SUPREME COURT OF PAKISTAN
(Appellate Jurisdiction)
PRESENT:
MR. JUSTICE IJAZ UL AHSAN
MR. JUSTICE MUNIB AKHTAR
MR. JUSTICE SHAHID WAHEED
CIVIL APPEAL NO.929 OF 2017 & C.M.A.NO.1708 OF 2019
(On appeal against the judgment dated
22.05.2017 passed by the Lahore High
Court, Lahore in Insurance Appeal No.1288
of 2015)
State Life Insurance
Corporation & another … Appellants/Applicants
VERSUS
Mst. Razia Ameer &
another … Respondent(s)
For the Appellant(s) : Mr. Mushtaq Ahmad Mohal, ASC
(via video link from Lahore)
For Respondent No.1 : Mr. Liaqat Ali Butt, ASC
(via video link from Lahore)
For Respondent No.2 : Mr. Sanaullah Zahid, Addl. A.G.
Shahid Fiaz, DEO (S.E), Narowal
Date of Hearing : 06.03.2023
JUDGMENT
Shahid Waheed, J. This direct appeal is of the insurer and
challenges the cogency of the judgment dated 22nd of May 2017, of
the first Appellate Court, which is at variance with the judgment
dated 18th of June 2015, of the Insurance Tribunal, Punjab, and
we are, therefore, called upon to examine both and determine
which one of them properly answers the question whether the
legal heirs of the assured person were entitled to claim liquidated
damages under Section 118 of the Insurance Ordinance, 2000?1
1 Madan Gopal v. Maran Bepari [PLD 1969 SC 617]
Civil Appeal No.929 of 2017
2
2. The facts on the basis of which the above two
judgments were made are straightforward and they may briefly be
stated. In the wake of the Group Insurance contract between the
Provincial Welfare Board, Punjab, constituted under the West
Pakistan Government Employees Welfare Fund Ordinance, 1969,
and the Sate Life Insurance Corporation of Pakistan (the insurer),
the husband of respondent No.1, namely, Ameer Ali, being the
Senior School Teacher (S.S.T) in the Education Department,
Government of the Punjab, was assured, on payment of premium
amount which was deducted from his monthly salary until his
retirement. He took early retirement on 2nd of December 2007, at
the age of 58 years on medical grounds and later died on 7th of
October 2008. Afterwards, his wife (respondent No.1 herein) on
10th of October 2008 (Mark P & Q), through the concerned office of
the Education Department, lodged her claim for obtaining the sum
assured from the insurer. Her claim was repudiated by the insurer
vide its letter dated 2nd of March 2009 (Mark Y), on the ground
that the policy was revised with effect from 1st of July 2007, and
the revised contract did not cover early retirees. This repudiation
gave fillip to respondent No.1 to file an application under Section
122 of the Insurance Ordinance, 2000, before the Insurance
Tribunal, Punjab, for recovery of group insurance claim of
Rs.600,000/- alongwith liquidated damages. The insurer resisted
the claim of respondent No.1. The divergent stances of the parties
led the Insurance Tribunal, Punjab, to frame the following
issues: -
(i) Whether the application is not
maintainable? (OPR)
(ii) Whether the application is without any
ground? (OPR)
(iii) Whether the applicant has no cause of
action to initiate the present
proceedings? (OPR)
(iv) Whether the petitioners are entitled to
decree as prayed for? (OPP)
(v) Relief.
3. During the course of the trial, the new policy dated
12th of July 2012 (Mark A) was enforced and made applicable to
Civil Appeal No.929 of 2017
3
early retirees retiring from 1st of July 2007, and as such the
insurer paid the sum assured, that is, Rs.600,000/- to the legal
heirs of the deceased through four cheques dated 16th of August
2013. This fact is also reflected in the letter dated 21st of August
2013 (Ex.R.2). Given the circumstances, the only question left to
be determined by the Insurance Tribunal, Punjab, was whether
the respondent No.1/applicant was entitled to the liquidated
damages as prayed for. The issue No.4, set out above, was
amended accordingly and the parties were asked to adduce
evidence on it in support of their respective claims.
4. To prove her claim for liquidated damages, respondent
No.1 produced her son, namely, Muhammad Zaheer Ameer
(PW.1). He was also her attorney. He reiterated those facts in his
statement which were mentioned by respondent No.1 in her
application and closed the evidence by tendering some
documentary evidence that include the claim application and
medical record of the assured person etc. On the other hand, the
insurer produced Syed Ghulam Abbas, Assistant Manager (RW.1).
This witness stated in his statement that since the assured person
had taken early retirement on 2nd of December 2007, at the age of
58 years on medical grounds, he was not entitled to get the sum
assured under the revised contract dated 17th of March 2009
(Ex.R.1/1-3), which was made applicable from 1st of July 2007.
However, he admitted that based on the contract dated 12th of
July 2012 (Mark A), which was made applicable retrospectively, so
as to bring within its fold the early retirees retiring from 1st of July
2007, the sum assured was paid to the legal heirs of the deceased.
5. On consideration of the evidence brought on record,
the Insurance Tribunal, Punjab, declined to grant liquidated
damages mainly on two grounds. The first was that the revised
contract entered into between the insurer and the Provincial
Welfare Board, Punjab (Ex.RW.1/1-3), did not contain a clause for
liquidated damages. It appears that the Insurance Tribunal,
Punjab, while returning this finding did not take into account
Section 118 of the Insurance Ordinance, 2000, which provides
Civil Appeal No.929 of 2017
4
that payment of liquidated damages on late settlement of claims
shall be an implied term of every contract of insurance. This
omission was noted by the first Appellate Court and thus, held
that on completion of all formalities, if the claim is not
satisfied/cleared within ninety days without any fault of the
claimant when it becomes due, then, under the implied term of
every contract of insurance the liquidated damages must be
granted. We are of the view that the findings of the first Appellate
Court does not suffer from any legal infirmity and are accordingly
sustained.
6. The other reason which dissuaded the Insurance
Tribunal to grant the application filed by respondent No.1 under
Section 122 of the Insurance Ordinance, 2000 was that since the
assured person was not a party to the group insurance contract,
his legal heirs had no standing to claim liquidated damages. This
understanding was, by all means, inconsistent with the scheme of
group insurance and the provision of law applicable thereto, and
thus, the first Appellate Court rightly repelled it with the
observation that group insurance is designed to provide monetary
benefits to the family of the assured person; particularly, if the
assured person has not defaulted in payment of premium amount.
To boot the above, it may be observed here that inasmuch as the
insurer reviewing its earlier repudiation had entertained the claim
of respondent No.1 lodged through application dated 10th of
October 2008 (Mark. P & Q) and paid the sum assured to the
family of the deceased on 16th of August 2013, it cannot be heard
saying that the family of the deceased assured person was not
entitled to receive liquidated damages under Section 118 of the
Insurance Ordinance, 2000.
7. To ring down the curtain on the moot, three more
points are important to be mentioned here. Firstly, RW.1 clearly
stated in his statement that the claim of respondent No.1 was
repudiated through letter dated 2nd of March 2009 (Mark Y), on
the basis of Group Insurance Contract (Ex.R-1/1-3). It is now well
settled that the policy/contract becomes effective from the date it
Civil Appeal No.929 of 2017
5
is signed by the executants.2 Here the said contract/policy was
signed on 17th of March 2009. It means that when the letter (Mark
Y) repudiating the claim was issued, the contract/policy did not
come into play. Such repudiation was not lawful, as it reflects
insurer’s malfeasance, misfeasance and nonfeasance, and for it,
the legal heirs of the deceased assured person cannot be left in
the lurch. Secondly, the evidence brought on record does not
suggest that respondent No.1 did not comply with the
requirements for claiming payment. And finally, the insurer has
failed to prove that its failure to pay the claim within the
stipulated time was due to circumstances beyond its control. The
upshot is that claim of the respondent No.1 for payment of
liquidated damages was well founded, and thus, was entitled to
receive it.
8. After a comparative examination of the merits of the
above-referred two judgments, we are poised to conclude that the
reasoning advanced by the first Appellate Court is
unexceptionable and therefore, calls for no interference. This
appeal is without merit and accordingly dismissed.
C.M.A.No.1708 of 2019
For the order recorded in the main case, this application has
become redundant and disposed of accordingly.
Judge
Judge
Judge
B-III
Islamabad, the
06.03.2023
“Approved for reporting”.
Sarfraz Ahmad & Agha Furqan, L/C
2 Bhaiyat vs. L. Chong Kha and others [AIR 1934 Rangoon 342]
