NAGAMMA v. DIVISIONAL MANAGER, L. I. C. RAICHUR — 1987 DIGILAW 304 (KAR)

RAMA JOIS, J. ( 1 ) IN this writ petition in which the petitioner has sought for the issue of a writ of mandamus directing the Life Insurance corporation to make payment pursuant to the two policies which had been taken by the husband of the petitioner during his life time, the following two questions of law arise for consideration: (1) Whether in view of Section 45 of the life Insurance Act, 1938, the Life insurance Corporation cannot repudiate the claim under a life insurance policy after the expiry of two years from the date of its issue, even if it has in its possession evidence to prove that the policy holder had suppressed material information which he ought to have disclosed or had made deliberate false statements in respect of a material matter? and (2) If the repudiation of the claim under a Life Insurance policy by the corporation, is on the ground that the policy holder had suppressed material information which he ought to have disclosed or on the ground that he had made deliberate false statements in respect of a material matter, on the basis of evidence it has in its possession and its correctness is disputed by the claimant, a writ petition under Article 226 of the constitution of India can be entertained for deciding such a dispute? ( 2 ) THE facts of the case, in brief, are as follows : The late husband of the petitioner narasing Rao Jatla was a cloth merchant at bidar. During his life time he had insured his life with the Life Insurance Corporation of India ('the Corporation' for short ). He was holding three Life Insurance Policies. The husband of the petitioner died on 3-1-1984. One of the policies taken for a sum of Rs. 25,000-00 was settled by the corporation. Regarding the other two policies, the Corporation repudiated the claim on the ground that the husband of the petitioner had deliberately made mis-statements and withheld material information regarding his health at the time of effecting the insurance. Thereafter, the petitioner got issued a legal notice on 4-5-1987 (Annexure-G) calling upon the corporation to settle the claim. In reply the corporation informed that for the reasons set out in their earlier letters, the corporation had repudiated its liability under the two policies and they have nothing further to add in the matter. Thereafter, the petitioner got issued a legal notice on 4-5-1987 (Annexure-G) calling upon the corporation to settle the claim. In reply the corporation informed that for the reasons set out in their earlier letters, the corporation had repudiated its liability under the two policies and they have nothing further to add in the matter. Thereafter, the petitioner has presented this petition praying for the issue of a writ of mandamus directing the Corporation to settle the claim in respect of the two policies. ( 3 ) WITH reference to the first question, the learned counsel for the petitioner submitted that in view of Section 45 of the insurance Act which applies to the corporation by virtue of Section 43 of the act, the Corporation after the expiry of two years cannot under any circumstance repudiate the claim under an Insurance policy on the ground that the policy holder had made mis-statements or false statements in respect of his health. Section 45 of the insurance Act, on which the learned counsel relies reads:"45. Policy not to be called in question on ground of misstatement after two years. No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of Life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer or referee or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently, made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose. " ( 4 ) A reading of the above Section at once indicates that the contention urged by the learned counsel for the petitioner is patently untenable. Section 45 of the Act has got two parts. " ( 4 ) A reading of the above Section at once indicates that the contention urged by the learned counsel for the petitioner is patently untenable. Section 45 of the Act has got two parts. According to the first part, even if there were to be inaccurate or mis-statements about the several particulars furnished in the proposal form, an insurer cannot repudiate the policy after the expiry of a period of two years. To illustrate, if in giving information about the number of his brothers and sisters, the proposer had given the number of brothers and sisters living and had failed to include the brothers and sisters who had died, it would not be a case of furnishing false information in respect of a material fact. Therefore, after the expiry of two years, the Corporation cannot repudiate the policy on that ground. According to the second part, the insurer, however, has the right to repudiate the claim under circumstances expressly stated therein. This question is covered by the judgment of the supreme Court in the case of MITHOOLAL v LIFE INSURANCE CORPORATION OF india - (AIR 1982 SC 814.) At paragraph 8 of the judgment, the Supreme Court set out the three conditions for the application of the second part of Section 45 of the Act. They are: (a) the statement must be on a material matter or must suppress facts which it was material to disclose. (b) the suppression must be fraudulently made by the policy holder, and (c) the policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose. In the said case, the Supreme Court held that the conditions set out in the second part of section 45 was satisfied and therefore the corporation was right in repudiating the claim. ( 5 ) IN the present case, the grounds on which the two policies in respect of which proposals were made on 28-12-1979 and 17-8-1980 were repudiated, have been set out in the letters dated 29-12-1984 and 12-2-1985 (Annexures-E and F respectively ). ( 5 ) IN the present case, the grounds on which the two policies in respect of which proposals were made on 28-12-1979 and 17-8-1980 were repudiated, have been set out in the letters dated 29-12-1984 and 12-2-1985 (Annexures-E and F respectively ). The relevant portion of Annexure-E reads :"xxx xxx xxx in this connection we have to inform you that in the proposal for assurance dated, 28-12-1979 and also personal statement regarding health signed by the deceased life assured on 4th May 1982 he had answered the following questions as undernoted:. Questions Answers. 17 (a) What has been your Good usual state of health 18 (a) Have you suffered from or are you suffering from: high or low blood No. pressure, Rheumatic fever, pain in chest, breathlessness, palpitation infraction or any other decease of the heard or arteries? (b) Any disease or kidney No. prostate or urinary system? 19) Have you been No. suspected of diabetes or are you suffering from diabetes or have you ever passed sugar albumin pus or blood in urine? we may however state that all these answers were false as we hold indisputable proof to show that about one year before he proposed for the above policy he had suffered from Micturition, breathlessness and giddiness for which he had consulted a medical man and had taken a treatment from him. He did not however disclose these facts in his proposal instead he gave false answers therein as stated above. It is therefore evident that he had made deliberate mis- statements and withheld material information from us regarding his health at the time of effecting the assurance and hence in terms of policy contract and the declaration contained in the form of proposal for assurance, we hereby repudiate the claim and accordingly we are not liable for any payment under the above policy and all moneys that have been paid in consequence thereof belongs to us. "similarly in respect of the proposal dated 17-8-1980 the Corporation stated in annexure-F as follows:"with reference to your claim under the above policy, on the life of your deceased husband, we have to inform you that the policy was allowed to lapse by non-payment of Hly. Premium due february 1979 without acquiring any paid up value. "similarly in respect of the proposal dated 17-8-1980 the Corporation stated in annexure-F as follows:"with reference to your claim under the above policy, on the life of your deceased husband, we have to inform you that the policy was allowed to lapse by non-payment of Hly. Premium due february 1979 without acquiring any paid up value. The policy was received on 17-8-80 for the full sum assured on the strength of a personal statement regarding health and made by the deceased on 30th june 1980 and short medical report. In the said personal statement of the said short medical report completed by the deceased he had answered the following questions as stated below: question Answer 2) Since the date of your proposal from or are you suffering from: (ii) High blood pressure or No any disease of the heart? (iii) Any disease of kidney, No. prostate or urinary system? 4) Are you in sound health Yes. at present? we hold indisputable evidence to show that the assured had suffered from micturition breathlessness and giddiness for which he took medical treatment from 1978 onwards. He did not however disclose these acts in his said personal statement. It is therefore evident that he made deliberate mis-statements and withheld material information from us regarding his health at the time of getting the policy revived and hence in terms of the declaration signed by him at the foot of the said personal statement the revival of the policy is hereby declared void and all moneys towards revival of the policy and subsequent thereto belong to us. The policy had run only for two years prior to date of revival. It has therefore not acquired any paid up value. As such nothing is payable under the policy. " ( 6 ) FROM the contents of the replies furnished it is clear that if what the Insurance corporation has stated in the two replies is true, the second part of Section 45 of the Act would be clearly attracted. Therefore, there is no substance in the contention of the petitioner that after the expiry of two years, the Insurance Company could not repudiate the claim under Section 45 of the Act. ( 7 ) LEARNED counsel for the petitioner, however, submitted that the Corporation itself had settled the claim under another policy held by the late husband of the petitioner for a sum of Rs. ( 7 ) LEARNED counsel for the petitioner, however, submitted that the Corporation itself had settled the claim under another policy held by the late husband of the petitioner for a sum of Rs. 25,000-00 and that being the position, the Corporation could not repudiate the claim under the two policies. In the petition, the petitioner had not mentioned about the date of the policy which had been settled by the Corporation. However, the learned counsel had taken time, when the matter came up on the last occasion and today he submitted that the said policy was taken in the year 1972. It is obvious that there was no ground falling under the second part of Section 45 of the act in respect of the policy taken in the year 1972, which was more than 7 to 8 years earlier to the two policies, in respect of which the Corporation has repudiated the claim. Therefore, the fact that the amount due under the said policy has been settled has no relevance at all to the repudiation of the claim under the two later policies. ( 8 ) THIS being the position, the only course open to the petitioner is to file a civil suit against the Corporation and in such a suit it would be for the Corporation to prove the grounds set out in the two communications in order to sustain its action of repudiating the claims under the two policies. ( 9 ) LEARNED Counsel for the petitioner, however, submitted that even the question as to whether the grounds mentioned in the two letters were true or not, could also be decided in this writ petition itself. In support of this, the learned Counsel relied on the judgment of the Bombay High Court in the case of ASHA GOEL v LIFE INSURANCE corporation OF INDIA ( AIR 1986 bom. In support of this, the learned Counsel relied on the judgment of the Bombay High Court in the case of ASHA GOEL v LIFE INSURANCE corporation OF INDIA ( AIR 1986 bom. 412 ) The learned counsel pointed out that having come to the conclusion that notwithstanding the fact that the relationship between the Corporation - the insurer and the insured was contractual,the Bombay high Court held that a writ of mandamus would lie to the Corporation to make the payment of the amount due under the insurance policy, and the Court proceeded to decide as to whether the grounds on the basis of which the Corporation repudiated the claim under the life insurance policy in exercise of its right under the second part of section 45 of the Insurance Act were justified or not? The court recorded a finding of fact that the grounds on the basis of which the Corporation repudiated the claim did not exist and consequently issued a writ of mandamus directing the Corporation to pay the amount due under the policy. ( 10 ) AS far as the maintainability of a writ petition under Article 226 of the Constitution of India against the Life Insurance corporation, which is established under an act of Parliament, namely, the Life insurance Corporation Act, 1956, is concerned, it is beyond doubt. The corporation is 'state' as defined under article 12 of the Constitution and therefore amenable to the writ jurisdiction of the High court under Article 226 of the Constitution. Further, it is also beyond doubt that a writ of mandamus can issue to the Life Insurance corporation for payment of money due under a policy, provided the withholding of the payment is contrary to law. For instance, if in a given case there are no grounds which entitles the Corporation to repudiate the claim in exercise of its right given to it under the second part of Section 45 of the insurance Act, certainly a writ of mandamus can issue to the Corporation to make the payment. For instance, if in a given case there are no grounds which entitles the Corporation to repudiate the claim in exercise of its right given to it under the second part of Section 45 of the insurance Act, certainly a writ of mandamus can issue to the Corporation to make the payment. Put when there is a reasonable basis for the Corporation to repudiate the claim under an insurance policy in exercise of its right under the second part of Section 45 of the Insurance Act, no petition under article 226 of the Constitution can be entertained, for, the question as to whether such grounds are true or not could be decided only after recording oral and documentary evidence, which cannot be done in a petition under Article 226 of the constitution. In this behalf, the observations of the Supreme Court in the case of radhakrishna AGARWAL v STATE of BIHAR - (AIR 977 SC 14963), in which an obligation under a contract was sought to be enforced in a petition under Article 226 of the Constitution, are apposite. They read :". . . . . . . IF those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. "the same is the position in the present case. The grounds, specified in the two communications (Annexures-E and F) which prima facie attract the second part of Section 45 of the Insurance Act, are true or not, can be decided only on recording documentary and or oral evidence. This can be done only in a civil suit. Therefore, the writ petition cannot be entertained. ( 11 ) IT is true that in the case of ASHA goel - (2), the learned Judge of the bombay High Court, who decided the case, even after having come to the conclusion that the grounds on the basis of which the claim under a policy was related attracted the second part of Section 45 of the Insurance act, proceeded to record a finding as to whether the grounds were true or not? As can be seen from the facts of the said case, the husband of the petitioner therein who was an employee of Digvijay Cotton Mills, had insured his life with the Corporation. After his death the Corporation repudiated the claim on the ground that the policy holder had made false statements on material matters which attracted the second part of Section 45 of the Insurance Act. The two material pieces of evidence on which the corporation relied were, that at the time when the husband of the petitioner therein was admitted to a Nursing Home in the year 1980, he himself had made a statement before Dr. P. C. Kowdhe that he had suffered from a similar ailment of Myocardial infraction in the year 1976 for which he was treated and secondly the evidence about the husband of the petitioner therein having taken sick leave from 20-8-1976 to 1-9-1976. The learned Judge proceeded to record a finding as to whether these two grounds were true or not? As regards the statement made by the deceased policy-holder himself about his illness in the year 1976 was concerned, the learned Judge rejected it on the ground that no affidavit of Dr. Kowdhe was filed in the High Court. As regards the leave records produced by the Corporation, the learned Judge said:"sometimes when the employees do not want to exhaust their privilege leave, they take sick leave although they may in fact not be sick. And even if it is a fact from 20-8-76 to 1-9-76 the deceased was sick, the record does not show as to what he was suffering from. "the learned Judge recorded a finding of fact that both the grounds on which the corporation repudiated the claim did not exist. With great to the learned Judge, I am unable to agree that the High Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution could proceed to record a finding of fact on such issues, which, as observed by the Supreme court in the case of RADHAKRISHNA agarwal - (3) require the adducing of documentary evidence and examination of witnesses, which involves examination and cross-examination of the witnesses concerned. Proceeding fo record a finding on such a disputed question of fact in a petition under Article 226 of the Constitution would result in the denial of opportunity to the Corporation to prove the truthfulness of its plea by adducing documentary evidence and examining witnesses to prove its contents. ( 12 ) FOR the reasons aforesaid, I answer the questions set out first, as under : (1) In view of Section 45 of the Insurance act, 1938, the Life Insurance corporation can repudiate the claim under a life insurance policy, after the expiry of two years from the date of its issue if it has in its possession evidence to prove that the policy holder had suppressed material information which he ought to have disclosed or had made deliberate false statements in respect of a material matter. (2) If the repudiation of the claim under a life insurance policy by the corporation is on the ground that the policy holder had suppressed material information which he ought to have disclosed or on the ground that he had made deliberate false statements in respect of a material matter, on the basis of the evidence it has in its possession and its correctness is disputed by the claimant, a writ petition under Article 226 of the constitution of India cannot be entertained for deciding such a dispute. ( 13 ) ACCORDINGLY, I make the following order: (i) The writ petition is rejected leaving liberty for the petitioner to file a civil suit against the Corporation, if she is so advised. (ii) No Costs. The write petitions stand dismissed. No order as to costs. Write petition dismissed --- *** --- .