U.C. Law, J.
1. This action was originally brought against the Oriental Governmenat Security Life Assurance Co. Ltd. of Bombay (to be referred to as 'the insurer' hereinafter) with leave under Clause 12 of the Letters Patent. The case made out in the pleadings is as follows:
2. On 9 November 1932 a Brojendra Mohan Maitra insured his life with the insurer for Rs. 24,000/- and the insurer in consideration of the premiums paid and to be paid to it, granted him a Policy No. 358406 thereby agreeing to pay to the assured or his assigns, executors, administrators or other legal representatives the sum assured together with all bonuses and profits which' might accrue upon the policy on the assured surviving until 25 October 1952 or at his death if previous. Under the terms of the policy the sum assured was payable at Bombay. This policy matured on 25 October 1952 and a sum of Rs. 29,650/- became payable on the policy to the assured.
3. By a Deed of Assignment dated 18th December 1952 the assured duly assigned to the plaintiff his son, in Calcutta within the jurisdiction of this Court, the benefits of the policy and the money due to him thereunder for valuable consideration. Thereafter by their letters dated 20th December 1952 both the plaintiff and Brojendra (the assured) gave notices in writing of the assignment to the insurer at its principal place of business in Bombay and also sent to it the Deed of Assignment which the insurer acknowledged in writing by its letter dated 31, December 1952.
4. The plaintiff claims that by virtue of this assignment in his favour a sum of Rs. 29,650/- is due and payable to him by the insurer but has not been paid, in spite of demands.
5. Subsequent to the filing of this suit which was tiled on 7 July 1955 the Life Insurance Corporation Act of 1956 (hereinafter referred to as 'the Act of 1956') was enacted. Under this Act the Life Insurance Corporation of India (to be referred to as 'the Corporation' hereinafter) was established with effect from 1 September 1956. Under Section 7 of the Act of 1956 all assets and liabilities pertaining to the controlled business of all insurers including the original defendant in this suit were transferred to and vested in the Corporation with effect from 1 September 1956, I do not think it is necessary to set out here the provisions of Section 9 of the Act of. 1956 in extenso as it is not disputed that under Section 9 of the Act of 1956 the present suit may be continued, prosecuted and enforced by or against the Corporation as it relates to the controlled business of the insurer. Accordingly by an order dated 17th September 1958 the present plaint was amended and the Life Insurance Corporation of India was made the defendant in place of the original defendant. Thus the plaintiff claims that the defendant is now liable to pay Rs. 29,650/- to him by virtue of his assignment as stated before together with interest.
6. It appears that the Life Insurance Corporation of India, the present defendant, has not filed a new written statement but has relied on the original written statement filed by the insurer. It is on that footing this case was heard. In its written statement the defendant has admitted the policy. It, however, contends:
(a) That the original defendant (the insurer) carried on extensive life insurance business in India with a branch at Dacca now in East Pakistan.
(b) The policy was issued in favour of the plaintiff's father Brojendra of Rajshahi now in East Pakistan.
(c) The policy became and remained attached to the Dacca branch and its records continued to be kept there,
(d) After partition of India the policy became and is part of the Pakistani business of the defendant and Brojendra became and still is a national of Pakistan.
(e) The assured paid premium in Pakistan where such payment was ordinarily to be made and the policy became part of the Pakistani business of the defendant.
(f) The policy is governed by or subject to the law of Pakistan.
(g) That the defendant had and still has property and assets in Karachi, Dacca and Lahore now in Pakistan and had maintained and still maintains books or registers in Dacca in which the policy in question is entered.
7. In paragraph 4 of the written statement the defendant has referred to an enactement in Pakistan known as the Foreign Exchange Regulations Act of 1947 and certain provisions thereof. In paragraph 5 it is stated that sometime before the maturity of the said policy and also thereafter the assured intimated the insurer that he desired to obtain payment in Indian currency. To that the insurer had replied stating, inter alia, that inasmuch as the said policy stood in the books of Dacca office the previous sanction of the State Bank of Pakistan to make payment in India would be required. It is further stated in paragraph 5 that with the object of obtaining payment in India without the sanction as required and also with the object of deliberately trying to avoid the operation of the law the assured purported to execute the Deed of Assignment mentioned in favour of the plaintiff and that the assignment was and is void, inoperative and has no legal effect whatever as the object thereof is unlawful and forbidden by law and if permitted would defeat the provisions of the law and is fraudulent and is an abuse to public policy. The defendant also denies that there was any consideration for the assignment.
8. In paragraph 8 it is staged that the defendant called upon the assured in writing to obtain sanction of the State Bank of Pakistan to the assignment but no such sanction was obtained. The insurer also applied to the Pakistan authorities for sanction to transfer the policy records to India as was required and to make payment to the plaintiff in India as assignee of the policy but the State Bank of Pakistan, refused to grant such sanction. In this connection the defendant has referred to its letter dated 25 April 1953 and the reply of the State Bank of Pakistan dated 2, December 1953. It is next stated that the defendant has valuable properties and assets in Pakistan and any payment to the plaintiff as' claimed would expose it to heavy penalty and may involve serious consequences including confiscation of property and that it was under no liability or obligation, to make any payment to the plaintiff or to the assured in India. In paragraph 9 it is stated that the payment as claimed is also contrary to the laws of India and by reason of partition of India and the provisions of law there has been impossibility of performance. Lastly, in paragraph 10 it is stated that the plaintiff a resident and citizen of India obtained the alleged assignment with full knowledge of the personal status and the disabilities of the assured and the law by which the said policy is governed and is bound by the equities subsisting between the assured and the defendant. The jurisdiction of the Court has also been denied. Upon these pleadings the following issues were raised and no other. The defendant agreed not to agitate against granting of leave under Clause 12 of the Letters Patent as stated in paragraph 7 of the plaint and as such no issue was raised. The case was heard on that footing.
1. Was the policy in suit attached and stillremains attached to the Dacca branch of the original or the substituted defendant?
2. After partition did the policy become and is now part of the Pakistani business of the defendant?
3(a). Did the insurer agree under the said policy to pay the policy money to the insured or his assign or other legal representatives?
(b) Was the policy money payable at Bombay under the terms of the policy?
4. Is the contract of policy in suit subject to and/or governed by the laws of Pakistan?
5(a). Was there an assignment as alleged in paragraph 4 of the plaint?
(b). is such assignment void and inoperative as alleged in paragraph 5(c) of the written statement?
(c). Was there any consideration for such assignment?
(d). Did the plaintiff and Brojendra give due notice of assignment to the insurer?
6. Is there any enactment in Pakistan known as Foreign-Exchange Regulation Act?
7. Would any payment or would the performance under the policy involve any breach of the Indian or the Pakistan Foreign Exchange Regulation? If so, would the payment on the policy be enforceable in this suit?
8. Was the assignment or transfer or the contract or covenant contained in it or the consideration or the object thereof illegal and forbidden by the law of Pakistan and India?
9(a). is the defendant under any liability to make any payment to the plaintiff in India under the said assignment without the consent of the State Bank of Pakistan as alleged in paragraph 8(d) of the written statement?
(b). is any payment on the policy contrary to the law of India and on the ground of public policy ?
10. Has there been any impossibility of performance by reason of partition of India?
11. is Brojendra a permanent resident of Pakistan ?
12. To what relief, if any, is the plaintiff entitled?
9. Apart from other questions which also arise in this case and to which I shall refer later on in this judgment there are two main questions, the first as to the law applicable to the contract of insurance (i.e., the policy) and the assignment; and the other as to the applicability of the doctrine of impossibility of performance by the supervenient law of a foreign country.
10. It appears from the policy that the contract of insurance was made at Bombay and the policy money is payable at Bombay in Indian rupee.
11. The defendant contends (i) that the law applicable is that of Pakistan and (2) that the performance of its contract involves doing in Pakistan (which is a foreign country) of something which the supervenient law of that country has rendered it illegal to do.
12. I shall deal with the first contention first. The question appears to be a complex question of private international law. First, 'what is the proper law to apply to the contract of insurance?' According to Dicey's Conflict of Laws, 7th Edition Rule 148, the term 'the proper Law of a contract' means law or laws by which the parties intended or may fairly be presumed to have intended the contract to be governed or in other words the law or laws to which the parties intended and may fairly be presumed to have intended to submit themselves.
13. Dicey has laid down three sub-rules for determining the proper law of a contract which may be summarised as follows:
(1) The expressed intention of the parties determines the proper law of the contract and in general overrides every presumption.
(2) When the intention is not expressed ia words the intention is to be inferred from the terms of nature of the contract and from the general circumstances of the case and such inferred intention determines the proper law of the contract.
(3) In the absence of countervailing considerations the following presumptions as to the proper law of a contract have effect -- first presumption, -- prima facie lex loci contractus is the proper law, second presumption is, if one contract is made in one country and is to be performed in another either wholly or partly then the proper law of the contract may be presumed to be lex loci solutionis.
14. Tests laid down by Halsbury, 3rd Edition, Vol. VII at pp. 72-3 and Mcgillivary are substantially the same.
15. Thus it appears that intention and presumption play a decisive part in determining the proper law according to the English School of thought. In Lloyd v. Guibtrt, (1865) 1 QB 115 (12(SIC)) Willes, J., observed
'in such cases it is necessary to consider by what general law the parties intended that the transaction should be governed or rather by what general law it is just to presume that they have submitted themselves in the matter'.
16. Cheshire in his book on Private International Law, 6th Edition at p. 215 says 'there are few words less precise or more ambiguous than intention. '
17. Question therefore is whether the proper law is to be determined subjectively or as Willes, J. seems to suggest in purely objective sense.
18. According to Cheshire 'the subjective theory may produce strangely unrealistic results'. He points out at page 215 of his book
'without a deeper analysis it is scarcely possible to be content with the aphorism that the proper law is the law intended by the parties.' Adopting the American view Cheshire says that
'there is another theory that the proper law is the law of the country in which the contract may be regarded as localised. Its localisation will be indicated by the grouping of its elements as reflected in its formation and in its terms. The country in which its elements are most densely grouped will represent its natural seat and the law to which in consequence it belongs ..... the country with which the contract is in fact most closely connected and in which lies its natural seat or centre of gravity'.
He says that it was Westlake's considered opinion that this objective method of solving the problem has in practice been adopted by English Courts,
19. At page 216 of his book he explains that the difference between localisation theory and the theory of intention as expressed by Lord Wright in the words 'the proper law of the contract is the law which the parties intended to apply' is the difference between objectivity and subjectivity. According to the theory of intention the Court purports to ascertain the actual intention of the parties: according to the localisation theory it imposes upon them the intention that in the circumstances of the case they should have, as reasonable men, formed. They are free to choose the connecting factors such as the lex loci contractus and the lex loci solutionis but having done this their intention is taken to be that the governing law shall be the law of the country in which the chosen factors show the contract to be localised...... In other words their intention is decisive but 'only so far as it appears that the contract and the circumstances in which it was made do not negative that intention'. On this view of course the expressed selection of a governing law will not be permissible if it conflicts with the natural seat of the contract as disclosed by tee grouping of its elements.
20. In cases where there is no expressed intention the difficulty is to discover the exact sense that intention is supposed to bear in this context. One view is that the Court is to infer from the terms and circumstances of the contract what their common intention would have been had they considered the matter at the time the contract was made; the other view is that the Court must determine for the parties what they ought to have intended had they considered the matter. In other words the Court either has to read an implied term into the contract or apply the extraneous standard of the reasonable man.
21. The decision of the Court of Appeal in The Assunzione, 1954 P 150 has now virtually dispelled all doubts as to the correct approach to the question. Singleton, L.J. states the rule as follows:
'Then the Court has to determine for the parties what is the proper law which as just and reasonable persons they ought to have intended if they thought about the question when they made the contract. That I believe is the duty upon us and in seeking to determine the question one must have regard to the terms of the contract, the situation of the parties and generally all the surrounding facts'.
22. It may also be mentioned here that in Bomython v. Commonwealth of Australia, 1951 AC 201 Lord Simonds had also described the proper law as 'the system of law by reference to which the contract was made or with which the transaction has its closest and most (sic) connection.'
23. Cheshire thus concludes at page 218 'in other word's where it has not been expressly chosen the proper law depends upon the localisation of the Contract. The Court imputes to the parties an intention to stand by the legal system which, having regard to the incidence of the connecting factors and all the circumstances. generally the contract appears most properly to belong. In short the proper law is the system with which the contract has the most substantial connection''.
24. This principle has now been finally and unanimously endorsed by the House of Lords in Tomkinson v. First Pennsylyania Banking and Trust Co. (1960) 2 WLR 969 affirming in this respect the decision of the Court of Appeal in In re. United Railways of Havana and Regla Warehouse Ltd, 1960 Ch. 52 at pp. 91-92.
25. Next it appears that even in cases where there is an express choice of the proper law the latest judicial pronouncement is that the Court will not necessarily regard the intention expressed by the parties as being the governing consideration where a system of law is chosen which has no real or substantial connection with the contract looked upon as a whole. (Per Upjon, J. in In re Claim by Holbert Wagg and Co. Ltd., 1956 Cb 323 to 341). There is clearly no justification for the view that the parties are free' to submit every aspect of their contract to any law that they seem fit to choose unless of course it is also the proper law according to the objective standard.
26. In the instant case the parties did not make any choice of the proper law, nor did they contemplate the possibility of India being partitioned at all. Thus to impute any intention would be merely artificial. In such cases where no express selection of proper law has been made Cheshire says
'It is manifest that the Court must necessarily apply the objective theory, It must impute to the parties an intention to stand by the law of the country to which having regard to the incidence of the connecting factors the contract entirely and substantially belongs.'
27. As regards the presumption Cheshire takes Dicey's presumption in a more cogent and logical form. He does not follow it but says that presumptions are only connecting and guiding factors. He explains at page 219:
'On this view every term of the contract every detail affecting its formation and performance, every fact that seems to indicate its natural seat is relevant. No one fact is conclusive. It is doubtful even whether any useful purpose is served by regarding certain facts such as the local contractus, locus solutionis ......... as presumptive evidence of the governing law. To enter upon the search with a presumption is only too often to set out on a false trail. The contract requires to be regarded as a whole.'
The proper course it seems is not to begin with a presumption and then enquire whether there are rebutting circumstances but to fall back on a presumption only when the circumstances viewed as a whole fail to reveal with reasonable certainty the law to which the contract really belongs.
28. In Delhi Coth and General Mills Co. Ltd., v. Harnam Singh, (S) : 2SCR402 the Supreme Court accepted Cheshire's theory of localisation and Bose, J. observed 'if driven to a choice we would prefer this way of stating the law'. It will be observed that the Supreme Court did not reject the theory of 'situs' altogether but said
'we need not decide this because so far as the present case is concerned the result is the same whether we apply the proper law of the contract or the English rules about the 'lex situs''.
Then after discussing the 'lex situs' and a number of cases of high authority Bose, J. observed:
'But when all is said and done we find that in every one of these cases the proper law of the contract was applied that is to say the law of the country in which its elements were most densely grouped and with which factually the contract was most closely connected. It is true that the Judges purport to apply the 'lex situs' but in determining the 'situs' they apply rules (and modify them where necessary to suit changing modern conditions) which in fact are the very rules which in practice would be used to determine the proper law of the contract.
The English Judges say that when the intention is not expressed one must be inferred and the rules they have made come to this that as reasonable men they must be taken to have intended that the proper law of the contract should obtain. The other view is that the intention does not govern even when express and the proper law must be applied objectively. But either way the result is the same when there is no express term.'
29. Thus it appears that the law is finally settled. The proper law depends upon the localisation of the Contract. It must be governed by the law to which the contract naturally belongs, ascertained objectively in the light of all the circumstances.
30. Cheshire in his book of private International Law, 6th Edition, at page 219 has given examples of relevant facts. The Court must take into accoant, he says, the following matters:
'The domicile and even the residence of the parties; the national character of a Corporation, and the place where its principal place of business is situated; the place where the contract is made and the place where the contract is to be performed; the fact that certain stipulation is valid under one law but void under another; the nature of the subject-matter or its situs; the head office of an Insurance Company whose activities are enjoyed over many other countries; and in short any other fact which serves to localise the contract.'
31. What now remains to be done is to apply this law or the test to the proyed facts and circumstances of this case.
32. The facts that emerge from evidence in this case are summarised as follows:
33. On 9 November 1932 the assured took out the policy in suit upon his own life for Rs. 24,000/-. The said policy matured on 25 October 1952. This is an Indian Rupee policy and is payable at Bombay. It appears that prior to 25 October 1952 the insurer wrote to the assured on 20 March 1952 from Bombay stating that they had made final adjustments in respect of payments of premia made by the assured at the official rate of exchange, namely, Pakistan rupees 69/8-equal to Indian rupee 100/- as advised by the State Bank of Pakistan and also rendered an account of all payments made by the assured towords premia. This letter is a post-partition document! written by the insurer from their head office at Bombay to the assured at Calcutta which no doubt clearly shows that obligation to pay the premia was in Indian rupee. By his letter dated 6 June 1952 written from his Calcutta address the assured requested the insurer to issue a draft in his name on their Calcutta Bank when the policy will fall due for payment as he required the money at Calcutta to liquidate certain debts incurred by him. On 20 October 1952 the assured again wrote to the insurer from Calcutta stating that he resided in India for major portion of the year and requested the insurer to pay him the policy money in Calcutta when the same will become due as he required the said sum for the treatment of his wife who was bed-ridden for a long time at Calcutta. He also enclosed with this letter a Discharge Form duly filed in by him. By their letter dated 25 October 1952 the Manager of the insurer acknowledged receipt of the Discharge Form duly executed and stated that as the policy stood in the books of the Dacca office they would require sanction of the State Bank of Pakistan to make payment in India and in order to enable them to obtain such sanction wanted to know whether the assured was a permanent resident of India. It appears that on 21 November 1952 the assured in reply to the letter of 25 October 1952 wrote to the insurer from his Calcutta address not to move in the matter and make any payment whatsoever until further instruction which would be issued very shortly. On 18 December 1952 the assured executed a Deed of Assignment in Calcutta within the jurisdiction of this court thereby assigning all his right, title and interest in the said policy of insurance absolutely in favour of his son, the present plaintiff, who is an Indian citizen permanently resident in India and thereafter on 20 December 1952 duly informed the insurer accordingly. On the same day the plaintiff also by his letter dated 20 December 1952 (Ex.c) informed the Manager of the insurer at Bombay that his father, the Original assured, had assigned the policy by a Deed of Assignment in his favour and forwarded the Deed of Assignment to the insurer company at Bombay for necessary verification and noting. On 31 December 1952 the insurer wrote to the plaintiff that they would make payment of the policy amount to him on the strength of the assignment deed dated 18 December 1952 executed by the assured in his favour after obtaining the sanction of the State Bank of Pakistan. By this letter no doubt the insurer accepted the validity of the assignment because there is no mention in the letter of any impediment regarding the assignment. By this letter also the insurer sent a form of discharge to the plaintiff for being duly executed by him to enable them to arrange for payment and wrote
'As regards payment we have to state that as the policy was effected through our Dacca branch office the records pertaining thereto are required to be transferred to our Head Office before payment can be made to you in India. We have further been recently informed by the State Bank of Pakistan that for transferring such records from Pakistan to India their prior sanction must be obtained ..... Please note that if sanction is not granted by the State Bank of Pakistan we shall not be able to make payment to you as stated above.'
On 16, January 1953 the plaintiff signed the form of discharge and forwarded the same by his letter dated 19 January 1953 to the Manager of the insurer and requested them to make arrangement to pay the amount by a cheque on the National Bank of India Limited, Calcutta at an early date. He further stated that being the assignee and an Indian citizen he was entitled as of right to claim payment in Indian currency. On 17 February 1953 the plaintiff sent a reminder to the insurer company for payment by cheque on the Calcutta branch of the National Bank of India Limited. On 18 February 1953 the insurer wrote back to the plaintiff stating that to enable them to make payment of the claim amount in India the policy records were required to be transferred from the Dacca office to an office of theirs in India and that in view of the Pakistan Control Regulations permission of the State Bank of Pakistan was necessary for the aforesaid transfer. By this letter the insurer also made certain enquiries about the date from which the plaintiff had been residing in India and how the interest on loan and the premia were paid to the Pakistan office (where the policy at present stands) since 27 February 1951. On 4 March 1953 the plaintiff informed the insurer that he was born in Calcutta in India in 1921 and also that he had been staying permanently in Calcutta since 1937 and the interest and the premia on the policy in question were paid at Rajshahi by his father, the original assured, and not by anybody else on his behalf and that they were not remitted to Rajshahi directly from India as such remittances were not permissible due to currency difficulties since 1949 and asked for early payment in Calcutta. It appears that on 31 March 1953 the insurer wrote to the original assured that as the policy stood in the books of Rajshahi and was assigned by him to his son (the plaintiff) for valuable consideration the approval of the State Bank of Pakistan was required to be obtained before any payment could be made and asked him to obtain and send them such approval of the State Bank of Pakistan for the assignment made by him and a copy of this letter was forwarded to the plaintiff. This appears to be the first time when the insurer asked the original assured to obtain the approval of the assignment by the State Bank of Pakistan though the original assured was no longer in the picture. In reply to the above letter the plaintiff by his letter dated 15 April 1953 pointed out to the insurer that they had by their letter dated 25 October 1952 stated that they (the insurer) would apply to the State Bank of Pakistan for sanction and by their letters dated 31, December 1952 and 18 February 1953 they had also stated that they were applying for sanction for transfer of policy records from Dacca office to the Head Office; but were now trying to shift the burden on the assured who had no further interest in the matter and objected to the contradictory statements of the Insurer Company. By his letter dated April 16, 1953, the assured also denied any interest in the, matter as the assignment in favour of his son was accepted to be legally valid by the Insurer Company and reminded the Insurer Company that the responsibility for obtaining any sanction of the State Bank of Pakistan was undertaken by them in their earlier letters. The next letter in the Brief of Correspondence (Ex. A) is D.D. 22 which is Ex. 5 but it does not bear any date. Ranadiva the main witness for the defendant in his evidence has stated that this was a draft sent with an enclosure with a covering letter to the Dacca Office instructing them to write along these lines. The document (Ex. 5) is the copy of the draft. The covering letter has, however, not been produced and proved. Ranadiva has not also proved that the draft was, in fact, sent to the Dacca Office. There is merely his statement to that effect there being no record of posting. Nonetheless Ex. 5 establishes beyond any doubt that the Head Office of the Insurer Company alone was functioning and the Dacca agency or branch only acted as a mere post office. In Q. 142 Ranadiva admitted that he had no personal knowledge if Dacca office wrote to the State Bank of Pakistan on the lines of the draft or at all. In QQ. 144-46 Ranadiva said that the Dacca office wrote back saying that they had written to the State Bank of Pakistan on the lines of his instructions to them but that letter also has not been produced despite requests to produce it. This document is initialled by Ranadiva and ramarked 'seen 257.4'. He has taken full responsibility for the contents and has categorically stated that he had no intention to deceive the State Bank of Pakistan and that the contents are his considered views. This Ex. 5 is an important document in that by this document the Insurer admits the validity of the assignment. It states
'the policy is absolutely assigned in favour of the assured's son, Mr. Rabindra Mohan Moitra, on December 18, 1952, who is a permanent resident of India.''
It further states
'To enable us to make payment of the claim amount in India the copies of the Policy records are required to be transferred to our Bombay office. The transfer of the Policy records does not involve the transfer of the Policy reserve either by book entry or otherwise.'
Lastly, it states
'That the assignment has been executed when both the assignor i.e., life assured and the assignee were in Calcutta..... In view of the fact that the assignment has been effected by the assured While he was a non-resident of Pakistan and that the assignment is in favour of another non-resident not in a different country but in favour of a person who was resident in the same country as the assignor, we presume, your approval is not necessary.'
34. Ex. 5 also refers to a letter dated February 16, on the general question of transfer to India of copies of records of Indian rupee Policies addressed by the Head Office direct to the State Bank of Pakistan. That letter obviously is very material but was not produced before the Court. The letter dated December 2, 1953 (Ex. 6-D.D. 29) is alleged to be the reply to Ex. 5 but it appears that there is nothing in this letter to connect it with Ex. 5. It refers to a letter dated October 29, 1953 which again is not before me. Ex. 6 does not contain any reference to Policy records or copies of such records nor does it deal with permission to transfer such copies, which were subject-matter of Ex. 5. In these circumstances, it is not possible upon the basis of these documents to come to the conclusion that in fact the necessary permission was applied for and refused. There is no evidence on record except Ranadive's oral testimony that permission of the State Bank of Pakistan was necessary or that such permission was applied for by the Insurer and refused. No Pakistan law or notification was proved to corroborate the oral testimony of Ranadive.
35. The next document I wish to refer is the letter dated December 22/22/1953 (PD 2O/DD 31). It was written by the Insurer from Bombay to the plaintiff at Calcutta thereby asking him to execute a letter authorising the Insurer Company to make payment to the assured in Pakistan. A Form of the letter of authority was enclosed for the plaintiff's signature and is to be found at page 43 of the Brief of Correspondence (Ex. 4). This letter and the enclosed Form clearly show that the plaintiff was the assignee of the Policy in question and as such entitled to receive the Policy money In India otherwise how could the Insurer Company ask him for a Letter of Authority thereby authorising and requesting the Insurer Company to pay to the Original assured. The plaintiff, however, did not authorise the Insurer Company as requested and on August 16, 1954 through his solicitor sent a letter of demand to the Insurer Company at Bombay. By their Solicitors' letter dated September 16, 1954, the Insurer Company refused to pay in India as the State Bank of Pakistan had refused permission. Thereupon on May 23, 1955 the plaintiff sent another letter of demand through his solicitor demanding payment at Bombay. On June 3, 1955, the Insurer Company refused, to pay on the same grounds as stated below.
36. I have exhaustively set out the documentary evidence in this case so that a most significant fact can be noted that all these correspondence were with the Bombay Head Office. There is not a single letter written by the Dacca agency or Dacca branch. The documentary evidence, in my opinion, clearly establish that the Bombay Head Office alone was dealing with the matter even prior to partition and subsequent thereto. There is no evidence to show that the Dacca Agency or branch. had anything to do with the matter except in the matter of issuing premium notices and collecting the premium in terms of Indian rupee. I shall now turn to the oral evidence in this case.
37. Mr. J.T. Ranadive was examined as the principal witness for the defendant. He joined the Insurer in 1937 as an assistant and subsequently was promoted as the Assistant Actuary and later became the Acting Actuary of the Insurer. After the Life Insurance Corporation of India was established and took over the controlled business of all the Insurance Companies including 'the Insurer' his services were transferred to the defendant Corporation and he is now its principal Actuary immediately under the Managing Director. In his evidence he admitted that servicing is mostly routine and done by branches while complicated questions are dealt with by the Head Office (Q.6). Servicing means -- (i) issue of notices, (ii) collecting of premia and (iii) answering enquiries regarding the Policy. He said that 'attachment to branch' means serviced through the branch and collected by it. In QQ.20, 24-26 Mr. Ranadiva said that after branch expenses are met the balance of premia are channelled to the Head Office for payment and all balances of premia are held physically by the Head Office. He admitted that premia of Policies were transmitted to India without difficulty from Pakistan after deduction of expenses and that Pakistan Government invariably gave such permission. He also said that records of payment of premia were at the Head Office. Transfer of records according to him does not mean transfer of money and transfer of copies of records are only required for making payment. He further admitted that there was no notification or law that copies of records would not be sent from Pakistan to Bombay and if copies were allowed to be sent over, there could be no objection to payment by the defendant. With reference to DD 22 which is Ex. 5 I have already dealt with if exhaustively. Mr. Ranadive had said that the contents of Ex. 5 were his views and he took complete responsibility for Ex. 5. He had further said that he had no intention of deceiving Pakistan and he gave no false information and took all responsibility on behalf of the Company. He admitted, however, that the logic of Ex. 5 was not correct. In QQ.191, 193-95 he said that impediment to the payment of Policy-holders is a matter of day-to-day working policy and he did not know of any provision of Indian law on this point.
38. This in substance is the gist of Ranadiva's evidence.
39. As regards other witnesses Samsul Huda has not proved anything except the Foreign Exchange Act, 1947 of Pakistan. It is well-settled that the contents arid, the effect of foreign law in a particular case have got to be proved but that has not been done in this case.
40. Krishnamurti has only proved Ex. 10 but in my opinion nothing turns on the evidence of this witness.
41. Pronab Mukherjee is the Local Zonal Officer. His evidence clearly manifests that no permission is necessary from the Pakistan authorities to bring records in this country. In fact, he brought such records viz., the Register within two days without any permission or difficulty from the Pakistan authorities.
42. Sailendra Nath Chandra did not prove anything. The register, in my opinion, was not proved and as such was not marked as an exhibit. He merely said that he had to consult or refer to this register at times.
43. It is contended on behalf of the defendant that the principal elements of the contract of insurance are most closely or densely grouped around Dacca in Pakistan. The elements mainly relied on by him are. (1) That the Insurance Policy (Ex. 1) is attached to Dacca Register, (2), the residence of the assured and his occupation on the face of the document are stated to be Zeminder, Ghoramara, Rajshahi, (3) the premium was paid in Rajshahi both before and after partition, (4) servicing of the policy was in Dacca and Rajshahi, (5) the Policy had been treated as a foreign business, and (6) impact of partition of India.
44. I am unable to accept this contention. With regard to (1) and (4) above, Ranadiva's answer to question 43 clearly explains the position and the meaning of the words 'attached to a branch' and I quote:
'That is an expression; I would say the jargon of the business of life insurance. If anybody says 'Policy attached to branch' it means the Policy is being serviced through branch, it means that premium notices are issued by the branch and collected by the branch.'
45. Thus in the sense in which the defendant seeks to use the word 'attached' is a trade jargon and has no legal significance. In this case, however, the Policy in question is admittedly also in the Bombay Register. In my opinion, mere servicing, issuing of premium notices and collection of premia through a branch cannot be said to be an element of Policy. There is no evidence on record nor it is the case of the defendant that the agent of the branch had any power to carry on business or issue Policies on their own in this case. It cannot be controverted that when a Policy is issued through an agency or a branch it must necessarily appear in some books kept by the branch for ready reference but that does not make it a Dacca Policy as distinguished from an Indian Policy which in fact it is. That cannot also be considered as an element nor can it be said that thereby the Policy becomes more attached to the country where the branch is situate in the sense that that is its natural seat. In seeking to determine the question one must have regard to the terms of the contract, the situation of the parties and generally all the surrounding circumstances. No one fact is conclusive. Every term of the contract, every detail affecting its formation and performance, every fact that points to its natural seat is relevant. The contract requires to be regarded as a whole.
46. As regards (2) residence of the assured and his occupation appearing on the face of the document were put there in 1932 when India was undivided and, in my opinion, are not material for determining the proper law upon the facts of this case.
47. As regards (3) it appears that such payments of premia were made only between February 27, 1951 and October 20, 1951 but were paid in terms of Indian rupee which were subsequently channelled to India after deducting the expenses. There is no positive proof or evidence on record that such payments of premia were made in Rajshahi prior to partition of India. Even if it were so paid that ought not to make any difference as the premia amount was channelled to Bombay where the policy reserves are kept.
48. As regards (5) this, in my opinion, is merely a method of keeping accounts by the Insurance Company and cannot be said to be an elelment for determining the proper law of the contract of insurance. No unilateral Act can alter the obligations of the parties under the contract. Section 11(c) of the Insurance Act provides how accounts and balance-sheet are to be kept and prepared. The premia collection for a limited period may have been shown as foreign business in Form D under this section. It is merely an accounting device and the moneys that are received from outside are shown separately but that cannot affect or alter the rights and obligations of the parties under the Policy. Further, there is no evidence before me and no books have been shown which are no doubt with the defendant, except there is the oral testimony of Ranadiva which again is not of his personal knowledge but derived from the records which have not been produced.
49. As regards (6) i.e., what impact the partition of India has on the Policy I wish only to observe, now that it is settled that the proper law depends upon the localisation of the contract and must be governed by the law to which the contract naturally belongs ascertained objectively in the light of all circumstances, the partition of India has no impact or effect on the Policy, as the proper law will be the law of the country to which the Policy naturally belongs to be applied as a living and changing whole and this would have been the case also had India been not divided as its States had the right to make different local! laws in undivided India.
50. As against this contention made on behalf of the defendant, Ranadiva's evidence clearly establishes the following elements of the Insurance Policy which in my opinion are closely or densely grouped around Bombay and upon which plaintiff relies:
(a) A proposal for an Insurance Policy can only be accepted at Bombay and could not be accepted in branch offices. In fact the Policy in suit was accepted at Bombay and was so admitted by Ranadiva in questions 298-301, 328-332.
(b) The Policy is expressly stated to be payable at Bombay. The evidence is the Policy itself and Ranadiva's answer to Q-3O5
(c) Notice of assignment is to be submitted for registration at the Head Office at Bombay (see the Policy itself, last but one clause and Ranadiva's answer to Q.302). In this case the notice of assignment was actually given to the Head Office at Bombay (Exts. C and D).
(d) The registered office and the Head Office of the Insurance Co. is admittedly at Bombay (Ranadiva Qs. 288-89).
(e) The management and control of the Insurance Co. is entirely from Bombay (Ranadiva Q. 299).
(f) The policy of the company was always decided by the Bombay Head Office (Ranadiva Q- 292).
(g) Bonus was declared at Bombay (Ranadiva Q. 293-95).
(h) The Board of Directors met at Bombay (Ranadiva Q. 290).
(i) The share-holders' meetings were held at Bombay (Ranadiva Q. 296).
(j) Dividends were declared at Bombay (Ranadiva Q. 297).
(k) This is an Indian rupee Policy (DDI and Ranadiva Qs. 309-310).
(l) The entire correspondence between parties were to and from Bombay.
(m) Primary obligation is to pay the Policy money in Indian rupee even after partition (DDI).
(n) Not a single letter has been written from Dacca office.
(o) Even after partition of India the premium was paid in terms of Indian rupees and if it was paid in Pakistan currency the payment was accepted in terms of Indian rupee (see DDI, DD22 And DD 34).
(p) Only between 27 February 1951 and 20, October 1951 when payment was made in Pakistan currency in terms of Indian rupee it was duly channelled to Bombay office.
(q) Refund of excess deposit of premium was made at Bombay office (DDI).
(r) Policy money is to be paid from the Policy reserves in India.
(s) Demands made to Bombay Office (P. W. 26).
(t) Form of Discharge is sent from Bombay (PD 3).
(u) Payments to be made out of funds in the Head Office since all balances of premia are held physically by the Head Office at Bombay (Ranadiva Qs. 20, 24 to 26, 38, 39, 83, 86 to 90. 119).
(v) Record of payment of premia is at the Head Office at Bombay.
(w) Lastly knowledge of Ranadive regarding present Policy was entirely derived from Bombay records (Ranadive Qs. 312, 313 and 324). This clearly shows that the complete records in respect of the policy in suit is at Bombay.
51. On these facts I hold that the elements of the contract of the policy of Insurance out of which the obligation to pay arises are most closely and densely grouped at Bombay and that is its natural seat and the place with which the transaction has its closest and most real connection. Thus, the proper law of the contract is the Bombay law, that is, the Indian law.
52. The next question that arises in this connection is whether the proper law applicable is the law that obtained where the contract was made and the obligations created or the law in force at the time when performance is due.
53. The answer is given by Cheshire quoting Wolff and In re: Chesterman's Trust, (1923) 2 Ch 466 at p. 478
'a proper law intended as a whole to govern a contract is administered as a living and changing body of law and effect is given to any change which is occurring in it before performance falls due' (see also (S) : 2SCR402 ). Thus the law applicable in the present case is the law at Bombay as it stands now.
54. Having dealt with 'the proper law' I shall now deal with the cases relied on by Mr. Arun Mukherjee, Counsel for the plaintiff.
55. In Parkins v. Royal Exchange Assurance Co., (1846) 8 Dunlop 365 a domiciled Scotchman made proposal for an insurance upon the life of a Scotchman with an Insurance Company through their agents in Edinburgh and thereafter received a Policy which was prepared at the Head Office in London and then transmitted to Edinburgh Agents by whom it was delivered to him and to whom also he made payments of the premium throughout. Held that the contract was English in respect that Edinburgh agents were not possessed of authority of themselves to conclude contracts binding upon the Company and it must the refore be regulated by the law of England.
56. The next case relied on is also an insurance case viz., Fouad Bisbara, Jabbour v. Costodian of Absentee's Property of State of Israel, (1954) 1 All ER 145 at pp. 151-52 which decided :
'(i) It is established by the decided cases that not only debts, but also other choses in action, are for legal purposes localised and are situated where they are properly recoverable and are properly recoverable where the debtor resides.
(ii) A corporation resides in a country if it carries on business there at a fixed place of business, and, in the case of an agency, the principal test to be applied in determining whether the corporation is carrying on business at the agency is to ascertain whether the agent has authority to enter into contracts on behalf of the Corporation without submitting them to the Corporation for approval.
(iii) Where a Corporation has residence in two or more countries, the debt or chose in action is properly recoverable, and, therefore, situated, in that one of those countries where the sum payable is primarily payable, and that is where it is required to be paid by an express or implied provision of the contract or, if there is no provision, where it would be paid according to the ordinary course of business.'
(See also New York Life Insurance Co. v. Public Trustees, (1924) 2 Ch 101).
57. On the evidence in this case the proposal for the Policy in suit was received and accepted at Bombay and the policy was executed andissued at Bombay and is also payable at Bombayin Indian rupee. 'Agency Dacca Rajshahi K.C.Sirkar' appearing on the face of the Policy orDacca branch by whatever name it is called admittedly had no authority of themselves to concludecontracts binding upon the insurer and in any casewithout submitting the contract to the Insurer forapproval and acceptance. It is also not the case of the defendant that Dacca or Rajshahi agencyhas any such authority.
58. Thus relying on those authorities I also come to the same conclusion that the law governing the contract of insurance in this suit is the law at Bombay i. e., the Indian law. Pakistan. law has no application in this case.
59. The next question for determination iswith regard to the assignment of the Policy. Thequestion is what law to apply?
60. That the debt is property cannot bedoubted. It is a chose in action and is heritableand assignable. According to Dicey 7th Edition,page 550 --
'Rule 89 -- The question where a debt or other intangible thing is capable of assignment and if so under what conditions (so far as they affect the debtor) is governed by the proper law of the debt or the law governing the creation of the thing.
Rule 90 -- Subject to Rule 89 and to the exception hereinafter mentioned, the intrinsic validity of an assignment of a debt or other intangible thing as between the assignor and the assignee is governed by the proper law of the assignment.
Exception: An assignment which is formally valid by the law of the place where it is made (lex loci actus) though not by its proper law, is formally valid in England.'
61. According to Cheshire 5th Edition, page 461 two types of question arise with regard to voluntary assignment -- (A) Questions depend solely upon the validity and the effect of the assignment itself e. g., disputes as to (1) capacity (ii) form and (iii) essential validity, (B) Questions depend upon the validity and effect of the original transaction by which the debt was created e.g., whether debt is capable of assignment or to which all the two or more competing assignees is it payable.
62. So far as the validity and effect of the assignment is concerned, according to Cheshire capacity, formalities and the essentials are all governed by lex loci actus (see Cheshire 5th Edition pp. 462-464). As regards the question dependant upon the original transaction by which the debt was created, assignability is governed by the proper law of the original transaction.
63. Halsbury 3rd Edition, Vol. VII states the law as follows:-
(i) The right of the assignor and the assignee on an assignment in one country, of the document of title to a debt or to an interest in personal property are in general governed by the law of the country where the assignment takes place.
(ii) The validity of an assignment of documents, such as Policies of Insurance or negotiable instruments is determined by the law of the place where the assignment is made; the documents being regarded as corporal movables.
(iii) The assignability of a contract and the effect of the assignment as against the debtor are governed by the proper law of the contract.
(iv) The essential validity of an assignment of a document of the title or of a negotiable instrument transferable by endorsement depends on the law of the place where the assignment takes place.
64. This in substance is the law applicable to the assignment in this case. Thus it is clear that the assignment of a chose in action arising out of a contract is governed by the proper law of the contract. It is reasonable and logical to refer most questions relating to a debt to the transaction in which it has its source and to the legal system which governs the transaction. One undeniable merit of this is that where there have been assignments in different countries, no confusion can arise from a conflict of laws since all questions are referred to a single legal system. In any event, the defendant cannot question the validity of the assignment if the assignment is valid according to Indian law.
65. Sunil Chandra Cbowdhury, Special Superintendent of Police, Intelligence Branch, West Bengal, has proved the execution of the Deed of Assignment (Ex. B-1, B-2 and B-3). The assignment is also admitted by the defendant.
66. From the evidence the following elements of the assignment appear:
(1) That the assignment was executed in Calcutta.
(2) That at the time of the assignment both the parties were residing in India and were nonresident of Pakistan and so admitted by Ranadive in Ex. 5 DD2.
(3) That the assignment relates to a Policy which as I have already found is governed by the Indian law.
(4) That the notice of assignment was sent to the Head Office at Bombay both by the assignor and the assignee. This notice is essential.
(5) Under the Policy the notice of assignment must be registered at the Bombay Head Office and at no other place.
(6) That the 'situs' of debt which is assigned is at Bombay.
(7) The residence of the debtor (Insurer) is at Bombay.
(8) That the formalities of Indian law were fully observed.
(9) That the assignment has no connection with Pakistan ex facie or otherwise.
67. Upon these facts and applying the test discussed above it is clearly manifest that the proper law of the assignment is the law of India which is also the proper law of the Policy. Pakistan law I does not come into the picture at all.
68. Mr. Subimal C. Roy on behalf of the defendant next contended that consideration for this assignment was not proved and the policy being 'security' within the meaning of the Pakistan Foreign Exchange Act 1947 the assignment contravened Section 13(b) of the Pakistan Foreign Exchange Regulation Act which prohibits transfer of 'security' without general or special permission of the State Bank of Pakistan in favour of a person resident outside Pakistan. It was further contended that if the Indian law applied the assignment also contravened Section 23 of the Contract Act and was against public policy and as such unenforceable. I am unable to accept this contention. Under Section 38 of the Insurance Act an assignment can be made with or without consideration by endorsement on the Policy itself or by a separate instrument signed by the assignor. In this case the Insure! had further accepted the validity of the assignment and they cannot now be heard to say that the assignment was not valid. As regards Section 13 (b) of the Pakistan Foreign Exchange Regulation Act, it has no application as the Policy in suit which was in India at the time of the assignment, is an Indian security and as such permission of the State Bank is not necessary. The mere fact that the Insurer in preparing the revenue account which was not proved adopted Schedule III, Part II, Form D showing this as foreign business will not, in my opinion, convert it into a Pakistan 'security'. In any event the assignment having taken place in India in conformity with the Indian law its legality is to be ascertained according to the Indian law and Pakistan law has no application. No permission of the Reserve Bank is necessary also as the assignment is in favour of a permanent resident of India.
69. As regards Section 23 of the Contract Act, in my opinion, it is not at all attracted as the assignment is not forbidden by the Indian law or is against public policy. It is legal according to the Indian law by which it is governed. Thus, it appears that apart from the second contention of the defendant the plaintiff is entitled to succeed.
70. The second contention to be considered is as to the applicability of the doctrine of impossibility of performance by the supervenient law of Pakistan viz., whether the performance of the obligation which the plaintiff wants to enforce involves the doing of a thing which is illegal by the law of the country where it is to be performed. It must be observed that the obligation which the plaintiff wants to enforce is only the payment of money. The policy provides that the money is to be paid in Bombay. The contract was also executed in Bombay. Bombay is, therefore, both the locus contractus and locus solutionis and also the place round which the elements of the policy are densely grouped and I can see no principle upon which it should be held that Pakistan law should be applied to it. It is true that the law in this country will not compel the fulfilment of an obligation whose performance involves the doing in a foreign country of something which the supervenient law of that country has rendered it illegal to do (De Beeche v. South American Stores Ltd. and Chillian Stores Ltd., 1935 AC 148 per Viscount Sankey, L. C.). It is true also that in the above case his Lordship does not use the words 'of necessity' but they are implied in the word 'involves'. The same principle was enunciated in a slightly different language by Scrutton, L. J., in Ralli Brothers v. Compania Naviera Sota v. Aznar, (1920) 2 KB 287 which decided
'where a contract required an act to be done in a foreign country it is in the absence of any special circumstances an implied term of the continuing validity of such a provision that the act to be done in the foreign country shall not he illegal by the law of that country. This country should not in my opinion, assist or sanction the breach of the laws of other independent States'.
71. Thus it seems that two elements must co-exist. If an Indian contract lawful at its inception is to be rendered unenforceable in the Court of this Country by supervenient foreign law, (i) there must be an act which the contract requires to be performed in the foreign country and (ii) that act must have been rendered unlawful there.
72. The contract in the present case is not at all concerned with the doing of any act in Pakistan. It calls for payment in Bombay and nothing is said in the contract that before such payment could be made it was required to transfer the register from Dacca to Bombay or India. The defendant contends that Pakistan law forbids transfer of register from Dacca without the leave of the State Bank of Pakistan for which they had asked but could not obtain. According to Ranadive only transfer of copy records were required for making payment. There is no evidence on record that there is any law in Pakistan which forbids transfer of copy records or records or Register from Dacca to India. As a matter of fact the register itself was produced before me without much trouble and within a very short time. There is no evidence also that any application was made by the defendant to the State Bank of Pakistan for sanction to transfer the records from Dacca to India and was refused. In my opinion, it would have made no difference even if the defendant had so applied and were refused because performance or fulfilment of the obligation under the policy does not involve doing of such act in Pakistan. This is merely the defendant's contention in its written statement which I am unable to accept. The defendant cannot unilaterally impose conditions upon payment by way of an impediment. On the evidence I am not satisfied that transfer of records from Dacca is of necessity required before payment is made in India. I repeat that according to the testimony of Ranadive only copy of records is required to enable the defendant to pay the policy amount and the policy reserves are in India out of which it is payable. The Bombay office admittedly has complete records of this policy which is in the Bombay register. Therefore no question of transfer of policy arises in this case and as such Section 13 (c) of the Pakistan Act is not attracted or applicable. It is only when performance of a contract is illegal in a foreign country that the doctrine based on comity of friendly nations can be invoked. Thus, it appears that though the conlract does not expressly call upon the defendant to do any act at all in j Pakistan and the act is not of 'necessity' required j to be done before any payment could be made yet the defendant says it cannot perform it without doing an act in Pakistan which would be a breach of Pakistan law. This appears to me to be an ingenious attempt to extend the principle of law stated in De Beech's case, 1935 AC 148 and Ralli Brothers' case, (1920) 2 KB 287 far beyond any set of facts to which it has hitherto been applied or applicable (see Kleinwort Sons and Co. v. Ungarische Eaunwolle Industrie Actiengeselischaft and Hungarian Genetal Creditbank, (1939) 2 All ER 782 also (1939) 3 All ER 38).
73. There is no substance also in the defendant's contention that it is liable to be penalised by the Pakistan Government if payment is made in India, Pakistan Foreign Exchange Regulation Act has no application to the facts of this case, where an Indian Corporation is called upon by as Indian national to perform an Indian contract. Pakistan Government cannot possibly have any say as to how an Indian Contract is to be performed1 in India.
74. Mr. Roy for the defendant relied on Foster v. Driscoll (1929) 1 KB 470 and Regazzoni v. K.C. Sethia (19.44) Ltd., reported in (1957) 3 All. ER 286 and contends that where the performance-involved the contravention of foreign Act, the performance cannot be enforced on the principle laid down in the above cases.
75. It is said that the assignment of the policy in suit is in contravention of the Pakistan Foreign Exchange Regulation Act as it is 'Security' within the meaning of Section 13 of the said Act which prohibits (except with general or special permission of the State Bank of Pakistan) transfer of a security or creation of transier of any interest in a... security to or in favour of a person -- resident outside Pakistan and also prohibits transfer of a security from a register in Pakistan to a register outside Pakistan. Thus, it is argued that in order to pay the Policy money the defendant has to pay upon two documents viz., (i) the Policy and (ii) the assignment. That means, the defendant has to act on a tainted document viz., the assignment.
76. I am unable to accept this contention. Such objection is not open to the defendant which is not a party to the assignment. Further the policy in suit is not a Pakistan policy but an Indian Policy. Therefore, it is not a Pakistan 'Security' within the meaning of the Pakistan Act. Pakistan Foreign Exchange Regulation Act has no application.
77. Pakistan Foreign Exchange Regulation Act 1947 appears to be a legislation applicable to people within Pakistan who are prohibited from transferring 'security' to a resident outside Pakistan without general or special permission of the State Bank by Section 13 (b) of the said Act. 'No person shall'......occurring in it mean and can only moan 'no person in Pakistan shall .....'; and cannot mean no person any where in the world, which would be too absurd. Section 1 (2) of the said Act clearly shows that it has no extra territorial operation, like the corresponding Indian Foreign Exchange Regulation Act which applies to till citizens of India outside India (vide Section 1(2) of the Indian Act).
78. Under Section 2 (e) cf the Pakistan Act 'Foreign security' means any security issued elsewhere than in Pakistan and any security the principal of or interest on which is payable in any foreign currency or elsewhere than in Pakistan. Thus the Policy in suit is 'foreign security' within the meaning of the Pakistan Act as it was admittedly issued in India and payable in India in Indian rupee. I do not find any provision in the Pakistan Act prohibiting acquisition, holding or disposing of any 'foreign security' as is provided in Section 13(e) of the Indian Foreign Exchange Regulation Act 1947.
79. Thus it seems the Pakistan Act has no application to the assignment in this case as it was not made in Pakistan but in India.
80. An assignment in India would be governed by lex loci actus so far as the capacity, formality and the essential validity are concerned i.e., by the law of India; and ..... as regards the assignability of a contract and its effet as against the debtor they are to be governed by the proper law of the original transaction out of which the debt arose, i.e., in this case by the Indian law also. Thus the assignment is not a tainted document or against any principle based on public policy, so that no payment could be made upon it. It is a perfectly valid document enforceable in India where the assignment was made.
81. Further there is no evidence on record that this policy was in Pakistan and was taken out of Pakistan for the purpose of the assignment. On the other hand it appears from P. Ws. 19, 21 and 22 in Ext. A that the said policy was in In alia. I was told at the Bar also that it was with the Head Office at Bombay. The assignment of the policy was admittedly made in India when both 'the assignor (assured) and the assignee were residents of India and non-residents of Pakistan. There is no evidence on record that at the time of the assignment the assured was a resident, in any sense, of Pakistan. Any subsequent statement by the assignor after the assignment is not binding on the assignee. Facts clearly show that all the correspondence written by the assured in 1952 were to the head office at Bombay. The assured also stated that he resided in Calcutta for the most part. No doubt the assignment is legal under the Indian law as I have already held. The Dacca register which was brought over and produced before me, was not proved and as such was not marked as an exhibit. Therefore there is no evidenca that this Policy is in the Dacca register. The policy itself shows that it was issued by the Bombay office.
82. In the light of what is stated above I proceed to answer the issues as follows:-
Issue No. 1: In the sense in which the defendant seeks to use it the answer is 'no'. The word 'attached' is a trade jargon and has ao legal significance. Even if I were to hold that the word 'attachment' had vital connection, the answer is still 'no' as in my opinion the policy is attached to Bombay and not to Dacca.
Issue No. 2: Answer is in the negative. It is still an Indian rupee policy. Only for a short period the premium was collected in Pakistan from 27th February, 1951 to 20th October, 1951, and the same was channelled to India. The premium collection for this limited period might be shown as Pakistan, business in Form D mentioned above but that is merely an accounting devise to show what moneys were received from outside India and were shown separately. That in my opinion cannot possibly affect the rights and obligations of the parties under the contract. Further as I have stated before the books of the Insurer have not been produced and there is no evidence except Ranadive's uncorroborated oral testimony which is difficult to accept, that the premium received upon this policy was shown separately ia the books.
Issue No. 3 (a): Affirmative.
Issue No. 3 (b): Affirmative.
Issue No. 4: Answer is in the negative. The contract is governed by Indian law and the assignment is also governed by the Indian law as staged in the Judgment. Pakistan law has no application because it is not lex loci solutionis under the exception to the rule and particularly because Pakistan (Dacca) is not the natural seat of the Policy.
Issue No. 5 (a): Affirmative. The only point raised by the defendant was as regards valuable consideration. Under Section 38 of the Insurance Act it is not necessary to prove consideration. Under this section an assignment can be made with or without consideration.
Issue No. 5 (b): Answer is in the negative.
Issue No. 5 (c) : It is not necessary to answer this issue as I have already held that under Section 38 of the Insurance Act an assignment can be made with or without consideration.
Issue No. 5 (d): Answer is in the affirmative.
Issue No. 6: Answer is in the affirmative. But it has no application to the facts of this case --neither to the policy nor to the assignment.
Issue No. 7: Answer to the first part of this issue is in the negative and as such, answer to the second part does not arise really; but I answer is in the affirmative that the payment of this policy would be enforceable.
Issue No. 8: Negative. It is not forbidden by both Pakistan and Indian laws.
Issue No. 9 (a): In the affirmative. No permission is necessary from the State Bank of Pakistan for such payment in India. Pakistan Foreign Exchange Regulation Act has no application as Foreign Exchange of Pakistan is not at all involved in this case.
Issue No. 9 (b): Answer is in the negative. The payment of the policy is not contrary to law of India nor contrary on the ground of public policy or on any other grounds. Foreign Exchange Regulation Act, 1947 (India) has no application as no foreign exchange is involved in this case. Section 5 of the Act upon which much argument was made is only attracted when payment is made or intended to be made to a person or to his credit resident outside India. Here the defendant is called upon by a permanent resident of India to pay him in India.
Section 5 of the English Act stands on a different footing as it relates to payment in the United Kingdom. Therefore it is doubtful whether the words of Lord Goddard, C. J., in Pickett v. Fesq. (1949) 2 All ER 705 at page 707 which was referred to on behalf of the defendant, can be applied in India as Section 5 of our Act restricts payment to persons resident outside India but does not say where such payment is contemplated, in India or outside India. I venture this observation as I am inclined to adopt the restricted meaning that 'resident' means physically resident at the time of the payment but making payment to a person physically resident outside India at the time of such payment for that would in my opinion fulfil the object of the Act. In any event nothing turns on this construction of the word 'resident' so far as this case is concerned.
Issue No. 10: Negative. Reasons are stated before.
Issue No. 11: As regards this issue, according to Erojendra, prior to the assignment he was residing for the most part in India and at the time of thy assignment he was no doubt resident of India but long after the assignment of the policy he in his letter dated 20th January, 1953, described himself as a permanent resident of Pakistan, when he had no interest in the Policy. In my opinion such subsequent letter cannot affect the rights of the assignee.
Issue No. 12: In the circumstances the plaintiff succeeds. It is contended that the decree it passed must be conditional, that is to say, the payment is to be made subject to the permission of the Reserve Bank of India as is provided in Sections 5 and 21 of the Indian Act. I cannot accept this contention as I do not know of any law which enjoins that permission of the Reserve Bank has to be obtained in order to make any payment in India to a permanent resident of India by an Indian corporation. Foreign Exchange Regulation Act, 1947 has no application as no foreign exchange is involved in this case. Section 5 (c) of this Act refers to payment by an agent by order or on behalf of any person resident outside India. It appears that this sub-section prohibits payment by persons resident outside India through the medium of agents in India.
In this case however no such question arises. Here the plaintiff is the assignee of a debt which is valid under the Indian law. He is claiming on his own rights to, be paid. The defendant here is not called upon to pay as an agent of the assignor, but as a debtor to pay to the assignee of this debt. The assignment also does not contravene Section 13 (b) of the Indian Act as the assignment was in India in favour of an Indian permanently resident in India and not in favour of a person resident outside India.
83. Thus there will be a decree in favour of the plaintiff for the admitted sum of Rs. 29,639.50nP. This decretal amount will carry interest at6 per cent per annum from 16th August, 1954,when notice was served on the defendant underthe Interest Act upto the decree and thereafter tillpayment. The plaintiff will be entitled to thecosts of this suit. Certified that this suit is fit forengaging two counsel.