The insurance company is bound to comply with the awards and recommendations of the Ombudsman under the Redressal of Public Grievances Rules, 1998, and the scope of judicial review under Article 226 of the Constitution of India in such matters is limited.

Tapabrata Chakraborty, J.

1. Life Insurance Corporation of India (hereinafter referred to as LICI) and its Zonal Manager has come up in appeal against an order dated 22nd March, 2017 passed by the learned Single Judge in a writ petition being W.P. No.2299 (W) of 2016. The said writ petition was preferred by the appellants herein challenging awards dated 23rd October, 2015 and 29th October, 2015 passed by the Insurance Ombudsman under the provisions of the Redressal of Public Grievances Rules, 1998 (hereinafter referred to as the said Rules)on complaints preferred by the nominees of a deceased insurance policy holder under LICI.

2. In the said writ petition the learned Judge framed the following issues:

(1) Can an insurance company be a person aggrieved by an award passed by the insurance Ombudsman discharging powers under the Redressal of Public Grievances Rules, 1998 ?

(2) Is a writ petition maintainable by an insurance company against an award passed the Insurance Ombudsman under the provisions of the Redressal of Public Grievance Rules, 1998 ?

(3) Are the subject five insurance policies vitiated due to breach of principles of uberrimafides ?

(4) To what reliefs, if any, are the parties entitled to ?

3. After answering the first two issues against the appellants, the learned Judge proceeded to decide the third issue and answered the same also against the appellants and disposed of the fourth issue directing the first appellant to settle the death claim in favour of the nominees of the deceased.

4. Mr. Basu, learned advocate appearing for the appellants submits that the said rules only provide for issuance of recommendation by the Ombudsman through mediation and when such settlement cannot be effected, the Ombudsman may pass an award to cover the loss, if any, suffered by the complainant upon considering the objection of the respective parties. In the instant case there had been suppression of material facts by the policy holder. Even after being satisfied that the policy holder had suppressed the fact of execution and subsistence of earlier policies in the subsequent policies, the learned Judge erred in law in dismissing the writ petition on a purported plea that the burden of suppression stands shifted upon LICI as it was incumbent on its part to ascertain such suppression upon appropriate scrutiny of the policy papers.

5. He further submits that the proviso to Rule 16 (2) provides that compensation by way of any award should be restricted to Rs.20 lakhs (including ex gratia and other expenses) and as a corollary it follows that the said rules would not apply in cases where compensation claimed is more than an amount of Rs.20 lakhs. In computing such compensation the Ombudsman is required to consider the effect of the aggravating and the mitigating circumstances involved in the lis. Such determination of an adversarial claim cannot be immune from judicial review.

6. According to him, no one can possibly fault the LICI for persistently pursuing the matter up to this Court because they are dealing with public money. If they have discovered that such public fund, in a whopping measure, would be knocked off fraudulently through a fake claim, there is full justification for LICI to approach the writ Court. At any rate the learned Single Judge ought not to have refused to consider the grievances of the appellants.

7. Per contra, Mr. Bhattacharyya, learned senior advocate appearing for the respondent nos. 2 and 3 submits that the said Rules have been framed by the Central Government in exercise of the powers conferred by Section 114(1) of the Insurance Act, 1938 (hereinafter referred to as the said Act of 1938) with an object to resolve all complaints relating to settlement of claim on the part of the insurance companies in a cost – effective, efficient and impartial manner. By the said Rules a Governing Body of Insurance Council consisting of LICI, General Insurance Corporation of India its four subsidiaries and other insurance co