Karnataka High Court
Life Insurance Corporation Of India And ... vs Ajit Gangadhar Shanbhag And Ors. on 5 January, 1996
Equivalent citations: I(2000)ACC54, AIR 1997 KARNATAKA 157, (1996) ILR (KANT) 2078, (2000) 1 ACC 54, (1998) 1 ACJ 373, (1996) 2 CIVLJ 787, (1998) 93 COMCAS 933
Author: B. Padmaraj
Bench: B. Padmaraj
JUDGMENT S. Rajendra Babu, J.
1. One Anil Gangadhar Shanbhag had taken out six policies of insurance on his life for Rs. 15,000/-, Rs. 10,000/-, Rs. 10,000/-, Rs. 10,000/-, Rs. 10,000/- and Rs. 25,000/- on 21.9.1972, 28.12.1975, 28.12.1975, 18.3.1976, 20.3.1976, and 10.8.1978 respectively from the respondent Life Insurance Corporation of India and he died on 10.12.1980. The claim made by the mother of the deceased for payment of the amount under the aforesaid policies taken out by. the deceased, after his death, was repudiated or denied by the appellant on the ground that the deceased while filling-up the proposal forms for the policies, was guilty of fraudulent misrepresentation and suppression of material facts, with regard to his health.
2. The respondent filed a writ petition under Article 226 of the Constitution before this Court in W.P. No. 16051 of 1984 seeking the following reliefs:
(i) Issue direction of writ to the respondents to produce the material on the basis of which the claims of the petitioner made in policy Nos. 40469599, 40384083, 40384001, 40380276/77, 4096022 have been rejected.
(ii) Issue writ or direction in the nature of mandamus directing the respondents to settle the claim of the petitioner by making payments under the policy Nos. 40469599, 40384083, 40384001, 40380276/77 and 40196022.
3. The learned Single Judge of this Court, by his order dated 5.6.1992 allowed the writ petition in the following terms:
Accordingly, I allow this petition and direct the respondent Corporation to honour its obligations in terms of the policies issued and settle the claims of the petitioner and make payment of all the amounts due under the respective policies after satisfying itself that the petitioner is the sole legal heir of the insured.
4. It has been further observed in the writ petition by the learned Single Judge that in view of the wrongful retention of the amounts due under the policies, the appellant Corporation will be liable to pay 15 per cent interest on the amounts due in terms of the policies from 19.1.1981 till the date of payment.
5. This appeal by the appellant Corporation is against the decision of the learned Single Judge of this Court in W.P. No. 16051 of 1984 dated 5.6.1992.
6. It was mainly argued on behalf of the appellants that the nature of the claim made by the respondent arises out of a contract qua contract and that further the matter involves serious disputed questions of fact, which needs thorough investigation and cannot be decided in the writ jurisdiction. There is no public law element involved in it. Thus a writ will not issue in relation to the nature of the claim made in respect of the policy of insurance issued by the Corporation, especially when the matter involves serious disputed questions of fact, which needs thorough investigation. In support of his contention, learned Counsel for the appellants has relied upon the decision of the Supreme Court in the case of Kulchhinder Singh v. Hardayal Singh Brar .
7. The learned Counsel for the respondent would, however, contend that the appellant Corporation in repudiating the claim made by the respondent, has failed to perform its statutory duty. He strongly placed reliance on the decision of the Supreme Court in the case of Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd. .
8. In para 5 of the writ petition filed by the respondent, it is stated as under:
The respondent No. 1 has stated in replies Annexures 'C' to 'F' that the deceased Anil did not disclose that he suffered from a trial septal defect and that he had consulted medical men and he had taken treatment in the hospital in the year 1973. The respondent No. 1 stated in its reply Annexure B that the deceased Anil had made a false statement that his proposal for 'insurance had not been rejected by the respondent No. 1 at any time before and that the information revealed that the proposal of the deceased Anil for insurance had been declined by the Bangalore office of the respondent in the year 1971. Thereafter the petitioner sought from the respondent No. 1 the material on which the respondent No. 1 had made the statements contained in Annexures B to E. The petitioner made a representation to the office of the respondent No. 1 at Bombay to verify from the record and find out the real nature of the case. As far as the petitioner is aware the deceased Anil had not made any proposal in the year 1971 to the Bangalore office of the respondent No. 1 for insurance. As far as the petitioner is aware the deceased Anil had not suffered from any disease in 1973 and he consulted any doctor and the deceased Anil had not taken any treatment in any hospital in that year for the disease which the deceased Anil is alleged to have suffered. The respondent No. 1 has not disclosed any material on the basis of which the respondent No. 1 can say that the deceased Anil has made false declarations in his proposals for insurance on the policies mentioned above. The request made by the petitioner to the Head Office at Bombay has been rejected. A true copy of the respondent No. 2 refusing to revise the decision taken by the respondent No. 1 is annexed hereto and marked as Annexure G.
9. Basing on these and other averments, the respondent filed the writ petition, seeking the above reliefs.
10. In the Statement of Objections filed by the appellants in the writ petition filed before the learned Single Judge, the appellants have stated in para 8 as under:
It is therefore evident that the life assured had made incorrect statements and withheld vital information from this respondent regarding his health at the time of submitting his proposals dated 26.12.1975, 28.2.1976, 8.3.1976 and 3.8.1978. In respect of proposal dated 23.8.1972 the deceased life assured had withheld material information regarding declinature of his proposal submitted to Bangalore Divisional Office in the year 1971; The life assured did not disclose the above material facts which are essential and required for undertaking the risk in the said proposal of the deceased life assured. Instead he gave false answers therein. A contract of insurance is a contract of uberrima fides, i.e., utmost good faith. The proposer has a duty cast on him to disclose all facts and information relating to the health, however^ unimportant it may appear to him. It is not for the proposer to judge whether they are relevant material and significant to the risk proposed. The life assured ought to have furnished the details regarding declinature of his proposal submitted to Bangalore office, which is essential to assess the risk in accepting his proposal dated 23.8.1972. The fact that the deceased life assured having knowledge of his ailment by deliberately suppressing the facts of his health and the declinature of the proposal, prior to taking insurance committed fraud on the respondent Corporation is clear from the answers given by him in the Personal Statement of the respective proposals at the time of submitting the proposals for life insurance. The respondent, therefore, in terms of the policy contract and the declaration contained in the Personal Statement at the time of submitting his proposals for insurance repudiated the claim under the above mentioned policies and accordingly this respondent by its letter Ref: PHS/DC/VRD, dated 21.6.1982, Ref: PHS/ DC/VRD, dated 14.5.1982 conveyed its decision to repudiate the claim under the six suit policies to Gangadhar Shanbhag, the nominee under suit insurance policies.
11. It is further contended in para 10 of the Objection Statement filed by the appellant before the learned Single Judge as under:
This respondent has indisputable proof to establish that the deceased was not keeping good health and took treatment from a reputed hospital before submitting his proposals for insurance. This respondent has also proof to show that the deceased life assured had withheld material information regarding declinature of his proposal submitted to Bangalore Divisional Office in the year 1971, when he submitted his proposal dated 23.8.1972, which resulted into policy bearing No. 40196022.
12. It has to be mentioned in the above context that an insurer can validly repudiate a contract of insurance on the ground of misrepresentation or suppression of material facts. It is well settled that a contract of insurance is contract uberrima fides and there must be complete good faith on the part of the assured. The assured is thus under a solemn obligation to make full disclosure of the material facts, which may be relevant for the insurer to take into account, while deciding whether the proposal should be accepted or not. While making a disclosure of the relevant facts, the duty of the insured to state them correctly cannot be diluted. Section 45 of the Insurance Act has made special provisions for a life insurance policy, if it is called in question by the insurer after the expiry of 2 years from the date on which it was effected. Having regard to the facts of the present case, the learned Counsel for the appellants rightly submitted that the matter involves serious questions of disputed facts, which cannot be decided in the writ jurisdiction and they have to be examined on the basis of the evidence to be adduced by the parties at a trial. In fact, learned Single Judge himself would observe in the course of his order that in view of the fact that in cases of fraudulent suppression of material facts, the burden of proof rests heavily on the party alleging fraud. Having so stated about the burden of proof, the learned Single Judge proceeded to observe that the appellant Corporation cannot escape its obligations under the policies by merely stating that the deceased insured at the time of making proposals had suppressed the material facts. With this view, he held that the respondent herein has to succeed. At the very outset, it has to be stated that the matter involves serious disputed questions of fact, which needs thorough investigation and cannot be decided in the manner in which it is sought to be done by the learned Single Judge in the writ petition filed before him. Further, we are at loss to understand as to which statutory duty is not performed by the appellant Insurance Company in repudiating the claim of the respondent. On the other hand, the appellants sought to repudiate or deny the claim of the respondent by taking recourse to Section 45 of the Act and on the basis of the principles involved in such type of contracts. In view of the facts and circumstances narrated herein above, apart from the fact that the matter in issue has arisen out of the contract between the insured and the insurer, there are disputed questions of facts which could be decided only in a regularly drawn trial between the parties. In Food Corporation of India v. Jagannath Dutta , it has been observed that question of contractual obligations cannot be gone into in writ jurisdiction.
13. In Kulchhinder Singh v. Hardayal Singh Brar (supra) relied upon by the learned Counsel for the appellants, it is held as under at page 2218:
The remedy of Article 226 is unavailable to enforce a contract qua contract. A mere contract agreeing to a quota of promotions, cannot be exalted into a service rule or statutory duty. Private law may involve a State, a statutory body, or a public body in contractual or tortious actions. But they cannot be siphoned off into the writ jurisdiction. Although Article 226 is of wide amplitude to correct manifest injustice, but contractual obligations in the ordinary course, without even statutory complexion cannot be enforced by this short, though, wrong cut. Hence, a writ petition merely to enforce an agreement entered into between the employees and the co-operative bank about giving certain percentage of promotions to existing employees is not maintainable.
14. In the case relied upon by the learned Counsel for the respondent stated supra, writ jurisdiction was invoked to enforce a provision to advance a loan. The Supreme Court upheld the issuance of the writ because the Court held that there was a statutory duty to perform the terms of the contract to advance the loan. There can hardly be any quarrel with the principles laid down in the aforesaid decision of the Apex Court. When an organ of the State/statutory authority is functioning, it is bound to be fair and just in the exercise of its statutory duties. If the Court finds that there is violation of the statutory duty or unfairness on the part of the statutory authority or an organ of the State, the Court would readily come down to exercise its power under Article 226 of the Constitution. But that is not the situation forth coming in the case before us. Thus, the decision relied upon by the learned Counsel for the respondent is not helpful to the facts of the present case. In the present case, not only that there is no violation of any statutory duty on the part of the appellants, but in view of the facts and circumstances of the case, apart from the fact that the matter arises out of the contract between the insurer and the insured, there are several disputed questions of fact, which cannot be gone into in writ jurisdiction. In our judgment, therefore, this was not a case worth the name to invoke exercise of the extraordinary discretionary remedy under Article 226 of the Constitution.
15. Having regard to the facts and circumstances emerging from the records of the present case, it is not possible for us to pronounce upon the disputed questions of fact.
16. It is enough to observe that it shall be open to the respondent to approach the Competent Authority having jurisdiction for an appropriate relief in accordance with law.
17. Dealing with the similar situation, the learned Single Judge of this Court in W.P. No. 17731 of 1985, disposed of on 26.7.1988, has observed as under:
This is a writ petition seeking relief of enforcement of policy entered into with the Life Insurance Corporation. The Corporation rejected the payment on the ground that petitioner's husband was suffering from paranoid schizophrenia. The aspect involves investigation of disputed facts. Hence this Court will not be in a position to ascertain the same and grant the relief.
It cannot be said that the remedy sought for by the petitioner was misconceived because a mandamus can be issued to the statutory authority to perform the statutory duty. Now if a suit is filed by the petitioner the same will be barred by limitation. Therefore, I direct that the respondent shall not raise the question of limitation if the suit is filed within three months from today and that the Court shall go into the merits of the case and dispose of the matter in accordance with law.
18. In the present case also, it cannot be said that the claim made by the respondent is either misconceived or untenable, but since it involves disputed questions of facts, this Court cannot go into the question of disputed facts and which could only be decided in a regularly drawn trial between the parties before a competent Civil Court and this Court cannot grant the relief sought by respondent in the writ petition. The respondent is at liberty to institute a civil suit to enforce her rights and if such a suit is filed by the respondent within 3 months from the date of this order, the appellants shall not raise the question of limitation and the Court before which such a suit is validly instituted shall dispose of the case on merits in accordance with law.
19. The appeal is accordingly allowed with the above observations and directions. There shall be no order as to costs.