Calcutta High Court
A. Akooji Jadwat Pvt. Ltd. vs Oriental Fire And General Insurance Co. ... on 16 July, 1971
Equivalent citations: AIR1972CAL228, 76CWN236, AIR 1972 CALCUTTA 228
ORDER S.C. Deb, J.
1. Pakistan waged war on India in 1965 and captured "M.V. Shakeela" near Chalna in East Pakistan. She belonged to the plaintiffs and was mortgaged to the last defendant. She was covered by a valued policy of Rs. 10 lacs by the Insurer-defendants against the perils of "Capture, seizure, arrest, restraint or detainment and the consequences thereof or any attempt thereat; and from the consequences of hostilities of warlike operations, whether there be a declaration of war or not". She was condemned as a lawful prize by the Prize Court at Dacca and was made over to the Government of Pakistan in lieu of her sale. Thereafter, a suit was filed in the Court of the subordinate Judge at Khulna in East Pakistan against the plaintiffs by their Pakistani agents claiming over Rs. 2 lacs from the plaintiffs and she was attached in the hands of the Government of Pakistan pursuant to an order of that court. Then an agreement was entered into by and between the two Governments for her exchange with the "Elahi Bux", a Pakistani merchant ship arrested by our Navy during the hostilities, but these two vessels were not ultimately exchanged.
2. In these circumstances the plaintiffs have brought this action on February 7. 1967 against the Insurer-defendants claiming her agreed value on the plea that she was an actual total loss and her loss was proximately caused by the perils insured against. This claim is supported by the mortgage-defendant but it is contested by the Insurer-defendants on the plea that she was available for release and the proximate cause of her loss was not the perils insured against but the attachment made by the Civil Court. In this state of pleadings, the following issues raised by the learned counsel Mr. Subrata K, Roy Chowdhury for the Insurers, were accepted by the learned counsel Mr. A.K. Sen for the plaintiffs and by the learned Counsel Mr. Mitter for the mortgagee-defendant and were settled by me:
ISSUES
1. Has the plaintiff any right to maintain the suit or to sue the defendants Nos. 1 to 4?
2. Is the plaintiff entitled to claim any sum, and if so, what sum, as trustee for the defendant No. 5 as alleged in paragraph 10 of the plaint?
3. (a) Was the vessel "Sakeela" seized or captured or impounded by Pakistan Authority on or about September 5, 1965 during hostilities between India and Pakistan and in consequence thereof as alleged in paragraph 4 of the plaint? (b) Was the plaintiff irretrievably deprived of the said vessel? (c) Was the said vessel condemned in favour of the Government of Pakistan by the High Court at Dacca in exercise of its jurisdiction as a Prize Court as alleged in paragraph 4 of the plaint?
4. Was the said vessel totally lost as alleged in paragraph 5 of the plaint or at all?
5. Was the said vessel "Sakeela" available for release as stated in paragraph 6 of the Written Statement of the defendants Nos. 1 to 4?
6. Was the said vessel not released to the custody of the plaintiff as a consequence of the facts stated in paragraph 6 of the written statement of the defendants Nos. 1 to 4?
7. On and from June 16, 1966 was the said vessel "Sakeela" under Civil Court attachment?
8. Was the alleged loss or claim for which the suit has been filed covered by the Policy of Insurance?
9. To what relief, if any, is the plaintiff entitled?
3. Mr. Q. M. Jadwat, the Managing Director of the plaintiffs, and Mr. S.K. Bose, the unfortunate Chief Engineer of the ill-fated vessel gave evidence for the plaintiffs. Dr. Nagendra Singh, the reputed Jurist on the Shipping Laws and at present acting as the Secretary of our President, was examined on Commission at Rastrapati Bhavan in New Delhi on the requests of the Insurers. Mr. G. V. Jannah, who was the Deputy General Manager of the first defendant at the material time, gave evidence on Commission in Bombay for the Insurers. The case of the plaintiffs was partly represented by Mr. Sen and partly by Mr. Roy Mukherjee but Mr. Roy Chowdhury alone carried the burden of the Insurers and has raised many a complex and interesting questions of law. They have admirably and with great decorum argued the case and have rendered valuable assistance to me.
4. I will now state the material facts of the case. The "Shakeela" was captured on September 5. 1965 and her men were detained in jail. Two other Indian merchant ships were also captured by Pakistan. Our Government detained three Pakistani merchant ships. On September 23, 1965 the Indo-Pakistan hostilities came to an end. On October 12, 1965 the plaintiffs claimed her value and the Insurers recorded the claim "without prejudice" on October 16. 1965 and from this day the first defendant acted for all the Insurers in relation to the subject-matter of the suit. On October 18. 1965 she was condemned by the Prize Court at Dacca and the Pakistani Marshal was directed to sell her and to pay the proceeds to the Government of Pakistan. On November 17. 1965 this Order for sale was rescinded by the Prize Court and her possession was made over to Pakistan. The Insurers did not pay the money and requested the plaintiffs and the defendant No. 5 to wait for the final decision of the Representative Committee of the Insurers.
5. On January 4, 1966 the plaintiff sent copies of the proceedings of the Prize Court to the first defendant with a request to settle the claim. On January 5, 1966 our Deputy Custodian of Enemy Properties requested the plaintiffs to deposit with him Rs. 1,70,000/- payable by the plaintiffs to their Pakistani agents but the plaintiffs did not deposit the money. On January 10, 1966 the Historical Declaration was announced from Taskent and by its clause 8 our Prime Minister and their President agreed to discuss the return of all the properties and assets taken by each Government during the conflict. (See Keesing's Contemporary Archieves. 1965-66 p. 21187 relied on by Mr. Roy Chowdhury) The Insurers took their stand on this clause and they did not pay her value on the plea that there was a possibility of exchange of the impounded vessels with the Pakistani ships detained by our Government. On May 9. 1966 the plaintiffs, through their Advocate, asked the Insurers to pay her agreed value alleging that there was no hope of recovery of the vessel from the Government of Pakistan but the Insurers did not pay it. The foreign Re-Insurers were vitally interested in the matter and they approached both the Governments and negotiations for exchange of the vessel started through them on foreign diplomatic channels.
6. While these negotiations were going on in which Dr. Singh participated the Pakistani agent of the plaintiffs filed the suit on June 15. 1966 against the plaintiffs and on July 27, 1966 the Subordinate Judge of Khulna attached the vessel by directing the Government of Pakistan not to deliver her to the plaintiffs. Then the two Governments entered into an agreement for exchanging the vessels through the Insurers after they were surveyed by the Insurers and a Press Note to this effect was issued on August 6. 1966 by our Government. Thereafter. Mr. Jadwat suggested to the Bombay representatives of the foreign Re-Insurers to arrange for her survey and the first defendant wrote to the Solicitors of the foreign Re-Insurers to have the vessel surveyed by the salvors of Lloyds on behalf of the Insurers before the exchange was finalised. The Lloyds insisted that the plaintiffs should authorise them to arrange for the survey which the plaintiffs did.
7. Thereafter the plaintiffs sent the copies of the proceedings of the Civil Suit to the first defendant who returned them by saying that the Insurers were not interested in that suit and in reply the plaintiffs told the first defendant that the exchange of the vassel in suit might be frustrated if the Pakistani agents were not paid off and in view of the prevailing conditions it was not possible for the plaintiffs to remit any money to Pakistan. The Reserve Bank of India did not allow the plaintiffs to send any money to the Pakistani agents and therefore the first defendant took up the matter with the Reserve Bank so that the plaintiffs could send the money to Pakistan and then on October 20, 1966 two other Indian vessels were exchanged with two other Pakistani vessels (See K. C. Archieves p. 21716 of November 1966).
8. On October 25. 1966 our Directorate of Shipping informed Mr. Jadwat that the question of releasing the "Shakeela" was taken up by our Government and the result would be communicated to him in due course. On November 7, 1966, the Reserve Bank informed the first defendant that the plaintiffs should take up the matter of sending money to Pakistan with the Union Ministry and before the first defendant could communicate this advice to the plaintiffs, on November 8. 1966 the plaintiffs, through the Director-General of shipping who was an officer under the Union Ministry, wrote to the Reserve Bank to permit the London Correspondent of the first defendant to guarantee the payment of the dues of Pakistani Agents of the plaintiff so that the vessel might be released and on the same day the Civil Court passed the decree against the plaintiffs and directed the attachment of the vessel to be continued.
9. On November 21. 1966 the first defendant communicated to the plaintiffs the advice given by the Reserve Bank and in the meantime the survey of Sakeela was completed. Dr. Singh advised a representative of the plaintiffs to pay off the dues of the Pakistani agents but the plaintiffs were not in a position to send any money to Pakistan for the reasons stated earlier. The "Shakeela" was to be exchanged with the "Elahi Bux" but the Pakistani owner of this ship did not pay our governmental dues and therefore this ship was not released by our Government. These two ships were not exchanged at all and all correspondence between the parties stopped and this action was brought in this Court.
10. Mr. Roy Chowdhury has challenged the legality of the sentence of condemnation though it was not questioned in the written statement of the Insurers. His contentions have no bearing on the rights and obligations of the parties but in deference to him. I will dispose them of before going into the main questions involved in this action. He drew my attention to the events recorded in Keesing's Contemporary Archieves relating to Indo-Pakistan conflict of 1965. He took me through the well-known Paris Pact, the Covenants of the League of Nations and the Charter of the United Nations Organisations. He read out the opinions from Prof. Oppenheim's International Law edited by Dr. Lauterpacht. and from Prof. Brierly's Principles of Public International Law and then from Prof. Brierly's the Law of Nations edited by Sir Waldock. He adopted their opinions and said that an aggressive war was outlawed by the Paris Pact, the Covenants of the League of Nations and by the Charter of the United Nations.
11. He contended that Pakistan has made an aggressive and illegal war on us and, therefore, the sentence of condemnation of the Prize Court at Dacca has no legal sanctity and it should not be recognized by this Court for the reason that illegality of this war has made this sentence illegal under the law of nations. He cited "The Flad Oyen", reported in 165 ER 124 and R. Viswanathan v. R.S. Abdul Wajid, in support of his contention that where a judgment of a foreign court is not in conformity with the well-established practice of mankind or it infringes the rules of the Public International Law it ceases to be a lawful judgment and the courts of other countries do not recognize such a judgment. But the principles laid down in these two decisions cannot be invoked by him in the manner he has endeavoured to do it for the reasons stated later on.
12. In the 17th Century It was Grotius who propounded the theory of lawful and unlawful war, but the Rulers of the nations went against his theory and maintained that the war was a matter of Sovereign Right of every Sovereign State) and there was no such thing as bellum justum and bellum unjustum. And for these reasons Mr. Hall said: 'International law has no alternative but to accept War, independently of the justice of its origin. * * * Hence both parties to every War are regarded as being in an identical legal position, and consequently as being possessed of equal rights" (See his International Law 8th Edn. p. 82).
13. The right to make a war is a Sovereign Right of every State. The Sword that created this Right has legalised it too. But I also find that the contention of Mr. Roy Chowdhury is partially true and the law stated by Mr. Hall requires some qualifications. Pakistan was not born when the Paris Pact and the League of Nations came into existence and, therefore. I will leave their provisions out of my consideration.
14. The Sovereign Right to make an aggressive war was relinquished by the Members of the United Nations Organisations but not by the Non-Members. Therefore, it is not wholly true to say that an aggressive war is legally gone for ever. The non-members have not surrendered their sovereign rights and they are not bound by the charter. An aggressive war by or against a non-member is still lawful, but it is wholly unlawful by and between the members. All disputes in relation to border between the Member-Nations must be settled not by the barrels of the gun but by peaceful negotiation through diplomatic Channels or through the mediation of U. N. O. is the mandate of the Charter. The sovereign right of a Member-Nation to wage an aggressive war on another member-nation is legally gone for ever and resort to arms by a member-nation for an aggressive war against another member is totally outlawed by the law of nations. No member nation is allowed to disturb the peace and tranquility of the World by waging an aggressive war on another member and if it is done, it must be held to be a bellum unjustum. India and Pakistan became members of the U. N. O. and therefore they were and are bound by the Mandate of this Charter. Pakistan has nakedly violated this Mandate but the significant imbecility made the U. N. O, too impotent to condemn it as an unlawful war waged by Pakistan.
15. Before the ink on the agreement in relation to Runn of Kutch was dried up Pakistan started this naked war and we were entitled to throw them out from every inch of our land. But a war, whether aggressive or defensive, is an act of state. No municipal court of any country has any jurisdiction to go into the question of legality of an act of state committed by a foreign State, whether within or outside its own territories, is the law of all civilised nations. This is the pith and substance of the judgment of our Supreme Court in State of Saurashtra v. Memon Haji Ismail Haji Volimohammed. and furthermore, in 'The Zamora' reported in 1916-2 AC 77, at p. 96 of the report, Lord Parker said:
"An act, though illegal by international law, will not on that account be justiciable in the tribunals of another Power--at any rate, if expressly authorised by order of the Sovereign on whose behalf it is done."
15. I am wholly debarred from going into the question of legality of the war waged on us by Pakistan and therefore, the principles laid down in "the Flad Oyen" and in Viswanathan's case. AIR 1963 SC I cannot help the Insurers. I must take this war as a fact and as an act of State of Pakistan with all its legal consequences. Question of legality of the decision of the prize court at Dacca is interwoven with the question of legality of this war. There is no mid-way between them. They must either stand or fall together. Jurisdiction of every Prize Court flows from the existence of a state of war and the war is an act of State. This Court is wholly incompetent to go into the question of legality of this war and, therefore, the legality of the sentence of the Prize Court cannot be attacked in this ingenious way. And, hence I am unable to hold that the sentence of the Prize Court was illegal due to the illegality of this war.
17. His next contention was that the Government of Pakistan did not issue any Commission. Warrant or Instructions for commissioning the Prize Court at Dacca, and, therefore, that court was not legally competent to act at all and its sentence of condemnation was a nullity. But, whether that Court was commissioned or not is a pure question, of fact. The Insurers did not take this plea in their Written Statement and "a decision of a case cannot be based on grounds outside the pleadings and it is the case pleaded that has to be found" is the law laid down by the Supreme Court in Trojan & Co. v. Nagappa Chettiar, of the report. No indication of this defence was given at the time the issues were suggested on their behalf. No evidence was adduced by them to show that the Prize Court at Dacca was not at all commissioned. The plaintiffs have closed their case. They were taken by surprise. They had no opportunity to adduce any evidence to meet this point raised at the Bar and therefore the Insurers are debarred from taking this plea.
18. In Siddik Mohomed Shah v. Mt. Saran, AIR 1930 PC 57 (1) Lord Dunedin said: "no amount of evidence can be looked into upon a plea which was never put forward" and in Nagubai Ammal v. B. Shama Rao. of the report the Supreme Court said: "The true scope of this rule is that evidence let in on issues on which the parties actually went to trial should not be made the foundation for decision of another and different issue, which was not present to the minds of the parties and on which they had no opportunity of adducing evidence." And this law is also against the Insurers and therefore I cannot permit them to take this plea.
19. Moreover, there is no dispute that Pakistan was "at war with India" and it was said to the whole world by the President of Pakistan in his broadcast of September 5, 1965. This declaration was followed by a proclamation of emergency and the capture of "Shakeela". And about 45 days thereafter she was condemned. The sole object of this condemnation was to take away the property of the plaintiff by lawful means, that is to say by obtaining her sentence of condemnation from the High Court at Dacca in exercise of its jurisdiction over the Prize causes. Therefore, this is a case where the maxim "Omina Praesumuntur rite et solemnitur acta" comes into play and I do not for a moment hesitate to presume that the Prize Court at Dacca was regularly commissioned by the required official act of the Government of Pakistan "in the absence of evidence to the contrary" as was done by the Judicial Committee in Jitendra Nath Shaw v. Monmohan Ghose, 57 Ind App 214 at p. 219 = (AIR 1930 PC 193) in relation to the procedure laid down by Sections 12 and 13 of the Bengal Tenancy Act.
20. And furthermore, in the "Countess of Lauderdale" reported in (1802) 165 ER 613. Lord Stowell at p. 614 of the report, laid down the law that where a captured ship is taken to a port of the Capturing State for condemnation there is a strong presumption that she has been regularly condemned by the Prize-Court of that State and the burden of disproving this presumption lies heavily on the party alleging it to be contrary. The Insurers did not make any attempt to discharge this heavy burden and, therefore, I overrule the contention made on their behalf.
21. An aggressive war being outlawed by the Charter, no member can lawfully declare a war on another member. Hence it was contended that these prohibitions have impliedly taken away the right of commissioning the Prize courts of a member waging an unlawful war. It was also urged that no prize court can lawfully function without a formal declaration of war and in support of this contention an analogy was drawn from a decision of the American Court of Military Appeals in the case of United States of America v. Avertte. A gist of this decision is given in October 1970 issue of American Journal of International Law and in the opinion of the learned Judges forming the majority of that court the expression "in time of war" used in Article 2(10) of the Uniform Code of Military Justice conferring jurisdiction on the Court below "means a war formally declared by Congress". I do not wish to go into the correctness of this decision nor do I intend to enter into the arena of this highly controversial topic of the day for the reasons sufficiently indicated while dealing with the next contention of Mr. Roy Chowdhury.
22. It was then contended that the vessel in suit was illegally captured by Pakistan for the reason that there was no war between India and Pakistan in the formal sense of that term and therefore her condemnation was also illegal. My attention was drawn to Vol. XXIV of the British Year Book of International Law (1947) at page 172 where it is stated:
"the right of prize derives from the existence of war in the formal sense and cannot be deduced from a state of armed conflict with a foreign power falling short of war. A decision of a prize court affecting the nationals of third states rendered in respect of a capture effected during such a period of armed conflict may be of no international effect; and either would not pass a good title or would give rise to a valid claim for damages before an international tribunal or through diplomatic channels".
23. Here I am not concerned with the right of a neutral and moreover there are many answers to this submission but I will choose only a few out of them. A capture is an act of State and its legality cannot be questioned in this action. The Insurers are bound by the terms and conditions of the policy and they have not protected themselves from an illegal capture nor from an illegal condemnation. The law of Marine Insurance is not concerned with "the existence of war in the formal sense" nor with a formal declaration of war. A total loss whether actual or constructive under this law does not depend on the legality of the capture nor on the legality of the sentence of condemnation. No question of bellum justum nor of bellum unjustum can ever arise between the assured and the underwriter. Where an insured ship is totally destroyed by an enemy action in a lawful war she is an actual total loss and the underwriter must pay her agreed value. There is no principle on which it can be said that she ceases to be an actual total loss if she is destroyed by an enemy action in an unlawful war. She is an actual total loss under the law of Marine Insurance and this law has not yet learnt to speak in two different languages. 'Prof. Hardy Evamy in his Marine Insurance (1969 Edn) at pp. 166-67 in relation to the words "taking at sea" said:
"These words include all cases of capture and seizure by an enemy, and the underwriter will be liable for all losses so caused. * * * * Questions as to whether there has been a change of property in the thing captured are wholly irrelevant in an action on the policy, though they may be of importance to the underwriter anxious to secure the salvage and minimise his loss.
A declaration of war is not required in order to bring the capture within the words. Therefore, a ship sunk, before any declaration of war, is a loss within a meaning of the term. Powell v. Hyde. (1855) 5 E & B 607.
Moreover, it is quite irrelevant to enquire whether the taking be lawful or unlawful for if the assured has suffered a loss by a "taking at sea", he is protected. Goss v. Withers, (1758) 2 Burr 683".
24. And in Dr. Arnould's Marine Insurance (latest Edn) in Article 820 at page 776 it is stated:
"Capture is deemed lawful when made by a declared enemy lawfully commissioned, and according to the laws of war; unlawful when it is made otherwise. But its legality or illegality does not affect the liability of the underwriter; whether lawful or unlawful, he is equally liable".
25. Capture of enemy merchant ships during a state of war whether at high seas or within the territorial waters of the capturing State is always a lawful Prize and they are liable to be condemned by the Prize Court. Where the prize is brought within the territory of a capturing state, the Prize Court of that State is immediately vested with the jurisdiction over the prize. Pakistan created a state of war and then captured her during this state of war and she was captured within the territorial waters of Pakistan. She was taken to East Pakistan and the Prize Court at Dacca had ample jurisdiction to condemn her and it is wholly immaterial to decide whether Pakistan waged a formal or an informal war.
26. The Insurers have received premium from the plaintiffs and they have covered "Sakeela" against the perils of capture, seizure, detention in consequence of hostilities and war-like operations irrespective of any question whether there was a declaration of war or not. They did not protect themselves from the consequences of an unlawful or an undeclared or an informal war. On the other hand they are bound by their contract and they cannot take shelter under the Charter of the U. N. O. nor under the law of nations. Furthermore, they did not take any of these pleas in their written statement and they cannot be heard to say anything which is not stated therein. These questions do not require any further consideration and I overrule the contentions made on behalf of the Insurers.
27. It was also argued that her condemnation was unlawful for the reason that she was condemned after the end of hostilities. The fittest answer is that the jurisdiction of the Prize Court does not come to an end with the end of hostilities and a prize court "is, of course, entitled to continue its functions after the conclusion of the war until all matters which arose during hostilities are finally disposed of" (see International Law of the Sea. 6th Edn p. 625 of Dr. Colombus).
28. In paragraph 4 of the plaint it was pleaded that the "Shakeela" was condemned in favour of the Government of Pakistan as a lawful prize and Mr. Roy "Choudhury contended that the plaintiffs have failed to prove this fact for the reason that they have not proved that the Prize Court at Dacca was a court of competent jurisdiction. Now, according to Dr. Arnould's Marine Insurance Article 821 at page 778: "the condemnation, in order to be legal, must be pronounced by a Prize Court of the Government of the captor, sitting either in the country of the captor or in that of his ally. * * * The Prize Court of a captor sitting in the country of his own sovereign, or of an ally, has lawful jurisdiction overprizes carried into neutral ports, and remaining there at the time of passing sentence".
29. The "Shakeela" was captured within the territorial waters of Pakistan and therefore she became "a prize subject to the jurisdiction of the Prize Court" is the law laid down by Viscount Simon in Schiffahrt Treuhand v. Her Majesty's Procurator General, reported in 1953 AC 232 at p. 258 of the report. She was taken to the territorial jurisdiction off the Prize Court at Dacca and hence that Court became a Court of competent jurisdiction to condemn her is a complete answer to this submission. Furthermore, the Prize Court at Dacca being a court of competent jurisdiction her "ground of the condemnation as well as the condemnation itself" must be "regarded as conclusive" (see Halsbury's Laws of England Vol. 30. 3rd Edn. Article 1268 at page 653).
30. Wherever there is a capture by right of war and the prize is brought to the jurisdiction of the Prize Court of the capturing State that Court is immediately invested with the jurisdiction to decide whether the capture is lawful or not and once this jurisdiction is attached the onus lies on those who contend its want of jurisdiction. And this law is laid down by the Judicial Committee in the "St. Helena" report in (1916) 2 AC 625. The Insurers have not discharged this burden and moreover the sentence of condemnation was exhibited as an admitted document and it conclusively proves the statements made in paragraph 4 of the plaint.
31. Judgment of every prize court of competent jurisdiction is a judgment in rem. It is internationally recognised and it is valid from one end to other end of the world. In Prof. Cheschier's Private International Law (6th Edn) at page 653 it is stated that "where a foreign court of Admiralty condemns a vessel in Prize proceedings it is a judgment in rem and this opinion was quoted with approval in the majority decision of the Supreme Court in Viswanathan's case, (supra) . "The Zamora" and the "St Helena" are against Mr. Roy Choudhury and Viscount Simon his taken away the foundation of his contentions. His ability has, therefore, failed to bring home his points in favour of the Insurers and I hold that the Prize Court at Dacca was a court of competent jurisdiction and this vessel was lawfully condemned by that court and this sentence of condemnation is a judgment in rem.
32. Before going to the real controversy between the parties it should be recorded here that in view of my finding that the vessel in suit became an actual total loss on October 18. 1965 it is wholly irrelevant to consider the events subsequent to her loss but as the matter was fully argued for a considerable number of days I will deal with all the Doints in the order they were urged before me. Mr. Roy Chowdhury contended that the vessel was available for release even after her condemnation in view of the agreement between the two Governments and this release was frustrated by her attachment made by the Civil Court and therefore this attachment was the last and the proximate cause of her loss and in any event it was a new cause and had broken "the links in the chain" of events following her condemnation and therefore the plaintiffs must fail in this action. He cited Fenwick (William France) and Co. v. North of England P. I. Association reported in 14 Asp. M. C. 92 where a British merchant ship was sunk by a German submarine and thereafter the insured ship ran over the submerged ship and was thereby partly damaged and in these circumstances it was held that the hostile act of the German submarine in sinking the other ship was not the proximate cause of damage of the insured ship and Bailhache. J. at p, 93 of the report said:
"It must always be remembered that the act of hostility to be looked for must be the proximate cause. It is not sufficient that some act of hostility is one of the links in a chain of causes without which link the accident would not have happened. It must be the effective proximate link in the chain". He also cited Fooks v. Smith, (1924) 2 KBD 508 where the same learned Judge at p. 514 of the report said as follows:
"Where by a peril insured against there is a constructive total loss and no notice of abandonment is given, then if in the ordinary course of an unbroken sequence of events following upon the peril insured against the constructive total loss becomes an actual total loss-as, for instance, if there is a capture followed by confiscation the underwriter is liable in respect of the total loss, If, however, the ultimate total loss is not the result of a sequence of events following in ordinary course upon the peril insured against, but is the result of some supervening cause, the underwriter is not liable", (underlined portion was relied on by Mr. Roy Mukherjee in connection with the main question discussed later on).
Lastly. Mr. Roy Chowdhury drew my attention to Becker, Gray and Co. v. London Assurance Corporation 1918 AC 101 where Lord Sumner said:
"Proximate cause is not a device to avoid the trouble of discovering the real cause or the 'common-sense cause', and, though it has been and always should be rigorously applied in insurance cases, it helps the one side no oftener than it helps the other (at p. 112) * * * * * "It must be admitted that the terminology of causation in English law is by no means ideal. It would be the better for a little plain English. I think 'direct cause' would be a better expression than causa proxima". (at p. 114).
33. Mr. Roy Mukherjee, objected to the expression "links in the chain" of events and drew my attention to Leyland Shipping Co. Ltd. v. Norwich Union Fire Insurance Society Ltd., 1918 AC 350 where Lord Shaw of Dunfarmline at p. 369 of the report said as follows:
"To treat proxima causa as the cause which is nearest in time is out of questions. Causes are spoken of as if they were as distinct from one another as heads in a row or links in a chain, but--if this metaphysical topic has to be referred to, it, is not wholly so. The chain of causation is a handy expression, but the figure is inadequate. Causation is not a chain, but a net.
* * * * * To treat proximate cause as if it was the cause which is proximate in time is as I have said, out of the question. The cause which is truly proximate is that which is proximate in efficiency. That efficiency may have been preserved although other causes may meantime have sprung up which have yet not destroyed it, or truly impaired it. and it may culminate in a result of which it still remains the real efficient cause to which the event can be ascribed."
34. In Canada Rice Mills Ltd. V. Union Marine and General Insurance Co. Ltd.. (1940) 4 All ER 169, speaking for the House of Lords at page 178 of the report. Lord Wright said "it is now established by such authorities as Leyland Shipping Co. v. Norwich Union Fire Insurance Society and many others that causa proxima in insurance law does not necessarily mean the cause last in time, but what is 'in substance' the cause (per Lord Finlay at p. 355), or the cause to be determined by commonsense principles (per Lord Dunedin at p. 362)".
35. In Yorkshire Dale Steamship Co. Ltd. v. Minister of War Transport (The Coxwold), (1942) 2 All ER 6 at PP. 9-10 of the report Viscount Simon said:
"Most results are brought about by a combination of causes, and a search for 'the cause' involves a selection of the governing explanation in each case. The cause of the death of a human being may,. I suppose, be scientifically stated to be the failure of the eupply of sufficient oxygen to the brain, but when a medical man certifies "the cause of death" he looks for the thing which 'has predominantly operated to bring death about.
* * * * It is this sort of practical test which has to be applied, always bearing in mind that the proximity of the cause is insisted upon by the Marine Insurance Act. 1906. Section 55, but bearing in mind also that the proximate cause is not necessarily the one which operates last.
* * * * It seems to me that there is no abstract proposition, the application of which will provide the answer in every case, except this: one has to ask oneself what was the effective and predominant cause of the accident which happened, whatever the nature of that accident may be".
And Lord MacMillan, at Pp. 11-12 of the report, said as follows:
"The adverb 'proximately' does not greatly assist the solution of the problem, but it at least serves to emphasise that it is the predominant and determining cause that is to be sought. No formula can be devised which will provide universal touchstone for the infinite variety of circumstances which may arise. Each case must be judged in the light of its own facts and by resorting, not to the refinements of the philosophical doctrine of causation, but to the common place tests which the ordinary business man conversant with such matters would adopt."
And. lastly. Lord Wright, at pp. 14-15 of the report, said:
"Once it is clear (as this House finally held in Leyland Shipping Co. v. Norwich Union Fire Insurance Co.) that 'proximate' here means, not latest in time, but predominant in efficiency, there is necessarily involved a process of selection from among the co-operating causes in order to find what is the proximate cause in the particular case. * * * "This choice of the real or efficient cause from out of the whole complex of the facts must be made by applying commonsense standards. Causation is to be understood as the man in the street, and not as either the scientist or the metaphysician, would understand' it. Cause here means what a business or seafaring man would take to be the cause without too microscopic-analysis but on a broad view."
36. In Athel Line Ltd. v. The Liverpool and London War Risks Insurance Association Ltd., (19451 2 All ER 694, Lord Greene M. R. at p. 696 of the report said:
"The legal theory of causation has. In the course of years, had remarkable history, but the point at the moment at which it appears to have come to rest is that which lays it down that this type of question of causation is really a matter for the ordinary common sense and intelligence of the ordinary man." Section 55(1) of our Marine Insurance Act 1963 was taken word for word from the Marine Insurance Act 1906 of England. It says "subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against".
37. The Act gives a double emphasis on causa proxima both from its positive and negative side but their effect is the same. And an insurer is only liable for the loss proximately caused by the perils insured against, is the pith and substance of this section. It rules out all remote causes and the losses not covered by the policy. The concept of causation is a difficult concept and it is one of the most problematic branch in Jurisprudence. And for this reason a simple and practical method is adopted by the Courts and the matter is viewed by the ordinary intelligence of a common man. The matter is simple where the loss is produced by a single cause, but where it is produced by combination of more than one factors, the investigation is no doubt problematic, but the wisdom of the past has ruled out the factor which is the nearest in point of time to the loss to be the sole criterion for determining the proximate cause.
38. The loss which is produced by| the direct, efficient and predominating cause is the proximate cause of the loss in the law of Marine Insurance. Mere intrusion of a new cause is of no moment so long it does not wither away the efficiency of the direct, efficient and predominating cause. Merely because a cause has intervened, does not make it a nova causa supervenient. The intervening cause must of its own force destroy the efficacy of the existing cause and it must become an independent and a direct, efficient and predominating cause of the loss before it can be said that the loss is proximately caused by nova causa superveniens.
39. Between the two causes, urged before me, which one was the proximate cause of her loss must be determined on the true facts and those facts must be viewed in the light of the surrounding circumstances with the intelligence of a common man. And, therefore, to clear up the position I will straightway dispose of a few unmeritorious contentions and for this purpose I will restate a few important facts here. She was captured and condemned. Her possession was made over to the Government of Pakistan in lieu of her sale under the order of the Prize Court. The hostilities put an end to the normal trade relations between the two countries. No suit was filed by the Pakistani Agent against the plaintiffs immediately with the out-break of the War. She was attached before the High Contract was entered into for her exchange with the 'Elahi Bux' and our Reserve Bank did not allow the plaintiffs to send any money to Pakistan.
40. Mr. Roy Chowdhury contended that her loss was induced by the plaintiffs by reason of the non-payment of the dues of Pakistani agents and, therefore, they must fail in this action, in view of my judgment in Khalil Adal Khan v. Great American Insurance Co. Ltd., (1969) 73 Cal WN 279. There I non-suited the assured for one of the reasons that he having refused to take delivery of the insured cargo had no cause of action against the underwriter but here the plaintiffs were legally incompetent to pay any money to the Pakistani agents and therefore what I have said there has no application here. It is true that plaintiffs did not pay the money to the Indian representatives of the Pakistani agents but they were fully justified in not paying the money in view of the provisions of our Foreign Exchange Regulations Act and the Defence of India Rules and if any payment was made to them the Directors of the plaintiffs would have committed an offence punishable with imprisonment. The plaintiffs also did not deposit the money with the Custodian of Enemy Properties, but no arrangement nor any agreement between the two Governments was placed before me to show either that the Custodian could have deposited this money in the Civil Court or could have given it to the Government of Pakistan for being deposited in the Civil Court. And I do not know under what law, if any, her attachment would have been automatically removed had the plaintiff deposited this money with our Custodian of Enemy properties.
41. Furthermore, a mere negligence on the part of the assured is no answer to his claim on the policy of Marine Insurance. There must be a wilful misconduct on his part and this misconduct must be the proximate cause of the loss so as to defeat his claim. The Written Statement of the Insurer does not speak of any wilful misconduct of the plaintiffs. No indication was even given at the time the issues were suggested on their behalf. Non-compliance with the mandatory provisions of O. VI, R. 4 of the Code of Civil Procedure stands in the way of Insurers and they cannot be heard to say that the plaintiffs were guilty of any wilful misconduct. Moreover, the matter requires investigation of many facts in view of the provisions of the Defence of India Rules, the Foreign Exchange Regulation Act, and the agreement, if any. between the two Governments for sending money to Pakistan. The burden lies on the Insurers to prove all those facts and they have utterly failed to discharge it and I overrule the contention made on their behalf that the proximate cause of her loss was the negligence or the wilful misconduct of the plaintiffs.
42. The laws of India became the laws of Pakistan under the Indian Independence Act, 1947. The Insurers have not shown to me that Section 60 of the Code of Civil Procedure was altered in Pakistan so as to empower the Civil Courts of Pakistan to attach the properties of the Government of Pakistan for the debts payable by the plaintiffs to their Pakistani agents. The Subordinate Judge was fully aware of the fact that the Shakeela became the property of the Government of Pakistan by the sentence of condemnation of the Prize Court at Dacca and he was fully aware that he had no power to attach her for the reason that she had ceased to be the property of the plaintiffs and he also recognised this legal position in his own order. He has passed this illegal Order knowing it to be illegal. His order of attachment is not a judgment in rem and it Is wholly illegal by the law of these two countries and this Court cannot take any notice of his illegal order.
43. But the fact that she was illegally attached cannot be ignored. The High Contract for her exchange with the "Elahi Bux" was entered into after she was attached by the Civil Court. The Subordinate Judge was bound to remove this attachment if an application was made to him by the Government of Pakistan but no such application was ever made by that Government for the obvious reason that the Elahi Bux was not at all released by our Government for non-payment of the dues by her Pakistani owner. I have said Pakistani owner because this ship was not at all condemned. Furthermore, there is nothing on the record even to suggest that the Government of Pakistan was unwilling to make any application to the Civil Court for vacating her attachment due to the non-payment of the dues of the Pakistani agents by the plaintiffs.
44. The Government of Pakistan was not a creditor of the plaintiffs. There was no term in the High Contract making it incumbent on the plaintiffs to deposit the dues of their Pakistan agents in the Civil Court for removing her attachment before she could be exchanged with Elahi Bux. The Government of Pakistan did not take any steps to remove her attachment and excepting to allow her survey nothing was done by Pakistan to implement this part of the High Contract. Removal of her attachment was a very simple matter for the Government of Pakistan and it could have been done even without depositing any money in the Civil Court because the Government of Pakistan became the owner of this ship and her attachment was wholly illegal even by the law of Pakistan. In other words, removal of her attachment was not an insuperable obstacle so far as the Government of Pakistan was concerned and therefore her attachment was not a cause at all not to speak of a nova causa supervenience. Furthermore, she became an actual total loss, as stated later on, long before her attachment and with no stretch of imagination it can be said that the efficacy of her actual total loss was destroyed by her attachment. No doubt, she was attached but undoubtedly her attachment was of no consequence whatsoever and I overrule the plea that the proximate cause of her loss was her attachment as contended on behalf of the Insurers.
45. Capture did not vest any title in the privateer nor in the Capturing-state. The previous state of law was that the capture made by a privateer must be brought to the prize court of his country for an adjudication "in order to prevent the right of seizure from degenerating into piratical rapine" and it was said by Lord Stowell in the Elsebe (Mass) reported in (1804) 165 ER 738 Capture by privateers was abolished by the Paris Pact but this judgment of Lord Stowell placed above all controversy the paramount right of every Government to release the vessels captured during war before they were finally condemned by the Prize Court in the following terms at page 741 of the report:
"The right of making war and peace Is exclusively in the Crown: The acquisitions of war belong to the Crown: and the disposal of these acquisitions may be of the utmost importance for the purpose both of War and Peace. This is no peculiar doctrine of our Constitution; it is universally received as a necessary principle of public jurisprudence by all writers on the subject, Bello partacedunt reipublicoe. It is not to suppose that this wise attribute of sovereignty is conferred without reason; it is given for the purpose assigned, that the power to whom it belongs to decide on peace or war. may use it in the most beneficial manner for the purpose of both."
46. The Elsebe (Mass), (1804) 165 ER 738 was followed in Alexander v. The Duke of Wellington. (1831) 39 ER 308 and there Brougham L. C. at pp. 314-15 of the report said:
"That prize is clearly and distinctly the property of the Crown, that the sovereign in this country, the executive Government in all countries, in whom is vested the power of levying the forces of the state, and of making war and peace, is alone possessed of all property in prize, is a principle not to be disputed. It is equally incontestable that the Crown possesses this property plenojure, absolutely and wholly without control; that it may deal with it entirely at its pleasure; may keep it for its own use, may abandon or restore it to the enemy, or finally, may distribute it in whole or in part among the persons instrumental in its capture, making the distribution according to whatever scheme, and under whatever regulations and conditions it sees fit."
47. One of the main defences of Mr. Roy Chowdhury was built up on the above statements of the law from the attack of Mr. Sen that the Sakeela was an actual total loss by reason of her condemnation. Mr. Roy Chowdhury contended that it was within the power of the Government of Pakistan to restore her possession to the plaintiffs after the end of the War because she was not sold by the Prize Court and remained in actual control and possession of the Government of Pakistan. He said that it has become the practice of all nations to restore possession of the war-captures after the end of the war. He drew my attention to pages 541-4 of the 'Legal Controls of International Conflict' (1959. Edn.) of Dr. Julius Stone where the history of this international practice is well-discussed. He submitted that in these circumstances. I should lay down that the concept of total loss, be it actual or total, under the law of Marine Insurance is now completely changed and a mere condemnation of the "Sakeela" was not an ipso facto loss to plaintiffs.
48. This international practice, this Sovereign Right of the capturing-State to restore the prizes, and the Rules of War and Peace are sought to be introduced by him in the law of Marine Insurance for the first time in the legal history. The history, however, shows that the commercial intercourse between the overseas countries was established by the sea-faring traders. They used to sail in their primitive vessels. Port to port they sold and bought merchandise. They sacrified their lives in the high waves and hurricanes. They were looted by the pirates and the freebooters. Sudden outbreak of war resulted in capture, seizure, and confiscation of their vessels and merchandise. Protection of their interests and encouragement of overseas trade gave birth to the law of Marine Insurance in Italy in the 13th Century. It was imported by the Lombards in England and the merchants and brokers of the under-writers used to assemble at the Lloyd's Coffee House in London and they used to share the risks of these hazards upon payment of premium by the traders to the underwriters. And. to complete the picture, in the 17th Century this historical place became the 'Lloyds' of today.
49. The Law of Marine Insurance is the law of the sea-faring people. Their maritime adventures and commerce brought into existence and shaped this branch of the law. This law essentially belongs to the Maritime Law and to the law Merchant and no part of this ever belonged to the Public International Law or to the Martial law of any country. The naval warfare is primitive. The prize courts are ancient tribunals. The practice of restoration of the prizes after the end of the war is not a modern innovation. The Sovereign Right of releasing the prize is not a new phenomenon too.
50. The Prize Law and the law of Marine Insurance developed side by side in the 17th Century in England. The maker of the prize law in England was Lord Stowell and the maker of the law of Marine Insurance was Lord Mansfield. The Prize Law is a part of the law relating to War at sea and the prize court administers the law of nation. The law of Marine Insurance partly belongs to the law of Contract and partly to the Marine Law and it wholly belongs to the Municipal Law of each and every civilized countries. The law relating to prizes though belongs to the Municipal Law of each country but in truth it forms part of the International Law. The legal history of these two laws are different. Their sources are different. They belong to two different systems of law one to the law of nations and the other to the domestic law of the respective countries. This domestic law varies from country to country and an attempt to make it an International Law of Marine Insurance in 1885 in Brussel's conference by the Institute of International Law was a complete failure (See Annurre de L' Institute do droit International Vol. 8. pp. 125-26). These two laws were never allowed to be telescoped - with each other and then on what principle it can be said that these rules of War and Peace, this Sovereign Power of restoration of the war-captures after the end of the hostilities and this International practice of the nations relied on by Mr. Roy Chowdhury have signed the death-warrant to the concept of total loss under the Law of Marine Insurance is beyond my conception of the law and I overrule his contention.
51. Furthermore, the loss is total and actual to him who has no control over the situation nor has any means of procuring the arrival of his insured-cargo or the insured-ship to the destination within a reasonable time. I repeat the words "no control" and the word "means". I do not say "the suspension of means", nor I use the words "by the grace of grant" of the capturing-state. War is an act of State. Peace is an act of State. Release of prize is a Sovereign Right and it is an extra-judicial act. Restoration of prize solely depends on the volition and the grace of the capturing-State. Peace, no doubt, puts an. end to the hostilities and to the enmity between the former belligerents but no former enemy has any right to have his property restored to him unless his former enemy is totally crushed in the war.
52. Capture followed by condemnation by the sentence of a Prize Court of competent jurisdiction extinguishes the title of the owner in the res. It is a judgment in rem. Seizure and capture followed by condemnation stand on the same footing and in both the cases the title in the res is vested in the capturing-State. Where the res is restored to its former owner after condemnation it is a gift to him and a new title flows from the date of the grant. The title in the res is also Rone by a seizure followed by a hostile confiscation by an enemy State is the law laid down by our Supreme Court in T.R. Bhavani Shankar Joshi v. Somasundara Moopanar, of the report. Therefore, I am unable to accept as correct the ingenious submissions of Mr. Roy Chowdhury.
53. No doubt, I have rejected what he has said but I do say that the law should change with the changing pattern of the Society. Our law is a living law. Those age-old concepts and the precedents which are wholly unfitted to our modern society or are hampering the well-being of our people must give way to the new thoughts and ideas of the day. The social values of the Victorian age are no longer the social values of this Space age. We have the history of the Second World War before us and we know the laws of jungle destroyed the laws of nations. The submarines, U-boats and bombers played a havoc on the sea trade. The merchant ships were sunk at sight. Even, the hospital ships were not spared. Human lives were left to the mercy of the high waves and the sea-animals. But these are the matters of the past. The day now belongs to the nuclear weapons, rockets and guided missiles. If the concept of total loss under the law of Marine Insurance has to be changed it must be changed not in the direction suggested by him but in the light of the modern warfare. And here I will not say a word to fetter my hands but will not deter to lay down the law if and when a fit occasion would arise.
54. Coming back to the point, "The Purissima Conception" reported at page 844 and the "Victoria" reported at page 1045 of 165 of the English Reports were condemned by Lord Stowell in favour of the privateers for the reasons that the title of the British owners were extinguished by condemnation and sale to the neutrals before they were re-captured. Mr. Roy Chowdhury cited these two cases and contended that as the "Shakeela" was not at all sold in execution of the sentence of condemnation she remained the property of the plaintiffs irrespective of the sentence of condemnation because the plaintiffs were not bound by the decision of the Prize Court at Dacca which was then our enemy court in view of the judgment of Lord Stowell In "The Cornelia" reported in 165 ER 1097 where it was said:
"if at the time when this vessel was taken it was clearly in the possession of the enemy, they would have a right to receive their property again, whether there had been a sentence of condemnation or not because such sentence operates nothing against the rights of the British owner. But it under the authority of a sentence hi the enemy's Court of Prize there had been a sale of the vessel to a neutral, that sale, which transfers the property to the neutral purchaser, will bar the claim of the original British owners against the neutral holder."
55. "The Cornelia". (1810-165 ER 1097) was followed by Lord Merriman in "The Salerno" reported in 1946 p. 189 Cited by Mr. Roy Chowdhury. She belonged to a British owner and was insured against the perils of war. She was captured by Germany and the assured gave notice of abandonment to the underwriter. She was thereafter condemned by a German Prize Court and was afterwards captured by a British privateer. The contest was between the British captor on the one hand and the insurer and the assured combined together on the other hand on the question to whom she should be delivered. Lord Merriman. at page 192 of the report, said: "The right of the owner to restitution is not. in the circumstances of this case affected by the mere fact of condemnation by the German Prize Court (See The Cornelia)" and at page 193 of the report further said: The claimant owners were undoubtedly her owners at the time of her capture by the Germans and her subsequent condemnation."'
56. Lord Merriman also dealt with the extra-judicial power of the British Crown in the matter of releasing the vessels before they were actually condemned. Mr. Roy Chowdhury also cited "The Leda" reported in 1919 P 264 from p. 271 of the report. He contended that the law is that the assured remains the owner of the vessel so long she is not actually sold to a neutral and condemnation without sale is not an actual total loss for the reason that there remains every possibility of her recapture so long the war continues and on her recapture she would belong not to the Capturing State but to the assured. He further contended that for this reason Professor Cheshire in his Private International Law (6th Edition) at p. 110 has said: "If a sale is ordered, judgment operates in rem in the sense that it divests the property in the ship from the owners and confers an absolute title upon the purchaser, good against all persons." But my own Professor did not lay down the entire law on the subject in the quoted statements which is clear from the earlier and the subsequent pages of this treat?.
57. In "The Odessa" reported in (1916) 1 AC 145 Lord Mersey, while delivering the judgment of the Judicial Committee at pp. 153-4 of the report said:
"It is worth while to recall generally the principles which have hitherto guided British Courts of Prize in dealing with a claim by a captor for condemnation. All civilized nations upto the present time have recognized the right of a belligerent to seize, with a view to condemnation by a competent Court of Prize, enemy ships found on the high seas or in the belligerent's territorial waters and enemy cargoes. But such seizure does not. according to British Prize Law. affect the ownership of the thing seized. Before that can happen the thing seized, be it ship or goods, must be brought into the possession of a lawfully constituted Court of Prize, and the captor must then ask for and obtain its condemnation as prize. The suit may be initiated by the representative of the capturing State, in this country by the Procurator-General. It is a suit in rem, and the function of the Court is to inquire into the national character of the thing seized. If it is found to be of enemy character, the duty of the Court is to condemn it; if not, then to restore it to those entitled to its possession. The question of national character is made to depend upon the ownership at the date of seizure, and is to be determined by evidence. The effect of a condemnation is to divest the enemy subject of his, ownership as from the date of the seizure and to transfer it as from that date to the sovereign or to his grantees. The thing -- the res -- is then his for him to deal with as he thinks fit, and the proceeding is at an end. (underline supplied).
As the right to seize is universally recognized so also is the title which the judgment of the Court creates. The judgment Is of international force, and it is because of this circumstance that Courts of Prize have always been guided 'by general principles of law capable of universal acceptance rather than by considerations of special rules of Municipal Law,"
58. Why the British Prize Courts move in two diametrically opposite directions in relation to the sentence of condemnation of their enemy counterparts must be properly understood. Why Lord Stowell took two different views and why Lord Merriman followed Lord Stowell in spite of "The Odessa" must be properly appreciated otherwise they are apt to create confusion. Those observations of Lord Stowell and Lord Merriman were made In relation to the domestic law of England and not in relation to the law of nations. This domestic law of England does not recognise the extinguishment of the title of the British owner where a vessel is re-captured after the seatence of condemnation by an enemy Prize Court provided however she is not sold to a neutral before her re-capture. The undelying principle of this domestic law is that nothing can be said to be taken by an enemy so long the war continues and all enemy properties must be taken and retaken by force. No doubt a condemnation confers an absolute title in the enemy State but this title or the enemy state is not recognised by the British Court so far as the unsold recaptured ships are concerned for the obvious reasons that the British Prize Courts are bound by their domestic law and when they apply this domestic law they depart from the law of nations and do not function as proper Prize Courts as said by Lord Parker in "The Zamora" 1916-2 AC 77 at pp. 91-2 of the report in the following terms:
"The law which the Prize Court is to administer is not the national or, as it is sometimes called, the Municipal Law but the law of nations -- in other words. International Law. It is worth while dwelling for a moment on this distinction. Of course, the Prize Court is a Municipal Court, and its decrees and orders owe their validity to Municipal Law. The law it enforces may. therefore, in one sense, be considered a branch of Municipal Law. Nevertheless, the distinction between Municipal and International Law is well defined. A Court which administers Municipal Law is bound by and gives effect to the law as laid down by the sovereign State which calls it into being. It need inquire only what that law is, but a Court which administers International Law must ascertain and give effect to a law which is not laid down by any particular State, but originates in the practice and usage long observed by civilised nations in their relations towards each other or in express international agreement It is obvious that, if and so far as a Court of Prize in this country is bound by and gives effect to Orders of the King in Council purporting to prescribe or alter the International Law, it is administering not international but Municipal Law."
And then at page 93 of the report Lord Parker further said as follows:
"It cannot, of course, be disputed that a Prize Court, like any other Court, is bound by the legislative enactments of its own sovereign State. A British Prize Court would certainly be bound by Acts of the Imperial Legislature. But it is nonetheless true that if the Imperial Legislature passed an Act the provisions of which were inconsistent with the law of nations, the Prize Court in giving effect to such provisions would no longer be administering International Law. It would in the field covered by such provisions be deprived of its proper function as a Prize Court."
59. The Prize Court administers the law of nations. The decision of the Prize Court of a competent jurisdiction is a judgment in rem. It is recognised throughout the world as a valid judgment. The prize must be brought to the Prize Court for adjudication except where the destruction of the Prize is lawful. So long the prize is not declared as a lawful prize by the Prize Court it remains the property of the owner. It is well established by the "Henrich B-Jorn" reported in (1886) 11 AC 270 at pp. 276-7 by "The Odessa" 1916-1 AC 145 and by Anderson v. Marten. (1908 AC 334) (Infra) that the condemnation by the Prize Court of competent jurisdiction extinguishes the proprietary interests of the ship-owner and the cargo-owner and the title vests in the capturing state from the date of the capture irrespective of any sale.
60. In no uncertain terms it was laid down by Lord Stowell that this domestic law of England is an exception even to the general law of that country in "The L' ACTIFF" (infra). This domestic Law of England cannot even be taken into consideration where the contest is between the assured and the insurer on the question of total loss of the subject-matter of the insurance under the law of Marine Insurance. And this law was laid down by Lord Mansfield in Goss v. Withers. (1758-97 ER 511) (Infra). Furthermore, this domestic law of England was given a statutory recognition by Section 40 of the Naval Prize Act 1864 which expressly provided for the restoration of the recaptured ship to the former British owner provided however she was not sold to a neutral before her recapture nor was used by their enemies as a ship of war. This special domestic law of England relating to prize causes have no bearing whatsoever on the questions involved before me and I am unable to hold that the sentence of condemnation of the Prize Court at Dacca is of no consequence merely because it was passed by an enemy court.
61. Stringer v. The English and Scottish Marine Insurance Co. Ltd., (1869) 4 QB 676 is one of the leading authorities on total loss under the law of Marine Insurance. During the pendency of an appeal filed by the captor from an order of the American Prize Court for restoration of the captured cargoes, covered by the under-writers against the perils of taking at sea. arrest and seizure etc., to the assured they were abandoned to the under-writers by the assured but the under-writers did not accept this abandonment and thereafter the insured cargoes were sold under an order of the court as neither the assured nor the under-writers deposited a sum which was more than 150 per cent of the value of the insured cargoes nor they furnished any security for chat amount as ordered by that Court. In these circumstances the question was whether the assured could succeed on the plea of constructive total loss of the insured cargoes. This case is not an authority on the actual question involved before me because "the sale was not under a condemnation" (see p. 690 of the report) and there. Blackburn. J., as he then was; made the following observations:
"the sale by the Prize Court stands on a very different footing. If, notwithstanding the intervention and opposition of the plaintiff, the Prize Court in America had wrongfully condemned the goods and they had been under that sentence sold, the case would have been identical with that of Mullett v. Shedden, "reported in 13 East 304, where the very point decided was. that by the sale 'the property was wholly lost to the owner, and therefore the necessity of any abandonment was altogether done away."
62. According to Mr. "Roy Choudhury these observations conclusively show that in order to be an actual total loss the condemned vessel must be sold by the sentence of the Prize Court and without a sale there cannot be an actual total loss. On the other hand. Mr. Roy Mukharjee drew my attention to where Lord Blackburn at pp. 688-90 referred to Mr. Phillips' Law of Insurance and said;
"He (Mr. Phillips) expresses an opinion that if an embargo or other detention were, in the result, to turn out much longer than was reasonably anticipated the assured, though he might in the first instance have elected to treat the loss as partial, might, on discovering this, treat it as total, unless something had occurred in the interval to prejudice the underwriters in consequence of the delay, although the detention had never changed its nature, and by condemnation or sale been turned into a total destruction of the thing. We are unwilling to say that this could never be the case."
63. Mr. Phillips said that insuredthing is totally destroyed "by condemnation or sale" and it was not disapproved by the Court and therefore Mr. Roy Mukherjee contended that the law is not what is stated by Mr. Roy Chowdhury. This judgment of Lord Blackburn was upheld by the Court of Appeal in (1870) 5 QB 599 and Kelly. C. B. at pp. 603-4 of the report said as follows;
"This loss of the goods arose, though not directly, out of the original capture (which was of itself, if it had been so treated, a total loss), through a series of consequences, viz., the institution, the different steps, and the continuance of the suit until the decree was pronounced; and the sale under the decree was, if I may use the expression, completion of the total loss. It is unnecessary to determine whether an abandonment was necessary at this time, when the goods had been actually sold and never could have been brought into the possession or under the control of the owner again, or, whether that sale did not in itself amount to a completion or perfecting of the total loss of the goods."
Martin. B. at page 606 of the report said:
"In my opinion, when that sale took place, the property in those goods was taken out of the owner, so that It became impossible for him to take those goods, under his original ownership, to the port of discharge; and. upon that taking place, the goods -- I will not say were totally lost, because I have complained of that being an ambiguous expression--but were taken entirely from the owner's dominion and control, and were absolutely taken away from him; and in my judgment, after that event took place, the word "abandonment" in the sense in which I have used the word with regard to what took place anterior to this, does not apply at all. ** ** In my judgment, by the sale of these goods under the lawful order of the court of prize, the assured was deprived of all dominion and property in them. They were taken out of his possession. He was deprived of all property in and dominion over his goods; and. therefore, under these circumstances, he is entitled to recover the full amount of his insurance, the under-writers, as I have said being entitled to the proceeds of the sale."
64. Hence. Mr. Roy Chowdhury contended that condemnation is not complete so long the prize is not actually sold and it is by the actual sale that the assured is deprived of the property and therefore there cannot be an actual total loss of the insured res without a sale. He drew my attention to Halsbury's Laws of England, Third Edition, Vol. 22. Article 282 at page 145 where it is stated "if the subject-matter insured is captured, condemned and sold, there is an actual total loss." And for this statement of law Stringer's case is noted in foot-note (P) where it is also stated "Capture", without condemnation, is not an actual total loss, although it may constitute a constructive total loss. (See Marstrand Fishing Co. Ltd. v. Beer, (1937) 1 All ER 158 at p. 163 per porter. J.)" where the ship "Girl-Pat" was insured against the risk of barratry and barratry is an actual total loss under, the law of Marine Insurance.
65. The "Girl-Pat" was wrongfully taken away by her master who completely effaced her identity. She was taken from port to port. She was damaged and was arrested in a port of refit but the master managed to escape her but she was ultimately recovered. No doubt, It was an extreme case but Porter, J., as he then was, after considering the balance of probabilities came to the conclusion that it was more likely that she could be recovered at the time the notice of abandonment was given to the insurers and his Lordship at p. 116 of the report said that it was a "case exactly on all four corners with that of the "Pollurian" her recovery being uncertain but not unlikely. If I had been asked to say: 'Is she more likely to be lost than to be recovered'. I should have felt obliged to reply: 'I do not know *** For my part. I am left in complete darkness as to whether the "Girl-Pat" was likely or unlikely to be recovered, and I must hold that she was never a constructive total loss and that her owners cannot recover." And dealing with the question of barratry Lord Porter, at pp. 163-64 of the report, said as follows:
"First of all, with regard to an actual total loss, it is said that barratry is analogous to capture, and that capture is an actual total loss, though that loss may be redeemed by a recapture. I doubt if this ever was the true question. I think it was always a question of fact whether capture was an actual total loss or merely a possible constructive total loss. Capture followed by condemnation no doubt was actual total loss, but that was because the vessel had in fact been condemned; the war was supposed to last indefinitely, and, therefore, there was no chance within any reasonable time of the ship being restored. **** The case is now governed by the Marine Insurance Act, 1906. Sections 56 to 60- That Act provides in Section 57, amongst its definitions of "actual total loss," "if the vessel be irretrievably lost." In my view, no one could say here that the vessel was irretrievably lost to her owners. Under the Marine Insurance Act, loss by barratry is necessarily an actual total loss, and in this case I find there was no actual total loss."
Lord Porter did not say that an actual sale is necessary to make it an actual total loss nor did he say that condemnation without sale is not an actual total loss. Therefore, the Stringer's case nor the "Girl-Pat" has finally decided the question involved before me. The quoted passage from Halsbury's Laws of England also do not say that condemnation without sale is not an actual total loss.
66. The "Polurrian" reported in (1915) 1 KB 922 is the first direct authority on constructive total loss as defined by Section 60 of the Marine Insurance Act. 1906. She was captured on October 25, 1912 by a Greek destroyer and the notice of abandonment was given by the assured on October 26 to the underwriter and thereafter she was released by the Greek Government on realisation of the mistake committed by the Greek interpreter in undertaking the English of the master of the ship. This mistake occurred in this circumstance. The master did not know that Greece had entered the war between Italy and Turkey and he told this fact when asked by the Greek interpreter who however thought that the master had told him that he was aware of that fact and accordingly be said so to the Naval Officer who arrested the ship. There the assured failed in his action on constructive total loss by capture and Kennidy, L.J., after reviewing the previous state of law, said that the assured could have recovered under the Pre-Act law relating to constructive total loss because her release was uncertain when the notice of abandonment was given by him, but the Act having altered this law to the disadvantage of the assured by using the expression 'unlikely' she was not a constructive total loss because her release was more likely than unlikely on that day. She was captured but was not condemned and I am not concerned herewith a capture simpliciter but with a capture followed by condemnation on which the 'Polurrian' is wholly silent.
67. In Mullet v. Shedden also reported in (1811) 104 ER 387 the insured cargo was condemned, unshipped and sold under an order of the Court of Admiralty which was reversed on appeal and the cargo was ordered to be restored to the assured or its value paid to him upon payment of the Captor's costs. The assured did not receive the cargo nor its value and he brought the action for a total loss without giving any notice of abandonment. While Mr. Marryapt, for the insurers, was contending that notice of abandonment was necessary Lord Ellenborough. C. J. at page 389 of the report said:
"The assured stands upon the actual destruction as to him of the thing insured, which precludes the necessity of any notice to abandon it"
And in delivering the judgment for the Court his Lordship at page 390 of the Report said:
"Then, as to the point of abandonment; if instead of the Saltpetre having been taken out of the ship and sold, and the property devastated and the subject-matter lost to the owner, it had remained on board the ship, and been restored at last to the owner, I should have thought that there was much in the argument, that in order to make it a total loss there should have been notice of abandonment and that such notice should have been given sooner: but there the property itself was wholly lost to the owner, and therefore the necessity of any abandonment was altogether done away."
68. Mr. Roy Choudhury contended that In this case there was an actual total loss because the title of the assured was extinguished by sale and the cargo was lost by sale. Though the effect on condemnation without an actual sale of the catgo was not an issue in this case, but in Dr. Arnould's Marine Insurance at p. 1103, Article 1130 this case is cited as an authority for the proposition "capture followed by confiscation or by unpreventible sale and unredeemed by any restoration of the goods or their proceeds before action is brought, is, as we have already seen a case of actual total loss on goods, in which no notice of abandonment is necessary. It will be recalled that if the goods subsist in specie, and there is a chance of restitution, notice of abandonment is necessary to establish total loss."
69. Bainbridge v. Neilson, (1808) 10 East 329 is a case of recapture of a ship and it was held that the assured was not entitled to convert his partial loss arising out of a capture into a constructive total loss by abandonment. The ship in question was however not condemned and therefore it is unnecessary to discuss this case. The principles laid down in the 'Polurrian' and in the 'Girl Pat' relating to constructive total loss was followed in C. Czarnikow Co. v. Java Sea & Fixe Insurance Co. Ltd.. (1941) 2 All ER 256 where the condition of the cargo deteriorated between the catpure and the recapture of the ship. There the assured succeeded in the action and Viscount Caldecote at P. 263 of the report, said "it was unlikely, -- i. e. more unlikely than likely -- that cargo-owner would recover his goods" and "there was a constructive total loss of goods proximately caused by the perils insured against."
70. A common judgment was delivered by the House of Lords in Rickards v. Forestal Land and Timber & Rly. Co. Ltd.. LR 1942 AC 50 where two different German Merchant ships with English cargoes were scuttled by their Captains for evading their capture In the Allied blockade during the Second World War and another German Merchant ship escaped the blockade the assured cargo-owners succeeded in their actions both in constructive and actual total loss against the under-writers and the principles relating to constructive total loss laid down in the 'Polurrian' and the 'Girl Pat' approved by the House.
71. Though the principles of constructive total loss were discussed in all these cases and the House of Lords also discussed the principles relating to actual total loss but the true effect of condemnation was neither an issue nor was discussed in these cases and, therefore, no useful purpose will be served in dealing with, these cases cited by Mr. Roy Chowdhury. He then cited my own judgment in Khalil Adal Khan's case (supra) where the assured was non-suited by me on the facts and circumstances of that case which need not be repeated here. There, the laws relating to total loss, both actual and constructive, and abandonment as they stood prior to the Marine Insurance Act 1963 and its English counter-part were reviewed by me including the classical judgment of Lord Abinger in Roux v. Shavador (Infra) and the opinions of Dr. Arnould that were relevant for the purpose of deciding that case. It was not a case on condemnation at all and, therefore, what was said there need not be considered here.
72. In Article 1054 at pages 1030-31 of Dr. Arnould's Marine Insurance under the heading "Effect of partial restoration after confiscation of goods" it is said as follows:
"There are dicta in two old cases which afford some authority for the view that if goods are seized and confiscated by a hostile Government, the restoration of a part of the goods, or their proceeds, before action brought prevents the assured from recovering from a total loss, even though prior to such restoration he might have claimed for an actual total loss. This view was adopted by Arnould. The learned editors of the 12th Edition took the view, however, that if at the time of the confiscation the goods could properly be regarded as irretrievably lost to the assured, so that there was then an actual total loss, the subsequent restoration of a part of the goods by the voluntary act of the Government of the captors could not deprive the assured of his right to claim for such actual total loss (25). In this view the only effect of the restoration of the property under such circumstances would be, that the under-writers would be entitled to the property as salvage. A fortiori, it is submitted that the restitution of a portion of the proceeds of the goods after the goods themselves have been sold, will not alter the nature of the loss.
Apart from these two cases, there does not seem to be any authority for the proposition that an actual total loss, when once constituted, can ever be defeated by subsequent event".
In foot-note 25 it is inter alia stated:
"The present editors considered that this view is, in theory, correct, and the text is therefore left unaltered. The crux of the matter is the premise that 'at the time of the confiscation the goods could properly be regarded as irretrievably lost'; it may be doubted whether any Court would so find, where the goods had been, released before action brought. The problem can hardly arise in any case except that of capture".
73. Mr. Roy Chowdhury placed strong reliance on the statements made in this foot-note and he contended that the term "confiscation" has been used here in a wider sense and it includes condemnation and therefore if "Shakeela" was released and restored to the plaintiffs before this action was brought no Court would have held that she was an actual total loss by her condemnation. Mr. Roy Mukherjee on the other hand contended that "confiscation" stands on a different footing from condemnation. He said that confiscation is an act of State whereas condemnation is a judicial act of the Prize Court. Similarly, capture is an act of state but not the condemnation. This article, according to him, therefore deals with confiscation and not with condemnation. But it is not necessary to resolve these two rival contentions for the simple reason that this ship was not restored to the plaintiffs at all. Furthermore, she was an actual total loss on October 18. 1965 and therefore no further question can at all arise.
74. In Halsbury's Laws of England, 3rd Edn. Vol. 30. Article 1268 at p. 653 it is said:
"A sentence of condemnation is necessary in order to vest the property In the captors or in their transferees and is conclusive as regards the property in, the condemned ship or goods. The sentence of a prize court of competent jurisdiction condemning captured property is a judgment in rem. Riving a good title as against all the World, the grounds of condemnation as well as the condemnation, itself regarded as conclusive."
75. The condemned property, at the option of the capturing State, must either be sold or made over to the capturing State by the Prize Court. Even where on order for sale is made but the sale is not yet held the capturing State has a further right to have this order for sale rescinded and is entitled to get back the possession of the Prize. This right of the capturing-State to retain possession of the Prize by the sentence of condemnation of the Prize Court conclusively demolishes the contention of Mr. Roy Choudhury that the condemnation is not complete until the Prize is actually sold and I am unable to accept that the dictum of Kelly C. B. has held down the entire law on the subject. No doubt, a ship is lost by sale under the Prize-law but no sale is even necessary to make her an actual total loss under the law of Marine Insurance.
76. It was contended by Mr. Roy Mukherjee that her possession was taken away from the plaintiffs by capture and this dispossession was confirmed and continued by the sentence of the Prize Court. He said that this sentence has further extinguished the title of the plaintiffs in the condemned ship and the World no longer recognized the title of the plaintiffs and once the title was gone "it is gone for ever" is the famous saying of Lord Stowell in "The L'ACTIF" reported in 2 Roscoe Pr. C at p. 32 of the report and therefore she was an actual total loss by her condemnation.
77. In the Corpus Juris Vol. 38, paragraph 416 at page 1138 it is stated that a capture followed by condemnation Is an actual total loss for the reason that the assured is effectively deprived of the possession and the use of his property-The same law is restated in Vol. 45, paragraph 955 at p. 1149-50 of the Corpus Juris Secundum. In Dr. Arnould's Marine Insurance under the heading "effect of re-purchase of ship by the Master" in Article 1102 at page 1075 in footnote 2 it is inter alia stated: "where there is a lawful condemnation it appears that there would be an actual total loss, which would not be effected by any repurchase by the Master. Notice of abandonment would therefore be unnecessary. See ante. Section 1054. Maclachlan however (6th. Ed. p. 1043) took a different view."
78. The Sixth Edition of Dr. Arnould's Marine Insurance edited by Mr. Maclachlan is, however, not available in Calcutta but I have looked into his "Merchant Shipping" (7th Edition) and in footnote 8 at page 17 it is stated:
"Even after the sentence of condemnation, a statutory British rule prescribes the restoration of a ship recaptured from the enemy, on payment of salvage, unless she has been used as a ship of war; Naval Prize Act 1864. Section 40. This provision only applies to British ships. As to salvage for the recapture of a neutral ship, see The Salerno (1946) P 189. In the United States the right to have restoration on recapture is lost when the property has been adopted condemned, and varying rules have been adopted in other countries: See Hall. Int. Law. Section 166, p. 522. 7th ed".
The above statements may be the reason, why Mr. Maclachlan took a different view and why the law is thus stated in the Corpus Juris. I will now pass on to Andersen v. Marten, (1908 AC 334) where the perils of the sea and not risks of capture, seizure etc. covered the ship "Romulous". Her voyage was to a Russian Port. During the Russo-Japanese War she had to deviate her course for avoiding a capture by a Japanese cruiser and was severely damaged by reason of her coming in contact with the ice. She had to proceed towards a Japanese Port of refuge for repairs and before she could reach there she was captured by the Japanese cruiser. While she was being taken by an opposite route to a Japanese Port for being condemned by a Japanese Prize Court she became a total wreck by the perils of the sea and two days thereafter she was condemned by the Japanese Prize Court. In these circumstances the assured, without giving any notice of abandonment, brought the action against the insurers which was tried by Channell, J., as he then was, and his judgment is reported in LR (1907) 2 KBD 248. The question was whether she was lost by the perils of the sea or by her capture followed by condemnation and it was answered in the following terms at pp. 253-5 of the report:
"I think that most people, looking at the matter from a common sense point of view and apart from technicalities, would say that under the circumstances the owner lost his ship by capture, and that the Japanese captors afterwards lost their price by shipwreck. If that is the correct view, then under this policy the plaintiff is not entitled to recover. If the effect of what took place when the Japanese officers came on board and directed the captain to take her down the coast in the opposite direction to that in which she was going, that is to say towards the Prize Court, was to divest the owner's property in the ship, then he had lost it and could not afterwards lose it again. From that moment he had no insurable interest in the ship. The ship itself was undoubtedly lost by the perils of the sea but the question is whose property was it at that time? If the property had passed from the original owner by the capture, he did not lose it; it was the loss of the Japanese who had taken it. I have examined the authorities on the subject, and I find that it is clear that capture without condemnation does not divest the owner of his property. I say without condemnation, not 'until condemnation, for I think that is the proper way of stating the rule. ***** the true law is that, although mere capture in itself when there is no condemnation does not divest the property when there is an adjudication of a prize court, which is an adjudication in rem binding on all the world, it is a decision not merely that the property has passed at the date of the decision, but that it did past at the time of the capture, and its effect therefore may be described as relating back. On that ground, therefore I must hold that the plaintiff is not entitled to judgment"
79. This judgment was upheld by the Court of Appeal reported in (1908) 1 KBD 601, and by the House of Lords in 1908 AC 334 and on behalf of the plaintiffs the following relavant portion from the speeches of Lord Halsbury at p. 340 of the report was relied on before me:
"This very question arose just 150 years ago in Goss v. Withers, and was argued before Lord Mansfield and he observed that a large field of argument had been entered into, and it would be necessary to consider the laws of nations, our own laws and Acts of Parliament, and also the laws and customs of merchants which make a part of our laws. After taking time to consider, the learned judge, delivering the judgment of the whole Court on November 23, 1758, then decided what would be enough to decide this case. After going through the whole law and discussing the question of how far and to what extent the seizure of the vessel affected the change in property, he says: "But whatever rule ought to be followed in favour of the owner against a recaptor or vendee it can in no way affect the case of an insurance between the insurer and insured ............ The ship is lost by the capture though she be never condemned at all nor carried into any port or fleet of the enemy, and the insurer must pay the value. If after condemnation the owner recovers or retakes her the insurer can be in no other condition than if she had been recovered or retaken before condemnation. The reason is plain from the nature of the contract; the insurer runs the risk of the insured and undertakes to indemnify. He must therefore bear the loss actually sustained.' * * *" Applying Lord Mansfield's words here, it seems to me that it would be a bold thing to argue against a judgment of the full Court of King's Bench presided over by Lord Mansfield and 150 years after it has been accepted as the law during that period by every English tribunal."
79-A. The doctrine of relation back laid down by Sir Arthor Channel was primarily based on Stevens v. Bagwell. (1808) 15 Ves 139 (152) where Sir William Grant said: "Though the property was not completely vested in the captors until condemnation, yet after condemnation it is by relation considered as theirs from the time of the capture".
80. It is true that this decision was not concerned with the effect of condemnation on the question of total loss under the law of Marine Insurance but the doctrine of relation back is firmly established by "The Odessa" 1916-1 AC 145 (supra). Sir Arthur Channel and the Court of Appeal were of opinion that the ship was lost by her capture which was followed by her condemnation and Lord Halsbury proceeded on the law laid down by Lord Mansfield in Goss v. Withers which is the main source of the doctrine of the constructive total loss. There, the Insured voyages were terminated by the capture of the insured ships and after they were recaptured the action was brought by giving notice of abandonment. The ships were not condemned and the contention that their title remained with the assured debarred him from getting the insurance money because of their ultimate arrival after recapture was overruled by Lord Mansfield at pp. 517-8 of (1758) 97 ER in the following terms:
"There is one point which, we are all of opinion is immaterial as between the insurers and insured; viz. 'whether by this capture, the property was or was not transferred to the enemy by the law of nation.' That question can happen but in two cases; namely, (1st) between the owner and a neutral person who has bought the capture from the enemy; (2nd) between the owner and re-captor. If the ship taken by an enemy escapes from the enemy, or is retaken; or if the owner redeems (ransoms) the capture; his property is thereby revested; which property in the ship taken was, by the law of nations, obtained by the captor.
The general proposition of writers upon this subject is, that 'quae ab hostibus capiunter, statim capientium fiunt'; which is to be understood, 'when the battle is over'. Indeed, nothing can be said to be taken, till the battle is over and the battle is not over, till all immediate pursuit has ceased, and all hope of recovery is gone. * * * * But whatever rule ought to be followed, in favour of the owner, against a recaptor or vendee, it can no way affect the case of an insurance, between the Insurer and insured."
81. Then the law quoted by Lord Halsbury was stated by Lord Mansfield and thereafter at page 519 Lord Mansfield again said:
"No capture by the enemy, though condemned, can be so total a loss as to leave no possibility of recovery if the owner himself should retake at any time, he will be entitled; and, by the Act of Parliament, if an English ship retakes at any time, (before condemnation or after) the owner is entitled to restitution, upon stated salvage. This chance does not suspend the demand, for a total loss, upon the insurer; but justice is done by putting him in the place of the insured in case of recapture".
82. I dare not lift this embargo laid by Lord Mansfield for allowing the Prize Law to intermingle with the law of the Marine Insurance. And a greater Mansfield is required to do so. Goss v. Withers. (1758) 97 ER 511 overrules all the rival contentions made before me discussed upto this stage and it lays downs (1) The law of Marine Insurance is not concerned with the destruction of the title of the assured in the insured ship by a sentence of condemnation of the prize court of an enemy State: (2) Merely because an insured ship is condemned during the continuance of the hostilities is no ground for holding that she is a total loss within the meaning of the law of Marine Insurance; and (3) All hope of recovery is gone for ever with the cessation of hostilities if she remains in the possession of the capturing State and the insurer must pay her agreed value in terms of the policy.
83. A loss, under the law of Marine Insurance, is either partial or total. A total loss is either constructive or actual. An actual total loss of the subject-matter of assurance by reason of the perils insured against occurs in three different situations; (1) Where the res is totally destroyed or is wholly annihilated; (2) Where the res ceases to remain in its original condition; and (3) Though the res is not destroyed and it remains in specie but it is irretrievably lost to the assured.
84. Section 57 of the Act says, "Where the assured is irretrievably deprived of the" subject-matter of the assurance "there is an actual total loss" but' it does not say under what circumstances an assured is irretrievably deprived of the subject-matter of the assurance. An actual total loss by irretrievable deprivation can only be understood if the principles relating to constructive total loss are properly appreciated.
85. Where the irretrievable deprivation has not yet taken place but the assured is deprived of the possession of his ship or goods by a peril insured against and it is unlikely that he could recover the ship or goods as the case may be and he has reasonably abandoned them to the insurers it is a case of constructive total loss under Section 60 of the Act. A constructive total loss is not a factual loss. It is a loss presumed by] the law. Abandonment is the foundation of every constructive total loss and without an abandonment there can be no constructive total loss. Abandonment must be duly notified within a reasonable time from receiving the intelligence of the accident which must also be made on the true facts though unknown, to the assured but it cannot be made on the facts supposed to be true when they are not really true.
86. The doctrine of constructive total loss originated in the cases of capture. It has a long history behind it but it is not necessary to dip into this vast Ocean. A chance of a recapture within a reasonable time makes the capture a constructive total loss provided the capture is followed by a duly notified abandonment is the law laid down by Lord Abinger in Roux v. Salvador. (1836) 43 RR 638 at pp. 649-50 of the report in the following terms:
"there may be a capture, which though prima facie a total loss, may be followed by the recapture which would revest the property in the assured. There may be a forcible detention which may Speedily terminate or may last so long as to end in the impossibility of bringing the ship or the goods to their destination * * * * in all these cases a party insured may for his own benefit as well as that of the underwriter, treat the case as one of the total loss and demand the full sum insured. But if he elects to do this as the thing insured, or a portion of it still exists and is vested in him the very principle of the indemnity requires that he should make cessation of all his rights to the recovery of it and that too within a reasonable time after he receives the intelligence of the accident, that the under-writer may be entitled to all the benefits of or may still be of any value; and that he may, if he pleases, take measures, on his own costs, for realising or increasing the value".
87. It is not the Taw that merely because an assured is deprived of his possession of the ship he will be entitled to abandon her to the insurer so as to convert Ms partial loss into a constructive total loss. Her unlikelihood of recovery must prevail over her likelihood of recovery to entitle him to convert a partial loss into a total loss by abandoning her to the insurer is the underlying principle of the constructive total loss in the law of Marine Insurance. This likelihood or, unlikelihood of recovery brings the subjective test into play. It is to be determined on the true facts and the circumstances prevailing at the time of abandonment The rule is that where the Insured ship exists in her original form and her recovery is unlikely the assured is put to an election either to treat her loss as a partial loss or as a constructive total loss. If he chooses to treat her as a constructive total loss he must give a notice of abandonment to the under-writer within a reasonable time from receiving the Intelligence of her accident because he cannot by delayed election prejudice the rights of the under-writer to recover her possession for his own benefit. Where the assured exericises his right of abandonment hi due time by a proper notice and the circumstance justifies such a course ha will get her agreed value.
88. And even where the assured has not abandoned her to the underwriter but by the subsequent turn of events she becomes an actual total loss, during the currency of the policy, by the perils insured against the under-writer must pay her value in terms of the policy to the assured and no abandonment is required from him because there nothing remains to be abandoned for the benefit of the under-writer. In (1836) 43 RR 638 at pp. 643-644 of the report Lord Abinger laid down the law relating to actual total loss in the following terms:
"If the goods once damaged by the perils of the sea, and necessarily landed before the termination of the voyage, are. by reason of that damage, in such a state, though the species be not utterly destroyed that they cannot with safety be reshipped into the same or any other vessel; if it be certain that, before the termination of the original voyage, the species itself would disappear, and the goods assume a new form, losing all their original character; if, though imperishable, they are in the hands of strangers not under the control of the assured; if by any circumstances over which he has no control they can never, or within no assignable period, he brought to their original destination; hi any of these cases, the circumstance of their existing in specie at that forced termination of the risk. is of no importance. The loss is. in Its nature, total to him who has no means of recovering his goods whether his inability arises from their annihilation or from any other insuperable obstacle".
Again at page 649 of the report the learned Law Lord said:
"The underwriter engages, that the object of the assurance shall arrive in safety at its destined termination. If. in the progress of the voyage, it becomes totally destroyed or annihilated, or if it be placed, by reason of the perils against which he insures, in such a position, that lit is wholly out of the power of the assured or of the underwriter to procure its arrival he is bound by the very letter of his contract to pay the sum insured".
89. The above statements of law were no doubt made in relation to the insured cargoes but they are equally applicable to the insured ships. Dr. Arnould in Article 1048 at page 1025 under the heading "What amounts to actual total loss" summarises the law laid down by Lord Abinger and the material portion of it is set out below:
"If. in the progress of the voyage, the thing insured becomes totally destroyed or annihilated, or if it be placed by the perils insured against in such a position that it is totally out of the power of the assured or the under-writer to procure its arrival, the latter is bound, by the very letter of his contract, to Pay the sum insured.
The great principle, therefore, on which all the cases of actual total loss depend appears to be this: the impossibility, owing to the perils insured against, of ever procuring the arrival of the thing insured. If, by reason of those perils, the assured is permanently and irretrievably deprived not only of all present possession and control over it, but of all hope or possibility of ever ultimately recovering possession of, or further prosecuting the adventure upon it, that is a case of actual total loss, independently of the election of the assured to treat it as such. Notice of abandonment would in such case be a mere idle formality because nothing remains to be abandoned.
90. The law relating to constructive total loss was altered to the disadvantages of the assured by the Act but the law relating to the actual total loss remains the same. An actual total loss is not a pure question of law. The loss must be actual and the actual loss must be a total loss. An actual total loss does not depend on the treatment, volition or election of the assured whereas the foundation of the constructive total loss is the election of the assured. In actual total loss a total destruction of the insured ship must be proved as a fact. Her conversion into a completely different thing is also a pure question of fact. And every irretrievable deprivation of the ship stands on the same footing. And here there is no scope for applying any subjective test. And all facts, subsequent to an actual total loss are wholly irrelevant for the purpose of determining the rights of the assured and the liabilities of the insurer because once there is an actual total loss it is actual total loss for all time to come under the law of Marine Insurance and it does (not) matter in the least whether the assured or the underwriter have any knowledge of the actual total loss nor their futile attempt to procure her arrival can alter its legal consequence.
91. According to Dr. Arnould:
"Every effective deprivation of the spes recuperandi amounts to an actual total loss: if the thing insured be in the hands of the strangers, not under the control of the assured; if, by any circumstances over which he has not control, it can never, or within no assignable period be brought to its original destination, in such cases the fact of its remaining in specie at any forced termination of the risk is of no importance. The loss is in its nature total to him who has no means of recovering his property, whether his inability arises from its annihilation or from any other insuperable obstacle." (See Article 1052 at pp. 1028-9).
92. It is not the universal rule that a capture is always a constructive and not an actual total loss. The 'Romulous' was lost by capture and not by condemnation. The proximate cause of her loss was her capture and thereafter the assured lost his title by the condemnation under the Prize Law. No doubt, this loss of title related back to the date of her capture by a legal fiction but that does not mean that she became an actual total loss by reason of her condemnation. It is true that the obiter dictum of Bailhache, J. in Fooks v. Smith, underlined by me, the acceptance of opinion of Mr. Phillips by Lord Blackburn in Stringer's case, the judgment of Sir Arther Channel in Anderson's case and the opinions of Dr. Arnould in Article 1130 and in footnote 2 of Article 1102 and the law stated in Corpus Juris and restated in Corpus Juris Secundum are apparently in favour of the plaintiffs but they should be viewed in their proper perspective. It is also true that Mr. Roy Choudhury has not been able to place any direct authority in support of his contentions but J am unable to accept these two diametrically opposite and extreme contentions because an actual total loss is always a mixed question of fact and law and therefore it cannot be said that there is always an actual total loss by a mere sentence of condemnation of an enemy Prize Court.
93. The learned counsel for both" the parties have proceeded on the footing that there will be an actual total loss of an insured ship if she is sold under a sentence of condemnation of the Prize Court of competent jurisdiction and therefore, subject to what are stated earlier. I do not propose to express any further opinion on it. But that again does not mean that in order to make her an actual total loss she should be sold to a neutral in execution of a sentence of an enemy Prize Court.
94. A condemnation of an insured ship though she has not been sold is not a mere fact but the most vital fact and should be regarded as of pivotal importance in those circumstances where her condemnation has taken place in such, a situation that her destiny can no longer be altered by the assured or by the insurer by any means whatsoever or it has become wholly beyond their power to procure her arrival within a reasonable time to her destination. And in this situation she Is then and there an actual total loss by the peril insured against, irrespective of any question as to whether she had been subsequently sold or not to a neutral under the sentence of condemnation of the Prize Court of the capturing state because the assured has already been actually and effectively deprived of his ship and has ceased to have any dominion over her. And here there is no sale and still the loss is actual and total X repeat that no sale is even necessary to make her an actual total loss and the loss is actual and total to the assured where his insured ship is placed In such a situation by the perils insured against that he and the insurer have lost all control over her destiny and they have no means of procuring her arrival within a reasonable time to her destination. Lord Abinger. in (1836) 43 RR 638 said and it was reiterated by Lord Blackburn in James Rankin v. Lewis Potter (1873) 6 HL 83 at p. 128 that:
"Neither the assured nor the underwriters could at the tune when the intelligence arrived exercise any control over the goods, or by any interference alter the consequences".
95. And this is the point where my journey comes to an end and here the spes recuperendi is gone and it is gone forever and the subject-matter of the insurance becomes an actual total loss.
96. The proximate cause of her capture was the Indo-Pakistan War. She was captured on September 5, 1965 while this war was actually going on. Her possession was taken away from the plaintiffs on this day. The war continued and, therefore, there was a faint chance of her recapture for the reason that there was a possibility of war being spread within the territories of East Pakistan in view of the deliberate provocative acts of the Pakistani Air Force in bombing a few places in West Bengal but due to the wisdom of our Government the war did not spread to East Pakistan. This war came to an end on September 23, 1965 Under the command of the Security Council and the Military Observers were posted by the United Nations Organisation throughout the cease fire line. And on this day this ship was under absolute control and in unfettered possession of the Government of Pakistan. She was not condemned during the war and there-lore she did not become the property of Pakistan but the plaintiffs had no control over her destiny nor they had any means of procuring her arrival to India or to any other destination. And on this day every possibility of her recapture was gone for ever. According to Lord Mansfield she became an actual total loss on this day but Lord Porter has supposed to have whispered the contrary was the contention of Mr. Roy Chowdhury.
97. Assuming, however that she was not an actual total loss on this day and on the further assumption that on this day a new faint possibility arose of her restoration to the plaintiffs within a reasonable time for the reason that she was still in the possession of the Government of Pakistan and she might have been allowed to come back to India by the Government of Pakistan. I will now deal with the subsequent events for ascertaining whether she became an actual loss at all and if so on which date. The hostilities came to an end on September 23 and the Government of Pakistan did not take her to the Prize Court upto October 17 but during this period the plaintiffs had no means to recover her possession and the Government of Pakistan retained her as a Prize in exercising of its sovereign, right.
98. She was then taken to the Prize Court on October 18. 1965 and why she was taken there? Because the Government of Pakistan wanted to take her away from the plaintiffs forever. She was condemned on this day at the instance of the Government of Pakistan and the Government of Pakistan became the owner of this ship. The Government of Pakistan wanted to deprive the plaintiffs permanently of this ship and it was done long after the cessation of the hostilities and on this day the Government of Pakistan wanted to have her sold so that the plaintiffs could never get her back by any chance whatsoever.
99. The day she was condemned, her men were also taken from jail to a Concentration Camp where they were not only detained but were also tied up with ropes (Bose Q. 25). Her possession was forcibly taken away from the plaintiffs on September 5, and this dispossession was permanently confirmed on October 18, when her title was also taken away from the plaintiffs. They had no control whatsoever over her. They had no means of procuring her arrival. Under no circumstances they could intervene and alter the situation. They could not even go to East Pakistan for securing their rights and furthermore who on earth would have listened to them there? Had any one of plaintiffs gone there by any chance he would have been sent to the same place where her men were detained for meeting the same treatment The Government of Pakistan took away everything from the plaintiffs so far as the "Shakeela" was concerned and it was done deliberately by the Government of Pakistan. And her destiny was finally sealed and settled on this day so far as the law of Marine Insurance is concerned.
100. These were the insuperable obstacles that stood on the wav of the plaintiffs from recovering her and they were irretrievably deprived of the vessel and there can be no doubt that she became an actual total loss to them. The Insurers were in no way in a better position than the plaintiffs. All hope of her recovery was extinguished and the spes recuperendi was totally vanished on October 18. 1965. The "Sakeela" was lost and she was lost forever so far as the law of Marine Insurance is concerned. Her possession was taken away from the plaintiffs by capture on September 5 and this dispossession continued uninterrupted right upto this day and therefore her loss was proximately caused by the perils insured against on this day and on this day she was not under any attachment of any Civil Court whatsoever. And the Insurers must pay her agreed value to the plaintiffs.
101. She was not actually sold and the Order for her sale was rescinded but that does not mean that she ceased to be an actual total loss because once there is an adtual total loss it is an actual total loss for all time to come under the law of Marine Insurance. No doubt, there was an agreement between the two Governments for exchanging her with the 'Elahi Bux' but that could not alter the situation because she became an actual total loss long before this agreement was entered between the two Governments. Furthermore, she was not exchanged at all with the 'Elahi Bux'.
102. The plaintiffs were Irretrievably deprived of her on October 18, and its effect was not the suspension of a mere chance of her recovery but an absolute and total destruction of all chances and hope of her recovery. They had no remedy against the Government of Pakistan whatsoever. The 'Elahi Bux' was not condemned but 'the Sakeela' was. Had the exchange been materialised she would have belonged not to the plaintiffs but to the Government of India and it was still said that our Government might have given her to the plaintiffs but this gift or grant by the grace of our Government and this act of benevolence cannot alter the law relating to actual total loss and, furthermore, the Insurers could have taken her away as salvage upon payment of the agreed value to the plaintiffs and the plaintiffs would have no say in the matter.
103. The actual total loss that happened on October 18. 1965 continued to be the actual total loss on the date the suit was filed because her possession was never restored to the plaintiffs and the plaintiffs and the Insurers had no means of procuring her arrival to India at any point of time. The agreement relating to her exchange with the "Elahi Bux" or her attachment by the Civil Court cannot by any principle of law be said to have destroyed the efficacy of her actual total loss and the Insurers must pay her value to the plaintiffs in terms of the policy.
104. All relevant facts relating to the "Sakeela" were communicated by the plaintiffs without any loss of lime to the Insurers. They took time to consider their own position. They kept the matter hanging for an indefinite period and if they have prejudiced their own rights, if any, they are to suffer and not the plaintiffs. Furthermore, the question of any prejudice to them can never arise because she was an actual total loss.
105. Price of a ship of her nature had gone up by leaps and bounds and the plaintiffs for this reason were vitally interested in getting her back and for this purpose they have rendered all possible assistance to the Insurers. This assistance was sought to be utilised against the plaintiffs on behalf of the Insurers for showing that the plaintiffs were exercising their right of ownership over her after she was condemned and were still hoping for her recovery and, therefore, she was not an actual total loss. There is no substance in this submission and the complete answer is that her actual total loss did not depend on the behaviour of the plaintiffs and by rendering assistance the plaintiffs did not destroy their rights under the policy.
106. The plaintiffs have paid oft the last defendant after the institution of this suit and in, view of this payment Mr. Roy Chowdhury expressly abandoned the first two issues raised by him. He and Mr. Roy Mukherjee requested me not to decide these two issues and therefore, I am not answering them and I answer the remaining issues as follows:--
Issues 3 (a), (b) & (c) Yes.Issue No. 4
Yes.Issue No. 5
No. Issue No. 6 The vessel was not released but not for the reasons stated in paragraph 6 of the Written Statement.Issue No. 7
'Yes' but It is of no legal consequence.Issue No. 8
Yes.Issue No. 9
Yes, as stated below.
107. The plaintiffs have succeeded in this action and therefore, the suit is decreed in terms of prayer (b) and (f) of the plaint with interim interest and further interest on the decretal amount at the rate of 6 per cent, per annum until realisation. The suit is dismissed as against the last defendant who will get the costs from the defendants Nos. 1 to 4, The plaintiff will also get the costs of two Commissions including the fees paid to their Counsel for appearing in Commissions from the defendants Nos. 1 to 4. Certified for two counsel.
108. The case was opened by Mr. Sen on March 3, 1971 and it was closed by Mr. Roy Choudhury on May 7. 1971. They did not waste a single moment of this Court for which I am grateful to them. I have taken a considerable time at home to consider the complicated questions involved in this action. Hence I suo motu stay the execution of this decree till the 15th December. 1971 to enable the Insurers to test the correctness of this decision, if they are so advised.