SC sets aside LHC judgment regarding payment of insurance company’s claim

ISLAMABAD – The Supreme Court of Pakistan Thursday set aside the Lahore High Court (LHC) judgment regarding payment of claim of Insurance Company. 

A three-judge bench, headed by Justice Mushir Alam conducted hearing of the appeal of Rana Basit Rice Mills Private Limited against the Lahore High Court judgment in insurance claim. 

The bench ruled that the lack of a board resolution authorizing the attorney does not invalidate the institution of the suit so long as the Articles of Association confer upon the person/persons to institute the suit in the company’s behalf. 

Rana Basit Rice Mills Private Limited, (appellant) through its Chief Executive, obtained from the Insurance Company (Respondent) a fire general policy to the tune of Rs150,002,000 covering its stock of rice, paddy machinery and building etc. as provided for in the Insurance Policy and the Mills’ petition against comprehensive insurable risk for a period 09.09.2011 to 09.08.2012 against the premium of Rs370,000.

The night between 13.06.12 and 14.06.12, a gust thunder storm caused losses to the appellants insurable interest covered under the insurance policy. Loss and damage to the insurable interests were fully covered by the insurance policy. Appellant as required under the law and policy lodged the claim to the tune of Rupees 9,851,760.

The respondent-insurer to assess and evaluate the loss, appointed a surveyor who, after all requisite formalities, assessed and verified the loss to the tune of Rs4,957,083. The assessed claim was not paid within 90 days as mandated under section 118 of the Insurance Ordinance, 2000. Consequently, the appellant approached the Insurance Tribunal Punjab, Lahore on 06.12.12 and claimed loss of Rs9,851,760 from the respondent-insurer. 

The respondent contested the insurance claim and objected to the maintainability of insurance petition on the ground inter alia that the petition was not filed by the authorized person as no resolution of the Board of Director was available on record. 

The Appellant, to meet the challenge posed by the respondent, filed an application under Order VI Rule 17 read with Order VII Rule 18 and section 151 C.P.C, seeking amendment of its petition to incorporate such fact and permission to place on record copy of Board Resolution authorizing the deponent of the Insurance Petition to file and contest the Insurance Petition for and on behalf of the Appellant. 

The Tribunal vide order dated 10.02.2014 allowed the Rice Mills to amend the petition and to place the Board Resolution on record. However, the respondent took no exception to the Tribunal order. 

The Tribunal, on examination of evidence vide order dated 22.11.2016 granted the insurance claim of the Mills to the extent of Rs4,957,083/- as assessed by the insurance surveyor along with liquidated damages under s.118 of the Insurance Ordinance. 

The respondents were directed to bear the cost of the case and to make the payment of the insurance claim and liquidated damages within a period of 30 days. However, the respondent-insurer challenged the tribunal order before the LHC on the ground that board resolution authorizing the attorney was admittedly not present on the date of filing of the insurance petition. The High Court accepted the appeal. 

Rana Basit Rice Mills filed an appeal against the LHC before the august court. The apex court examined the legal repercussions of where no Board Resolution is presented authorizing the deponent Rana Abdul Basit, Chief Executive of the Mills to file and contest the insurance petition. 

The judgment said that even otherwise such a defect can always be cured by placing on record a Board Resolution issued even at a subsequent date, which would put the matter to rest. 

The judgment said that the respondent (Insurance Company) did not challenge the finding of the Insurance Tribunal before the High Court on merit of the insurance claim as determined by the Tribunal, nor before the apex court. 

Respondent insurer throughout laid emphasis on maintainability of the Insurance Petition filed without Board Resolution, which was allowed to be placed on record. Respondent was not able to show any prejudice was caused to it. 

The judgment said that the claim allowed by the Insurance Tribunal was based on the loss determined by the surveyor of the respondents. Under the given facts and circumstances of the case, the appeal is allowed. Impugned judgment dated 11.04.2018 passed by the Lahore High Court is set aside and that of the learned Insurance Tribunal dated 22.11.2016 is restored.

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