Back
ALLAHABAD HIGH COURT
M. Katju & R.S. Tripathi, JJ.
SHANTA BAI @ BASANTA DEVI—Petitioner
versus
LIFE INSURANCE CORPORATION OF INDIA—Respondent
Civil Miscellaneous Writ Petition No. 26862 of 2002—Decided on 21.8.2003
Counsels for the Parties :
For the Petitioner:Mr. S.K. Srivastava, Advocate.
For the Respondent:Mr. Manish Goyal, Advocate.
Fraud vitiates everything, and non-disclosure of material facts in insurance policies can lead to the rejection of claims.
Headnote:
Insurance Claim - L.I.C. Policy - Section 45 of the Insurance Act - Table No 14 - Fraud vitiates everything
Fact of the Case:
The petitioner, a widow, filed a writ petition seeking to quash the orders rejecting her insurance claim and to direct the respondents to make payment of the insurance claim amounting to Rs. 60,000 with interest. The petitioner's husband had taken L.I.C. policies, and after his death, the petitioner applied for the insurance amount as a nominee. The claim was rejected on the grounds of alleged illness of the petitioner's husband and non-disclosure of hospitalization.
Finding of the Court:
The court found that the petitioner's husband obtained the policy by misrepresentation and concealing material facts, justifying the rejection of the claim. The court also held that fraud vitiates everything and declined to exercise discretion under Article 226 of the Constitution in favor of the petitioner.
Issues: The issues revolved around the genuineness of the insurance claim, the alleged illness and non-disclosure of hospitalization by the insured, and the application of Section 45 of the Insurance Act.
Ratio Decidendi: The court relied on the principle that fraud vitiates everything and cited legal precedents to support its decision. It also emphasized the importance of disclosing material facts in insurance policies and the consequences of misrepresentation.
Final Decision: The petition was dismissed, and the court declined to intervene in favor of the petitioner due to the fraudulent actions of the insured.
M. Katju, J.—This writ petition has been filed for quashing the impugned orders dated 25.11.2000 and 18.12.2001 (Annexure 10 to the petition) and for a mandamus directing the respondents to make payment of the petitioner’s insurance claim amounting to Rs. 60,000/- with 18 per cen interest.
2. Heard learned Counsels for the parties.
3. The petitioner is a widow of late Rewa who was working in the Railways on the post of Khalasi. It is alleged in para 3 of the petition that the petitioner is now old, infirm and sick and is wholly illiterate.
4. The petitioner’s husband took an L.I.C. policy in 1997, copy of which is Annexure 1 to the petition. In 1998 again the petitioner’s husband took another policy from the L.I.C. known as Bandobasti Bime. The petitioner was a nominee for the policy vide Annexure 2 to the petition.
5. In para 9 of the petition it is stated that the insurance policy relating to Table No 14 is only for the persons who are below 45 years of age, and a person above 45 years of age can take the policy only after a medical test vide Annexure 3 to the petition. The petitioner’s husband was above 45 years of age and hence he appeared for the medical test.
6. In para 10 of the petition it is alleged that after taking the above insurance policies, the petitioner’s husband continuously deposited the premium from time-to-time. Unfortunately in September, 1998 the petitioner’s husband died. The petitioner being a nominee under the policies applied to the respondent No. 4, Branch Manager, L.I.C., District Branch Office, Kamachha, District Varanasi for payment of the insurance amount. The respondent demanded relevant documents which the petitioner supplied vide Annexures 6 and 7 to the petition. Thereafter, payment of the earlier insurance policy was made to the petitioner through cheque vide Anenxure 8 to the petition. However, since no payment was made in respect of the subsequent insurance policy, the petitioner made another application on 23.5.2000 before the respondent No. 5 vide Anenxure 9 to the petition. The petitioner was thereafter informed on 25.11.2000 when she approached respondent No. 3 that her claim has been rejected due to illness of her husband from 18.5.1998 to 3.6.1998 which had not been disclosed vide Annexure 10 to the petition. In the order dated 25.11.2000 the petitioner was informed that if she is not satisfied she can approach the respondent No. 2, Zonal Manager, L.I.C. It is alleged that due to her illness the petitioner could not approach respondent No. 2 upto May, 2001 and after recovery from illness on 5.5.2001 she made an application before the respondent No. 2 regarding her insurance claim vide Annexure 11 to the petition.
7. In December, 2001 the petitioner was informed by a letter dated 18.12.2001 that her claim has been rejected vide Annexure 12 to this petition. It is alleged in para 29 of the petition that the petitioner’s husband was not having any serious disease, but due to some casual illness he was treated in the hospital, and when the insurance policy was granted a complete medical test of the petitioner’s husband was done by the doctor and it was only after his full satisfaction that the petitioner’s husband was granted the insurance policy. Hence on the ground of alleged illness of the petitioner the respondent cannot withhold the payment.
8. A counter affidavit has been filed by the L.I.C. and we have perused the same.
The respondent has taken a preliminary objection that the petitioner’s remedy is to file civil suit and we are overruling this objection as alternative remedy is not an absolute bar to a writ petition. The petitioner is widow and if she is relegated to a suit it will take a long time and she will continue to suffer. Hence we are deciding the case on merits.
9. In para 4 of the counter affidavit it is stated that the petitioner’s claim is not genuine and bona fide and has rightly been repudiated by the Corporation. In para 9 it is stated that when the petitioner’s husb
