Chairman State life Insurance Corporation of Pakistan Through Rizwan Majeed etc Vs Riaz Ahmad Naveed

Stereo. HCJDA 38.

Judgment Sheet

IN THE LAHORE HIGH COURT, LAHORE

(JUDICIAL DEPARTMENT)

R.F.A. No. 11941 of 2021 Chairman State Life Insurance, etc.

Versus Riaz Ahmad Naveed.

JUDGMENT

Date of hearing 26.02.2026 For appellant(s) Mr. Ibrar Ahmad, Advocate

For the Respondent Mr. Liaqat Ali Butt, Advocate Mian Hamza Amjad, Advocate.

ASIM HAFEEZ, J. This and collectively heard appeals, bearing RFA No.2365/2020, RFA No.4347/2020 RFA No.10715/2020, RFA No.18987/2020, RFA No.18983/2020, are directed against judgment(s) and decree(s). Underlying facts of each of the appeals manifest commonality to the extent that in all appeals subject proceedings arose out of claims pertaining to insurance policy(ies) - comprising of Jewan Sathi policies and group insurance(s) -, which were decreed in exercise of jurisdiction under erstwhile Insurance Act 1938 [the ‘Act 1938’], since insurance policy / group insurance were operative and effective before the promulgation of Insurance Ordinance 2000. Appellant(s), in all appeals, is the State Life Insurance Corporation of Pakistan, which was sued respectively by the nominees/beneficiaries of insurance policy(ies) / group insurance claimants. There is another common element that is respondent(s), upon communication of rejection / repudiation of claims - with respect to life insurance(s) claims were rejected on the premise of withholding of pre-insurance ailments -

forthwith approached Wafaqi Mohtasib. And in two of the appeals [RFA No.18987/2020 and RFA No.10715/2020] principal payments were adjusted and only claims with respect to interest payments were decreed under section 47-B of the Act 1938 – in other appeals principal and interest claims are subject matter of adjudication. Legal issues involved in all appeals overlap. In wake of aforesaid facts all listed appeals are heard and adjudicated collectively.

2.Learned counsel primarily raised two legal questions and an ancillary issue. Firstly, that claims were time barred, which were not raised within statutory limitation period, which included as ancillary issue that decision(s) to condone limitation, upon invoking sections 14 and 19 of the Limitation Act 1908 [the ‘Act 1908’], were fanciful, unjustified and otherwise being contrary to the law and facts. And secondly, the objection is that interest awarded was not allowable since it was declared unislamic. And another ancillary issue was regarding relevant time-period for payment of interest.

Learned counsel elaborated that interest payment(s) was granted also for the period during which the claimants were perusing remedies before wrong forum(s). Adds that award of interest is contrary to the text and spirit of section 47-B of the Act 1938. Support is solicited from the ratio settled in the case of State Life Insurance Corporation of Pakistan and another v. Mst. Undlus Begum’ [2024 CLD 445] – decisions rendered by the Hon’ble Federal Shariat Court were discussed in referred citation.

3.In response, learned counsel for the respondent(s) contends that policy(ies) was issued / effected before promulgation of Ordinance

2000 and respondent(s) is entitled to the interest payment(s) upon establishing unjustified and unwarranted delay caused in honouring insurance claims. Adds that section 47-B of the Act 1938 would be enforceable notwithstanding decisions declaring interest unislamic since decisions have been made applicable prospectively. Reference is made to the case of ‘State Life Insurance Corporation of Pakistan and another v. Mst. Shamshad Akhtar’ RFA No.10709/2020 – decision was Announced on 21.01.2026 -, whereby interest in terms of section 47-B of the Act 1938 was made payable by extending / reading prospective effect to the decision(s) of Hon’ble Federal Shariat Court.

4.Heard. Record perused.

5.Argument pleading limitation against claims of insurance payments has two facets. Firstly, limitation is pleaded as defence in terms of Article 86(a) of Act of 1908; and secondly, unfairness qua condonation allowed with respect to time consumed in litigating before Wafaqi Mohtasib or in some cases before the Insurance Tribunal - [later established under Ordinance 2000] – is pleaded by appellant(s).

Submissions, on both counts are found misconceived and dismissed on the basis of analysis / reasoning infra.

6.In terms of Article 86(a) of Act 1908, limitation runs from the date of death of deceased, though period of commencement of limitation varies in each appeal but claim was raised within three years of accrual of the cause of action – though forum opted for seeking insurance recompence was Wafaqi Mohtasib. The debate that why claimants had approached the Office of Wafaqi Mohtasib, seemingly a

preferred choice in wake of quantum of value of claims, largely falling within bracket of Rs.100,000/-, is an academic issue and need no discussion. Even otherwise scope of jurisdiction of Wafaqi Mohtasib is tangled with certain limitations one of which being the limitation regarding decision of disputed/intricate issues. Apparently, claims were registered with Wafaqi Mohtasib alleging malice on the part of appellant(s).

Upon reading the reasoning extended by court(s), while passing judgments impugned, I find no reason to disagree, differ or reject lawful and reasonable exercise of discretion by condoning delay(s) in terms of section 14 of the Act 1908. There is no cavil that communication of repudiation / termination of insurance contracts on plea of withholding of pre-insurance ailments gives a fresh cause of action. Be that as it may, allegations of pre-insurance ailments, when raised after two years of the execution of insurance policy, are otherwise devoid of any force and does not affect the maintainability of claims - [section 45 of the Act 1938 is relevant and effect thereof was discussed in the judgment(s) impugned].

7.Now I deal with argument against grant of interest. Basis and rationality of grant of interest is not disputed, since payment of insurance claims was not made upon demand or triggering of contingency, therefore, respondent(s) is entitled to due compensation by way of grant of interest. Firstly, I deal with the precise objection that corpus / incidence of interest under section 47-B of the Act 1938 was declared unislamic hence, same could not be awarded as part of judgment along principal payment. There appears no reason to re-

adjudicate this issue when similar issue was dealt with in the case of ‘State Life Insurance Corporation of Pakistan and another v. Mst.

Shamshad Akhtar’ (supra), paragraph 15 whereof is reproduced as, “15. The insured persons were covered under the regime of the Act of 1938 and died, and the claims were initially repudiated, at a time when Section 47B was on the statute book and enforceable, i.e., prior to the promulgation of the Insurance Ordinance, 2000 and prior to the cut-off date (30.06.2001) mentioned in Dr. M. Aslam Khaki. Moreover, the judgments in Dr. Mahmood-ur-Rahman Faisal and Dr. M. Aslam Khaki were subsequently set aside in review when the matter was remanded for fresh determination and even in the post-remand judgment (Farooq Brothers), the Federal Shariat Court contemplated prospective operation and granted time for legislative/administrative measures (notably up to 31.12.2027). Thus the respondents in each of these cases were entitled to the benefit of Section 47B of the Act of 1938. The reliance placed by learned counsel for the appellants on Mst. Undlus Begum is misconceived, the same being distinguishable on facts. In that case, the death of the insured occurred on 24.02.2002, i.e., after the pronouncement in Dr. M. Aslam Khaki and after the date from which the provisions of the Act of 1938 (including Section 47B, as treated therein) were directed to cease to have effect i.e., 30.06.2001, and also after repeal/substitution of the Act of 1938 by the Ordinance, 2000. Moreover, the controversy in the present matters has been examined also in the light of the subsequent developments, including the review judgment and the post-remand decision in Farooq Brothers. Conversely, in the present cases, the cause of action for interest on account of delayed settlement accrued during the subsistence of Section 47B and prior to both the promulgation of the Ordinance, 2000 and the cut-off date 30.06.2001. Accordingly, the ratio of Mst. Undlus Begum as regards applicability of Section 47B of the Act of 1938 does not govern the controversy in the present cases. The review judgment as well as post-remand judgment in the case of Farooq Brothers were probably not brought to the attention of the Court during the hearing of Mst. Undlus Begum, therefore, the same were not discussed therein.”

8.Entitlement of interest payment(s) is established and to that extent judgment(s) impugned need no interference.

9.Now I deal with the objection that no interest is payable for the period during which respondent(s) remained litigating matter before wrong forum(s). Evidently, court had granted interest from the date of default, which date(s) varies in each case – date of payment of insurance is reckoned from the date of happening of contingency; be it death in case of life insurance or a designated event relating to cases of group insurance. I agree with learned counsel for appellant(s) that no premium could be extended for time consumed in pursuing remedy(ies) before other forums, other than the time spent in proceedings before the District Judges / Court(s). It is unfair to extend dual benefit to respondent by making appellant(s) liable for payment of interest for such period during which respondent remained litigating the claim(s) before Wafaqi Mohtasib. Premium for failing to choose proper remedy is not allowable. Courts failed to distinguish between actual failure to pay or delay therein and circumstances beyond the control of appellant(s). This aspect was overlooked by the court while granting interest payment(s) from date of default(s) without appreciating that period for payment of interest has to be computed in the context of the facts of each case – determination of the period during which appellant(s) defaulted and such default / failure was attributable to the conduct of the appellant(s). Time consumed in litigating claims before District Judge(s) / Courts empowered under the Act 1938 would be computed towards computing interest payments(s) – since said time consumed was on account of delay in payment of insurance claim(s), be it on the pretext of pre-insurance ailments or other reason(s) pleaded.

10.In view of aforesaid, this and collectively heard appeals bearing R.F.A. No. 2365/2020, R.F.A No. 4347/2020 and R.F.A No.

18983/2020 are partly allowed to the extent that entitlement of the respondent(s) to receive principal insured amounts, where unpaid, and matter of determining quantum of interest for relevant period, during which appellant(s) had defaulted in making insurance payment(s) is remanded to the court(s), where learned judge(s) shall redetermine the period for the purpose of payment of interest and render judgments to that extent only, which determinations shall be read part and parcel of the judgments partly affirmed, hereby, upon rejecting the appeals, partly, to the extent of principal payment(s) were applicable. R.F.A No.

18987/2020 and R.F.A. No. 10715/2020 are allowed – wherein principal payments have been made and only claim(s) of interest are involved. No order as to the costs.

(Asim Hafeez) Judge Announced in open Court on this 23rd Day of April 2026.

Judge *M. Nadeem/*

APPROVED FOR REPORTING.

Judge