STATE LIFE INSURANCE CORPORATION OF PAKISTAN Versus Mst. Begum RASHIDA JAMIL

MUHAMMAD AMEER BHATTI, J.--- Through this appeal, filed under section 124 of the Insurance Ordinance, 2000, the appellants assail the final order dated 18.05.2017 passed by the learned Insurance Tribunal, Punjab, Lahore, in pursuance of direction issued by this Court vide order dated 03.04.2017 passed in E.F.A. No.38/2017 to recalculate the amount of liquidated damages, whereby they were directed to make further payment of Rs.18,67,527/- to the respondent with the following observations:-

"The contention of the judgment debtor that the order required to be executed is coram non-judice is a stance which cannot be taken before Executing Court at this stage because the order of Tribunal was assailed before Hon'ble Lahore High Court, Lahore and the same was retained intact vide judgment dated 10.12.13 reported in 2014 CLD 1216 in this case the amount to be calculated is from date of death of the deceased of this case which is 09.01.2005. The word realization denotes that the amount of decree which is paid or realized. The amount mentioned above in the Mark-A is payable to the decree holder as such it could not be said that the decree stood realized. The decree will be satisfied on payment of entire decretal amount as ordered by the court."

2. The claim of the appellants is that after the judgment reported in Messrs State Life Insurance Corporation of Pakistan v. Mst. Anwar Gulzar (2012 CLD 1014 Lahore), the learned executing Court traveled beyond its jurisdiction to grant this advantage/facility to the respondent to calculate the damages by giving the compounding effect, therefore, the order impugned passed by the learned executing Court being contrary to the law laid down by this Court is unsustainable in the eye of law.

3. On the other hand the learned counsel for the respondent contended that the judgment cited in 2012 CLD 1014 Lahore had been challenged before Hon'ble Supreme Court and same was set-aside, copy whereof was presented in Court, therefore, the respondent is entitled to take the benefit of compound calculation, thus, the learned executing Court has not committed any illegality and irregularity.

4. We have heard the learned counsel for the parties and gone through record of the case.

5. The observations made in the judgment of the learned Division Bench reported in 2012 CLD 1014 are as under:-

"6. There is no judgment by a superior court on the point in issue namely, the meaning of the expression "prevailing base rate" used in section 118 ibid. It is, therefore one of first impression to which we have given our due consideration. It is clear that LDs are to be calculated at monthly rests for the period that an insurer has failed to make payment due under a policy. Therefore, the entitlement of the decree-holder is to be determined with reference to each month that payment is delayed. Some guidance in the matter may be obtained from the definition of the expression "base rate" given in section 2(8) of the Insurance Ordinance, 2000: this is reproduced below:- "base rate" means the effective annual rate implied by the most recent repurchase rate that is published from time to time in a circular issued by the Securities Department of the State Bank of Pakistan for six months Pakistan Treasury Bills, or, if such rate is not available, the most recent repurchase rate for six months Short Term Federal Bonds, or, if neither of such rates is available, the most recent repurchase rate for any other short term paper issued by the Federal Government of an approximately similar tenor, whether in addition to or in substitution for any of the foregoing':

7. The SBP announces its base rate periodically, sometimes on a six monthly basis and at other times on quarterly or monthly basis. Accordingly, for each monthly rest, the most recent base rate announced by the SBP is easily ascertainable. Accordingly, the expression "prevailing base rate" used in section 118(2) of ibid refers to the six monthly SBP repurchase rate that is announced most recently before the monthly rest under consideration for calculating the LDs accruing during such period.

As a result, we hold that the expression "prevailing base rate" is dynamic in meaning as it varies from time to time depending on the six monthly repurchase rate announced by the SBP that is most recent in relation to the relevant monthly rest that is under consideration. To peg the base rate to a particular event as contended by learned counsel for the respondent/decree-holder would burden one party, the insurer or the claimant, with the chance effect of a high or a low base rate as the case may be, without, apportioning the benefit and/or burden of the impact of a dynamic rate.

8. The question in issue is answered as stated above. It also follows from the reasoning given above that the resort to a weighted base rate in order to simplify the calculations is not justified. Consequently, a base rate must be calculated for each monthly rest separately and applied accordingly in the calculations in order to determine the accumulated LDs."

Same view was followed by this Court while deciding E.F.A. No. 178155/2018, which is as under:-

"5. Thus, it was held by the Division Bench of this Court that the base rate must be calculated for each monthly rest separately and applied accordingly. The method of calculation by compounding liquidated damages to the next monthly rest was discountenanced. The learned counsel for the respondents argued that the judgment had been set aside by the Supreme Court of Pakistan. However, we have not been referred to any such judgment passed by the Supreme Court of Pakistan which has overridden the holding of the Division Bench of this Court. Therefore, the Insurance Tribunal went wrong in determining the liquidated damages by giving the definition a compounding effect. No such effect can be read in the provisions of sub-section (2) of section 118 of the Ordinance, 2000."

In the presence of the observations, quoted above, now it is well settled that the respondent could only claim that liquidated damages in terms of the law laid down by this Court.

6. So far as the contention of the learned counsel for the respondent that the apex Court has set-aside the judgment of this Court, has no force. The Hon'ble Supreme Court only determined the matter with regard to competency of the Tribunals set-up under the said Ordinance. Nothing, as mentioned in the Judgment 2012 CLD 1014 Lahore, was elaborated or overruled. In other words, the verdict of this Court has been upheld, thus the same is being followed. Hence, the order of the learned executing Court to this extent is without lawful authority and hereby set-aside. However, we are not inclined to direct the respondent to return the amount she had already drawn and consumed to meet with her everyday problems of living and now she being widow is not in a position to return the same, whatever she had drawn from the appellants either during the pendency of the execution proceedings or during pendency of this appeal before this Court, same shall not be recovered from her nevertheless the amount which is deposited by the present appellants in pursuance of order of this Court pending with the Deputy Registrar (Judl.) of this Court, shall be returned to the appellants and the claim/matter, if any, shall be recalculated by the learned executing Court in terms of judgment of this Court reported as 2012 CLD 1014 Lahore for the remaining unpaid period.

7. This appeal stands accepted in the above terms with no order as to cost.

KMZ/S-65/L Appeal allowed.