Law: Contract Act, 1872

Section: 124, 125

Law: Insurance Ordinance, 2000

Section: 75

Summary: The appellant’s pickup truck was insured but allegedly stolen while being used to carry third-party goods on hire. The Insurance Tribunal awarded 75% of the insured sum, but the Lahore High Court set that award aside because the vehicle’s use breached the policy’s permitted-use and exclusion clauses and the insurer’s surveyor indicated non-compliance with safeguards. The driver—key eyewitness—was not produced, weakening the theft proof. The Supreme Court agreed with the High Court, holding that the insured’s breach took the loss outside policy coverage and that the claimant failed to prove the theft; the appeal was dismissed. Core points Vehicle: Hyundai Shehzore H-100, purchased 31.08.2007, insured under Policy No.009-PC/001547/2007 (11.10.2007–10.10.2008). Loss: Alleged theft on 14.12.2007; FIR No.725/2007 lodged 16.12.2007. Tribunal decision (02.01.2016): Allowed 75% of insured amount (Rs.513,750) with 5% p.a. liquidated damages. High Court (23.05.2017): Allowed insurer’s appeal and set aside Tribunal award. Supreme Court findings: Insurance is a contract of indemnity; insurer’s liability limited to risks covered. Policy contained a permitted-use limitation and exclusion for property not belonging to the insured or held in custody for hire. Vehicle was used to transport third-party goods on hire — breach of policy terms and within exclusion. Surveyor’s report identified breaches and non-compliance with safeguards; relevant evidence against claim. Driver (material witness) was not produced; failure to produce best evidence undermined theft proof. Breach of conditions intended to control risk can defeat a claim; equitable considerations cannot override clear contractual terms. Result: Appeal dismissed; insured not entitled to indemnity. Law and sections Topic Law / Statute Section Short explanation Contract of indemnity (nature of insurance) Contract Act, 1872 (Pakistan) Section 124 Defines a contract of indemnity as one where one party promises to save the other from loss caused by conduct of the promisor or any other person. Rights of indemnity-holder Contract Act, 1872…