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2009 DIGILAW 566 (CAL)

MD. Fazlul Haque v. UNION OF INDIA

2009-07-30

G.C.GUPTA

body2009
Judgment :- (1) Jolekha Khatun since deceased, wife of the writ petitioner, took a life insurance policy on 20th December, 1995 for a sum assured of Rs. 50,000/- and nominated her minor sons. Similarly she took another policy on 20th July 1997 for a sum assured of Rs.1,00,000/- and nominated one of her minor sons viz, Md. Ziahul Haider. The insured died on 22nd October, 1998 during continuance of the aforesaid policies, The information as regards death of the insured was duly given to the Life Insurance Company of India (hereinafter referred to as the LICI for brevity). But the sum assured was not disbursed. By a letter dated 31st August, 2002 claim was finally made which was replied to by a letter dated 4th September, 2002 stating that the matter had been referred to the Divisional Office and the writ petitioner was likely to get a suitable reply shortly. No reply was however received. In the circumstances the present writ petition was filed on 20th March, 2003. (2) On behalf of the LICI an affidavit-in-opposition was filed affirmed by one Shri Amit Kumar Bose wherein as regards the maintainability of the writ petition the following points were taken :- "2.1 That the said application is not maintainable since an insurance is a contract between the insurer and the insured and a dispute relating to a contractual matter cannot be decided by way of a writ application, 2.2 That said application is not also maintainable since it involves disputed questions of fact which can only be settled by way of adducing evidence and as such writ Court is not the proper forum for adjudication of the same." As regards the merit the following defence was taken :- 2.4 In terms of the rules of Life Insurance Corporation of India (hereinafter referred to as LICI) investigation was initiated and on the basis of the documents collected by LICI both of the policies were repudiated on the ground of suppression of material fact which have also been communicated to the appointee to the nominee of the life assured. Since both the claims were repudiated for suppression of material facts nothing is payable against the two polices." (3) When the petition was taken up for hearing the learned Advocate appearing for the respondents reiterated the points noticed above. Since both the claims were repudiated for suppression of material facts nothing is payable against the two polices." (3) When the petition was taken up for hearing the learned Advocate appearing for the respondents reiterated the points noticed above. On behalf of the writ petitioners it was submitted that the writ petition is maintainable because the LICI a State within the meaning of article 12 acted unfairly in rejecting the claim. On merits the allegation as regards the suppression of material facts was denied. It was submitted that in any event insofar as the policy dated 28th December, 1995 was concerned the respondents were not entitled to reject the claim on the basis of an alleged suppression of material facts under Section 45 the Insurance Act, 1938. Therefore the questions which arise for determination are as follows :- a) Is the rejection of the claim arising out of the aforesaid policies bad altogether ? b) Is alternative remedy a bar in this case ? (4) Section 45 of the Insurance Act 1938 provides as follows :- "45. Policy not to be called in question on ground of mis-statement after two years. b) Is alternative remedy a bar in this case ? (4) Section 45 of the Insurance Act 1938 provides as follows :- "45. Policy not to be called in question on ground of mis-statement 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 in that the statement was false [or that it suppressed facts which it was material to disclose]: [Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to he called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in this proposal.] (5) It would appear from a plain reading of the section that life insurance policy, after expiry of two years from the date on which it was effected is given an immunity by the statute from being avoided on the ground that any statement made in the proposal was inaccurate or false. With regard to the cases of alleged suppression of material fact the legislature has insisted upon an allegation and proof of the fact that the alleged suppression was made by the policy holder fraudulently and intentionally. With regard to the cases of alleged suppression of material fact the legislature has insisted upon an allegation and proof of the fact that the alleged suppression was made by the policy holder fraudulently and intentionally. The use of the expression fraudulently makes the intention of the legislature clear, A mens rea on the part of the policy holder to perpetrate a fraud upon the insurer is required to be alleged and proved before any claim on the basis of alleged suppression of material fact can be rejected. Reference in this regard may also be made to an authoritative judgment of a Division Bench of the Punjab High Court in the case of Lakshmi Insurance Company Private Limited v. Bibi Padmavati reported in AIR 1961 Punjab 253 wherein the following view was expressed :- "According to the provisions of Section 45. the insurance contract can be avoided on fraud, and a charge of fraud, naturally, requires a high degree of probability. It is well known that fraud is odious and cannot be presumed fraus est odiesa et non est praesumenda. The Courts will not be satisfied with proof, which falls short of showing that intentional misrepresentation was made with the knowledge of perpetrating fraud. The onus probandi in all such cases rests heavily on the party alleging fraud. The Privy Council in Narayanan v. Official Assignee, Rangoon, AIR 1941 PC 93 held, that fraud must be established beyond all reasonable doubt and could not be based on suspicion and conjecture. Applying the test of preponderance of evidence I am not satisfied that the defendant-appellant has discharged the heavy burden of proof." (6) The defence taken by the LICI has been quoted above. It would appear that no fraud or no case of intentional suppression of material fact has even been made out in the affidavit-in-opposition. The documents relied upon by the LICI originated in the year 1998.1 am, therefore, inclined to hold that there is a lot of force in the submission advanced on behalf of the petitioners that the LICI whimsically rejected the claim arising out of the policy dated 28th December 1995. However as regards the policy taken on 28th July, 1997 no such protection is available and therefore the allegation that the policy holder suppressed material fact has to be gone into in an appropriate proceeding. However as regards the policy taken on 28th July, 1997 no such protection is available and therefore the allegation that the policy holder suppressed material fact has to be gone into in an appropriate proceeding. Therefore the rejection of the claim arising out of the policy dated 28 December, 1995 was bad and offended Article 14 of the Constitution of India. The first issue is accordingly answered. (7) With regard to the point as regards maintainability. I can quote from the judgment in the case of ABL International Limited v. Export Credit Guarantee Corporation of India Limited reported in (2004)3 SCC 553 wherein Their Lordships in paragraph 52 opined that "The requirement of Article 14 should extend even in the sphere of contractual matters for regulating the conduct of the State activity". (8) Their Lordships in that judgment further held in paragraph 26 that monetary relief could also be granted in ah appropriate case. In the present case I have found that the rejection of the claim arising out of the policy dated 28th December, 1995 was bad and offended Article 14 of the Constitution of India and therefore the writ petition to that extent is maintainable. The issue is accordingly answered. (9) In the premises the petition partly succeeds. The respondents No. 2.3 and 4 are directed to pay the risk benefit together with interest at the rate of 12% per annum from 22nd November 1998, that is to say one month from the date of the death of the insured which is a reasonable period within which the claim should have been met together with costs of this application assessed at Rs. 3,000/-within six weeks from the date of communication of this order. As regards the claim of the writ petitioner arising out of the policy dated 28th July, 1997 the petitioner shall be entitled to seek his remedy from a civil Court within three months from the date hereof. In the event a suit is filed within the time stipulated herein the petitioner shall be entitled to exclusion of time under Section 14 of the Limitation Act because this Court for jurisdictional reason is unable to entertain the disputed claim arising out of the aforesaid policy. (10) Urgent xerox certified copy of this judgment be made available to the learned Counsel for the parties, if applied for, upon compliance of all formalities.