' AJMAL MIAN, C J.---This is an appeal with the leave of this Court against the order, dated 30-10- 1993, passed by a learned Division Bench of the High Court of Sindh in Constitutional Petition No,D- 1942 of 1993 filed by the appellant against the respondent's order dated 14-6-1993 whereby appellant's name was delisted from the respondent's list of approved Insurance Companies with immediate effect, dismissing the same.
2. The brief facts are that the appellant is an Insurance Company having its Head Office at Karachi and has branches in the various cities of Pakistan. The appellant is engaged in insurance business and has affiliation/arrangement with foreign insurers and reinsurers. It appears that the appellant issued Fire Insurance Policy in favour of the respondent as Mortgagees and M/s. Bela Ghee Mills Limited as Mortgagors in respect of the stock in the factory premises of Bela Ghee Mills Limited situated at SITE, Lasbella, Balochistan, in the sum of Rs,26 million. The appellant received an intimation of loss from the respondent in April, 1991 on account of fire. It further seems that according to the appellant, it got the above alleged loss surveyed by a surveyor under section 44- A, of the Insurance Act, 1938 (hereinafter referred to as the Act). It is also the case of the appellant that surveyors through their Survey Reports dated 8-9-1991 rejected the respondent's claim. It appears that there was exchange of correspondence between the parties on the above claim. The contention of the respondent was that the rejection of its claim was not justified. It further appears that at one stage the appellant without prejudice to the liability, assessed the loss at, Rs,4,14,830.
Since the above matter was not resolved between the parties, the respondent issued the above impugned order, dated 14-6-1993 delisting the petitioner from its approved list of Insurance Companies. Thereupon, the appellant filed above Constitutional petition, which has been dismissed in limine by a Division Bench of the High Court of Sindh through the impugned order, inter alia, on the ground that petitioner has no right under the law to require the respondent to maintain the appellant's name on its approved list nor the appellant has any vested right in respect thereof.
3. Thereupon, the appellant filed a petition for leave to appeal which was granted to consider the following question:-- "Whether the respondent was entitled in law to delist the petitioner from the list of approved Insurance Companies without even getting the dispute, which was the cause of delisting, adjudicated upon by a competent forum?"
4. In support of the above appeal Mr. Muhammad Ali Sayeed, learned counsel for the appellant, has vehemently contended that in the absence of any adjudication from a competent Court to the effect that the rejection of the respondent's claim by the appellant was not well founded, the impugned order of delisting is violative of Articles 4, 18 and 25 of the Constitution of the Islamic Republic of Pakistan (hereinafter referred to as the Constitution). Learned counsel further contended that the impugned order also suffered on account of violation of principle of natural justice.
5. On the other hand, Mr. Bilal A. Khawaja, learned counsel appearing for the respondent, has contended as follows:-- "(i) That there was no requirement to obtain any decision of a judicial ,forum or other forum to the effect that the appellant's rejection of the respondent's claim was not justified before delisting the appellant from the list of the approved Insurance Companies.
0i) That the respondent was entitled to decide as to whether a particular Insurance Company should be kept on the list of approved Insurance Companies or not and therefore, delisting of the appellant from the approved list of the Insurance Companies does not violate any of the Fundamental Rights; and ' That there was no violation of principle of natural justice as the appellant was provided sufficient opportunity to put up its point of view and to pay the due amount before them impugned order of delisting was passed.
' To reinforce the above first submission Mr. Muhammad Ali Sayeed has invited our attention to sections 44-A and 44-B of the Act, to demonstrate that the Act provides mechanism for the assessm ent of the admissibility and quantification of a claim made against an Insurance Company.
7. It may be observed that subsection (1) of section 44-A, of the Act, provides that "No person other than an insurance surveyor holding an appropriate certificate under this section shall after the expiry of six months from the commencement of the Insurance (Amendment) Act, 1958 undertake in Pakistan the surveying, assessm ent or adjustment of any loss in respect of general insurance business and no insurer shall pay any claim in respect of general insurance business transacted, by him in Pakistan unless the loss has been surveyed, assessed or adjusted, as the case may be, by an insurance surveyor holding an appropriate certificate under this section. Provided that the provisions of this subsection shall not apply to such persons and to such losses as may be prescribed."
8. Whereas section 44-B, of the Act, lays down as under:- "44-B. Second survey.--(1) If in any case the Controller of Insurance has reason to believe that an insurance surveyor has given a false report or has grossly over-assessed or under-assessed a loss or has made an adjustment of loss in a grossly unjust manner, he may direct the insurer to arrange for another survey of that loss through any other surveyors or to surveyors approved by him.
(2) In the event of the second survey made under subsection (1) the surveyors shall forward one copy of the report to the Controller who on considering such report and after giving an opportunity to the first surveyor to be heard, may cancel the certificate of the surveyors concerned in accordance with the provisions of subsection (7) of section 44-A."
9. According to Mr. Muhammad Ali Sayeed, learned counsel for the appellant, the appellant upon receipt of the claim of the respondent in respect of the loss allegedly arising out of the fire at the Oil Terminal appointed an Insurance Surveyor holding an appropriate certificate in terms of above subsection (1) of section 44-A, of the Act. According to his report, the respondent's claim was not entertain able and therefore, its claim was turned down. It has been further submitted by him that in case the respondent was of the view that the above Surveyor's report was not correct, they had the option to approach the Controller of Insurance with the request to appoint another Insurance Surveyor of repute in terms of subsection (1) of section 44-B of the Act, referred to hereinabove.
' It was further urged by him that if the respondent did not want to invoke subsection (1) of section 44-B of the Act, it could have invoked arbitration clause in terms of the Insurance Policy or could have filed appropriate legal proceedings if the respondent was of the view that the matter was no covered by the arbitration clause of the Insurance Policy.
10. In support of his above submissions the learned counsel for the appellant has referred to the following cases:--
(i) M/s. Erusian Equipment and Chemicals Ltd. v. State of West Bengal and another (AIR 1975 SC 266): ' In which several matters were brought before the Indian Supreme Court involving the question as to the principles applicable for black-listing or delisting a contractor. The Supreme Court dismissed the appeal filed by the Government of West Bengal and allowed petitions of the private parties who had approached the Supreme Court. In this regard it will be pertinent to reproduce paras. 15, 16 and 17 of the above judgment, which reads as follows:7 "15. The blacklisting order does not pertain to any particular contract. The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are 'instruments of coercion':
16. In passing an order of blacklisting the Government department acts under what is described as a standardized Code. This is a Code for internal instruction. The Government departments make regular purchases. They maintain list of approved suppliers after taking into account the financial standard of the firm, their capacity and their past performance. The removal from the list is made for various reasons. The grounds on which blacklisting may be ordered are if the proprietor of the firm is convicted by Court of law or security considerations so warrant or if there is strong justification for believing that the proprietor or employee of the firm has been guilty of malpractices such as bribery, corruption, fraud, or if the firm continuously refuses to return Government dues or if the firm employs a Government servant, dismissed or removed on account of corruption in a position where he could corrupt Government servant. The petitioner was blacklisted on the ground of justification for believing that the firm has been guilty of malpractices such as bribery, corruption, fraud. The petitioners were blacklisted on the ground that there were proceedings pending against the petitioners for alleged violation of provisions under the Foreign Exchange Regulations Act.
17. The Government is a Government of laws and not of men. It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender .Or quotations for the purchase of goods. This privilege arises because it is Government which is trading with the public and the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions. Hopfield treats privileges as a form of liberty as opposed to a duty. The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone but if it does so, it must do so fairly without discrimination and without unfair procedure. Reputation is a part of person's character and personality. Blacklisting tarnishes one's reputation."
(ii) M/s. Radhakrishna Agarwal and others v. State of Bihar and others (AIR 1977 SC 1496): ' In the above case certain appeals were brought upon certification of the cases by the High Court in which identical questions of law were raised in relation to the revised rate of royalty payable by the private parties for the lease to collect and exploit sal seeds from forest. In the discourse of the judgment, the following portion of the above-quoted judgment in the case of Erusian Equipment and Chemicals Ltd v. State of West Bengal and another (AIR 1975 SC 266) was quoted: "Under Article 298 of the Constitution the executive powers of the Union and the State shall extend to the acquisition, holding and disposal of property and the making of contracts for any purposes.
The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the law. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality."
11. We are unable to subscribe to the submission of Mr. Muhammad Ali Sayeed that before delisting the name of the appellant from the list of approved Insurance Companies, the respondent should have obtained adjudication as to the genuineness of its claim against the Insurance Policy. In our view, the basic question is as to whether there was material available on record on the basis of which a reasonable unbiased person could have concluded that there was no basis for rejection of the claim. In the present case if the respondent would have invoked section 44-B, of the Act, and if the second Surveyor would have given report to the effect that the appellant's rejection of the respondent's claim was unjustified/unwarranted by law, it would have been justified to delist the appellant from the list of the approved Insurance Companies. In the present case the respondent did not opt to' get an independent surveyor appointed by the Controller of Insurance under subsection (1) of section 44-B of the Act, nor it had recourse to the remedies provided under the Insurance Policy, namely, arbitration, nor it invoked the jurisdiction of the competent Court of law.
The respondent had itself adjudicated upon the question of genuineness and correctness of its claim. In other words it had become a judge in its own cause and delisted the appellant's name from the list of approved Insurance Companies, and in consequence thereof it carries with it a stigma to the effort that the appellant is an Insurance Company which does not honour its legal obligation under the Insurance Policies. The respondent not only delisted the appellant Company from the above list of approved Insurance Companies, but circulated the copy of the same inter alia to all of their offices and branches. It would be advantageous to reproduce Information Circular No,12 of 1993, which reads as under:-- "NATIONAL BANK OF PAKISTAN Head Office Karachi ' INFORMATION CIRCULAR NO.12/93 JUNE 14, 1993.
' DELISTMENT FROM BANK'S APPROVED LIST MESSRS. NEW JUBILEE INSURANCE COMPANY LIMITED.
' Reference is invited to Head Office Information Circular No,93 of 1989, dated 9-9-1989 advising enhancement of the single risk limit of the above-named Insurance Company to Rs,20 million.
' It is notified for information of all concerned that the above-named Insurance Company has been delisted from the Bank's list of approved Insurance Companies with immediate effect.
' It should be ensured that no insurance policy/cover note is accepted from the aforesaid Insurance Company and all policies/cover notes already in force be substituted with any of the Companies on the Bank's approved list.
(Sd.)
(Hasan Askari), Senior Vice-President, Credit Policy Department.
(Sd.)
(S.A. Hashmi), Executive Vice-President, Credit Policy Division.
' To:
(1) All SEVPs at Head Office and Provincial Headquarters.
(2) All Heads of Divisions/Wings/Departments at Head Office.
(3) All Heads of Regional/Zonal Managers of Branches.
(4) All Regional Heads/Managers of Foreign Branches.
12. It may be observed that there are certain basic norms of justice. One of the cardinal principles of above basic norms is that one cannot be a judge in his own cause. The breach of the above cardinal principle of jurisprudence will in fact be violative of the right of "access to justice to all which is a well-recognised inviolable right enshrined in Article 4 of the Constitution. This right is equally founded in the doctrine of "due process of law". The right of access to justice includes the right to be treated according to law, the right to have a fair and proper trial and the right to have an impartial Court or Tribunal. The term "due process of law" can be summarised as follows as held by this Court in the case of Aftab Shahban Mirani v. President of Pakistan (1998 SCM R 1863):- "(1) A person shall have notice of proceedings which affect his rights.
(2) He shall be given reasonable opportunity to defend.
(3) That the Tribunal or Court before which his rights are adjudicated is so constituted as to give reasonable assurance of his honesty and impartiality, and
(4) That it is a Court of competent jurisdiction. Above are the basic requirements of the doctrine "due process of law" which is enshrined, inter alia, in Article 4 of the Constitution. It is intrinsically linked with the right to have access to justice which is fundamental right. This right, inter alia, includes the right to have a fair and proper trial and a right to have an impartial Court or Tribunal. A person cannot be said to have been given a fair and proper trial unless he is provided a reasonable opportunity to defend the allegation made against him."
13. Reference may also be made to a Full Bench judgment of this Court in the case of Mushtaq Ahmed Mohal and others v. The Honourable Lahore High Court, Lahore and others (1997 SCM R 1043), wherein this Court while construing Article 27 of the Constitution in conjunction with inter alia Articles 2A, 18 and 25 of the Constitution with regard to quota system in service, observed as follows:-- "We may observe that Article 27 of the Constitution is to be read in conjunction with inter alia Articles 2A, 18 and 25 of the Constitution. Aforesaid Articles 2A and 18 of the Constitution have already been referred to hereinabove. Whereas above Article 25 of the Constitution guarantees that all citizens are equal before law and are entitled to equal protection and that they shall not be discriminated on the basis of sex alone. Inter alia the above Articles of the Constitution are designed, intended and directed to bring about an egalitarian society based on Islamic concept of social justice."
14. The above question was also examined with reference to inter alia Injunctions of the Holy Qur'an and the following observations were made in this behalf in the above judgment of this Court:- "The above quoted para of the aforesaid judgment of the Federal Shariat Court are apt to the controversy in issue. It is manifest that the Holy Qur'an inter alia enjoins that there is no difference between the individuals of mankind on the basis of race, colour and territory and that all human beings are equal in the eyes of Allah. The fittest person who is strong and trustworthy is to be employed. It is evident that the concept of zone or quota system runs counter not only to the above clause (1) of Article 27 read with Article 2A and Article 25 of the Constitution, but also to the Commandment of Allah as ordained in the Holy Qur'an. We may observe that the quota system has not served Pakistan interest but on the contrary, it has generated parochial and class feelings resulting into disunity."
15. It may be stated that the respondent is a Bank owned by the State and therefore, under the Constitutional mandate, it should act fairly, justly, without any discrimination, and without adopting unfair procedure. If an Insurance Company fulfills the required conditions and becomes eligible to be enlisted in the list of approved Insurance Companies, the respondent cannot arbitrarily refuse enlistment for a reason which may have no nexus with the eligibility to be enlisted. However, a company (including the appellant), listed in the list of the approved Insurance Companies has no right to force the respondent to enter into a contract of Insurance. It can at the most claim that it may be treated alike with the other Insurance Companies, placed in the same/similar position/situation. In other words, it is entitled that its offer to insure may be considered along with the other similar offers. The respondent is free to accept or not to accept any particular offer. So long the respondent acts in good faith, acceptance of a particular offer or non-acceptance of the same will not ensue any justifiable cause of action.
16. It may be pointed out thus the fall-out of the blacklisting of the appellant is to prevent it from the privilege and advantage of entering into lawful relationship with the respondent for the purpose of gains which is violative of Article 18 of the Constitution, which lays down that subject to such qualifications, if any, as may be prescribed by law, every citizen shall have the right to enter upon any lawful profession or occupation, and to conduct any lawful trade or business. The blacklisting of a company/firm/person, also tarnishes the reputation of it/has, as to its/his credibility to honour its/his commitments which may dissuade other parties from entering into contracts with the former. Thus the consequences of blacklisting a company/firm/person are of great magnitude, which warrant that before taking such an action, there should be material on record prima facie to indicate that the delinquent Insurance Company's refusal to pay claim was not warranted in the circumstances of the case.
17. We are, therefore, inclined to hold that the impugned order/action of G the respondent cannot be maintained in law.
18. Adverting to the second submission of the learned counsel for the appellant that the respondent had violated the principle of natural justice, it may be observed that Mr. Muhammad Ali Sayeed has relied upon the following cases:--
(1) Muhammad Iqbal v. Fatima Jinnah Medical College and another (1989 M LD 4237).
(2) Sri Rama Engineering Contractors v. Construction Engineer Civil Engineering, Department of Space, Government of India, Sariharikota, Nellore and another (AIR 1981 Andhra Pradesh 165), and
(3) Preetam Pipes Syndicates v. Tamil Nadu Slum Clearance Board, Madras (AIR 1986 Mad. 310).
' In the first case learned Single Judge of the Lahore High Court has held that the order blacklisting the plaintiff without issuing previous show-cause notice is void of being against the principles of natural justice. In the second case it has been held that wherever an order inflicts civil consequences on the applicant the principles of natural justice should be observed. In the third case it was held that blacklisting of and forfeiture of the security of the appellant without hearing him was violative of the principles of natural justice.
19. There cannot be any cavil with the proposition that when an act or order inflicts civil consequences on a person in respect of his reputation or property which is harmful to his interest, he is entitled to be heard before such an action or order is taken or passed. In the instant case though there was no formal show-cause notice issued, but the appellant inter alia was served with the notice, dated 3-4-1993 (copy at page 47 of the paper book) whereby it was called upon to review its decision with regard to repudiation of the claim within seven days and settle the claim amicably failing which the respondent was to have no option but to delist the appellant from the Bank's approved list of Insurance Companies. This letter was received and replied to by the appellant. In our view, this has been sufficient compliance of the principle of natural justice.
20. The upshot of the above discussion is that the appeal is allowed. This order of the High Court is set aside, the appellant's above Constitutional petition is allowed, the order of delisting the appellant is quashed and the respondent is directed to include the name of the appellant in the approved list of the Insurance Companies and to notify the same to the parties to whom the delisting was notified.
THE END
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