' MUHAMMAD KHALID MEHMOOD KHAN, J.---Through this constitutional petition, the petitioner has assailed order dated 15-4-2009, 31-7-2009 and 14-10-2010 passed by respondents Nos.2, 3 and 1 respectively.
2. The petitioner is a public limited Insurance Company has furnished a guarantee in the shape of performance bond No, E-P. B , No,01-P-05-00005-05-04 dated 10-6-2004 on behalf of respondent No,5 in favour of respondent No,4. As per terms of guarantee it was payable on the demand of its beneficiary, the guarantee was valid up to 31-11-2005 and claim lodgment period was agreed within 15 days after expiry of the validity of guarantee.
3. The respondent No.4 allegedly within the agreed period lodged claim, the petitioner refused to pay the claim under its guarantee and raised number of- objections, the respondent No.4 filed a complaint before respondent No.2, which was allowed vide order dated 15-4-2009, the petitioner filed appeal before respondent No.3, which too was dismissed on 31-7-2009, the petitioner assailed the two orders before respondent No.1 which also failed on 14-10-2010, hence the present petition.
4. Learned counsel for petitioner submits that impugned orders are against facts and law, the impugned orders are non-speaking orders and are in violation of section 24-A of the General Clauses Act. The respondents have no jurisdiction to entertain the complaint. Learned counsel submits that, under the Insurance Ordinance 2000, the respondent No,2 has no power and authority to issue direction for the payment of amount of performance bond, nor has any power to allow liquidated damages under section 118 of. The Insurance Ordinance 2000. Learned respondent No,2 only enjoy the powers to issue certain specific directions to insurance companies for achievements of the amicable resolution of disputes between the parties. The claim under the guarantee is barred by time. The respondent No,5 has filed a suit against respondent No,4, hence, the jurisdiction of respondent No,2 is barred by law. The recommendations of respondent No,2 is not a decree and as such recommendations are not executable against the petitioner. Learned counsel adds that allegation of default and allegation of limitation are mixed question of law and facts which could not be adjudicated upon without recording the evidence. He has relied on Punjab Industrial Development. Board v. United Sugar Mills Limited (2007 SCM R 1394), Mst. Inayat Bibi v.
Nazir Ahmed and others (1991 CLC 1660), Collector of Customs, Sales Tax and Central Excise Karachi-III v. Mudasser Travers Karachi and another (2006 PTD 146), Muhammad Khalid v.
Divisional Superintendent M.S.T.K. Division (2009 PLC (Lahore) 71), Messrs Poineer Cables Limited through General Manager v. Chairman Labour Appellate Tribunal Balochistan Quetta and 2 others (2002 PLC 82) and Colgate-Palmolive (Pakistan) Ltd. v. Registrar of Trade Marks and another (2008 CLD 974).
5. Learned counsel for respondents Nos.1 and 3 submits that respondents Nos.1 and 3 have the jurisdiction under sections 125 to 134 of Insurance Ordinance 2000. The dispute having taken cognizance is covered under section 127(2) being the mal-administration.
6. Learned counsel for respondent No.4 submits that petitioner has not raised the objection of jurisdiction and by filing reply to complaint has waived the objection of jurisdiction, hence, through the present petition, they have no right to raise the objection of jurisdiction. Learned counsel submits that this Court in its constitutional jurisdiction could not enter into factual controversy, hence, the petition is not maintainable. The Insurance Ombudsman has the exclusive jurisdiction to entertain and decide the complaint against the Insurance Company, the petitioner is a willful defaulter, the petitioner has already availed the statutory remedy under the Insurance Ordinance 2000 and as such the constitutional petition is not maintainable, learned counsel supports the impugned orders. Learned counsel for respondent No,5 supports the arguments of learned counsel for petitioner.
7. With the consent of parties, the petition is being decided as Pacca case.
8. Heard, record perused.
9. The issuance of performance guarantee/bond on behalf of respondent No,5 favouring respondent No,4 is an admitted fact between the parties. The refusal of petitioner to honour the performance bond is not denied by the petitioner, but the claim of petitioner is that performance guarantee stand expired and is not payable, the default is not on the part of respondent No, 5, the insurance Ombudsman has no jurisdiction to entertain the complaint against the petitioner as the contract between petitioner and respondent No,4 is not a insurance contract but is of a guarantee.
In these circumstances, the only question requires for resolution is what are the jurisdictional limits of Insurance Ombudsman.
9(sic). The Insurance Ombudsman is creation of Insurance Ordinance 2000. To ascertain the intention of legislator of insurance Ordinance 2000, it has to be seen what is the preamble of Insurance Ordinance 2000.
10. The preamble of Insurance Ordinance 2000 (hereinafter referred to as Ordinance 2000) is read as under:-- "An Ordinance to regulate the business of the insurance industry to ensure the protection of the interests of Insurance policy holders and to promote sound development of the Insurance industry and for matters concerned therewith and incidental thereto: WHEREAS, it is expedient to repeal and re-enact the law relating to the business of insurance; ' AND WHEREAS the National Assembly and the Senate stand suspended in pursuance of Proclamation of Emergency of the fourteenth day of October, 1999, and the Provisional Constitution Order No,1 of 1999; ' AND WHEREAS, in pursuance of the proclamation of Emergency of the fourteenth of October, 1999, and Provisional Constitution Order No,1 of 1999, as well as Order No,9 of 1999, and in exercise of all powers enabling him in that behalf the President of the Islamic Republic of Pakistan is pleased to make and promulgate the following ordinance."
11. Under section 125 of the Ordinance 2000, the Federal Government appoints the Insurance Ombudsman (hereinafter referred to as Ombudsman), the terms and conditions of Ombudsman are provided in section 126 of the Ordinance 2000. Section 127 of the Ordinance 2000 provides the jurisdiction, functions and powers of the Insurance Ombudsman.
12. Section 127 is read as under:-- "127. Jurisdiction, functions and powers of Insurance Ombudsman... (1) The Insurance Ombudsman may on a complaint by any aggrieved person undertake any investigation into any allegation and mat administration on the part of any insurance company.
' Provided that the Insurance Ombudsman shall not have any jurisdiction to investigate or inquire into any matters which-----
(a) are within the jurisdiction of the Office of the Wafagi Mohtastb under the Establishment of the Office of Wafagi Mohtasib (Ombudsman) Order, 1983 (P.O. 1 of 1983); or
(b) are sub judice before a Court of competent jurisdiction or Tribunal or hoard in Pakistan on the date of the receipt of a complaint; reference or motion by him."
13. The perusal of section 127 shows that the Ombudsman may on a complaint by an aggrieved person undertake any investigation into "any allegation of mal administration on the part of Insurance Company".
14. Under section 127(2) the mal-administration include:- "(2) For the purposes of this section "maladministration" includes....
(a) a decision, process, recommendation, act of omission or commission' which;
(i) is contrary to law, rules, or regulations or is a departure from established practice or procedure, unless it is bona fide and for valid reason; or
(ii) is perverse, arbitrary or unreasonable, unjust, biased, oppressive, or discriminatory; or
(iii) is based on irrelevant grounds; or
(iv) involves the exercise of powers, or the failure or refusal to do so, for corrupt or improper motives, such as, bribery, jobbery, favourlism, nepotism and administrative excess; and
(b) Corruption, nepotism, neglect, inattention, inordinate delay, incompetence, inefficiency and ineptitude in the administration or discharge of duties and responsibilities."
15. Now it has to be seen whether the dispute between the parties is of a Insurance claim and whether the nonfulfillment of petitioner's obligation under the performance bond is a "mal- administration".
16. The perusal of preamble of Ordinance 2000 shows that it has been enacted to regulate the business of Insurance Industry, to ensure the protection of interest of "Insurance Policy holders" and to promote sound development of the Insurance Industry and for matters connected therewith and incidental thereto.
17. The word used in the preamble is "business of Insurance". The Insurance is defined in section 2(XXVII) which is read as under:- "Insurance" means the business of entering into and carrying out policies or contracts, by whatever name called, whereby, in consideration of a premium received, a person promises to make payment to another person contingent upon the happening of an event, specified in the contract, on the happening of which the second named persons suffers loss, and includes reinsurance and retrocession: ' Provided that a contract of life Insurance shall be deemed to be a contract of Insurance notwithstanding that it may not comply with the definition set out in this clause"
18. Policy holder is defined in section 2(XLVI) as under:-- 'Policy holder " means the person to whom a policy is issued or, in the case of a policy of life insurance, the person to whom the whole of the interest of the policy holder in the policy is assigned once and for all, but does not include an assignee thereof whose interest in the policy is defeasible or is for the time being subject to any condition;"
19. The definition of "Insurance" shows that it includes "entering into" "Carrying out policies or contract" against the payment of premium Insurance Company promise to make payment to insured person of their nominee, in case of happening of any agreed, event, specified in the contract, whereas in contract of guarantee the beneficiary is third party, meaning thereby the Insurance Policy or contract are two different subjects, the Insurance company can enter into a contract of Insurance or some other contract and the consideration is the premium, whereas in a contract of guarantee or performance bond the purchaser to pay commission and that commission does not cover the entire amount of contract. In case of encashment of guarantee, the purchaser is bound to pay the amount of guarantee to the guarantor, but in the case of Insurance Policy it is not, in case of death of insured the Insurance Company is bound to pay the insured amount irrespective of the payment of only one or two installments. In case the insured paid the entire premium and the Insurance Policy is matured, the Insurance Company is bound to pay the insured amount to the insured. In a contract of insurance against different type of loss, the Insurance Company is bound to pay the insured amount without payment of any further premium.
In the contract of guarantee, the purchaser of the guarantee is not the beneficiary, and in case of payment of guarantee amount the purchaser has to reimburse the Insurance Company, hence the contract of Insurance and contract of guarantee are different contracts.
20. The contract subject matter of the present petition is not a contract of Insurance, but is covered under the definition of "or contract". The contract of performance bond/guarantee is an independent contract which the Insurance Company entered into with the respondent No,4 for a specific act. So it has to be seen whether the contract other than Insurance Policy comes within the Jurisdiction of Ombudsman or not?
21. The present contract performance bond/guarantee is admittedly is not a contract of Insurance, the petitioner company entered into a contract with respondent No,5 for providing a Insurance guarantee in favour of respondent No,4 promising to pay to respondent No,4 on their first demand without recourse to the respondent No,4. The Insurance Company no doubt is authorized to enter into an agreement of guarantee but the question is whether its non payment falls within the purview of mal administration or-not?
22. The term of mal administration is defined in section 127(2) of the Ordinance 2000.
23. The plain dictionary meanings of mal administration are Oxford English Dictionary "formal manage or administer badly or dishonestly".
Black Law Dictionary Mal, Bad, wrong, it is prefix in terms such as mal administration or mal practice mal administration.
' Poor management or regulation, esp. In official capacity.
24. The definition of mal practice includes section 127(2)(a) (i)(ii)(iii)(iv),(b):--
(a) a decision, process, recommendation, act of omission or commission which:
(i) is contrary to law, rules or regulations or is a departure from established practice or procedure, unless it is bona fide and for valid reasons; or
(ii) is perverse, arbitrary or unreasonable, unjust, biased, oppressive, or discriminatory or
(iii) is based on irrelevant grounds; or
(iv) involves the exercise or powers, or the failure or refusal to do so, for corrupt or improper motjves, such, as bribery, jobbery, favourtism, nepotism and administrative excess:
(b) corruption, nepotism, neglect, inattention, inordinate delay, administration or discharge of duties and responsibilities."
25. The question arose whether the petitioner's act refusal to honour the respondent No,4's claim is an act of mal administration or not, the petitioner's contention is that claim was not received within 15 days of the expiry of the period of guarantee and the respondents Nos.4 to 5 contract was not terminated. The argument of learned counsel for respondent No,4 is that respondent No,4's case falls under section 127(2)(i) as the words used are "act of omission". The dictionary meaning of "omission" are a failure to do something - a neglect of duty - something that is left out, under, and if we read the dictionary meaning of word mal administration, element of dishonesty is necessary, so where the omission is under some bona fide act it will not fall within the definition of mal administration.
26. Admittedly the performance bond/guarantee was valid up to 30-11-2005 and claim lodgment period under the said guarantee was within 15 days after expiry. The respondent No,4 allegedly lodged its claim on 14-12-2005 which allegedly received in the office of petitioner on 15-12-2005.
The respondent No,4 filed the complainant on 27-5-2008. The petitioner raised the objection that till July, 2006, no claim was received to petitioner, the dispute is thus whether claim lodged by the beneficiary is within time or not required recording of evidence and the Ombudsman is not a Court who can record evidence, hence, the argument of learned counsel has no force.
27. The other aspect of the case is that preamble of Ordinance 2000 will show that it regulates the business of Insurance Industry to ensure the protection of interest of policy holders and for matter connected therewith and incidental thereto. Thus the jurisdiction of Insurance Ombudsman is restricted to the Insurance Business only. The dispute between the parties is factual which could only be resolved after recording the evidence, hence, the respondent No,2 wrongly assumed the jurisdiction on the respondent No,4 complaint.
28. In view of the above the petition is allowed and the impugned orders dated 15-4-2009, 31-7- 2009 and 14-10-2010 are declared without lawful authority having no' legal effect.