Telangana High Court
Smt. Hema Agarwal vs Union Of India on 18 December, 2024
Author: G.Radha Rani
Bench: G. Radha Rani
THE HONOURABLE SRI JUSTICE SUJOY PAUL
&
THE HONOURABLE DR. JUSTICE G. RADHA RANI
WRIT PETITION No.25825 OF 2024
ORDER:(per Hon'ble Dr. Justice G.Radha Rani) This petition is filed to issue an appropriate writ or direction more particularly a writ in the nature of Writ of Certiorari calling for records in Revision Petition No.291 of 2020 before National Consumer Disputes Redressal Commission, New Delhi and to set aside the order dated 05.12.2023 passed by the National Consumer Disputes Redressal Commission, New Delhi in I.A.No.2537 of 2020 and revision petition No.291 of 2020 and to pass such other order or orders, which this Court deems fit and proper in the circumstances of the case.
2. The brief facts of the case giving rise to filing of the present petition are as under:
(i) The husband of the petitioner obtained Jeevan Tarang Policy (T.No.178) bearing No.645784306 for an assured sum of Rs.9,90,000/- commencing from 24.11.2009 from respondent No.3 through respondent No.4 agent. The petitioner is nominee in the policy. The husband of the petitioner met with a sudden heart attack on 10.08.2010 and died. Thereafter being a nominee as required under the policy, within the specified period, the petitioner informed 2 SP, J & Dr.GRR, J wp_25825_2024 about the death of her husband to respondent No.3 and placed her claim under the policy.
(ii) The respondent No.3 deputed their representative to collect the required document. Thereafter, she continuously approached respondent No.3 and requested to settle the claim and to release the insurance amount and other benefits in favor of her. The respondent No.3 informed that the same was in process. But later, the respondent No.3 sent a letter dated 19.02.2011 repudiating the claim of the petitioner on the ground that the deceased had suppressed about previous four (04) policies taken by him at the time of filling the proposal form and further advised the petitioner to make a representation to the Zonal Manager. The petitioner vide letter dated 23.03.2011 informed respondent No.3 that the policy form was filled by respondent No.4 and her deceased husband gave all the particulars and had not suppressed about the issuance of the previous policies. The respondent No.3 sent a letter to the petitioner to submit requisite document towards settlement of the claim. But, however, the Zonal Office of respondent No.3 vide letter dated 08.08.2011 upheld the repudiation decision of the Divisional Office with an advice to approach Central Office within three (03) months.
(iii) The petitioner filed a Consumer Case No.47 of 2012 before District Consumer Disputes Redressal Forum-II, Hyderabad to direct respondents 3 and 4 to pay jointly and severally the insured sum of Rs.9,90,000/- under Jeevan Tarang Policy along with interest of Rs.1,62,030/- @ 12 % per annum from 10.08.2010 till filing of the complaint and 3 SP, J & Dr.GRR, J wp_25825_2024 interest @ 12 % per annum from the date of complaint till realization and to pay sum of Rs.50,000/- towards compensation and a sum of Rs.25,000/- towards costs.
(iv) Upon receiving the notice, the respondent No.3 filed counter. The complainant filed a rejoinder to the counter of respondent No.3. Further, the petitioner filed her evidence affidavit and got marked Exs.A1 to A8. The respondent No.3 also filed his evidence affidavit and also got marked Ex.B1.
(v) On considering the evidence on record and the written arguments filed by the petitioner, the District Forum vide order dated 20.11.2013 dismissed the consumer case.
Aggrieved by the decision of the District Forum, the petitioner preferred an appeal before the State Commission, Hyderabad. The State Commission, Hyderabad vide order dated 22.03.2018 allowed the appeal of the petitioner setting aside the order dated 20.11.2013 in CC.47/2012 directing respondent No.3 to pay the insured sum of Rs.9,90,000/- with interest @ 9 % per annum from the date of filing of complaint till the date of realization and to pay compensation of Rs.10,000/- towards mental agony and Rs.5,000/- towards costs within four (04) weeks.
(vi) Aggrieved by the decision of the State Commission, the respondent No.3 preferred Revision Petition before the National Commission, New Delhi. Along with the petition, the respondent No.3 also filed I.A.No.2537 of 2020 seeking condonation of delay of 580 days in filing the Revision Petition. The said I.A and the Revision Petition filed by 4 SP, J & Dr.GRR, J wp_25825_2024 respondent No.3 were allowed by the National Commission, New Delhi.
(vii) Aggrieved by the impugned order dated 05.12.2023 passed by the National Commission, New Delhi, the petitioner filed the present Writ Petition.
3. Heard Sri Pranay Sohini, learned counsel for the petitioner and Sri Kowturu Pavan Kumar, learned counsel for respondent No.3.
4. Learned counsel for the petitioner contended that the National Commission, New Delhi committed an error of law in allowing I.A.No.2537 of 2020 ignoring the judgment of the Hon'ble Apex Court in Anshul Aggarwal v. New Okhla Industrial Development Authority 1, wherein it was held that while dealing with an application seeking condonation of delay under the Consumer Protection Act, 1986, the special nature of the Act has to be kept in mind. The National Commission completely overlooked the law laid down by the Hon'ble Apex Court in R.B.Ramalingam v. R.B.Bhavaneshwari 2 , wherein it was held that in each and every case, the Court has to examine whether delay in filing the special leave petitions stand properly explained. The true guide was whether the petitioner had acted with reasonable diligence in the prosecution of his appeal / petition.
1 (2011) 14 SCC 578 2 (2009)(2) CLJ (SC)24 5 SP, J & Dr.GRR, J wp_25825_2024 4.1. Learned counsel for the petitioner further submitted that the National Commission had not taken into consideration that I.A.No.2537 of 2020 filed by respondent No.3 was a cut, copy and paste petition, wherein the respondent No.3 wrongly mentioned the First Appeal number, order date and even the forum name, which would demonstrate the conduct of respondent No.3. Even the delay was not properly calculated and failed to observe that the free copy was made ready on 17.02.2018 and the clock of limitation starts running from the said date onwards i.e. 17.02.2018 and the 90 days time period for filing the Revision Petition had expired by 29.06.2018. As such, there was a delay of 673 days in filing the Revision Petition. The address obtained from respondent No.3 - Company would demonstrate that the address of respondent No.3 was same as the address mentioned in the judgment passed by the State Consumer Dispute Redressal Commission of Telangana in F.A.No.1277 of 2013. The respondent No.3 had not filed any document before the Commission to demonstrate change in address. 4.2. On merits of the case, learned counsel for the petitioner further contended that it was an admitted fact that all the policies of the deceased policy holder were issued by respondent No.3 and the same were obtained through respondent No.4 and the form was filled by their agent. Therefore, the contention of respondent No.3 ought to 6 SP, J & Dr.GRR, J wp_25825_2024 have been disregarded. The policy status issued by respondent No.3 itself would prove that the petitioner's husband had not suppressed about the existence of previous policies to them and in fact they accepted the previous policy of the assured as age proof for the present policy under which the claim was due, which would prove that the ground for repudiation of the claim of the petitioner would not survive. Further, respondent No.3 had also admitted that they had also obtained the Agents Confidential Report, which would reveal that the agent had discussed with the proposer about the previous policies. As such, the respondent No.3 had knowledge of the existence of the previous policies and there was no suppression of material fact. The Merchant Premium Collection Portal relied by respondent No.3 would disclose that at the column of age (Date of Birth), it was mentioned as 43 years (01.08.1966) as per previous policy, which would reveal that the Insurance Company mentioned about the Date of Birth of the policy holder relying on his previous policy and prayed to set aside the impugned order passed by the National Commission, New Delhi, which was illegal, arbitrary and unreasonable.
5. Learned counsel for respondent No.3 on the other hand contended that the National Commission, New Delhi condoned the delay by taking into account all the relevant circumstances. While allowing I.A.No.2537 of 2020, the Commission had imposed costs of 7 SP, J & Dr.GRR, J wp_25825_2024 Rs.1,00,000/- on respondent No.3. Due to the change of address of the Branch Office of respondent No.3, the free certified copy of the judgment was not received. A newspaper advertisement dated 26.06.2018 was also published in respect of change of address. The National Commission after due consideration of all the above facts had condoned the delay.
5.1. On merits, learned counsel for the respondent No.3 submitted that the petitioner's claim was repudiated on the ground that the deceased policy holder suppressed four (04) policies at the time of filling the proposal form. The District Consumer Forum vide its order dated 20.11.2013 in Consumer Case No.47 of 2012 dismissed the complaint filed by the petitioner herein on the count that the non-disclosure of the previous policies would amount to suppression of material facts. The disclosure about the previous policies was a vital material fact for assessing risk and sum assured that could be granted under the Insurance Policy. Any suppression of material facts in the proposal form would render the insurance cover invalid and would result in "repudiation of claim". The contention of the learned counsel for the petitioner that the policy holder signed on the blank form, as the agent assured to fill the form as required and provided all the information, was not tenable in view of the judgment of the Hon'ble Apex Court in Reliance Life Insurance Company Limited 8 SP, J & Dr.GRR, J wp_25825_2024 and another v. Rekhaben Nareshbhai Rathod 3 . No prior information was provided by the petitioner's husband regarding existence of four (04) previous policies. The deceased policy holder committed breach of the doctrine of utmost good faith by not disclosing the details regarding the existing insurance policies. The amount of insurance cover depends on the income, financial status of the proposer and human life value of the individual to be insured. Any disproportionate insurance would increase the moral hazard and raises a question with regard to insurable interest. The details of existing life insurance policies by the proposer would help the Insurance Company to determine whether the sum assured proposed was commensurate with his earning capacity. Any subsequent revelation of misstatement or suppression of existing insurance details would render the insurance cover void ab initio. In such circumstances, the insurer was well within its contractual rights to repudiate the death claim and relied upon the judgments of the Hon'ble Apex Court in N.Balakrishnan v. M.Krishnamurthy 4 and Sheo Raj Singh (deceased) through Legal Representatives and others v. Union of India and another 5 on the aspect of delay and relied upon the judgment of the Hon'ble Apex Court in Reliance Life Insurance Company Limited and another v. Rekhaben 3 (2019) 6 SCC 175 4 (1998) 7 SCC 123 5 (2023) 10 SCC 531 9 SP, J & Dr.GRR, J wp_25825_2024 Nareshbhai Rathod (cited supra) in Civil Appeal No.4261 of 2019 on the merits of the case.
6. On considering the rival pleadings, the questions that arise for consideration are:
(a) Whether the National Commission, New Delhi while passing the judgment and final order dated 05.12.2023 had committed any error of law in condoning the delay?
(b) Whether the National Commission, New Delhi had committed any error of law while considering the merits of the matter?
(a) Whether the National Commission, New Delhi while passing the judgment and final order dated 05.12.2023 had committed any error of law in condoning the delay?
7. As seen from the petition filed for condonation of delay by respondent No.3 before the National Consumer Disputes Redressal Commission at New Delhi, the respondent No.3 has wrongly mentioned the First Appeal Number as A/618/2017, the order date as 09.07.2018 and the forum name as the State Consumer Disputes Redressal Commission, West Bengal, instead of the correct number of First Appeal as F.A.No.1277 of 2013, date of the order as 22.03.2018 and the name of the forum as State Consumer Disputes Redressal Commission of Telangana, which would show non-application of mind. The reason given for condonation of delay was that there was a shift in 10 SP, J & Dr.GRR, J wp_25825_2024 the petitioner - Insurance Company's office at Hyderabad, due to which the free certified copy of the impugned judgment was not received. Only while reviewing the status of the cases pending, they found that the First Appeal had been disposed of by the State Commission on 22.03.2018. As such, they applied for a certified copy, which was delivered on 31.12.2019 and after receipt of the same, the entire file was forwarded to the Head Office at Mumbai explaining the circumstances of the case and as the Head Office recommended filing of the Revision Petition, the papers were forwarded to the counsel on 13.02.2020 and the petition was filed on 19.02.2020. Due to which, there occurred a delay of 580 days.
8. No document was filed before the National Commission to demonstrate the change in address.
9. But, however, the National Commission by relying upon the judgments of the Hon'ble Apex Court in Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy and Others [(2013) 12 SCC 649] and in N.Balakrishnan v. M.Krishnamurthy (cited supra), observed that:
"After considering the contention raised by the petitioner regarding the delay having occurred on account of shifting of its office / alteration for its Satellite Office to Branch Office was not altogether without substance, the delay of 580 days in filing this Revision Petition is condoned after awarding 11 SP, J & Dr.GRR, J wp_25825_2024 costs of Rs.1,00,000/- to the respondent / complainant."
10. The observation of the Hon'ble Apex Court in Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy and Others (cited supra) was also extracted by the National Commission as:
"21.4(iv). No presumption can be attached to deliberate causation of delay, but gross negligence on the part of the counsel or litigant is to be taken note of.
11. In N.Balakrishnan v. M.Krishnamurthy (cited supra), the Hon'ble Apex Court stated the guidelines for construing the word "sufficient cause" and held that:
"9. It is axiomatic that condonation of delay is a matter of discretion of the court Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to want of acceptable explanation whereas in certain other cases delay of very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on whole untenable grounds or arbitrary or perverse. But it is a different matter when the first Court refuses to condone the delay. In such cases, the superior Court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammeled by the conclusion of the lower court.12
SP, J & Dr.GRR, J wp_25825_2024
10. The reason for such a different stance is thus:
The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice. Time limit fixed for approaching the court in different situations in not because on the expiry of such time a bad cause would transform into a good cause.
11. Rule of limitation is not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.
12. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause"
under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi Jain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749].
13. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn 13 SP, J & Dr.GRR, J wp_25825_2024 down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay, the Court should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss."
12. It should be remembered that both these cases are arising not under the Consumer Protection Act, 1986.
13. Learned counsel for respondent No.3 also relied upon the judgment of the Hon'ble Apex Court in Sheo Raj Singh (deceased) through legal representatives and others v. Union of India and another (cited supra), wherein it was held that:
"The expression "sufficient cause" is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub-serves the ends of justice. Expression "sufficient cause" should, therefore, be considered that pragmatism in justice- oriented approach rather than the technical detection of sufficient cause for explaining every day's delay.
Emphasis was laid on the Courts adopting a liberal and justice-oriented approach. Where substantial justice and a technical approach were pitted against each other, a pragmatic approach should be taken with the former being preferred. Substantive rights of private parties and the State are not defeated at the threshold simply due to technical considerations of delay.14
SP, J & Dr.GRR, J wp_25825_2024 For sufficient cause to receive liberal treatment, the same must fall within reasonable time and through proper conduct of the party concerned.
For such an application for condonation to be seen in a positive light, the same should be bonafide, based on true and plausible explanations, and should reflect the normal conduct of a common prudent person. Further, the explained delay should be clearly understood in contradistinction to inordinate unexplained delay to warrant a condonation.
What counted was indeed the sufficiency of the cause of delay, and not the length, where the shortness of delay would be considered when using extraordinary discretion to condone the same. Courts should attempt to decide a case on its merits, unless the same is hopelessly without merit.
It would be improper to put the State on the same footing as an individual since it was an impersonal machinery operating through its officers. Factors which are peculiar to and characteristic of the functioning of the governmental conditions would be cognizant to and requires adoption of pragmatic approach in justice-oriented process.
Consideration to condone could only be made on presentation of a reasonable explanation, and the same could not be done simply because the appellant therein was a public body."
14. In the above case also, the Hon'ble Apex Court held that the consideration to condone delay could only be made on the presentation of a reasonable explanation and the same could not be done simply because the appellant therein was a public body.
15. Learned counsel for respondent No.3 had filed a notification in the newspaper, wherein it was shown that the Life Insurance Corporation of India, Divisional Office, 5-9-21, Jeevan Prakash, 15 SP, J & Dr.GRR, J wp_25825_2024 Secretariat, Hyderabad - 63 was shifted to H.No.22-5-885 to 900/1, First Floor, BSNL Exchange near Charminar, Hyderabad - 500 002 with effect from 29.08.2018. The notification was given in the newspaper on 26.06.2018. But as seen from the record, the F.A.No.1277 of 2013 was disposed by the State Commission on 22.03.2018 and the free copy was made ready on 17.04.2018. As such, by the date the free copy was dispatched to respondent No.3, there was no change in their address. The office was continuing in the same address as appeared in the cause title of the State Commission. The respondent No.3 needs to explain satisfactorily the reason for condonation of delay. The National Commission had taken a liberal approach to condone the delay in filing the revision by awarding costs to the complainant.
16. The Hon'ble Apex Court in Anshul Aggarwal v. Okhla Industrial Development Authority (cited supra), held that:
".... while deciding the application filed for condonation of delay, the Court has to keep in mind that a special period of limitation has been prescribed under the Consumer Protection Act,1986 for filing Appeals and Revisions in consumer matters and the object of expeditious adjudication of the consumer disputes will get defeated if the Appeals and Revisions, which are highly belated, are entertained and as the petitioner had miserably failed to demonstrate each and every single day of delay occurred in filing the present petition and as the petitioner had not filed any single document to demonstrate the change in address taken by the 16 SP, J & Dr.GRR, J wp_25825_2024 petitioner, as such the present petition is liable to be dismissed with exemplary costs."
17. The factual situation of this case is in pari materia with the facts as stated by the Apex Court in the above case.
18. As there is no reasonable explanation given by respondent No.3, the National Commission ought not to have accepted the same. As such, this Court considers that the National Commission had committed an error of law in condoning the delay without the respondent No.3 explaining the reasons for the day to day delay without considering the period of limitation prescribed under the Consumer Protection Act, 1986.
(b) Whether the National Commission had committed an error of law while considering the merits of the matter?
19. As seen from the facts of the case, the District Forum dismissed the complaint observing that both the complainant and the opposite party had submitted judgments, which were applicable to the facts of the case on hand. If the judgment relied by the complainant reported in Revision Petition No.4502 of 2010 delivered on 06.07.2011 was accepted, the non-disclosure of previous policies was not material, the repudiation of the opposite party was illegal and would amount to deficiency of service. Whereas the latest judgment of the National Commissioner delivered on 16.07.2012, if taken into consideration, 17 SP, J & Dr.GRR, J wp_25825_2024 the non-disclosure of existence of previous policies amounts to suppression of material fact and the repudiation of the claim of the insurance company would not amount to deficiency of service and relied upon the latest judgment and dismissed the complaint.
20. The State Commission after going through the facts of the case, observed that the respondent - Insurance Company did not place before them any rule to repudiate the insured claim of the present policy when previous policies were in existence. The respondent - Insurance Company argued that:
"Had the deceased policy holder disclosed his previous policies, he would have been subjected to medical tests to ascertain his health condition. That means, if the previous policies were disclosed, they would ascertain health condition. It explains that they would issue policies on the basis of the health condition. In other words, if the health condition is good, they would have no hesitation to issue further policies. In other words, it can be said that, issuance of the present policy depends upon health condition, but, not on issuance of previous policies. Nowhere, it is stated that the deceased policy holder is suffering from any disease at the time of issuance of present policy in question and that he suppressed the same and for that reason he died. Further, the Insurance Company computerized all the policies of the customers and hence if any person sends a proposal for a new policy, the computer would automatically show the other policies of the said person, if any, without, any effort. Hence, the contention of respondent No.1 - Insurance Company that the deceased policy holder obtained the present policy in question suppressing previous four (04) policies is ridiculous. From the above circumstances, it can be concluded that taking of previous policies by the deceased policy holder is not a ground to repudiate the claim 18 SP, J & Dr.GRR, J wp_25825_2024 of the appellant / complainant and that the repudiation of the claim is unjust and it tantamounts to deficiency in service and therefore the appellant / complainant is entitled to the insured amount. The absence of the second respondent / second opposite party agent also supports the contention of the appellant / complainant that her deceased husband informed her about the existence of previous four (04) policies at the relevant time and hence it also infers that there is no suppression of material fact."
21. The National Commission placed reliance upon the judgment of the Hon'ble Apex Court in Reliance Life Insurance Corporation Limited and another v. Rekhaben Nareshbhai Rathod (cited supra) and observed that the facts of the present case were squarely covered by the ratio of the aforesaid decision of the Hon'ble Apex Court and since admittedly no information regarding existence of the previous insurance policies was conveyed by the insured in his proposal form, the contention that the signatures of the assured on the form were taken without explaining the details to him, was not acceptable, and allowed the Revision Petition.
22. There is no doubt that the contracts of insurance are covered by the principle of utmost good faith and it requires all parties to a contract to be fair and open with each other to create and maintain trust between them.
23. Admittedly, the respondent No.3 had taken the age proof of the deceased policy holder basing upon the previous policy. The Merchant 19 SP, J & Dr.GRR, J wp_25825_2024 Premium Collection Portal marked as Ex.A7 would disclose that against the column of age (Date of Birth), it was mentioned as 43 years (01.08.1966) as per previous policy. The same would reveal that the respondent - Insurance Company mentioned the date of birth of the policy holder relying upon his previous policy. As such, it cannot be contended that the existence of previous policy was not known to the respondent - Insurance Company and there was any suppression of material fact. There is no material on record to show that the deceased policy holder was suffering from any disease at the time of issuance of the policy in question and that he suppressed the same and for the said reason he died, as observed by the State Commission.
24. As rightly observed by the State Commission, the Insurance Company computerized all the policies of its customers and as such the computer would automatically show the other policies of the said person without any effort. Repudiating the claim on the ground that the deceased policy holder suppressed the previous four (04) policies is unjust, as the earlier insurance policies were also issued by the same respondent No.3.
25. In a similar situation, the Hon'ble Apex Court in Bhagwani Bai v. Life Insurance Corporation of India, Jabalpur 6, observed that: 6
1983 SCC OnLine MP 10 20 SP, J & Dr.GRR, J wp_25825_2024 "9.Admittedly, in the case before us, the policy came into effect on 28-3-1972 and that' the said policy was repudiated by the defendant Corporation by its letter (Ex. D-3) dated 29-3-1973 within two years. It has been found on appreciation of evidence adduced by the Corporation, that the assured late Moolchand did not disclose in answer to question No. 8 of the proposal that his prior three policies had lapsed and, therefore, the defendant Corporation vehemently urged that the non-
disclosure and suppression of this fact in the proposal as well as in the personal statement made by the assured had rendered the contract of insurance void because of the aforementioned misrepresentation on the part of the assured. Learned trial Court recorded a definite finding that the non-disclosure of the above said fact was not a suppression of a material matter-and there were no reasons for us to differ with that finding.
Consequently the second part of Section 45 of the Act was not attracted. In these circumstances; in our opinion it would be the general law of contract which would be attracted because in substance the question with which we are now confronted is whether the non-disclosure of the information about lapsed policies by the assured amounted to misrepresentation and whether the said fact had such a bearing on the risk undertaken by the defendant Corporation that it would not have accepted the proposal if the fact of lapsed policies was made known to its officials. Even if Section 45 of the Act is also attracted then also it has to be shown by the Corporation that the fact suppressed was material fact having bearing on the risk." While also considering the General Law of Contract, the Hon'ble Apex Court held that:
"11. Here it may also be relevant to look to the provisions of fraud and misrepresentations under the Contract Act. Section 17 defines fraud and Section 18 defines misrepresentation. A combined reading of Sections 17 and 19 of the Contract Act makes it clear that representation is a statement of fact, past or present, distinct from statement of opinion and a fraudulent misrepresentation of fact 21 SP, J & Dr.GRR, J wp_25825_2024 confers on the represented with a right to avoid the contract. It may be said that a misrepresentation will not be effective to ground the avoidance of a contract unless it was material in the sense that a reasonable man would have been influenced by it in deciding whether to enter into the contract and if it was material in this sense, the represented may have considerable difficulty in satisfying the Court that he was in fact influenced by the misrepresentation. Mere non-disclosure of fact, material or not, does not ordinarily amount to misrepresentation unless it was fraudulent. The insurer cannot repudiate the liability by showing only some inaccuracy or falsity of statement nor can it avoid the policy for an immaterial misrepresentation or even for a material mis' representation which had no bearing on the risk. Similarly mere non-disclosure of some immaterial facts would not per se give right to rescission. In other words a misrepresentation would not ipso facto to be a ground available to an aggrieved party to avoid the contract unless it was found that the consent of the other party was secured by practicing some deception. Thus on every misrepresentation or concealment of a fact a contract cannot be avoided merely on trivial and inconsequential misstatement or non-disclosure. In Joel v. Law Union and Crown Insurance Company (1908) 2 KB 853 it has been pointed out that to apply strictly the rigid rule of warranties even to the immaterial and inconsequential concealments is to throw the innocent assured at the mercy of the insurer. Further, Lord Fletcher Moulton L. J., strongly disapproved the way in which an insurance policy was effected. To quote in his own words, he observed that "I wish I could adequately warn the public against such practices on the part of insurance offices. I am satisfied that few of those who insure have any idea how completely they leave themselves in the hands of the insurers should the latter wish to dispute the policy when it falls in.
13. Learned counsel for the respondent Corporation produced no Rules before us in support of the contention that a new proposal cannot be accepted if the previous policies had lapsed within a year from the date of new proposal unless the lapsed 22 SP, J & Dr.GRR, J wp_25825_2024 policies are revived. This contention, therefore, has no force.
15. It is true that the assured did not disclose the fact about his lapsed policies which at the most could be said to be a foolish concealment but without any fraudulent intention. In the facts and circumstances of this case we have no hesitation in holding that the non-disclosure of fact regarding lapsed policies had no bearing on the risk and it did not amount to fraudulent misrepresentation as no undue advantage was sought to be derived by concealment of said fact. Thus, the Corporation had made out no case for avoiding or repudiating the policy, and it is liable for payment of the policy amount with interest."
26. In Life Insurance Corporation of India v. Shahida Begum 7, the Hon'ble Apex Court on a similar matter pertaining to non- disclosure of the previous policies, held that:
"11. In the present case, the officials of the insurance company were well-aware of the earlier policy being held by the assured person when the subsequent policies were issued. We fully agree with the Ld. District Forum, as held in the case of Bhagwani Bai VS LIC [AIR 1984 SC 125], referred to in the impugned order that the insurer cannot repudiate the liability by showing some in accuracy or falsity of statement nor can it avoid the liability for immaterial misrepresentation or for material misrepresentation which had no bearing on the risk. Similarly mere non-disclosure of some immaterial facts would not pee se give right to rescission. In other words, a misrepresentation would not ipso facto and be a ground available to the aggrieved party to avoid the contract unless it is found that consent of opposite party was secured by practicing some deception. Thus on every misrepresentation or concealment of a fact, a contract cannot be avoided merely on trival and inconsequential misstatement or non-disclosure."7
2011 SCC OnLine NCDRC 652 23 SP, J & Dr.GRR, J wp_25825_2024
27. Though the Hon'ble Apex Court in Reliance Life Insurance Corporation Limited and another v. Rekhaben Nareshbhai Rathod (cited supra) held that the disclosure of the earlier cover was material to an assessment of the risk which was being undertaken by the insurer. But as the facts of the present case would disclose that the insurer was aware about the existence of the previous insurance policies, as it recorded the date of birth of the assured from his previous policy, we are of the view that the National Commission had committed an error of law on merits also, as there is no deception practiced by the deceased policy holder or any material misrepresentation, which had the effect of bearing on the risk to avoid the liability by respondent No.3. The non-disclosure of the existence of previous policies is considered as inconsequential, as they received the premium without any objection from the deceased, whose life was assured without repudiating the policy during his lifetime.
28. In the result, the Writ Petition is allowed setting aside the impugned order dated 05.12.2023 passed by the National Consumer Disputes Redressal Commission, New Delhi in I.A.No.2537 of 2020 and Revision Petition No.291 of 2020 approving the order of the State Commission.
No order as to costs.
24
SP, J & Dr.GRR, J wp_25825_2024 As a sequel, miscellaneous applications pending in this petition, if any shall stand closed.
_______________________ JUSTICE SUJOY PAUL ______________________________ Dr. JUSTICE G. RADHA RANI Dated: 18.12.2024 Nsk