No — a civil court cannot hear disputes directly arising from or relatable to a contract of insurance, as these must be filed in a District Court of competent jurisdiction or the High Court, per Pakistan’s Insurance Act, 1938.
Learn how a landmark Supreme Court case clarified the proper forum for insurance disputes, protecting policyholders and insurers alike.
In Islamabad, a legal battle over insurance claims reached Pakistan’s highest court, reshaping how such disputes are handled.
The case began when multiple individuals, including Mst. Sardar Begum and others, filed suits against the State Life Insurance Corporation of Pakistan. These suits stemmed from disputes over insurance contracts, with claims ranging from unpaid benefits to policy disagreements. The plaintiffs chose civil courts to seek justice, believing these courts could handle their grievances. However, the State Life Insurance Corporation argued that civil courts lacked jurisdiction under the Insurance Act, 1938, sparking a legal showdown.
The core issue was whether civil courts could hear cases directly related to insurance contracts. The stakes were high: if civil courts could take on these cases, it might lead to inconsistent rulings across Pakistan. If not, plaintiffs would need to navigate a specific legal pathway, potentially affecting access to justice. The Insurance Act, 1938, specifically Section 46, set clear rules: claims arising from insurance contracts must be filed in a District Court of competent jurisdiction or, depending on territorial and pecuniary limits, in the principal seat of the Sindh High Court or Islamabad High Court.
The plaintiffs argued that civil courts, under the Code of Civil Procedure, could hear their cases, as their claims involved broader issues beyond just insurance contracts. The State Life Insurance Corporation countered that Section 46 of the Insurance Act, 1938, explicitly ousted civil court jurisdiction for insurance-related disputes, directing them to specialized forums. The dispute escalated through the Lahore High Court, which upheld the specialized jurisdiction, prompting an appeal to the Supreme Court.
The Supreme Court, led by Chief Justice Mian Saqib Nisar, examined the legal framework. Section 46 of the Insurance Act, 1938, was clear: all claims directly arising from or relatable to insurance contracts must go to a District Court or High Court, depending on the case’s value and location. The court clarified that this rule applied only to insurance contract disputes, not unrelated claims against an insurance company, which could still go to civil courts under the Code of Civil Procedure. The court also noted that appeals from District Court decrees would go to the High Court, ensuring a robust appellate process.
The verdict was decisive: civil courts lacked jurisdiction over insurance contract disputes. The Supreme Court dismissed the petitions, affirming the Lahore High Court’s judgment on March 28, 2017. This ruling protected the specialized framework of the Insurance Act, ensuring consistency in handling insurance disputes. For policyholders, it clarified where to seek legal redress, while insurers gained certainty about the proper legal forum.
This case was a wake-up call for those navigating insurance disputes. It underscored the importance of following the Insurance Act’s rules, ensuring claims are filed in the right court from the start. For the plaintiffs, it meant redirecting their fight to the proper forum, a detour in their quest for justice.
This story is based on a real judgment passed by the Supreme Court of Pakistan in 2017 (Civil Petitions Nos. 3195-L to 3198-L, etc., and 63-L of 2017).
FAQs
Can a civil court hear disputes arising from insurance contracts in Pakistan?
No, civil courts cannot hear disputes directly arising from or relatable to insurance contracts. These must be filed in a District Court of competent jurisdiction or the High Court, as per Section 46 of the Insurance Act, 1938.
What happens if an insurance dispute is filed in the wrong court?
If an insurance dispute is filed in a civil court instead of the designated District Court or High Court, the case may be dismissed for lack of jurisdiction, requiring refiling in the correct forum.
What types of claims fall under the Insurance Act, 1938?
Claims directly arising from or relatable to insurance contracts, such as disputes over policy benefits or terms, are covered by the Insurance Act, 1938, and must follow its jurisdictional rules.
Can non-insurance claims against an insurance company go to civil courts?
Yes, claims not related to insurance contracts can be filed in civil courts under the Code of Civil Procedure, as the Insurance Act’s jurisdiction rules do not apply.
What laws govern the jurisdiction of insurance disputes in Pakistan?
The Insurance Act, 1938, particularly Section 46, governs the jurisdiction for insurance contract disputes, directing them to District Courts or High Courts based on territorial and pecuniary limits.
Disclaimer
This blog is for public awareness only and does not constitute legal advice.
