ASKARI GENERAL INSURANCE COMPANY LIMITED vs ISLAM LUBRICANTS (PVT — 2022 CLD 425 LAHORE-HIGH-COURT-LAHORE

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ASKARI GENERAL INSURANCE COMPANY LIMITED VS ISLAM LUBRICANTS (PVT.) LIMITED S. 118--- Payment of liquidated damages on late settlement of claims---Production of evidence---Scope---Claimant and the insurer may disagree on a myriad of issues relating to payment on a policy issued by the insurer such as the time when the payment becomes due, the precise payment to be made to the claimant and whether if at all the claim is due to the claimant or not---All of these issues may give rise to triable issues for which evidence and proof is required---Sum of liquidated damages cannot follow as a matter of course as soon as the payment on a policy becomes due in the estimation of the claimant. S. 118---Civil Procedure Code (V of 1908), O. XIV, R. 1---Payment of liquidated damages on late settlement of claims---Framing of issues---Scope---Insurer challenged the relief granted by the Insurance Tribunal with regard to liquidated damages---Validity---No specific issue was framed by the Tribunal for the grant or otherwise of liquidated damages under S. 118 of the Insurance Ordinance, 2000---Such a claim by its very nature required evidence to be led and proof that the claimant in the given case was entitled to the payment of liquidated damages on late settlement of claims---Mere fact that the claim was settled belatedly did not ipso facto and without more gave rise to the payment of liquidated damages under S. 118 of the Insurance Ordinance, 2000---Insurer was willing to make payment of the claim based on surveyor's report which was not agreed by the claimant and so the claimant chose to file an application to the Insurance Tribunal---Since the course of litigation was adopted by claimant, the insurer was left with no choice but to defend its stance before the Tribunal---Relief granted by the Insurance Tribunal with regard to liquidated damages was set aside. S. 118--- Payment of liquidated damages on late settlement of claims---Production of evidence---Scope---Section 118 of Insurance Ordinance, 2000 makes the payment of liquidated damages an implied term of every contract---Underlying precondition for payment of liquidated damages is to establish that breach of a promise has occurred--- Such would require evidence to be taken down. S. 77---Construction of ambiguities in favour of policy holder---Insurance policy---Depreciation clause, non-insertion of---Effect---Question before High Court was whether the insurance policy had depreciation clause or not---Argument on behalf of the insurer related to general practice whereby a depreciation clause was to be read in all matters relating to insurance claim---Validity---Insurer was specifically required by the Insurance Tribunal to establish whether there was a depreciation clause in the insurance policy or not---None had been demonstrated to exist in the contract of insurance and so it could not be argued by the insurer that such a clause must be read in all insurance policies---Tribunal had rightly returned the finding in favour of insured and against the insurer. S. 118--- Payment of liquidated damages on late settlement of claims---Production of evidence---Scope---Provisions of S. 118 of Insurance Ordinance, 2000 reveal that entitlement of claimant is assured unless insurer proves that such failure was due to circumstances beyond his control---Said argument is further bolstered by the condition "if he fails to make the payment within a period of ninety days from the day on which the payment became due…"---Payment becomes due only upon its determination by a competent forum provided by law and in particular, if a dispute arises over the claim, that is, only when the claim crystallizes and a person becomes entitled to it---In a nub, the issue regarding grant or refusal of liquidated damages is a matter of evidence and no decree can be passed unless a claim is established on a balance of probabilities. S. 122---Insurance policy---Fire and property damage---Deduction on account of debris---Scope---Deduction on account of salvage/debris of building and machinery was disallowed by the Insurance Tribunal on the ground that it was to be taken by the insurer and same could not be assessed to be deducted from the total amount of assessed losses---Validity---Said holding had no basis and was not borne out of the record---Said issue was dependent upon who kept the salvage and in the present case, there was no evidence to suggest that it was retained by the insurer---Surveyors were quite justified to deduct salvage from the claim on the notion that it would be retained by the claimant---Same could not have been added back on the misplaced plea that as the claimant was not willing to retain salvage, hence the salvage/debris (outcome of incident of fire) would be collected by the insurer---Impugned judgment to the extent of grant of claim in respect of salvage was set aside. S. 118---Civil Procedure Code (V of 1908), O. XIV, R. 1---Payment of liquidated damages on late settlement of claims---Framing of issues---Scope---Insurance Tribunal in all applications must frame a specific issue with regard to the grant or refusal of liquidated damages under S. 118 of the Insurance Ordinance, 2000---If 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. S. 118--- Payment of liquidated damages on late settlement of claims---Scope---Purpose of S. 118 of the Insurance Ordinance, 2000 is to contain an inbuilt procedure for imposition of damages upon an insurer which shows contumacy and deliberate intent in denying the legitimate claim of a person---Such is not applicable in a case where no contumacy and deliberate evasion is proved and the insurer merely sets up a bona fide defence regarding the claim of a person.

ASKARI GENERAL INSURANCE COMPANY LIMITED vs ISLAM LUBRICANTS (PVT — 2022 CLD 425 LAHORE-HIGH-COURT-LAHORE

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