LHC upholds widows’ right to interest on delayed insurance payments

“LAHORE: The Lahore High Court (LHC) has upheld the right of widows and legal heirs of deceased policyholders to receive statutory interest on delayed group insurance payments. Justice Raheel Kamran ruled this dismissing four appeals filed by the State Life Insurance Corporation of Pakistan related to insurance disputes dating back to the late 1990s. The cases involved widows and heirs of deceased State Life employees and sales officers whose group insurance claims were initially rejected by the corporation, forcing them to pursue prolonged litigation before the Wafaqi Mohtasib, the president, insurance tribunals and courts for decades. Although the principal insurance amounts were paid after intervention by the ombudsman and courts, the corporation refused to pay statutory interest for delayed settlement under Section 47B of the Insurance Act, 1938. The trial courts had earlier ruled in favour of the claimants and directed State Life to pay interest at a rate five percent higher than the prevailing bank rate from the date of death of each insured person until realization of the amount. Challenging the decrees, State Life argued that section 47B had ceased to be effective after being declared repugnant to Islamic injunctions by the Federal Shariat Court and later upheld by the Supreme Court’s Shariat Appellate Bench. However, the high court rejected the contention and held that the insurer’s reliance on earlier judgments was misplaced because those decisions were subsequently set aside in review proceedings and remanded for fresh determination. Justice Kamran further noted that even in the later Federal Shariat Court judgment, implementation of the decision regarding interest-related laws had been deferred until Dec 31, 2027. The judge observed that the insured persons had died and their claims had accrued when Section 47B was still fully enforceable. Therefore, the beneficiaries had acquired vested statutory rights protected under Section 6 of the General Clauses Act despite later repeal of the Insurance Act, 1938. The judge also rejected objections relating to limitation and maintainability, observing that the claimants had continuously pursued remedies in good faith amid confusion regarding the proper legal forum for insurance disputes. Consequently, the judge dismissed all four appeals of the State Life and upheld the decrees granting statutory interest to the claimants --- the widows and heirs of Riaz Hussain, Aslam Shah, Syed Alamdar Hussain Taqi and Muhammad Azam. Published in Dawn, May 16th, 2026

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