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2000(8) Supreme 521
SUPREME COURT OF INDIA
(From Bombay High Court)
B.N. Kirpal & D.P. Mohapatra, JJ.
Life Insurance Corporation of India & Ors. -Appellants
versus
Smt. Asha Goel & Anr. -Respondents
Civil Appeal Nos. 4186-87 of 1988
Decided on 13-12-2000
Counsel for the Parties :
For the Appearing Parties : H.N. Salve, Dr. Y.S. Chitale, Sr. Advocates, K.K. Sharma, Kailash Vasdev, A.K. Gupta, Advocates.
Article 226 of the Constitution confers extra-ordinary jurisdiction on the High Court to issue high prerogative writs for enforcement of the fundamental rights or for any other purpose. It is wide and expansive. The Constitution does not place any fetter on exercise of the extra-ordinary jurisdiction. It is left to the discretion of the High Court. Therefore it cannot be laid down as a general proposition of law that in no case the High Court can entertain a writ petition under Article 226 of the Constitution to enforce a claim under a life insurance policy. It is neither possible nor proper to enumerate exhaustively the circumstances in which such a claim can or cannot be enforced by filing a writ petition. The determination of the question depends 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. While the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution cannot be denied altogether, Courts 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. The Courts have consistently taken the view that in a case where for determination of the dispute raised it is necessary to inquire into facts for determination of which it may become necessary to record oral evidence a proceeding under Article 226 of the Constitution is not the appropriate forum. The position is also well settled that if the contract entered between the parties provide an alternate forum for resolution of disputes arising from the contract, then the parties should approach the forum agreed by them and the High Court in writ jurisdiction should not permit them to by-pass the agreed forum of dispute resolution. At the cost of repetition it may be stated that in the above discussions we have only indicated some of the circumstances in which the High Courts have declined to entertain petitions filed under Article 226 of the Constitution for enforcement of contractual rights and obligation; the discussions are not intended to be exhaustive. This Court from time to time disapproved of a High Court entertaining a petition under Article 226 of the Constitution in matters of enforcement of contractual rights and obligation particularly where the claim by one party is contested by the other and adjudication of the dispute requires inquiry into facts. (Para 10)
The position that emerges from the discussions in the decided cases is that ordinarily the High Court should not entertain a writ petition filed under Article 226 of the Constitution for mere enforcement of a claim under a contract of insurance. Where an insurer has repudiated the claim, in case such a writ petition is filed the High Court has to consider the facts and circumstances of the case, the nature of the dispute raised and the nature of the inquiry necessary to be made for determination of the questions raised and other relevant factors before taking a decision whether it should entertain the writ petition or reject it as not maintainable. It has also to be kept in mind that in case an insured or nominee of the deceased insured is refused relief merely on the ground that the claim relates to contractual rights and obligations and he/she is driven to a long drawn litigation in the civil court it will cause serious prejudice to the claimant/other beneficiaries of the policy. The pros and cons of the matter in the context of the fact situation of the case should be carefully weighed and appropriate decision should be taken. In a case where claim by an insured or a nominee is repudiated raising a serious dispute and the Court finds the dispute to be a bona fide one which requires oral and documentary evidence for its determination then the appropriate remedy is a civil suit and not a writ petition under Article 226 of the Constitution. Similarly, where a plea of fraud is pleaded by the insurer and on examination is found prima facie to have merit and oral and documentary evidence may become necessary for determination of the issue raised them a writ petition is not an appropriate remedy. (Para 11)
(ii) Insurance Act, 1938-Section 45-Repudiation of claim by insurer -On ground of mis-statement-Mere inaccuracy or falsity in respect of some recitals or items in proposal not sufficient-Statement must be on material matter, must be fraudulent and policy holder knew it was false-Burden of proof is on insurer-Repudiation should not be mechanical.
On a fair reading of Section 45 it is clear that it is restrictive in nature. It lays down three conditions for applicability of the second part of the section namely :- (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. Mere inaccuracy of falsity in respect of some recitals or items in the proposal is not sufficient. The burden of proof is on the insurer to establish these circumstances and unless the insurer is able to do so there is no question of the policy being avoided on ground of misstatement of facts. The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called in question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person. (Para 12)
In course of time the Corporation has grown in size and at present it is one of the largest public sector financial undertakings. The public in general and crores of policy-holders in particular look forward to prompt and efficient service from the Corporation. Therefore the authorities in-charge of management of the affairs of the Corporation should bear in mind that its credibility and reputation depend on its prompt and efficient service. Therefore, the approach of the Corporation in the matter of repudiation of a policy admittedly issued by it should be one of extreme care and caution. It should not be dealt with in a mechanical and routine manner. (Para 16)
Key Points: - The judgment discusses maintainability of a writ petition under Article 226 for enforcement of life insurance claims and factors influencing its admission (contractual rights vs. legal/constitutional questions) (!) (!) (!) . - It analyzes the scope and conditions of repudiation under Section 45 of the Insurance Act, including material misstatements, fraud, and the burden of proof on the insurer (!) (!) (!) (!) (!) . - It notes that where disputes are fact-heavy requiring oral or documentary evidence, a civil suit may be more appropriate than a writ petition, and where fraud is prima facie involved, or complex facts are required, writ petitions are often not suitable (!) (!) . - It acknowledges that when an insurer repudiates a claim, courts must consider the specifics of the case, including whether invoking Section 45 is appropriate and whether alternate dispute resolution forums should be used (!) (!) (!) . - It emphasizes the necessity of fair and cautious handling by the insurer in repudiating policies and that the policyholder’s rights must be weighed against the insurer’s evidence in the writ context (!) . - It confirms that the final remedy in this matter was to pay the claim and proceed expeditiously, with no costs, directing adherence to the single judge’s order (!) .
JUDGMENT
D.P. Mohapatra, J.-These appeals, filed by the Life Insurance Corporation of India (hereinafter referred to as the Corporation ), are directed against the judgment of a Division Bench of the Bombay High Court in writ appeal No. 843/85 allowing the appeal on the ground that the appellant should have had an opportunity of leading evidence relevant to their contention that the insurance policy was obtained by misrepresentation, and therefore, avoidable at the instance of the Corporation, and remitting the writ petition to the writ court for fresh decision, after allowing the Corporation to lead evidence. The Division Bench did not accept the objection raised by the Corporation against maintainability of the writ petition on the ground that the case involves enforcement of contractual rights for adjudication of which a proceeding under Article 226 of the Constitution is not the proper forum. The contention on behalf of the Corporation was that the writ petition should be dismissed as not maintainable leaving it to the writ petitioner, respondent No. 1 herein to file a civil suit for enforcement of her claim.
2. The factual backdrop of the case relevant for the purpose of the present proceeding may be stated thus :
Late Naval Kishore Goel, husband of Smt. Asha Goel-respondent No.1, was an employee of M/s. Digvijay Woollen Mills Limited at Jamnagar as a Labour Officer. He submitted a proposal for a life insurance policy at Meerut in the State of U.P. on 29th May, 1979 which was accepted and the policy bearing No. 48264637 for a sum of Rs. 1,00,000 (Rs. One lakh) was issued by the Corporation in his favour. The insured passed away on 12th December, 1980 at the age of 46 leaving behind his wife, a daughter and a son. The cause of death was certified as acute Myocardial Infarction and Cardiac arrest. The respondent No.1 being nominee of the deceased under the policy informed the Divisional Manager, Meerut City, about the death of her husband, submitted the claim along with other papers as instructed by the Divisional Manager and requested for consideration of her claim and for making payment. The Divisional Manager by his letter dated 8th June, 1981 repudiated any liability under the policy and refused to make any payment on the ground that the deceased had withheld correct information regarding his health at the time of effecting the insurance with the Corporation. The Divisional Manager drew the attention of the claimant that at the time of submitting the proposal for insurance on May 29, 1979, the deceased had stated his usual state of health as good; that he had not consulted a medical practitioner within the last five years for any ailment requiring treatment for more than a week; and had answered the question if remained absent from place of your work on ground of health during the last five years in the negative. According to the Divisional Manager, the answers given by the deceased as aforementioned were false. Since the respondent No. 1 failed to get any relief from the authorities of the Corporation despite best efforts she filed the writ petition seeking a writ of mandamus directing the Corporation and its officers to pay the sum assured and other accruing benefits with interest.
3. The writ petition was opposed by the Corporation on the ground of maintainability as noted earlier. Alternatively the contention was raised that in case the High Court is inclined to entertain the writ petition then opportunity should be given to the Corporation to lead evidence in support of its plea of repudiation of the claim.
4. The learned single Judge after examining the question of maintainability of the writ petition from different angles, held that in view of the provisions of the Life Insurance Corporation Act, 1956 and the relevant provisions of the Insurance Act, 1928 which are applicable to the Corporation liability of the Corporation under a policy of life insurance is a statutory liability and hence a writ petition can lie
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