JUSTICE (RETD.) ALI AKBAR QURESHI, CHAIRMAN. That any system of administration of justice, which does not give effect to palliate the injury by awarding adequate compensation, when it remedies any wrong, stemming from malfeasance, misfeasance or nonfeasance, is defective to that extent with this prefatory statement, we go on to the facts of this case, which paint a sordid picture of the apathy of the insurance company and the empathy for the respondents, who had been deprived of living with grace, dignity and liberty to use their property.
2. This is an application under section 116 of Insurance Ordinance, 2000, filed by the petitioner/company to deposit the amount of the death claim of Muhammad Imran Afzal (deceased/insured) on the grounds, that the deceased/insured purchased a policy No.515698 (HIFAZAT PLAN), from the petitioner/company; that the insured person died on 16.12.2016 as per the information provided by the widow of the insured namely Sumera Imran (who is guardian of nominee Fatima Imran) through an application dated 27.02.2017 along with death certificate; that the petitioner/company, in order to finalize the claim, firstly wrote a letter on 04.10.2017, whereby the respondent was asked to provide the death certificate issued by any authority of Turkey, medical record of deceased and Embassy letter of Pakistan and Turkey and also issued a final reminder on 18.10.2017 for demanding the same documents but no reply Was made by the respondent, hence this petition. The record was examined and found, that as per the death certificate annexed by the petitioner dated 24.01.2017, the insured died on 16.12.2016 because of natural death at Village Kalasky, Tehsil Wazirabad, District Gujranwala, therefore, prima facie, it appears, the petitioner/company demanded the wrong documents through letters dated 04.10.2017 and 18.10.2017, in order to delay the claim of the insured.
3. Although, the petitioner company has filed a petition under section 116 of the Ordinance, ibid, to deposit the amount of death claim in favour of the respondent or the Tribunal, but at the same time, it is imperative to examine and assess, as to whether the petitioner company was not legally bound to deposit the policy proceeds into the Tribunal, after availing or expiry of the grace period of nine months provides in section 116 and whether, the respondent is entitled to receive the profit/interest earned by the petitioner/company by investing, utilizing in its business activities or retaining in bank the amount of death claim from the day the policy holder died?
4. The deeper appreciation of the record reveals, that the insured died on 16.12.2016 and the nominee filed a proper claim on 27.02.2017, which was duly received by the petitioner/company.
Admittedly, the application under section 116 of the Ordinance ibid, was filed on 03.02.2023. The petitioner, as per contents of the petition, in order to obtain certain documents, written few letters, but no reply was made. The petitioner, thereafter, filed the instant petition on 03.02.2023 to deposit the amount into the Tribunal. The petitioner deliberately, while filing the instant petition did not annex or submit the cheque of the amount of the death claim. The notices were issued to the respondents to procure their attendance. The petitioner/company retained and utilized the amount till date and by this way, the petitioner/company utilized the proceeds for about six years and two months and earned the profit thereon, which is contumacious, sheer negligence and crass violation of section 116. Since, this petition has been filed under section 116 of the Ordinance, 2000, therefore, it would be appropriate for the ready reference to reproduce the same in order to understand the logic and wisdom behind it:-
(1) Where in respect of any policy of life insurance maturing for payment an insurer if of opinion that by reason of conflicting claims to or Insufficiency of proof of title to the amount secured thereby or for any other adequate reason it is impossible otherwise for the insurer to obtain a satisfactory discharge for the payment of such amount, the insurer may before the expiry of nine months from the date of maturing of the policy or, where the circumstances are such that the insurer cannot be immediately aware of such maturing, from the date on which notice of such maturing is given to the insurer, apply to pay the amount in the Tribunal within the jurisdiction of which is situated the place at which such amount is payable under the terms of the policy or otherwise".
5. The aforementioned subsection provides a procedure to the insurance company to pay the policy proceeds in the Tribunal instead of retaining the same itself in case, it is not possible for the insurance company to discharge its liability in the normal circumstances. The first part of the section provides a complete procedure to make the payment in the Tribunal from the date of maturing the policy, whereas, the second part of the subsection, mandates that the petitioner/company shall apply to the Tribunals for the payment of the policy proceeds from the date on which, notice of such maturity is given. In this case, the respondent, who is widow of the insured filed an application along with death certificate of the insured to the insurance company on 27.02.2017, to receive the amount of the death claim. The petitioner, although, requisitioned certain documents from the respondents through letters and no response was made and thereafter the petitioner instead of depositing or paying the amount of the claim into the Tribunal retained the same for a long time and finally instituted the application on 03.02.2023. So much so, the petitioner, while filing the instant petition did not annex or submit the cheque of the amount of the death claim.
6. The aforementioned subsection provides a procedure to the insurance company to pay the policy proceeds in the Tribunal, instead of retaining the same itself in case, it is not possible for the insurance company to discharge its liability in the normal circumstances. The first part of the section provides a complete procedure to make the payment in the Tribunal from the date of maturing the policy, whereas, the second part of the subsection, mandates that the petitioner/company shall apply to the Tribunals for the payment of the policy proceeds after expiry of the grace period provided in the section, ibid.
7. The aforementioned facts and law applicable on the case are sufficient to hold that the petitioner company for a long time retained the amount of the death claim willfully and deliberately, obviously, in its bank accounts or utilized in its business and earned the profit thereon for which, the petitioner company in any circumstance was not entitled to receive even a single penny on account of interest on the said amount.
Needless to mention, that in law, the moment, the insured person dies, the succession opens and the policy proceeds or the amount of the death claim vests and devolves upon the heirs of the deceased like the property, moveable or immoveable by operation of law as provided by the principles of Muhammadan Law.
8. In this case, the succession was opened on the demise of the insured, on 16.12.2016, and the amount of the death claim immediately vested into the respondents being the legal heirs and admittedly, the respondents well within time filed an application to the petitioner on 22.02.2017, to receive the amount of the death claim. As regard the rights of the legal heirs of the deceased/insured to receive the policy proceeds (amount of death claim) along with profits or liquidated damages, the legislatures have already taken care of this aspect of the case by inserting section 118. The Section, 118 is reads as under:-
(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 -complies 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.
The simple reading of the above mentioned Section reveals that the policy proceeds (including all claims) are to be paid to the policy holder or the legal heirs in time and incase of delay, the profit/interest earned by the insurance company while retaining the same is also to be paid to the insured person or the legal heirs as the case may be. Further, if the proceed is deposited with the Tribunal by the insurer, the same is to be invested by the Tribunal in Government Securities under section 116(5) so that the policy holder, or the legal heirs as the case may be, could avoid the effect of devaluation of the amount.
9. Although, there is a slight difference between sections 116 and 118 of the Ordinance, ibid, but while deducting the analogy from section 118 as regard the due date to make the policy proceeds/death claim by the insurer is almost the same. In section 116, the Payment becomes due when the policy matured or from the date of which the notice of such maturity is given to the insurer and further, if the insurance company is satisfied that the payment of claim is not possible to pay the policy holder or the nominee, the same is to be paid into Tribunal according to the terms of the section.
The word DUE has been defined in OXFORD Advance Learner's Dictionary as under:- DUE/OWED Due.
"When some of money is due, it must be paid immediately".
Owed.
"To somebody as a debt because it is his right or because he has done something to observe it".
In Merriam Webster Dictionary, the word due is defined as under:- Due/owed/owing "Owing is a debt.......... .payable............. . required or expected in the prescribed, normal or logical course of events".
Due.
"Something due or owned............. .'something that rightly belongs to one payment or obligation required by law".
Having a glance on the dictionary meaning of the word due or owed, or the due date, suffice to observer that on the due date, i.e. on the expiry of grace period (nine months), the amount of the death claim became the ownership of the legal heirs and they are entitled to receive the amount along with profit/interest incurred thereon earned by the petitioner/ company from the date due, till its realization.
10. Even otherwise, the scheme of law (Ordinance 2000), provides that the policy proceeds including the death claim etc. should be paid to the claimant forthwith, when the same becomes doe. Furthermore, no such provision is available in the Ordinance which permits the insurer to retain the due amount for an indefinite, period period and if the insurance company retains the due amount for no reason against the spirit of scheme of law that will always be at the risk and responsibility of the Insurance Company. It is the responsibility of the insurer to pay the due amount to the claimant within time and if the delay is occurred, the insurer is liable to pay the liquidated damages or all the profits incurred on the due amount are attracted immediately after due date, otherwise, it would seriously affect the credibility of the scheme. Needless to mention that the petitioner is ongoing business concern and must have utilized the amount gainfully in their commercial activities to earn the profit, whereas on the other hand, the claimant suffered financial loss because of the unlawful and illegal act of the petitioner company. Reliance is placed on PLD 2022 Lahore 188.
11. In this case, as established from the record, the petitioner company firstly failed to make the payment to the claimant or to deposit the same into the Tribunal in terms of section 116 of the Ordinance, ibid, and secondly intentionally and deliberately, retained the due amount for a long time, obviously, at its own risk and responsibility, in order to utilize the same in its business to earn the profit or to retain the same in its bank accounts to earn the interest thereon, for which the petitioner was not permitted by any law.
12. We now advert to 'another aspect of this case as to whether to grant the liquidated damages, it is necessary to frame an issue to collect the evidence. There is a judgment of the Hon'ble Lahore High Court Lahore title Askari General Insurance Company Ltd. v. Islam Lubricants Private Ltd.
(2022 CLD 425 Lahore), wherein it is held as under:- "Before parting with this judgment, we may clarify that in all applications to the insurance Tribunal a specific issue must be framed with regard to the grant or refusal of liquidated damages under section 118 of the Ordinance. Further, in case an amount is admitted to be due to a person by the insurer under a claim that amount should be deposited in a profit bearing account at the first opportunity by the Insurance Tribunal and to that extent the insurer should not be held liable for liquidated damages in any case. This order shall be transmitted to all the Insurance Tribunals across Punjab for compliance".
Respectfully submitted, the aforementioned direction is given by the Hon'ble Lahore High Court, Lahore in a case of General Insurance, whereas, the case in hand relates to the life insurance and the facts are neither denied nor controverted, therefore, apparently, there is no need to frame any issue.
13. As regard the case in hand, the petition under section 116 of the Insurance Ordinance was filed on 03.02.2023, whereas, in para No.7 of the petition, the petitioner/company, admitted to receive the information of the death of the deceased through application dated 27.02.2017, submitted by the legal heirs of the insured, but failed to perform its statutory duty to deposit the policy proceeds into the insurance Tribunal after the expiry of the grace period provided in Section, ibid. This lapse of the petitioner/company will not deprive the respondents to recover the sum assured along with profit or liquidated damages from the day, the grace period expired, as the policy proceeds was utilized by the petitioner in its business to earn the profit.
14. The Hon'ble Supreme Court of Pakistan while interpreting section 118 of the Insurance Ordinance, has observed in an unreported judgment, in a case titled "State Life Insurance Corporation and another v. Mst. Razia Ameer and another" in Civil Appeal No.929 of 2017 as follows:- "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 that payment of liquidated damages on late settlement of claims shall be an implied term of even 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, (underlined for emphasis) then, under the implied term of every contract of insurance the liquidated damages must be granted".
15. There is another pivotal and vitally important aspect of the case that according to the principle of Muhammdan Law, the property, movable and Immovable owned by the deceased vested and devolves upon the legal heirs by operation of law and they become owners to the extent of their shares on his demise. Needless to mention, the Constitution of Islamic Republic of Pakistan, 1973, categorically mandates and provides a guarantee, that in Pakistan, no law can be made contrary to the injunctions of Quran and Sunnah. Therefore, in our humble view, the legal heirs are entitled to enjoy property along with its benefits from the day of the death of the owner. Apparently, it appears against the law of inheritance, which is Quranic injunctions that the insurance company is permitted by law (section 116) to retain or utilize the amount to earn the profit after the death of the insured for a period of nine months_ Anyhow, the legislatures while enunciating the Insurance Ordinance, 2000, has provided a grace period of 09 months to the Insurance companies, in section 116 to make the payment to the insured person/legal heirs or to deposit the same in the Tribunal as the case may be, therefore, this Tribunal having no option but to follow the procedure given in section 116 and to allow the petitioner/insurance companies to enjoy the grace period while retaining and using the amount of the legal heirs, in their business to earn the profit and paid only sum assured at the end of the day.
16. Since, this Tribunal is under legal obligation to follow the dictates of the Insurance Ordinance, 2000, therefore, the petitioner/company is directed to pay the sum assured along with liquidated damages under section 118 of the Insurance Ordinance, 2000, from 27.02.2017, excluding the grace period of nine months as proved under section 116 of the Ordinance ibid, till 14.04.2023.