provided that the only right that an insured has for compensation or damages for any damage or loss to the property is the right which the Ordinance gives him and every other right is extinguished. Therefore when the loss occurred, namely, on April 14, 1944, retrospectively by reason of the Ordinance the only right that the holder of the fire policy had was not against the insurer but against the Government; and what the defendants are claiming against the plaintiffs is the compensation which the Government would have paid them if the goods had been insured.
34. Further it must be remembered that the question whether the insurance company was liable on an ordinary fire insurance policy or not has not been litigated and could never be litigated in view of Clause 18 of Ordinance No. XXXII of 1944. It could not be said that the plaintiffs had no claim against the insurance company on the policy on April 14, 1944. The insurance company might have in defence taken its stand on Clause Nos. 6 and 7 of the policy. But the plaintiffs' claim and the plaintiffs' rights under the policy were taken over by the Government by the Ordinance and the Government became liable to pay compensation in place of the insurance company.