Legal Principle & Question Decided

Ruling Summary: This decision was rendered by the Lahore High Court (Honorable Mr. Justice Ch. Sultan Mahmood), officially reported as 2026 LHC 3734. In this matter between IGI Insurance Limited American Life Insurance Company Pakistan Ltd. and Zaiba Amir Widow etc, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.

Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.

Full Judgment Text & Judicial Ruling

COURT: Lahore High Court (Honorable Mr. Justice Ch. Sultan Mahmood) DECISION DATE: 31-03-2026 CASE DETAILS: Regular First Appeal (R.F.A) (Final Decree) 2876/24 ============================================================ 1 R.R

Stereo. H C J D A 38. JUDGMENT SHEET LAHORE HIGH COURT, LAHORE JUDICIAL DEPARTMENT

R.F.A. No.2876 of 2024.

IGI Insurance Limited Vs. Zaiba Amir & 6 others.

JUDGMENT

Date of hearing: 31.03.2026.

Appellant by: Ch. Muhammad Awais Zafar, Advocate. Respondents by: Ex-parte against respondents vi de order 10.02.2026.

Ch. Sultan Mahmood , J: -This Regular First Appeal, instituted under Section 124 of the Insurance Ordinance, 2000, calls into question the legality, propriety and jurisdictional validity of the judgment dated 11.12.2023 passed by the learned Insurance Tribunal, Lahore, whereby the claim petition filed by the respondents was allowed notwithsta nding an admitted settlement between the parties and an application for unconditional withdrawal of the proceedings. 2. Briefly stated, the facts of the case are that one Amir Jameel obtained an insurance policy from the appellant company on 31.07.2012 and subsequently expired on 20.08.2013. A claim petition was instituted before the learned Insurance Tribunal, Lahore by his father, Muhammad Jameel, without impleading the widow and children of the deceased. The appellant contested the claim on diverse legal and factual grounds, inter alia, maintainability, limitation, and alleged concealment of pre-existing illness. During the pendency of the proceedings, the original claimant expired and his legal heirs 2 R.R

R.F.A.No.2876 of 2024 IGI Insurance Limited v. Zaiba Amir & 6 others

were brought on record through an amended petition, which too was contested by the appellant on additional grounds. During the course of proceedings, the parties entered into an amicable settlement dated 31.08.2023 whereby the respondents agreed to accept a sum of Rs.750,000/- as full and final settlement of their claim. The settlement was reduced into writing, supported by affidavits and undertakings. Pursuant thereto, the appellant company paid the settled amount of Rs.750,000 /- on account of death claim through Cheque No.00450583 dated 11.09.2023, which was duly received and encashed by the respondents without any protest or reservation. Consequent upon such settlement, the respondents filed an unconditional application for withdrawal of the claim petition, which was not opposed by the appellant -company. However, the learned Tribunal, vide order dated 13.10.2023, declined the request for withdrawal and proceeded further in the matter , and ultimately allowed the claim petition on merits vide judgment dated 11.12.2023, hence the instant appeal. 3. Learned counsel for the appellant has contended that the impugned judgment is without lawful authority and is coram non judice. It is argued that the learned Tribunal gravely erred in d iscarding a valid and voluntarily executed settlement in absence of any legally admissible evidence of coercion, fraud, or undue influence. It is further contended that the respondents had an absolute and unqualified right to withdraw the claim under Order XXIII Rule 1 C.P.C., and once the settlement was executed and acted upon, no lis survived between the parties. It is submitted that the learned Tribunal acted in excess of jurisdiction by refusing withdrawal and proceeding to decide the matter on merits, and that the impugned judgment is the result of misreading of evidence and misapplication of settled principles of law. 3 R.R

R.F.A.No.2876 of 2024 IGI Insurance Limited v. Zaiba Amir & 6 others 4. Despite service, the respondents failed to appear and were proceeded against ex -parte. This Court has, therefore, proceeded to decide the matter after hearing learned counsel for the appellant and examining the available record. 5. The controversy in the present case essentially hinges upon the legal eff ect of a concluded settlement between the parties and the scope of the insurance petitioner’s right of withdrawal under Order XXIII Rule 1 C.P.C. It is by now trite law that a plaintiff, being dominus litis , has an absolute, unqualified and indefeasible right to withdraw his suit or abandon his claim at any stage of the proceedings, provided such withdrawal is unconditional and not coupled with a request for permission to institute a fresh suit. The law on t he subject stands authoritatively settled by the Hon’ble Supreme Court of Pakistan in “Muhammad Yar (deceased) through L.Rs. v. Muhammad Amin (deceased) through L.Rs. ” (2013 SCMR 464), wherein it has been held that the Court has no discretion to refuse an unconditional withdrawal. Likewise, in Mrs. Afroz Shah and others v. Sabir Qureshi and others (PLD 2010 SC 913), it has been held that the right of withdrawal is both substantive and procedural in nature and lies within the exclusive domain of the plaintif f, subject only to exceptional circumstances. 6. A similar issue was addressed by the Bombay High Court in Mahadkar Agency v. Padmakar Achanna Shetty (2003 AIR(Bombay) 136), wherein it was held as follows:- “12. Once it is established from the facts and the circumstances of the case, that the plaintiffs can abandon or withdraw the suit, such withdrawal being unconditional, the question of rejection of such request does not arise and in the absence of any adjudication of any rights of the parties, the question of passing any speaking order for allowing to withdraw simpliciter does not arise. Hence, merely the order allowing the withdrawal simpliciter, does not disclose any reason for passing such order, it cannot be said that the same has been passed either by illegal or improper exercise

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R.F.A.No.2876 of 2024 IGI Insurance Limited v. Zaiba Amir & 6 others

of jurisdiction, so as to warrant interference in revisional jurisdiction.”

Therefore, Bombay High Court has unequivocally held that where a plaintiff seeks to withdraw a suit unconditionally, the Court possesses no authority to refuse such withdrawal, and the mere act of permitting withdrawal without recording reasons does not constitute an illegal or impro per exercise of jurisdiction. 7. Even otherwise, this Court is of the considered view that the law contemplates two distinct categories of withdrawal and adjustment of suits, namely: ( i) absolute withdrawal, being withdrawal or abandonment of a claim without the leave of the Court; and (ii) qualified withdrawal, being withdrawal with permission to institute a fresh suit . In the case of absolute withdrawal, the plaintiff, being dominus litis, has an unqualified and unfettered right to abandon the suit o r any part of the claim against all or any of the defendants at any stage of the proceedings, and the Court has no jurisdiction to refuse such withdrawal or compel continuation of the proceedings 1. However, where permission to institute a fresh suit is sou ght, the Court may exercise its discretion, subject to being satisfied that the suit would fail on account of a formal defect or that sufficient grounds exist to justify fresh litigation. The object underlying such provision is to prevent miscarriage of ju stice on mere technical grounds2. 8. A clear distinction exists between withdrawal simpliciter under Order XXIII Rule 1(1) C.P.C. and withdrawal with permission to institute a fresh suit under Rule 1(2). In the former case, the right is absolute and does not require permission of the Court, whereas in the latter case, the Court may exercise discretion. In the present case, the respondents

1 KS Bhoopathy v. Kokila(2000)5SCC454. 2 Sheo Kumar v. Thakurji Maharaj AIR1959 ALL 463. 5 R.R

R.F.A.No.2876 of 2024 IGI Insurance Limited v. Zaiba Amir & 6 others sought unconditional withdrawal simpliciter and did not seek permission to file a fresh claim; therefore, the learned Tribunal had no jurisdiction to refuse such withdrawal. 9. It is equally well -settled that although the right of withdrawal is absolute, it may be regulated in exceptional circumstances where its exercise would prejudice accrued or vested rights of the opposite party or defe at the ends of justice. Reference in this regard may be made to Sahibzada Sharyar Khan v. Additional District Judge (2004 CLC 1860) , Zaman Cement Company Pvt. Ltd. v. CBR (2002 SCMR 312), and Asadullah Mangi v. PIA (2005 SCMR 445). However, such limitations are attracted only where compelling circumstances exist. No such circumstance is discernible in the present case. On the contrary, the appellant supported the withdrawal and no prejudice was caused to any party. 10. The record unmistakably establishes that the respondents voluntarily entered into a settlement, executed a written agreement, furnished affidavits affirming their free consent, and received the agreed amount without any protest. It is also an admitted position on record that the appellant di scharged its liability by paying Rs.750,000/ - through Cheque No.00450583 dated 11.09.2023, which was duly received and encashed by the respondents, thereby giving full effect to the settlement. There is no allegation, much less proof, of fraud, coercion, o r undue influence. The finding recorded by the learned Tribunal to the contrary is based on conjectures and surmises and is legally unsustainable. The essential ingredients of undue influence under Section 16 of the Contract Act, 1872 have not been established. It is a settled canon of law that a settlement, once voluntarily executed and acted upon, constitutes a closed and concluded transaction, thereby extinguishing the lis between the parties. 6 R.R

R.F.A.No.2876 of 2024 IGI Insurance Limited v. Zaiba Amir & 6 others 11. Once the settlement was executed and the withdrawal application was filed, the lis stood extinguished and the learned Tribunal became functus officio insofar as adjudication on merits was concerned. At that stage, the learned Tribunal w as left with no lawful option except to allow the withdrawal or, at the most, to dismiss the petition for non -prosecution. Any adjudication thereafter was coram non judice and without lawful authority. The course adopted by the learned Tribunal in proceeding to decide the matter on merits, despite a subsisting settlement and non -prosecution by the claimants, constitutes a clear case of jurisdictional overreach. 12. The learned Tribunal further misdirected itself by discarding documentary evidence without la wful justification, relying upon unsubstantiated oral assertions, ignoring material questions of limitation and maintainability, and placing reliance upon precedents such as “Khan Muhammad Yousaf Khan Khattak v. S.M.A yub and 2 others ” (PLD 1973 SC 160 ) and “Javaid Iqbal Abbasi & Company v. Province of Punjab and 6 others ” (1996 SCMR 1433 ), which are clearly distinguishable and inapplicable to the facts of the present case. The findings so recorded are perverse, arbitrary, and unsustainable in law. 13. For the foregoing reasons, it is unequivocally held that the settlement agreement dated 31.08.2023 is valid, lawful, and binding between the parties and respondents had an absolute and unqualified right to withdraw the claim petition; refusal of withdrawal by the learned Tribunal was illegal, without jurisdiction, and of no legal effect; the impugned judgment is vitiated by misreading of evidence, misapplication of law, and jurisdictional defect.

7 R.R

R.F.A.No.2876 of 2024 IGI Insurance Limited v. Zaiba Amir & 6 others 14. Consequently, this appeal is allowed, the impugned judgment dated 11.12.2023 passed by the learned Insurance Tribunal, Lahore is set aside, and the claim petition shall be deemed to have been validly withdrawn in terms of Order XXIII R ule 1 C.P.C. The settlement agreement dated 31.08.2023 is declared lawful, binding, and fully operative. It is further held that the appellant has already satisfied its liability by paying the settled amount of Rs.750,000/ - through Cheque No.00450583 dated 11.09.2023, which has been duly received by the respondents, therefore, no further claim survives between the parties. The parties shall remain bound by the terms of settlement. There shall be no order as to costs.

(Malik Muhammad Awais Khalid) (Ch. Sultan Mahmood) Judge Judge

Approved for Reporting

Judge Judge

M.Shahzad/*

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