RASAAL HASAN SYED, J.---This appeal under section 124 of the Insurance Ordinance, 2000 (the "Ordinance") impugns judgment of the Insurance Tribunal dated 13.3.2018 whereby the insurance application of respondent for recovery of insurance claim under section 118 of the Ordinance was allowed in the sum of Rs, 3,500,000/-along with liquidated damages.
2. Brief facts of the case are that an Electrical Engineer Akhtar Hussain Chaudhry, who was employed in Saudi Arabia, purchased a Life Insurance Policy w,e,f, 01.11.2006 bearing No,507895184- 0 in the sum of Rs, 3,500,000/- at an annual premium of Rs, 274,220/-. He was 54 years of age at that time being born on 04.5.1952. A few months after the policy was purchased i.e. on 23.8.2007 Akhtar Hussain died; his widow Mst. Safia Akhtar who was the designated nominee of policy, claimed the insured sum of Rs, 3,500,000/-, which was declined. The matter ended up before the Insurance Tribunal Punjab, Lahore, by means of filing application on 14.9.2013 for the recovery of policy proceeds along with liquidated damages under section 118 of the Ordinance. The appellant filed reply therein raising preliminary objections and resisted the claim on merits as well. Issues were framed and parties were put to trial.
3. From the side of the respondent Mst. Safia Akhtar herself deposed as A.W.1 and documentary evidence was brought on record including letter dated 13.8.2009 along with reminder dated 28.6.2012 as Ex.A1 and Ex.A2, certified copy of judgment dated 22.1.2015 passed by this Court in Insurance Appeal No,1092 of 2013 as Ex.A3, photocopy of passports bearing visas, etc. as Ex.A4 and Ex.A5 and death certificate of Engineer Akhtar Hussain as Ex.A6. The appellant on the other hand produced Khalid Mehmood, Manager Claim, Gujrat as R.W.1 and Muhammad Bukash Raza, Death Claim Examiner as R.W.2 and they both adduced their respective reports in evidence.
4. After detailed analysis of the evidence learned Additional District Judge/Insurance Tribunal, Gujrat vide order dated 13.3.2018 decided the case in favour of Mst. Safia Akhtar respondent, thereby awarding her Rs, 3,500,000/- along with liquidated damages under section 118 of the Ordinance from the date of death of the policy holder till realization of claim, which order is being challenged in this appeal.
5. Learned counsel for the appellant argued that the learned tribunal misread the evidence, incorrectly applied the provisions of law and based its findings on inadmissible evidence and without appreciating that the claim was based on a life insurance policy obtained through fraud, misrepresentation and by concealment of pre-insurance illness, which as such was unenforceable.
Further alleged that the claim being time-barred could not be entertained and in case any right which the respondent may have had, the same stood extinguished with time. Based on these submissions learned counsel asserted for the annulment of the decision of the tribunal and for dismissal of the insurance application. Learned counsel for the respondent refuting the above arguments submitted that the assertions of misrepresentation and bad faith were not supported by any record and that the findings of the learned Addl. District Judge Insurance Tribunal, Gujrat are based on correct analysis of the evidence on record and that the present appeal is ill-founded.
6. We have given deep consideration to the submissions by both the learned counsel and gone through the record with their able assistance.
7. Record indicates that after Engineer Akhtar Hussain's death on 23.8.2007, the widow approached the appellant but her claim was rejected vide letter dated 13.8.2009 (Ex. Al) which compelled her to file a complaint before the Federal Ombudsman on 28.4.2010 wherein she complained that despite completion of all formalities she had been wrongly denied the death claim of her husband. The Federal Ombudsman vide order dated 27.6.2011 received a report from the appellant wherein the claim was denied, and on 12.4.2013 the case was decided against her. The respondent thereafter on 14.9.2013 approached the learned Insurance Tribunal Punjab under the provisions of the Ordinance for redressal of her grievance by filing an application for recovery of policy proceeds in the sum of Rs. 3,500,000/-along with liquidated damages under policy No, No,507895184-0 effective from 01.11.2006 duly purchased by Engineer Akhtar Hussain Chaudhry who died nine months later at 54 years of age on 23.8.2007. Before the learned tribunal the appellant through its written statement mainly denied the claim alleging that in terms of Article 86(a) of the Limitation of Act, 1908 the prescribed period for enforcing a policy of insurance was three years which would start from the date of death of the deceased and since the claim was filed on 14.9.2013 it was beyond the permissible period which argument was rejected.
8. Record indicates that vide order dated 20.9.2013 after hearing preliminary arguments the claim of the respondent was rejected as being barred by time. Mst. Safia Akhtar preferred an appeal before this Court which was registered as Insurance Appeal No,1092 of 2013 wherein it was held that section 19 of the Limitation Act, 1908 was fully applicable to the case of the respondent which provides as under: "Effect of acknowledgment in writing.---(1) Where, before the expiration of the period prescribed for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing singed by the party against whom such property or right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Evidence Act, 1872, oral evidence of its contents shall not be received.
Explanation I.---For the purposes of this section acknowledgment may be sufficient though it omits to specify the exact nature of the property or right or avers that the time of payment, delivery, performance or enjoyment has not yet come,. or is accompanied by a refusal to pay, deliver, set-off or is addressed to a person other than the person entitled to the property or right.
Explanation II. ---For the purposes of this section, "signed" means signed either personally or by an agent duly authorized in this behalf.
Explanation III.---For the purposes of this section an application for the execution of a decree or order is an application in respect of a right.
9. A Division Bench of this Court vide judgment dated 22.1.2015 allowed the appeal set aside the order dated 20.9.2013 of the tribunal by holding as under: "To our mind Article 86(a) ibid would be applicable, if his claim was payable, whereas in the present case the claim of the appellant was repudiated by the Insurance Company (respondent No,2), but this aspect has been totally ignored by the learned Tribunal while passing the impugned order. The case law cited by the learned counsel for the parties is not applicable to the facts and circumstances of the instant case as said verdict was given in the cases of final adjudication and applicability of sections 14 and 19 of the Limitation Act, 1908 was also not discussed.
7. Consequently the instant appeal is allowed, the impugned order is set aside and the application filed by the appellant will be deemed to be pending before the learned Tribunal, who will decide the same afresh in the terms noted above. The parties are directed to appear before the learned Tribunal on 09.02.2015.
10. In the post-remand proceedings, the learned Additional District Judge received evidence and decided the objection of limitation in negative. Perusal of record shows that the respondent who herself appeared as A.W.1 in her testimony stated that soon after the sudden death of her husband on 23.8.2007 she approached the appellant who provided claim forms which were completed and lodged on 17.9.2008. She was issued a letter on 13.8.2009 whereby her claim was repudiated. She approached the Federal Ombudsman against refusal of her claim on 28.4.2010 through complaint No, HQR/4751/2010 which was eventually decided against her on 12.4.2013 whereafter she moved the tribunal on 14.9.2013. She testified that during the pendency of the matter before the Federal Ombudsman vide reminder No,2254/07 dated 28.6.2012 the appellant asked her that the original passport of the deceased was required. She produced this reminder as Ex. A2 in evidence whereafter she stated that the passport was duly provided.
11. It appears that the period of limitation under Article 86(a) of the Limitation Act, 1908 started from the date of the death of Engineer Akhtar Hussain on 23.8.2007, and as per Limitation Act the period of three years provided relates to "a policy of insurance when the sum insured is payable after proof of the death has been given to or received by the insurers." Evidence indicates that appellant had been giving the impression that proof to process the claim of the respondent was awaited thereby implying an acknowledgment that the appellant was willing to process the claim provided there was proper documentation. Vide letter dated 13.8.2009 when the appellant repudiated the claim the period of limitation was extended by three years in line with section 19 of the Limitation Act, 1908 which was held to be applicable to the matter by virtue of the judgment of Division Bench dated 22.1.2015 wherein the case was specifically remanded to the learned Insurance Tribunal on limitation. Thereafter on 28.6.2012 reminder No,2254/07 was issued to Mst. Safia Akhtar which referred to letter issued by the appellant on 30.5.2011, wherein she had been reminded to supply documents, so that the department of claims could proceed further. This included reference to the passport of the deceased Engineer Akhtar Hussain. In "State Life Insurance Corporation of Pakistan through Manager State Life Insurance and 2 others v. Arian Ram and 2 others" (PLD 2003 Kar. 523) the acknowledgment of liability through letter or refusal will result in fresh period of limitation from the date of acknowledgment. Similar view was expressed in "Messrs Norwich Union Fire Ins. Society Limited v. Messrs Zakaria Industries Karachi" (1994 CLC 1280). In "Behlul v. Quetta Municipal Corporation and another" (1997 SCM R 536) the august Supreme Court after considering the interpretation of section 19 of the Limitation Act in various cases by the superior courts held that "the ratio of the above cases seems to be that the main distinction of section 19 of the Limitation Act and section 25(3) of the Act is that under the former provision if a person who is liable to be sued in respect of any property or right, acknowledges his liability before the expiry of period of limitation for filing of a suit or an application in respect thereof, a fresh period of limitation shall be computed from the time when the acknowledgment is so made..."
12. The effect of this correspondence in the context of section 19 of the Limitation Act, 1908 is that an acknowledgment of liability in writing will ipso facto extend period of limitation if such acknowledgment was made before the period of limitation had expired. In the instant case by virtue of letters dated 13.8.2009 (Ex. Al), 30.5.2011 (mentioned in Ex.A2) and 22.6.2012 (Ex. A2) the period of limitation kept getting a new lease of life and as such at the time the claim was filed before the learned Insurance Tribunal on 14.9.2013 it was within three years i,e, the period of limitation prescribed by law. The findings of the learned Insurance Tribunal as to limitation in the impugned judgment as such appears to be in accordance with law.
13. #TS##The other main defense of the appellant was that the policy had been procured on the basis of concealment of the health of Engineer Akhtar Hussain who allegedly suffered from terminal illnesses at the time the policy was purchased but this fact was deliberately concealed from the appellant and on early death soon after the claim an investigation had revealed that he suffered from diabetes mellitus and ischemic heart disease therefore the appellant was not liable to pay the insured amount. The onus to prove this issue was on the appellant who in support of their assertion produced Khalid Mehmood, Manager Claim, Gujrat as R. W.1 and Muhammad Bukhsh Raza, Death Claim Examiner, Gujrat as R.W.2 who produced their inquiry reports in evidence.
It appears that the evidence of both witnesses was based on pure hearsay as they were personnel of the insurance company who had conducted inquiries and as such were themselves recorders of statements made by third parties. None of those persons were directly called into the witness box so as to fulfill the requirements of the law of evidence that requires facts to be proved through direct evidence while indirect evidence is inadmissible. Consequently, the testimonies of both the witnesses were devoid of legal relevance.
14. On the other hand A.W.1 along with her oral testimony produced extensive documentary evidence in the form of test reports that had been initiated and completed for the appellant at the time the policy was being purchased to satisfy the appellant as to the state of health of the Engineer Akhtar Hussain in due course of business for determination of the premium chargeable against policy No, 507895184-0 being issued to him. Mst. Safia Akhtar specifically testified as A.W.1 that an extra premium of Rs. 28,700/- was charged based on the test reports. This included policy schedule and medical proposal form comprising six pages as Mark-A, urine examination report dated 31.10.2006 as Mark-B, complete blood count/hematology, etc. dated 21.10.2006 as Mark-C, liver functioning test/renal test, etc. dated 21.10.2006 as Mark-D, copy of ergometry examination as Mark-E and report of stress test as Mark-F. This evidence indicates that the appellant was on sufficient notice as to the state of health of Engineer Akhtar Hussain at the time the policy was sold and a premium was charged accordingly. The subsequent disclaimer alleging that in fact that the policy had been purchased without due disclosure and in bad faith by concealing the health condition of Engineer Akhtar Hussain at the time he purchased the policy as such remains completely unsubstantiated.
15. On being confronted with the question as to why evidence, if any, as to the alleged state of health of Engineer Akhtar Hussain was not brought on record, a tenuous argument based on order dated 07.2.2017 of the learned Insurance Tribunal was attempted wherein it was stated that in fact an application was moved seeking permission to deposit diet money and travel expenses for issuance of summons to the witnesses of the appellant but the court did not allow the same. An examination of the order dated 07.2.2017 of the learned Insurance Tribunal under reference reveals that three of the four witnesses namely Dr. Shahid Nazir Gondal, Muhammad Hussain and Zafar Ahmad who had been nominated in the appellant's application were dead at that time and the only alive witness was one Iqbal Begum to whose extent permission to deposit diet money and travel expenses was given. Learned counsel for the appellant asserts that denial of deposit of diet money seriously prejudiced the case of the appellant in trial. However, when asked as to whether these witnesses were alive at the time the application was declined, learned counsel was not able to answer in the affirmative. Be that as it may the law did not leave the appellant remediless and mere refusal to summon dead witnesses could not infuse life still born argument.
16. The onus of proof with respect to the question of fraud and misrepresentation was on the appellant which it could not discharge through plausible evidence especially in view of the extensive tests that had been carried out at the time the policy was issued. In consequence the claim of the respondent on factual plane was fully operative once all necessary documents procedurally required in support thereof had been supplied to the satisfaction of the policy requirement of the company and her claim as widow of the deceased insurer Engineer Akhtar Hussain could not be denied. No dispute as to the quantum thereof to the tune of Rs.3,500,000/- has been raised and therefore this amount has been correctly awarded.
17. As to the claim of the liquidated damages section 118 of the Ordinance provides that where the payment on a policy has become due and the person entitled has complied with all the requirements including filing of complete papers, making a claim for payment, if the insurer fails to pay within a period of 90 days from the date on which the payment becomes due or the claimant complies with all the requirements, whichever is later, the insurer shall pay liquidated damages calculated at monthly rests @ 5% higher than the prevailing base rate. The only exception is if the insurer is able to prove that the failure to pay was due to circumstances beyond its control. In the instant case in light of the evidence available on record no such case of circumstances beyond the control of the appellant in the context of denial of payment could be proved to exist. As such the claim to liquidated damages has also been correctly awarded in the circumstances of the case.
18. For the reasons above this appeal fails which is consequently dismissed.