East West Insurance Company Limited and others Vs Aurangzeb Khan and another

Judgaent Sheet

IN THE PESHAWAR HIGH COURT PESHAWAR

JUDICIAL DEPARTMENT

|l RFA No.168-P/2015

JUDArcilT

Aonellants.

(East West Insurance Co. Ltd. etc.) By: Mr.Arshad Jamal Qureshi' advocate,

Resoondents.

(Aurangzeb etc) By: Mr.Shumail Ahmad Butf advocate.

+****{t******+{'*****

WOAR AHIEA D. J.- Thro ugh this single iudgment recotded in RFA No.168-P2015 Ailed East lltest Insurance Company Ltd etc Vs Aurangzeb Khan and another)' we ate also going to dispose of connected FAO No.6i-P2015 ( titled Aurangzeb Khan Vs- East lVest Insurance Company Ltd etc.) as both appeals have urisen oat of same impugned iudgment of learned Insurance Tribunal Khybet Pakhtunkhwa at Peshawar.

2.Eqst lVest Insurance Company Ltd. (heteinaftet referred to AS "appellant") has filed instant appeal against judgment and decree ofthe learned Insurance Tribunal Khyber M.Ishaq Shah (RFA l68-P/2015) (DB) onlble M^lustlce I ,tlaq lbnhlm, HCt) Hon'ble Mr,lasdce Whu Ahmd

Pakhtunkhwa dated 17.3.2015 whereby suit ftled by one Aurangzeb (hereinofier refened to os "respondent No.l) lor recovery of insurance claim was pailially allowed to the ef,ent of granting him rate of depreciated value of Truck in question while rest of claim of respondent was declined Being aggricved, both parties hovefiled appeals as mentioned in Para-l above.

3 Brief facts leading to filing of instant appeal ore lhat respondent No,l had insured his long vehicle, trailer Truck, Model2004 ( hereinafier refeted to as "Truck") with appellant through SME Leasing Limited with effect trom 13'2'2006 to 2 2. 2. 2 00 7 under Policy No.EWAPON/PS H/C W-0 2 8/2/2 00 6 for

IEV/Sum insured amounting to Rs.35,60,000/-on onnual premium of Rs,1,06,800/'. Since respondent No'l was transporler by profession, therefore, the Truck in question wos being used on long routes for transportafion and catriage' For rhis purpose, one Muhammad Gul , driver , hailing from Khajoori, Bara had been employed by respondent No'l' lYhen despite hectic efforls, respondent No.l had statedly failed to contact said Driver about his whereobouts, the matter wos Ll.Ishaq Shah 6FA*|6E P/2015) (DB) Hoatble Mr.lustce Ishtlaq lbrq,,lm' HCt) Hon'btc Mnlastlcc Mqor Ahad

reported to Levy Police Station Dargai, Malakond, which was reduced into writing in Daily Diary of the Levy Post on 19.1.2007. The Insurance Company (appellant) was also approached in the matter, for payment of insured amounl as the incident of missing of the Truck wos claimed to have been covered under the policy of Insurance inked between the parties, The insurance company had eatlier shown certain reservations but later on flatly refused to admit his claim which compelled respondent No.l for filing a suit before the learned Insutance Trib un al Khyb er P ak ht un khw a.

4 Appellant/Insutance Compony contested the suit by ftling written statement where lhey denied claim of respondent/ plaintffi Divergent pleadings of the porties gave rise to as 'nany as 6 issues and the parties were directed to produce evidence. In support of claim of plaintiff/respon dent No.l, three witnesses were examined while on appellant's side, two witnesses have recorded their evidence. On close oftheir evidence, the learned Tribunal partially allowed ctaim of plaintiffhespondent and plaintiff was held entitled only for the encashment of insurance Lt.lshoq Shoh 6FA{1dE-P/.2015)

(DB)Hontblc Mt'Junlc. lshth| lbruht n' HCI) Hon'ble MnJadlcc Wtqat Ahnad

in respect of his vehicle subject to the rote of depreciation while rest of the claim of plainfifllrespondent No,l was reiected, vide j udgme nthr der dat e d I 7. 3. 2 0 1 5 (imp ugn e d h er e in), J. Learned counsel for the appellant i,e, Insurance Company submitled during lhe course of his argwnents that the Truck in question had not been sTolen from respondent No.I, rather he had himself handed it over to his driver, Muhammod Gul, who had allegedly misappropriated the truck and that the case of misappropriation had not been coveted under lhe Policy' Learned counsel also contended thut conduet of respondent No.l wos indicating thot the truck wos concealed somewhere with his consenl and the claim was laid with the Insurance Company on the basis of Naqal Mad report lodged al Police Stotion Dargai, Malakand which criminal case has also not been properly pursued- He addedthot respondent No'l had not

law enforcing ftled any applicallon before the high'ups of the agency or before the Jusfice of Peace for lodging of an FIR so

that the mutter could have been properly investigated and the truck retrieved, tf reolly misappropriated' It was very strange ' ' Honlblc Mt ta tDD cc Ishtlaq lbrqttm' HCJ) M.Ishsq shqh (RFAll6E'Pn0lt) Hon'btc Mn,lu cc Wtqot Ahmqd

that respondent No.I had not made any effort for retrieval of the alleged misappropriated truck and had lodged a claim with the insurance company, lhat too, with delay of almost three months from the date of disappeflrance of the truck. He also contended thal the insurance claim had rightly been declined by the Insurance Company/appellant while the learned Tribunal had wrongly accepted(partly) the claim petition of respondent No.I.

6.Learned counsel for respondents contended, in rebultal, thd it has been a practice of the Insurance companies that whenever a claim is luid before them, they dig out flimsy reosons for rejection of the claim . He also contended that nephew of respondent No.l had informed the local police and further lodging of the FIR and investigation in the case was the responsibility of lhe local police. He added that respondent No,l had ako informed the Insurance compony and it wos sulftcienl for the purpose of clearing the claim but same was wrongly declined. He also contended that it was a comprehensive insurance policy of insuring the vehicle against all eventualities including mischiwous acts, therefore, claim was very much M.IshqqShqh (RFA*I6E-Pn0ls) (DB) Honlble Mr.lustlce Ishthq lbruhln, HCO Hon'ble MnJusdce Wqar Ahmad

covered there-under, He nert contended that respondent No.I could not be presumed to hove been instrumental in concealing or removing the truck, in the absence of any material evidence.

fn respect of appeal tiled by respondent No.l, he contended that the learned Tribunal had wrongly held that the depreciated value of the vehicle should be paid to the plaintiff/respondent No.l and that he was entitled to the entire sum of insurance, therefore, his appeal bearing No.63-P/2015, should be allowed and the appeal of Insurance Company bearing No.l68-P2015 be dismissed. Learned counsel for respondent also refeted to certain documents brought on record us Ex-PW.l/8 and contended that the insuronce company had reinsured the amount with another Company namely Pakistan Re-Insurance Company Limited Karachi and the former had also submitted claim before lhe later mentioned company.

7.We have heard arguments of learned counsel for the parties and have gone through the record with their valuable assistance.

8.Following questions require determination in the appeals:

M.Ishaq$hah (RFAl68-PD0l5) (DR) Honlble MhJadlce Ishtlaq Ibruhtm,IICJ) Hon'Ue Mr,Jusllce Wqat Ahmad

a), Whether claim of respondent No,l has wrongly been declined by the Insurance Company?

b). lYhether appellant has claimed re-insurance and payment has been made to appellant by Pakistan Re-Insuronce Company Karachi ?

c) Whether respondent No.l was entitled to re-imbursement of the entire amount insured i.e. Rs.35,60,000/- logether with mark-up ond liquidated damages under Section 118 of the Insurance Act,2018 ?

9.Resolulion of Ouestion h):

Learned counsel for the insurance company while arguing his appeal, had laid great slress on the conduct of respondent No.l as discernible from the record of lhe case, therefore, said argument is being consideredfirst.

The vehicle was leased from Ws SME Leasing Limiled, Peshawar and sarne was insured with appellantfinsurance company for a sum of Rs.35,60,000/- and annual premium of Rs.1,06,800/- was also paid to appellant. All these facts can eosily be gathered from the statement of PW.l when read with dacuments exhibited in his statemenl M.Ishaqshah (RFA#168-P2015) (DB) ontble Mh.Iustbe Isht qq lbruhrm, IlCt) Ilon'ble MnJusfice Wqar Ahmad

10.The record reveals that on 19.1.2007, nephew of respondent No,l lodged a report in P.S. Dargai which was reduced into writing in the shape of Naqal Mad No.8, dated 19.1.2007. Copy of Naqal Mad was brought in evidence as ExPW.l/6. In the report, Nasrum Minallah (nephew of respondent No.l) has alleged that Trailer vehicle bearing registralion No, 599/TLC (which was owned by his maternal uncle Aurangzeb Khan), was ander his supervision and same was being driven by Muhammad Gul, Driver who had been hailing from Khajoori, Baru It was further alleged in the report that afier seven days of Eid ul Fitr, said driver had lefi Dargai Adda for Peshawar but afier one monlh, said driver had contacted him and informed that whatever protit he had earned from the Trailer , had been spent on the purchase ofnew tyres for said troiler and pledged that he would soon send remoining money to them. Thereafier , said driver had neither sent money nor conlacted him or his maternal uncle. He wenl on to allege thdt presumably soid truck had been stolen. Afier rccording above report with the local police, respondent No.l had lodged claim with the Insurance Company/appellant on 27.1,2007 vide M.Ishsqshah (kFA#16E-P/2015) (DB) Hottble Mt lasrtce Ishataq lbruhtm, HCJ) Eon'ble ltlr.Justtce Wtqar Ahmad

applicolion EtcPW.l/4. The Insurance Company had referred claim of respondent No.l to Surveyor i,e. M/s Dusam & Co.(Pw) Ltd who conducted surltey and submitted its report ExPll/.1/15. For ready reference, Jindings, opinion and recommendalion of the Surveyor are also reproduced as under:-

"FINDINGS

1)The owner/insured handed over the trailor No.TLC 599 to Driver Mr.Gul S/O unknown of village Kojora Khyber Agency who lefi for Peshawar on 2Eh October, 2006 for normal earning through caniage/ transportalion.

2)The driver once contacted the owner from Peshawar and informed him that earned income has been spent for purchase oftyres and further saving will be sent lo the owner.

3)The driver basically went missing with Trailor from 28 October,2006 onward.

4)The owner Mr.Aarangzeb reported the case to Durgai Police Station on 19.1,2007 afier about 2 months and 3 weeks.

5)Mr.Aurangzeb, the owner of the trailor reported the missing trailor to the insurer on 27.1.2007 afier 3 months,

M.Islraq Shah (RFA#168-PaUS) (DB) Ilottble Mntuilce lshttaq lbruhln , HCt) Hon'ble Mllus ce Wtqat Ahmqd

6)Dargai police issued o note on 25.4.2007 for non- rccovery of the trailor TLC-599 till that date. The trailor has not been recovered as per informotion obtained from the insured till this date of issue of sarvey report.

7)The insured has not complied with condition at serial No,l of the insurance policy which clearly indicated that in case of any loss the insured must inform the ins urance compuny immediately.

8)The insured reported regarding the missing/stealing of the truck by his own driver after a period of three monlhs. The claim ls time barred,

9)Driver of the Trailor was an employee of the insured and he should have had better conlrol of him. Basically the trailor has gone missing with the driver of the insured which is not acl which is covered under the insurance policy. It is a wilful act.

l0 .There is no other third party involved in this episode.

11.The insured failed to provide copy of driving license and I.D. Card of the driver.

OPINION

From lhe circwnstantiol evidence and above ftndings it is opined that missing of the truck with employee of the insured was a wilful act and time barred and violation/breach of the insurance clauses. It does nol M.IshaqShah (RFA#168-P/2011) (DB) Hontble Mr..Iailce Ish aq lbnhtm, CJ) Hon'Ue Mllus ce Wlqar Ahrnad

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fall within the terms and conditions of the policy for compensation to the insured

RECOMMENDATION

Adjustment of loss is not recommended as the

circumstantial evidence does qualify the insured tor the compensation as per tindings and opinion mentioned above.t'

Finally claim of the respondent No,I was declined by the Insurance Company on 24.5.2007, vide letter Ex-PW.I/|6.

11.This history of the cose was amply indicating that respondent No,I had not made any effort for retrieval of the truck from the driver except lodging of report which was also enlered in Daily Diary at the Levy Post Dargai, Malakand Laler on respondent No,l had not made any furlher elforl to parsae the criminal case or take any action against driver. This act was found to be against normal human conduct.

Respondent No.l had ako deposed in the case os PW.3. In his cross-examination, while replying lo a question, he has informed thot he had been doing the business of transport since the year 1971. He further informed that in those days, two of his M.lshaq Shqh (RFA#16-P2US) (DB) flontble MLJust ce Ishdaq lbruhln, ECJ) Hon'ble MzJustlce Wqu Ahmad

transport vehicles had been plying on road in connection with said business. Then he was asked about address of the driver who had allegedly misappropriated the vehicle, in response to which he stated that he had obtained copy of his CMC which was available on record. However, he was not remembering name offather of the driver. He had also stated that he had trust over the driver, however, the driver had breached his trust. He had also stated that he had handed over said vehicle to the driver when he had satistied himself that the driver was not involved in activities of thefi etc but added that his satisfaction was to the possible exlent and that he was not having any knowledge of the future. He added that ol the time of engaging said driver, he had not located his house and hod not enquired about his antecedentq however, all the detaik were available in his CMC.

12.Respondent No.l was a seosoned transporter by profession and transporters know how to hire drivers and how to keep eye on thent In his cross-exnmination also, respondent No.l could not give satisfactory answers regarding all these aspects of the matter. Further ahead, he was also osked aboul M.Ishuq Shah (RFA#168-PaUS) (DB) Honlble Mn,lustlce Ishtlaq lbruhrm, HCt) Eorr'ble Mr.Justtce Mqar Ahmad

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ahernate driver and Cleaner, in response to which the witness statedthat earlier his nephew had been hired as ohernate driver and later on driver Muhammadi Gul had hired another driver as his nephew could not conlinue his job and therefore, he was not knowing about the second driver employed in said truck, during the relevanl days and same was also case of the Cleaner employed on the vehicle. Learned counsel for respondent No.I was aho confronled with all these facts regarding conduct of respondent No.l but he was also facing dfficulties in satisfactorily erylaining such conduct of respondent No,l, He mainly contendedthat nephew of respondent No.l had conveyed information to the local Police at Police Stalion Dargai, Malakand and it local police had not performed his duly, then respondent No.I could not be blamed lor iL Bal it is ulso u normal conduct visible in most of the cases thfi people do pursue their criminal cases. If the local police do not perform their duty then people lodge complaints with the high-ups of law enforcing agenc! or with Justice of Peace. In this background, all the ^Sessians Judges and Additional Sessions Judges have been noffied as fu$ices of Peace for exercising power under M.Ishaq$hah (nFA#168-P/201t) (DB) ontble MnJusrtce Ishttsq lbnhtm, HCO Hon'ble Mr,Jurdce mqar Almad

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Section 22-A Cr.P.C. Such background of need of pursuing criminal cases has not only been acknowledged in the legislative instrumenl but same has also been acknowledged in judicial precedents like judgment of the Honourable Supreme Court rendered in the case of Younas Abbas and others Vs. Additional Sessiozs fudse. Chakwal and others reoortedasPLD 2016- Sunreme Court - 581 as well as earlier judgment of this court rendered in the case of Sved Abdul Hameed Vs Mian Izhar Ahmad and 2 others reoorled as P L D 2019 - Peshawar - 154.

13.The forum of lustices of Peace (in the shape of courts of Sessions Judges and Additional Sessions Judges) are everywhere available to cilizens, where any citizen can lodge application and never ever any diffrculty has been reported in lodging such applications. But it is very strange thal respondent No,l had not liled any such application before Justice ofPeace for directing the local police for registration of an FIR and properly investigating the case despite the fact that the alleged offence was cognizable in nature. . He had not made any complaint to the superior hierarchy of law enforcing agency for M.Maq Shoh (RFAq16-PD0I5) (DB) Eo Ue Mt lastlce Ishrtqq lbruhtm, flC.I) Hon'ble Mnlusllce mqat Ahuad

activating them to retrieve his vehicle from the driver. Proofof such an effort is not ovailable on record oflhe case, In such circumslances, story advanced by respondent No.l in his claim petition before the Insurance Tribunal as well as in his evidence, is hard to be believed Even learned Tribunal below while allowing petition of respondent No.l alsofound his history hard to be believed. While recording its findings on Issue No.S, the leurned Tribunal had eryressly staled, "No doubt, collusion between the claimant and the driver regarding missing of the vehicle in question could no way be ruled out, bul mere allegations are not suflicient enough to discharge the burden of proof in the circumstances where the claimant in view of the evidence, so recorded, has discharged his liability pertaining to the insurance of the vehicle in question, its lost and has not yet been traced out, lollowed by request for encashment of insurance." Sofar asfurther observations of the Tribunal that mere allegotions were not sutftcient to discharge the burden of proof are concerned, in this respect it is apporent that burden of proo! that the vehicle had in fact been stolen, in the mode and manner mentioned in the claim petition' was lying on the M,Ishsq Shah @fA*168-P/2015) (DB) flor,lble MLJufllce Ishdaq lbruhlrrt' HCJ) Hon'ble MnJuslce lYlqu Ahmod

plaintilf before the learned Tribunal (respondent No.l herein) and adverse inference drawn by the Tribunal on theface offocts presented to it and evidence produced before the Tribunal, should have been put in the account of the plaintiff , rather than requiring an atfirmdive evidence in this respect from the defendants (Insurance Company). It was even beyond imagination that the colltuion that had taken place between respondent No.l and his driver could hove been brought to surface by the Insurance Company through producing affirmalive evidence.

14.Another ospect of the case is that claim of breoch of trust was not even covered under the Insutdnce Policy. No doubt it was a comprehensive insurance but while insuring the vehicle, the terms "loss or damage" mentioned in the policy in Section 1, earlier had been replaced , inter alia, with words uthefi" and "malicious acl". Thus, these items have been expressly provided in the policy and could not be taken as hidden condition in the policy. Learned counselfor appellant contended that il was hard lo believe thal case ofbreach oftrust could be covered underthe Lf.Ishaq Shah (RFAttlS-P2015) (DB) Hoalble Mr.,rusttce hhrlaq lbruhlm, HCt) Hon'blc Mr.lastlce Wqu Ahmad

term mischievous act. Mischievous act has been explained in the Block's Law Dictionary as "a wrongful act intentionally done without legal justification or , orcuse; an unlawful act done wilfully or purposely to injure another" . In the Pakistan Penal Code, certain mischievous acts have been declared. as crimes and ils punishment has been provided ,n Chapter-XYlI separately. In mischievous acts, no gain is normally, found accrued to the wrong door and only damage to someone else's properXy is caused In the case in hand the vehicle had allegedly been mkappropriated by the driver. Even in the PPC, offence of breach oftrust has been detined distinctly in Section 405 PPC while punishment has been provided under Section 408 PPC. If any FIR was lo be regMered on the complaint of the nephew of respondenl No,l, it would hove been for a criminal breach of trust, It is clear thal general term of mischievous act was not covering the instant cose. Rather it was a clear case of criminal breach of lrust, Clause I of the Insurance Policy was excluding the term of breach of trust from the purview of insurance policy.

It was therefore, apparent that the Insurance policy has not been covering the case of criminal breach of trust.

M.lshaq Shqh (RFAflI68-P20tS) (DB) Eonlble MhJusttce Ishtlaq lbruhln, Cl) Eon'ble Mt tusdce tnqar Ahusd

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15.In light ofwhat has been discussed above, queslion No.(a) is resolved in the manner that the fnsurance Company i,e. appellant has rightly declined claim of respondent No.I. As a corollary thereof, it is also held that the Tribunal below had wrongly allowed claim of respondent No.l to the ertefi of deprecialed value of truck on the basis of Naqal Mad No.8, dated 19.1.2007 (Ex.PW.1/13) entered at Police Station Dargai, Malakand, as neither any FIR hod been registered in the light of Daily Diary in question nor the nominated accused in the Daily Diary had been detained/arrested nor lruck in question had been recovered nor there had been any enquiry or investigation repofi on the part of Police,

Ouestion- (b)

16.Form-G @xPll/.I/8) was brought in evidence in the statemenl of PW.l reinsuronce claimed by appellant frotn Pokistan Re-insurance Company Ltd Karachi and to this effect, when a question was asked from witness of appellant, namely Ghulam Safdar Shahid (DW.2), in his uoss- examination, he replied thd the claim of re-insurance is only M.Ishqq Shoh (RFAWAA-PD0|5) (DB) Hoalble Mntustlce lth,taq lbruht n, flCt) Ilot'ble Mr.Jus ce Wtqat Ahmad

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made when the amount of claim made by insured is believed and claim is accordingly paid to the person making insurance. He denied that the reinsurance form had been liled thereafter, claim of re-insurance was made. Similarly there was no afJirmMive evidence of filing of the clairu In such circurnstances, Question (b) is answered in lhe manner that claim of reinsurance from Pakistan Re-fnsurance Company Limited Karachi regarding payrnent to appellant had not been established on record

Ouestion - k)

17.In light of our resolution of Questions (a) and (b) made above, respondent No.l was not found entitled to the claim submitted before the Tribunal. In such circumstances, the question whether the whole insurance amount should be paid or it should be paid according to the depreciated value of the vehicle, has lost its signiticance and being redundant is not required to be discussedfurther.

18.As sequel to our above discussion, appeol of Insurance Company (appellant in RFA No.168-P12015) is M.Ishaq Shah (RFAl168-P/201t) (DB) flontble M^Justlce Ishtlsq lbruhb t, HCJ) Eon'ble Mt tusdce tn$r Ahmd

accepted, the impugned judgment and decree of the learned fnsurance Tribunal stands set aside and suit of plaintitf/respondent No.l before the Insurance Tribunal stands dismissed while appeal of plaintffi respondent No.l bearing No, 63/2 0 1 5 stands dismissed.

19.While hearing these cases, we noted that a single Tribunal has been notifted under Section 121 ofthe fnsurance Ordinance, 2000 for hearing insurance cases from all across the province of Khyber Pakhtunkhwa which included far ofif stations, like districts of lower Chitral, Upper Chitral, Upper Kohistan, Waziristan, Tank and DIKhan etc . We found this to be amounting to abridging the rights for access to justice of people of the Khyber Pakhtunkhwa, particularly, persons dealing with insurance companies as lheir customers. In such circumstances, it would be most appropriate that all District and Sessions Judges of the province are notitied as Insurance Tribunals for the respective districts under Section 121 of the fnsurance Ordinance, 2000, which would be benejicial for insuring rights of access to justice lo the insurance holders and M.Ishaq Shah (WA{168-P/2015) (DB) Hollble Mrtusice Ishtbq lbrohlm, HCt) Hol'ble Mnlusdce mqat Ahmad

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other related person inclading their families who subsequently get rights ,n case of life insurance of their predecessors, Learned Registrar of this Courl shall ensure that the matter is taken up with the concerned quarter for doing the n at the earliest.

JUSTICE

J GE

Drtc of herring ...., 10.9.2024

Datc ofannouncement OfJudgment 4.10.2024

D&tc ofPreporotion and signing of Judgment 4,r0 ,2024

M.IshaqShal (RFA#168-PD011) (DB) Hoxible Mllustice Ishrtsq lbruhlm, HCJ) Hott'Ue Mr,Jusrlce Wlqat Ahmqd