Jurisdiction of Insurance Ombudsman and Tribunals

In the case of Securities & Exchange Commission of Pakistan vs. East West Insurance Company & Others (2019 SCMR 532), the Supreme Court of Pakistan addressed pivotal issues concerning the jurisdiction and role of the Federal Insurance Ombudsman and the Securities and Exchange Commission of Pakistan (SECP) in insurance disputes. The case highlights the procedural complexities and the boundaries of authority between quasi-judicial bodies and the courts in the context of insurance claims.

Key Issues:

Jurisdiction of the Insurance Ombudsman: The core issue in this case was whether the Federal Insurance Ombudsman had the jurisdiction to adjudicate claims related to insurance policies, or whether such matters fell exclusively within the domain of the Insurance Tribunals established under the Insurance Ordinance, 2000. The insurance companies contended that the Ombudsman overstepped its jurisdiction by making determinations on policy claims, which they argued were not cases of "maladministration" as defined by the Ordinance.

Role of the SECP as an Appellate Authority: Another significant issue was the role of the SECP as the appellate authority over the decisions of the Insurance Ombudsman. The SECP had upheld the Ombudsman's orders, directing the insurance companies to settle claims and pay damages for late settlements. The insurance companies challenged this on the grounds that the SECP, as a regulatory body, should not have the power to enforce decisions on substantive insurance claims, which they believed were the purview of the judicial system.

Scope of Judicial Review under Article 199: The Supreme Court also examined whether the SECP, after acting as an appellate authority, could challenge the decisions of the High Court, which had set aside the Ombudsman's and SECP’s orders. The insurance companies argued that once the SECP had made a decision, it became functus officio, and any further challenge should be initiated by the aggrieved policy holders, not the SECP.

Syed Yakoob vs. K.S. Radhakrishnan (AIR 1964 SC 477): This case was referenced to underscore the principle that quasi-judicial bodies are not supposed to defend their own orders in higher courts unless specific allegations are made against them. The Supreme Court applied this reasoning to question the SECP’s standing in challenging the High Court's decision.

Mohtesham Mohd. Ismail vs. Spl. Director Enforcement (2007) 8 SCC 257: The Court also considered this case, which dealt with the limits of a regulatory body's role in adversarial proceedings, reinforcing the idea that such bodies should not partake in litigation beyond their statutory mandate.

Court's Conclusion: The Supreme Court dismissed the SECP’s petitions, holding that the Insurance Ombudsman and the SECP had overstepped their jurisdiction in deciding substantive insurance claims, which were not within the scope of "maladministration" as defined by the Insurance Ordinance, 2000. The Court affirmed that such claims should be adjudicated by the Insurance Tribunals, which have the proper judicial authority to resolve disputes arising from insurance policies.

Furthermore, the Court ruled that the SECP, after acting as an appellate authority, did not have the standing to challenge the High Court's decision. The SECP's role was limited to regulatory oversight and appellate review within the bounds of the Insurance Ordinance, and it should not engage in further litigation once its appellate function is completed.

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