' IJAZ UL AHSAN, J.---Through this single Judgment we propose to decide EFAs Nos.725, 726, 727, 728 and 729 of 2010 along with EFA No,724 of 2010, as common questions of law relating to interpretation of provisions of Insurance Ordinance, 2000 are involved.
2. The appellant in all these appeals assails orders passed by a learned Additional District Judge, Lahore, with powers of Insurance Tribunal, Punjab, Lahore. The parties have a long history of litigation arising out of claims filed on the death of the insured. Disputes arose relating to payment of claims which led to complaints being filed before the honourable Wafaqi Mohtasib, representations before the President of Pakistan and writ petitions before this Court. On the formation of the Insurance Tribunal, Punjab, Lahore, applications were filed before the said Tribunal claiming amounts of death claims under insurance policies issued by the respondent. After holding a trial in which both parties were duly represented, the Tribunal allowed the applications and passed orders in the following terms:-- "In view of my finding, the application is accepted with costs in favour of the applicant and against the respondents. The applicant is entitled to recover policy proceeds along with liquidated damages from the respondents".
3. It appears that the respondents, namely, State Life Insurance Company, preferred appeals before this Court against the order of the Insurance Tribunal which were dismissed. In some instances Civil Petitions for Leave to Appeal have been filed before the honourable Supreme Court of Pakistan. However, no restraining order has been issued by the apex Court.
4. The respondents filed execution/implementation petitions before the Insurance Tribunal, Punjab, Lahore, for recovery of the following:--
(i) sum assured;
(ii) accruing bonus;
(iii) liquidated damages, and
(iv) costs.
' The amounts claimed in the execution petitions were based upon calculations made by the respondents who claimed to be entitled to receive amounts specified in the execution petitions which were accompanied by calculation sheets. The execution petitions were contested by the appellant. The main objection of the appellant was that the calculation of liquidated damages was incorrect insofar as the same had been calculated from the date of death rather than from a date which fell 90 days after the claimant had fulfilled the documentary requirements of the Insurance Company. The award of costs was also objected to. It was stated that the appellant was ready and willing to pay the amounts calculated by the Insurance Company (which was less than the amount being claimed by the claimants), subject to decision of the CPLAs filed by the appellant before the honourable Supreme Court of Pakistan. It was also claimed that part payment had already been made to the respondents.
5. After hearing the learned counsel for the parties, the Tribunal rejected the objections raised by the appellant and ordered them to pay amounts calculated by the Tribunal within seven days including liquidated damages and costs, with the observation that the amount received by the respondents shall be adjustable in accordance with the final decision of the honourable Supreme Court of Pakistan.
6. The learned counsel for the appellant submits that the Insurance Tribunal has failed to appreciate the applicable provisions of section 118 of the Insurance Ordinance, 2000. He argues that where payment on a policy is due and the person entitled thereto has complied with all requirements, including filing of complete papers for the claim and the insurer fails to make payment within ninety days from the date on which payment becomes due, the Company is liable to pay liquidated damages for the period of delay in settlement of claim caused on its end. He argues that the respondents did not fulfil the requirements of section 118 of the Insurance Act, 2000, insofar as, they did not complete the requirements which may have entitled them to claim payment. Consequently, the calculations made by the appellant have to be accepted as correct.
The learned counsel further submits that the respondents had initiated proceedings against the appellant and the time consumed in litigation cannot be counted for the purpose of determination of liquidated damages as envisaged in section 118 of the Insurance Ordinance. The learned counsel also maintains that the aforesaid provision of law does not contemplate that liquidated damages have to be paid from the date of death of the insured rather when the formal requirements are fulfilled and from the date of commencement of the proceedings before the learned Insurance Tribunal. The learned counsel adds that the Insurance Tribunal has travelled beyond the judgment/decree by allowing costs claimed by the respondents inclusive of legal fee. It has finally been argued that the Insurance Tribunal lacked jurisdiction in the matter, as it was not validly ,constituted under the provisions of the Insurance Ordinance, 2000.
7. The learned counsel for the respondents submits that in terms of interpretation of section 118 of the Insurance Ordinance, there are two factors which determine the time from which the payment of compensation of liquidated charges is to be calculated. The said factors are, when the policy matures and secondly when the insured person dies and payment becomes due. According to the learned counsel the payment of the insured amount becomes payable on the death of the claimant and in case any delay occurs in finalization of the payment of dues, the same attracts liquidated damages at the rate specified in the Insurance Ordinance. In support of his contention he relies on State Life Insurance Corporation v. Mst. Sadaqat Bano (PLD 2008 Lahore 461) and Mst.
Nusrat Malik Saleem v. Federation of Pakistan (2006 CLD 874). The learned counsel has also drawn our attention to the cases of Mst. Nusrat Malik Saleem, Mst. Rukhsana Kausar and Mst. Sadaqat Bano (supra), in which the appellant company was directed to pay liquidated damages calculated from the date of death. The learned counsel for the respondents has also drawn our attention to the fact that the appellant had not produced any documents before the learned Insurance .
Tribunal to establish that the claimants were asked to fulfil any requirements before their claims could be processed. He submits that in the absence of such evidence, the learned Tribunal was justified in calculating the starting point of accrual of liquidated damages as the date of death. He further submits that three out of the six cases relate to policies in which claim papers are not required to be filled. He therefore submits that the defence of non-fulfilment of formalities was not available to the appellant/Company.
8. So far as the objection relating to the defect in the constitution of the Insurance Tribunal is concerned, the learned counsel submits that where any Tribunal is constituted the Federal Government has the power to issue notification designating the District Judge or an Additional District Judge as a Tribunal. He submits that such notification had been issued in the instant case and, therefore, there was no defect in the constitution of the Tribunal. In support of his contention he has placed reliance on State Life v. Mst. Jafar Hussain (2009 CLD 1413).
9. Adverting to the question of award of costs by the learned Insurance Tribunal, the learned counsel points out that in two of the six cases costs were awarded while in the rest no costs were awarded by the Tribunal. He submits that claim of costs is duly supported by a certificate issued by the learned counsel representing the claimant. As such the learned Insurance Tribunal was quite justified in awarding costs to the claimants who had incurred expenses in prosecuting their claims before courts of competent jurisdiction.
10.. We have heard the learned counsel for the parties at length and have also examined the record with their assistance.
11. Adverting first to the contention of the learned counsel as to the constitution of the Tribunal, he has relied upon section 121 of the Insurance Ordinance, 2000 to contend that the Tribunal must consist of three members, while the impugned order has been passed by an Additional District Judge. We are afraid this contention is wholly misconceived. The proviso of section 121 of the Insurance Ordinance, 2000, specifically provides that where no such Tribunal is constituted, the Federal Government may issue a notification conferring the powers of the Tribunal to a District or an Additional District and Sessions Judge. It is common ground between the parties that such a notification had been issued conferring the powers of insurance Tribunal upon an Additional District Judge at Lahore, who passed the impugned ordeRs, Reference in this regard may usefully be made to 2009 CLD 1413 and 2009 CLD 1069. We therefore hold that the Insurance Tribunal that rendered the impugned order was validly constituted and had the jurisdiction to pass the same.
12. Before we deal with the question of payment of liquidated damages, it will be useful to reproduce the provisions of section 118 of the Insurance Ordinance, 2000:-- "118. Pa ment of II uidated dama es on late settlement of claims.---(1) It shall be an implied term of every contract of insurance that where Payment on a policy issued by an insurer becomes due and the person entitled thereto has complied with all the requirements, including the filing of complete papers, for claiming the payment, the insurer shall, if he fails to make the payment within a period of ninety days from the date on which the payment becomes due or the date on which the claimant complied with the requirements, whichever is later, pay as liquidated damages a sum calculated in the manner as specified in subsection (2) on the amount so payable unless he proves that such failure was due to circumstances beyond his control.
'Explanation.---For the purposes of this subsection, failure or delay by any person in making payment (including without limitation payment under a contract of reinsurance) to an insurer shall not constitute circumstances beyond the control of the insurer.
(2) The liquidated damages payable under subsection (1) shall be payable for the period during which the failure continues and shall be calculated at monthly rests at the rate five per cent higher than the prevailing base rate."
13. It is evident from a plain reading of the aforesaid provisions that payment becomes due on death of the insured and in case a claim is made and the same is not settled within 90 days, the insurance company is liable to pay liquidated damages. However, if the Insurance Company bona fide requires papers from the claimant, the 90 days period would commence from the date that the papers required by the Insurance Company are filed by the claimant. There is only one exception to this principle. Liquidated damages will not be payable if the insurance company proves that such failure was due to circumstances beyond its control, The question that requires determination by this Court is as follows: ' If the Insurance Company fails to pay a claim within 90 days, from which date would liquidated damages be payable?
' The answer to the above question has been. Provided by the appellant/Company itself through letters/circulars sent by it to "All Functional Heads/Zonal Heads" on May 31,2002 and August 06, 2002. It will be useful to reproduce some paragraphs from the said letters:-- "2. Such delays in claim payments give rise to noticeable inequality. Therefore the Corporation is pleased to announce an EQUITABLE 'NO FAULT COMPENSATION" to claimants/policy holders whose claim payments are delayed more than 90 days. The compensation will be paid from the date of death or maturity to actual date of payment of claim "
3.2 DEATH CLAIMS: In case of death claims, if payment of claim is delayed by more than 90 days from the date of death, then the compensation will be paid from the date of death to the actual date of payment.
In its letter/circular dated August 06, 2002 answering "frequently asked questions", the appellant informed its Zonal Heads/Functional Heads as follows:-- ' Question: What would be the delay period in (i) Death Claim Cases?
' Answer: (i) From the date of death to the date of issuance of pre-receipt discharge voucher.
' The above position was affirmed in a judgment of this Court in RFA No,2 of 2008 dated 20-5-2010.
Consequently, the appellant is estopped from taking any stance different from what has been its declared policy i.e. If it fails to pay a death claim within 90 days of the death of the insured person, compensation/liquidated damages will be paid from the date of death till the date of payment, calculated on the basis of criteria provided in section 118(2) of the Insurance Ordinance, 2000. It is not denied that the claims were not paid within 90-days of death of the insured.
' We have examined the entire record of the case. We have not found any thing which may even remotely suggest that the Insurance Company had ever required the claimant to file complete papers or that despite such request the claimant had failed/refused to do so. In the absence of any such evidence, in our opinion, the learned Insurance Tribunal was quite justified in calculating the starting point of accrual of liquidated damages as the date of death. It is also significant to note that three out of six cases before us relate to policies in which no claim papers are required to be filed. In case of those policies, even otherwise, the defence of failure to fulfil codal formalities is not available. It may be observed that it is not the case of the Insurance Company that it was prevented by causes beyond its control to process and pay the claims within the time frame provided in section 118 of the Insurance Ordinance.
14. Adverting to the argument that the time consumed in litigation cannot be utilized towards calculation of liquidated damages, suffice it to say that the respondents were forced by the acts and omissions on the part of the appellant to resort to litigation. It does not, therefore, lie with the appellant to argue that it is not responsible for the time consumed in finalization of the litigation. If the time consumed in litigation were to be excluded by this Court it would set a bad precedent and create a loophole in the law which could be abused by unscrupulous insurance companies to drag claimants in protracted litigation and deprive them of their lawful claims for years on end. This would be contrary to the principles of equity, justice, fair play and good conscience and would also defeat the very purpose for which provision has been made for payment of liquidated damages.
We are of the opinion that the provision for liquidated damages has been incorporated in order to safeguard the interests of the claimants and to ensure that settlement of claims is not unduly delayed/prolonged. In coming to the above conclusion we are fortified by a Judgment of the honourable Supreme Court of Pakistan dated 24-4-2006 rendered in C.Ps. Nos. 982-L and 983-L of 2006 (State Life Corporation of Pakistan v. Nusrat Malik Saleem and Mst. Rukhsana Kausar and otheRs, Reference in this regard may also usefully be made to Mst. Nusrat Malik Saleem v.
Federation of Pakistan (2006 CLD 874).
15. So far as costs are concerned, it has been pointed out to us that the learned executing court has awarded costs only in two out of six cases. In the two cases in which costs were awarded, such costs were duly supported by certificates issued by the learned counsel representing the claimants. We have examined the costs claimed. These are quite reasonable considering the various for that the claimants were forced to approach on account of the obstructive and unprofessional attitude adopted by the appellant to coerce the claimants into accepting from the appellant/Company, less than what was lawfully due to them. As such there is no illegality in the order passed by the learned Tribunal insofar as it has reimbursed the respondents for legal costs and expenses incurred by them in bona fide prosecuting their claims before courts of competent jurisdiction.
16. For the foregoing reasons, we do not find any merit in these appeals, which are accordingly dismissed.