1. The plaintiffs have tiled this suit as the owners of a vessel called the Fatehkhair to recover from the defendants as underwriters the sum alleged to be duo on a policy of marine insurance effected on the above vessel. Defendants Nos. 1 and 4, who appear and contest the suit, have raised a variety of defences which will be found embodied in the thirteen issues that have been raised in the suit. In most of those defences there is little or no substance and I do not find it necessary to discuss them at any length,
2. The plaintiffs' case is that the policy was a time policy for two hundred and eighty days and that the ship sailed from Jamnagar in September 1919 with a cargo of rice and proceeded to various ports, finally arriving at Busrah about the beginning of the mouth of January 1920. The details of the voyage as far as Busrah are not necessary for the purposes of the present suit. After the voayel left Busrah, it is said, the proceeded to Fao, and after leaving Fao she encountered bad weather and was driven ashore on the coast of the Persian Gulf near a place callel Mastafa. There she became a total loss and the captain and the crew made their way to Linga, whence a telegram was sent to the owners in Bombay, and from Linga they proceeded via Karachi to Jamuagar, the home port of the vessel in question.
3. That is in brief the plaintiffs' case, and turning to those issues which are of minor importance and which embody defences, which might well have been omitted having regard to the evidence in the case, I will make the following remarks. The first issue is : Whether the plaintiffs are owners of the vessel fatehkhair. As to that, it is sufficient to say that there is the evidence of a partner in the plaintiffs' firm that they purchased the vessel. That evidence is supported by extracts from his accounts showing rayments made towards the purchase price, There is the evidence of the captain who swears that the plaintiffs were the owners. There is the evidence of the broker who effected the policy and of the plaintiffs' Munim, and there is also the fact that the defendants, the underwriters, accepted the plaintiffs' firm as the owners of the vessel when they effected the insurance. There is also other evidence which it is unnecessary to discuss. Against all that there is nothing upon the record to suggest that any other person was the owner of this craft; and, therefore, there can be no doubt that the first issue must be answered in the affirmative.
4. The second issue is : Whether the plaintiffs had any insurable interest; and the finding on that follows the finding on the first issue.
5. Then, another point has been taken, that the vessel was not seaworthy, and that too is one which possesses no substance whatever. It is settled law that on a time policy there is no warranty of seaworthiness, and in any case it would be for the defendants to show that the vessel was not seaworthy. The evidence of the captain at least implies that she was seaworthy and there is nothing whatever to the contrary.
6. Then, again, an issue is raised : Whether the vessel was lost by the perils insured against. Precisely what is understood by that issue I do not apprehend. No argument has been advanced before me upon the point, and seeing that the vessel, if the story told before me is true, was lost by the perils of the sea, there is nothing in that defence. It was further denied that the vessel was lost in the manner alleged in the plaint. As to that, there is no room for reasonable doubt in the light of the evidence recorded. The tindal Jusnb Abu gave a very lively and apparently truthful account of the voyage and of the manner in which the vessel was lost. I see no reason whatever to decline to accept the story told by him. I believe it to be true; and the only criticism made was that whereas in the plaint the date of the loss was given as February 20; 1920, a calculation of the dates given by the tindal in his evidence would bring the date to somewhere about February 7. Well that is a discrepancy which perhaps would have been avoided if a little care had been taken to arrive at the precise date; but it is one which is immaterial and does not detract in any way from the truth of the story told by the tindal. In other respects, no criticism has been made on this man's evidence and I accept it as true. It clearly shows that the ship met bad weather the third day after she left Fao, that bad weather got worse and at a certain point when a squall was approaching the crew endeavoured to take down the sail and while they were doing so the pulley on the mast jammed and the mast was carried overboard. They were obliged to cut it loose to avoid further damage and to bring the ship to anchor After some time the anchor-cable broke and the ship drifted towards a rock and during the night on a falling tide the ship was practically broken up. I do not feel any reason to doubt that the ship was so broken up as to lose her character as a ship and, therefore, there was an absolute total loss. Enough has been said to show that the questions raised in the fourth, fifth and sixth issues must also be answered in favour of the plaintiffs.
7. The real point in this case, in fact the only arguable point, is as to the question of the premium, First, it is argued that no premium has been paid and from this it is further argued that the plaintiffs, the assured in this case, are not entitled to recover anything on the policy. These two questions. that is whether in point of fact the premium was paid and whether if it was not paid the result is as contended for by the defendants, are closely interconnected. In my opinion it makes no difference whether the premium was in fact paid or not; and I will approach the question which arises from that point of view. It is, I understand, conceded that under the English law relating to marine insurance the non payment would afford no defence to the underwriter of a suit by the assured to recover losses. The matter is compendiously stated in Halsbury's Laws of England, Vol XVII, Article 692, and I will cite a short past age :~-
Unless otherwise agreed, where u marine policy is effected on behalf of the assured by a brokor, the broker is directly responsible to the insurer for the premium, and the insurer is directly responsible to the assured for the amount which may be payable in respect of losses or in respect of returnable premium. Where a marine policy effected on bolulf of the assured by a broker acknowledges the receipt of the premium, such acknowledgment is, in the absence of fraud, conclusive as between the insurer and the assured, but not aa between the insurer and broker.
8. It must necessarily follow from that that in a suit between the assured and the underwriter, no question can arise as to the payment of premium.
9. The matter will be found further discussed in Arnould on Marine Insurance, Vol, I, (10th Edition), p. 155. The judgment of Baylay J. in the case of Power v. Butcher (1829) 10 B. & Cr. 329 is there cited. The passage runs as follows :-
According to the ordinary course of trade between the assured, the broker and the underwriter, the assured does not in the first instance pay the premium to the broker, nor does the latter pay it to the underwriter. But, as between the assured and the underwriter, the premiums are considered as paid. The underwriter, to whom, in moat instances, the assured are unknown, looks to the broker for payment, and he to the assured. The latter pay the premiums to the broker only, who is a middleman between the assured and the underwriter. But he is not merely an agent : he is a principal to receive the money from the assured, and to pay it to the underwriters.
10. That practice has now been embodied in the English Statute Law in Section 54 of the Marine Insurance Act.
11. That is, in brief, the law upon this point in England, and no doubt that law rests upon a long course of usage, and it cannot be assumed that the same course of usage is applicable to marine insurance in Bombay of the nature of that now before us. But before coming to the evidence in the case, there are various considerations which may be set out as indicating that in all probability the law is the same. In the first place it is extremely likely that the practice of marine insurance in Bombay is borrowed from the English usage. So far as I am aware, marine insurance is of a western birth and has been adopted from English sources; it is thus by no means improbable that the English usage will be found to prevail in Bombay. In the second place, this contention is not, as far as my knowledge goes, a new one. I am aware from at least one case that has been before me that it has been asserted before and though in that case the dispute was settled and no decision was arrived at, there it was practically admitted that the usage was as is now alleged. Further, there was a suit as regards the payment of the premium upon this very policy between the assured and the broker; and Mr. Justice Pratt, who decided that suit, judicially recognised the usage in Bombay to be the same as in England upon this point. (See judgment February 2, 1923, in Suit No. 4091 of 1022). Next, the wording of the policy itself suggests that that is so. The fifth Clause of the policy is as follows:-'The insurance premium in respect of this vessel has been debited to the account of Thakar Tulsidas Raindas,' this Thakar Tulsidas Ramdas being the broker who brought about the policy. Why that clause should be inserted as one of the conditions of the policy is not clear unless the parties recognised it to have some effect and the only effect that it could have would be that the debiting the premium to the broker was held as between the underwriter and the assured to be equivalent to the payment of the premium,
12. Next, it is material with reference to this matter to invite attention to the conduct of the defendants themselves before the suit was filed. If the non-payment of premium were so obvious and so glaring a flaw in the plaintiffs' case as has been suggested in the argument before me, one would have anticipated that no sooner a claim was made the underwriters would have replied : 'My dear Sir, you cannot seek to recover on this policy because no premium was paid.' As a matter of fact nothing of the kind was said. The plaintiff firm on receipt of the news of the lose of the vessel communicated that news to the underwriters on March 2, 1920, and on April 7, 1920, they wrote to the underwriters calling upon them to pay their quota of the loss, On August 10, 1920, the plaintiffs wrote again saying that they had been verbally requested by the broker to furnish the underwriters with papers about the loss of the vessel and asking for details of the papers required. It is in evidence that no answer was received to any of these letters or to the reminder which was sent on September 19, 1920, The matters rested there until on July 23, 1921, the plaintiffs addressed the underwriters through their attorneys calling upon them to pay the amount of the policy. On July 28, 1921, for the first time we get a statement of the case for the defendants upon this point. First they say that the policy does not apply to the voyage referred to. Next, they deny the wreck. Thirdly, they say that the goods on board the vessel were not the goods covered by the policy. Then, they say they have not been furnished with the necessary papers and they go on to make a detailed demand for certain documents. In that letter from beginning to end there is not one word about the non-payment of the premium: and that tacit admission on the part of the defendants is a further corroboration of the usage which is now set up. But the matter does not rest here.
13. There is in the case a very fair body of apparently truthful testimony for the plaintiffs upon this point and not one line of evidence for the defendants to contradict it. Ghellabhai Hansraj, a partner hi the plaintiffs' firm, says that the underwriter looks to the broker for the payment of premium That is his experience as an insurer of several vessels. Then, we have very a reliable witness Mathuradas Kanji, who is both an owner of vessels and an underwriter of considerable experience. He says :-
The underwriter looks to the broker alone for the payment of the premium If the assured fails the broker is bound to pay the premium.
14. He then goes on to say :-
If a policy is effected and a ship is lost before the premium is paid the underwriter is responsible If a policy for 285 days is effected in September 1919 and the ship is lost in February 1920 the non payment of premium does not release the underwriter of his liability. The actual payment of premium does not affect the liability of the insurer.
15. Then again he says:-
If the insurer does not pay the assured has no claim against the broker: that is as far as payment of loss is concerned. If the ship is not lost the insurer can sue the broker for the premium whether the assured has paid the broker or not, I know many naaea in which the broker has been compelled to pay. I never go to Court and cannot remember instances).
16. Tulsidas Ramdas, who was broker in this case, supports this position. He says :-
The assured pay the premium to the broker, That is the invariable practice ... The underwriter looks to the broken- for his premium.
17. Then, there is the evidence of Naiandas Chathurbhuj, the Munira of a firm of underwriters, and he states :-
We do not keep any account in the name of the assured. Our account is in the name of the broker. In case of loss the amount is debited to the brokor. I have never heard of any case in which any objection was raised to paying loss on the ground that the premium was not paid.
18. He also says that ' he cannot give instances in which the underwriter has paid loss when the broker has not paid the premium in the month of Shravan,' That of course because no instance of the kind has occurred. Then, we have the evidence of Jivandas liamdas, an insurance broker of twenty years' standing, and he too says that the underwriter looks to the broker for his premium, and he gives instances in his own practice where the assured having failed, he himself as broker had to pay the premium to the underwriters. He also says :-
If there is an account between the underwriter and the broker the account may run on, but if the underwriter insists on being paid at Shravan the broker is bound to pay.
19. Now, if all that evidence is taken together, it seems to me to establish almost conclusively that the practice in this matter in Bombay is equivalent to or identical with the practice which the English law has recognised in the passages which I have already set out, I really do not feel that there is any doubt though so far as I am aware the matter has not been judicially decided in these Courts as between the underwriter and the assured. Tlutt being so, is there any reason why the Court should refuse to give effect to this usage I can see none,
20. It was argued that supposing the premium was not paid by the broker there would be no consideration for the contract, and that, therefore, the contract would be bad as provided in the Indian Contract Act; but that argument, I think, rests upon two fallacies. First, Section 1 of the Indian Contract Act specifically exempts any usage or custom of trade; and secondly, I fail to see how it can be said that there is no consideration for a contract such as this. The consideration for the contract is the broker's undertaking to pay the premium, and that consideration, though it moves from a third person, is good consideration as the law stands in India. Therefore, it appears immaterial to me in this case to consider whether the broker Tulsidas Ramdas did or did not pay the premium to the defendants. If he did not, they have their remedy against him If he did, can 'it question. But in no case is the right of the assured to recover the loss affected in any way.
21. It follows necessarily from what I have said that the plaintiffs are entitled to recover the amount claimed in their plaint. Therefore, there must be a decree against the first defendant as prayed in Clause 1 of the prayer of the plaint, and decree against each of the remaining defendants as prayed in Clause 2 of the prayer.
22. The defendants' attorneys to refund Rs. 500 paid by the plaintiffs to the defendants.
23. The costs of the suit to include the costs of the commission.