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2007 DIGILAW 2792 (ALL)

SHANTI DEVI v. OFFICE OF INSURANCE OMBUDSMAN

2007-11-20

AMITAVA LALA, SHISHIR KUMAR

body2007
JUDGMENT Hon’ble Amitava Lala, J.—The fact remains that the petitioner’s deceased husband made a policy during his life time under the money back scheme of Life Insurance Corporation of India (hereinafter called as ‘L.I.C.’) in its local office. Number of the policy is 311465500 dated 31st January, 2002. The policy was lapsed due to non-payment of premium on 28th June, 2002 and 28th December, 2002. The policy was revived on full payment of premium on 15th February, 2003. However, the insured expired on the following day i.e. 16th February, 2003 due to heart attack. On 27th May, 2004 Senior Divisional Manager of the L.I.C., Allahabad had rejected the claim of his wife on account of her husband’s death. On 18th January, 2005 Zonal Manager of the L.I.C. from its office at Kanpur had also rejected such claim. On 2nd February, 2005 wife of the insured was formally informed by the Divisional Office, Allahabad about the order of the Zonal Manager, Kanpur, from which an appeal was preferred before the Insurance Ombudsman. Ultimately the Insurance Ombudsman by his award dated 30th June, 2005 upheld the repudiation action taken by the insurer, in repudiating the claim under the Policy No. 311465500. Challenging the order/award dated 30th June, 2005 passed by the Ombudsman this writ petition has been filed by the wife of the deceased/insured. 2. Before entering into the dispute, we have to consider the scope and ambit of the writ jurisdiction as it has been held in 2001 (2) SCC 160 (Life Insurance Corporation of India and others v. Asha Goel (Smt.) and another). Supreme Court held that the determination of the question under the writ jurisdiction will depend on consideration of several factors, like, whether a writ petitioner is merely attempting to enforce his/her contractual rights or the case raises important questions of law and constitutional issues; the nature of the dispute raised; the nature of inquiry necessary for determination of the dispute etc. The matter is to be considered in the facts and circumstances of each case. The matter is to be considered in the facts and circumstances of each case. While the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution cannot be denied altogether, Court must bear in mind the self-imposed restriction consistently followed by High Courts all these years after the constitutional power came into existence in not entertaining writ petitions filed for enforcement of purely contractual rights and obligations which involve disputed questions of facts. 3. According to us, the Insurance Act, 1938 with the latest amendment is a beneficial piece of legislation. Therefore, if a benefit which the petitioner is legally entitled has been refused, Court cannot enter upon the arena to render equitable justice. The Court of equity cannot shut out the eyes taking plea that there is mere or bare disputed question of fact. The disputed question of fact ipso facto cannot be ground for rejection unless or until it is proved beyond the doubt before Court of equity under Article 226 of the Constitution of India that the dispute is such that cannot be resolved by the writ jurisdiction at all. If we place factum of case within the guidelines of the Supreme Court in Asha Goel (supra), we shall have no doubt in our mind that the writ jurisdiction can be invoked in the circumstances. 4. In this case it has been contended by the learned Counsel appearing for the petitioner that before the date of death the deceased attended his office to work. He was not under treatment for any disease to be treated by any Doctor. However, as per the certificate given by the particular hospital, the deceased was suffering from jaundice. In the common parlance different kind of jaundice and its several stages of suffering are available to which an expert can give any opinion. But it gradually develops and gradually diminishes. A person having jaundice normally can not attend his office to do the work just before one day of his death. Death occurred by heart attack. No specific denial is available whether the deceased was medically treated any where before his death. Nobody was examined on behalf of hospital. Only on the certificate of the Hospital “according to attendant he was suffering from jaundice”, the concerned Ombudsman upheld the repudiation of insurance agreement. Death occurred by heart attack. No specific denial is available whether the deceased was medically treated any where before his death. Nobody was examined on behalf of hospital. Only on the certificate of the Hospital “according to attendant he was suffering from jaundice”, the concerned Ombudsman upheld the repudiation of insurance agreement. The petitioner has shown two Division Bench judgments of the High Court reported in 2007(1) ADJ 11 (DB), (Umesh Narain Sharma v. New India Assurance Co. Ltd. and others, and 2007 (2) ESC 1026 (All) (DB), (Smt. Ram Kali v. Life Insurance Corporation, Allahabad) to establish her case. In the first one, factum of heart attack and in the other factum of suffering of cancer is applicable. Both claims were allowed. We have gone through the facts of both the cases and found that factually this case in the hand is standing on a better footing than those cases. 5. Mr. Prakash Padia, learned Counsel appearing for L.I.C., cited before us a judgment reported in AIR 1962 SC 814 (Mithoolal Nayak v. Life Insurance Corporation of India) to establish that second part of Section 45 of the Insurance Act, 1938 applies in the following circumstances—(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. 6. According to us, second part of Section 45 of the Act cannot be taken into account in isolation but in the context of first part which deals with fixation of a period of two years from the date on which the policy was effected. There is a reason behind insertion of such Section under the Act. If somebody makes a policy by misstatement that can be taken care of before making an agreement or within a reasonable period of two years after the execution of the agreement. Such period cannot be extended as per the sweet will of the insurance company. In the case of Mithoolal Nayak (supra) the insurance policy was executed on 18th October, 1945. The policy holder expired on 12th November, 1946. The claim was repudiated for some reason or other on 10th October, 1947. Such period cannot be extended as per the sweet will of the insurance company. In the case of Mithoolal Nayak (supra) the insurance policy was executed on 18th October, 1945. The policy holder expired on 12th November, 1946. The claim was repudiated for some reason or other on 10th October, 1947. Therefore, misstatement or falsity, if any, was taken care of by the authority within such period. In the instant case the agreement in support of the policy was executed on 31st January, 2002. The policy holder expired on 16th February, 2003. The decision on account of repudiation was made on 27th May, 2004 taking a plea that the insurance policy was revalidated only on 15th February, 2003. We are of the view that as soon as a policy is revalidated it relates back to the date of execution i.e. 31st January, 2002 herein. Thus, the period for repudiation is beyond the period as provided in first part of Section 45 of the Act and as such cannot be sustainable. 7. Secondly, Section 45 speaks for statement made in the proposal for insurance etc. which has been specifically taken care of by the Supreme Court in Mithoolal Nayak (supra) and also held as follows : “.......................that the insured Mahajan Deolal had been guilty of deliberate mis-statements and fraudulent suppression of material information in answers to questions in the proposal form and the personal statement, which formed the basis of the contract between the insurer and the insured.” 8. Hence, we are of the view that the incident subsequent to the execution of the document if not related to the execution of the policy and two years being the reasonable ground cannot be a valid ground for the purpose of repudiation. A suffering or a disease or any death not arising out of any false or misstatement at the time of making the policy cannot be a ground for repudiation by the insurance company as alleged or at all. It has to be related to the execution of the document. 9. From the paragraph 15 of the judgment referred above i.e. Umesh Narain Sharma (supra) a Division Bench of this High Court made such aspect of the matter explicit on the basis of the terms and conditions of the insurance policy as quoted hereunder : “Clause 4.1 of the terms and conditions of the insurance policy read as under : “4. From the paragraph 15 of the judgment referred above i.e. Umesh Narain Sharma (supra) a Division Bench of this High Court made such aspect of the matter explicit on the basis of the terms and conditions of the insurance policy as quoted hereunder : “Clause 4.1 of the terms and conditions of the insurance policy read as under : “4. Exclusions. 4.1 Such diseases which have been in existence at the time of proposing this insurance pre-existing condition means any injury which existed prior to the effective date of this insurance. Pre-existing conditions also means any sickness or its symptoms which existed prior to the insured person had knowledge that the symptoms were relating to the sickness. Complications arising from pre-existing disease will be considered part of that pre-existing conditions.” Lastly, it is to be seen how the Ombudsman proceeded in this matter. The Ombudsman proceeded in this matter on the basis of the order of the earlier officers but at the same time out of his usual fairness quoted about an effort of mediation as follows : “Efforts for mediation were made during Personal Hearing but since insurer’s representative was not prepared to reconsider the claim, these did not succeed. In view of failure of mediation proceedings, I proceed to give my award in the matter as under.” 10. According to us, fraud and equity cannot run simultaneously. If it is a question of genuine fraud there is no scope of showing any equitable justice towards any insured but when at an occasion the authority made an effort for mediation it is to be understood that the insurance company was also not in a position to come to a definite finding about any falsity. Therefore, it can be safely presumed that the question of any falsity does not arise otherwise the Ombudsman could not have poised down to a position of making effort of mediation to render equitable justice. 11. Therefore, in totality we do not find that any such case has been made out on behalf of the Insurance Company to repudiate the agreement ignoring payment of the meagre amount of Rs. 1.0 lakh (Rupees one lakh only) to the petitioner. Hence, we hereby quash the order of the Ombudsman dated 30.6.2005 as well as the orders dated 18.1.2005 and 27.5.2004 passed by the authorities of the L.I.C., being impugned in the present writ petition. 1.0 lakh (Rupees one lakh only) to the petitioner. Hence, we hereby quash the order of the Ombudsman dated 30.6.2005 as well as the orders dated 18.1.2005 and 27.5.2004 passed by the authorities of the L.I.C., being impugned in the present writ petition. As a result whereof we hold and say that the petitioner is entitled for the said sum which will be released by the Insurance Company in favour of the petitioner as early as possible but not beyond the period of one month from the date of communication of this order alongwith interest @ 12% per annum at a simple rate from the date of first refusal till the date of actual payment finding that the same is reasonable. Accordingly, the writ petition is allowed. 12. However, no order is passed as to costs. Honble Shishir Kumar, J.—I agree. ————