Delhi High Court
Rajiv Khosla vs Union Of India & Ors. on 7 April, 2010
Author: S. Muralidhar
Bench: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
W.P.(C) 5702/1999
Reserved on : 5th March 2010
Decision on: 7th April 2010
RAJIV KHOSLA ..... PETITIONER
Through: Mr. K.C. Mittal with
Ms. Ruchika Mittal and
Mr. Sujeet Kumar Singh, Advocates
versus
UNION OF INDIA & ORS. ..... RESPONDENTS
Through: Mr. Shankar N. Sinha, Advocate
for R-2 and 3
CORAM: JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the order? No
2. To be referred to the Reporter or not? Yes
3. Whether the order should be reported in Digest? Yes
ORDER
07.04.2010
1. The Petitioner is an advocate practising in the Delhi Courts. He has challenged, by this petition, a clause in the "Jeevan Kishor Policy" of the Life Insurance Corporation of India (LIC), (Respondent No.2 herein) whereunder LIC is not obliged to make payment if the assured dies prior to the „deferred date‟.
2. The Petitioner took a Jeevan Kishor Policy for his daughter Ms. Aprajita Khosla for a sum of Rs.1,00,000/- by a policy No.120312578 dated 14th October 1994. Yearly premium of Rs.5,533/- was payable for W.P.(C) No. 5702 of 1999 Page 1 of 7 14 years thereafter. The Petitioner paid premium for two consequent years i.e. 1994-1995 and 1995-1996. The Petitioner‟s daughter expired on 11th September 1996 in unfortunate circumstances and thereafter premium was not paid.
3. The Petitioner sent a letter dated 20th December 1996 to the LIC informing them of the death of his daughter and asking for the claim under the policy to be settled. When no response was received, the present petition was filed. The petitioner states that payment was not made on account of the following clause in the policy, which he challenges in the present petition:
"This Policy shall stand cancelled in Case the Life Assured shall die before the Deferred Date and in such event provided the Policy is then in full force, a sum of money equal to all the premiums paid without any deduction whatsoever, shall become payable to the person entitled to the Policy moneys."
4. The reply by the LIC to the present petition raised a preliminary objection that the Petitioner ought to have filed a civil suit since he essentially seeks to enforce a contractual obligation. It is submitted that claim has been repudiated in terms of the conditions of the contract. Even to challenge any particular clause of a contract, the petitioner ought to have filed a civil suit. Reliance is placed on the judgments of the Supreme Court in Food Corporation of India v. Jagannath Dutta AIR 1993 SC W.P.(C) No. 5702 of 1999 Page 2 of 7 1494; Divisional Manager, National Insurance Co. Ltd., Ahmedabad v. Manguben AIR 1987 224 (Guj) and Shardaben Kantilal Panchal v. Life Insurance Corporation of India AIR 1989 1 (Guj). It is not denied that the relevant clause of the Jeevan Kishor Policy denied payment of the assured sum if the death of the insured occurred during the waiting period. In other words, if the death of the insured occurs within a period of two years of the commencement of the policy, only the premium paid till that date was payable and nothing more. The reply of the LIC to the specific ground challenging validity of the deferred payment clause reads as under:-
"It is trite proposition that contract of life insurance is a special contract and life insurance business is a business in risk, as it deals with uncertain life. Accordingly, every life insurer has to deal with the risk and uncertainty based on actuarial presumptions and assumptions while undertaking the risks and carving out the exceptions and exclusions. There is no legal compulsion on any one to effect an insurance policy, if the terms and conditions are not upto his liking. But, however, having taken an insurance policy willingly and consciously, and thereby entering into binding insurance contract, the same cannot be challenged subsequently on the alleged grounds, and that too by invoking the writ jurisdiction of this Hon‟ble Court, without taking recourse to civil suit, as per the settled law and judicial precedents."W.P.(C) No. 5702 of 1999 Page 3 of 7
5. In its rejoinder, the Petitioner has contended that at the time of the taking of the policy such a condition was not known. The policy itself was usually sent much later, even after payment of the first premium. In any event, as long as the premium was paid, it was not open to the LIC to repudiate the claim and defer payment. It is pointed out that the deferred date in the instant case is 14th October 1996 and the Petitioner‟s daughter who was approximately 11 years old, died on 11 th September 1996. It is contended on behalf of the petitioner that the classification of life insurance policies into those payable only after the deferred date and those without such limitation was arbitrary.
6. An additional affidavit has been filed on 21st May 2002 on behalf of the LIC. It is denied that the Jeevan Kishor Policy was meant only for the middle income/higher income class. It is submitted that it was a flexible policy where the minimum and maximum amount that could be insured was Rs.20,000/- and Rs.50,00,000/- respectively. It is explained that the premium is a multiple of the tabular rate paid depending upon the desired sum assured and age of the assured. It is further explained that in the case of children it is not practically possible to obtain any medical report or special report, which would indicate the future expected mortality in respect of life. It is explained that as any medical examination is unlikely to reveal an authentic and reliable insight into the health status of a child, the LIC of India, in order to safeguard adverse undertaking of risks, imposes certain restrictions under the Jeevan Kishor Plan before the risk W.P.(C) No. 5702 of 1999 Page 4 of 7 on the child commences. This is explained to be the rationale behind the imposition of "deferred date" or "waiting period". According to the LIC, the "waiting period" acts as a guard against likely moral hazard involving the lives of innocent insured children, who might fall a prey to the greed of the human desire to make a fast buck. The policy is meant for every strata of the society and is not meant only for the elite and gentry.
7. This Court has heard Mr. K.C. Mittal, learned counsel appearing for the Petitioner and Mr. Shankar N. Sinha, learned counsel appearing for the LIC. Learned counsel for the Petitioner at the outset made a statement that the Petitioner is not interested in the payment of the policy amount at this stage and is only interested in the law being clarified for the future. This is a fair gesture on the part of the Petitioner.
8. The stand of the LIC as extracted in the above paragraphs does not sufficiently explain the need for deferring the payment under policy for children for two years. It appears to this Court that once the LIC accepts the contract by offering to insure even the life of a child, then it obviously does do so irrespective of the age of the child. While insurance business is largely dependent on the analysis of risk, it is not possible to accept the submission of the LIC that the "deferred date" clause became necessary only on the basis of the risk that may be faced by the LIC. If the LIC chooses to insure children and collects premia, there is no justification for W.P.(C) No. 5702 of 1999 Page 5 of 7 negativing a claim on the basis that payments thereunder should stand postponed to a "deferred date". There is no justification for imposition of a deferred date on the apprehension that such waiting period is necessary to prevent "moral hazards" involving the life of children.
9. This Court does not find merit in the submission that the Petitioner ought to have filed a suit and not a writ petition to challenge the aforementioned clause of the contract. The facts not being in dispute, this Court has only to examine if the clause in question is a reasonable one. In ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd. (2004) 3 SCC 553, the Supreme Court explained that even in matters of contract, the High Court under Article 226 is not powerless to entertain the writ petition and interfere, if it finds that by enforcing such a clause in the contract, LIC would be acting unfairly or unreasonably.
10. In a further additional affidavit filed by the LIC on 28th April 2003, the information relating to number of Jeevan Kishor Policies issued from 1990-1991 to 2001-2002 including the ages of the victims have been given. Given the large number of Jeevan Kishor Policies issued [which stood at 471000 as of 2001-02], the actual claims in respect of children in the age group of eleven years for the years 1999-2000, 2000-2001 and 2001-2002 are 39, 55 and 53 respectively. The figures are comparable for other age groups upto 15 years. By no means can it be argued that there W.P.(C) No. 5702 of 1999 Page 6 of 7 will be far too many claims against the LIC if the "deferred date" clause is not incorporated. Given the number of claims being made on a yearly basis on account of the deaths of children under the Jeevan Kishor Policy, this Court holds that the LIC is not acting fairly or reasonably in insisting that no claim will be entertained for two years after the commencement of the policy.
11. For all the above aforementioned reasons the writ petition deserves to be allowed. It is directed that claims made hereafter under the Jeevan Kishor Policy will not be repudiated by the LIC on the ground that they have been made before the "deferred date" subject, of course, to other conditions being satisfied. In other words, it is clarified that this decision is prospective and will not result in reviving claims that have already been rejected under the said „deferred date‟ clause.
12. The writ petition is allowed in the above terms with no order as to costs.
S. MURALIDHAR, J.
th 7 April, 2010 ps W.P.(C) No. 5702 of 1999 Page 7 of 7