High Court
Legal Reasoning
{1} wp 5628.24.odtIN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADWRIT PETITION NO. 5628 OF 20241. Life Insurance Corporation of India through its Divisional Manager, Divisional Office, Nanded “Jeevan-Prakash” Gandhi Nagar, P.B. No.23, Hingoli Road, Nanded Taluka and District Nanded, Maharashtra2. Zonal Manager, Life Insurance Corporation of India, Yogakshema East Wing, Jeevan Bima Marg, Mumbai, Maharashtra.3. The Secretary, CO/CRM Life Insurance Corporation of India, Yogakshema Building, Central Office, Mumbai, MaharashtraPetitioner Nos. 1 to 3 through itsAuthorized personSukhdev s/o. Bansi BansodeAge 59 years, Occ. Service,Devilal Parisar, Opp HP Petrol Pump,Beed Bypass Aurangabad.. PetitionersversusMohd. Sikander Mohd. MaulanaAge 52 years, Occ. Business,R/o. Rahemat Nagar, Opp. Golden Bakery,Near Water Tank, Deglur Naka, NandedTaluka and District Nanded, Maharashtra..Respondent(original complainant)Mr. A.D. Kasliwal, Advocate for the petitioners.Mr. P.C. Mayure, Advocate for respondent sole. {2} wp 5628.24.odt CORAM : S.G. CHAPALGAONKAR, J. RESERVED ON : 20th JUNE, 2024.PRONOUNCED ON : 28th JUNE, 2024. JUDGMENT :-1.The petitioner takes exception to the order dated 18.4.2024passed by National Consumer Disputes Redressal Commission, New Delhipassed in F.A. No. 350 of 2016, thereby allowing the complaint Case No.11 of 2015, filed by respondent for recovery of insurance claim for a sumof Rs. 20 Lakhs towards death of life assured.2.The respondent - original complainant obtained lifeinsurance policy for his wife effective from 4.7.2011 to July, 2026, on thebasis of proposal dated 22.8.2011. The amount of Rs. 20 Lakhs was sumassured. During currency of the policy, she passed away on 20.9.2012.The complainant submitted claim. However, the Life InsuranceCorporation rejected the same vide repudiation letter dated 1.3.2013 onthe ground that material information was withheld pertaining to healthcondition. The material part of the repudiation letter reads thus :-“ We may, however, state that all these answers werefalse as we have evidence and reasons to believe thatLife Assured died of Chronic Renal Failure with historyof DM for 15-20 years and was on insulin for 2 to 3years as per consultation sheet of KEM Hospital,Mumbai. There is suppression of material facts. Allthis history goes prior to the date of commencement ofpolicy; however it is not disclosed in the proposal ...” {3} wp 5628.24.odt3.The respondent assailed repudiation of the claim before theConsumer Disputes Redressal Commission, Mumbai, Bench atAurangabad vide Consumer Complaint No. 11 of 2016. The StateCommission, after hearing the parties dismissed the complaint vide orderdated 6.5.2016. The petitioner assailed said order in appeal before theNational Commission, which has been allowed by the impugned orderdated 18.4.2024.4.Mr. A.D. Kasliwal, learned advocate appearing for thepetitioner contends that material information as regards health conditionof the deceased-life assured (DLA) / Policy Holder had been withheld inproposal. He invites attention of this Court to the Consultation Sheetdated 12.9.2012 from Department of Nephrology, KEM Hospital, Parel.The DLA was examined. The history of illness records that she is sufferingfrom diabetes for 15 to 20 years and Hypertension since 2 to 3 years.Document shows history to be recorded as per the information given bybrother of the DLA.5.Mr. Kasliwal would further invite attention of this Court tothe proposal form which contains various columns. Column No. 3(C)pertains to the previous illness, which is answered as “Yes” with furtherremark, Diabetes from one year” According to Mr. Kasliwal, when DLAwas suffering from diabetes for more than 15 to 20 years, falseinformation regrading health status was supplied. Believing suchstatement, the insurance policy was issued. He would submit thatconsidering the aforesaid aspects of the matter, the State Commissionhad rightly dismissed the complaint. However, National Commissionerroneously allowed appeal and directed payment of Rs. 20 Lakhs to the
Legal Reasoning
{4} wp 5628.24.odtcomplaint towards claim amount. To buttress his submissions, Mr.Kasliwal relied upon the following judgments :-1]Judgment of the Supreme Court in the case of Reliance LifeInsurance Company vs. Rekhaben Nareshbhai Rathod, reported in AIR2019 SC 2039.2]P.J. Chacko vs. Chairman, Life Insurance Corporation of India andothers reported in AIR 2008 SC 4243]Satwant Kaur Sandhu vs. New India Assurance Company 2009AIR SCW 72134]Judgment of the National Commission dated 9.2.2024 in the caseof Divisional Manager, Life Insurance Corporation of India throughAssistant Secretary vs. Shriraj Amar Mahagaonkar.6.Per contra, Mr. Mayure, learned advocate for the respondentwould submit that the DLA had clearly informed that she was sufferingfrom diabetes mellitus in the proposal form. In pursuance to suchdisclosure, she was thoroughly examined by the consultee Doctor of IifeInsurance Corporation. After medical examination, a confidential reportwas forwarded certifying her health condition to be healthy. He wouldfurther point out that DLA was subjected to special bio-medical test 0-13for LIC proposal, wherein, report as to blood sugar level and otherparameters were called. After considering the report of the medicalexamination and laboratory reports, the insurance policy was issued. Mr.Mayure would further point out that when DLA had consulted with KEMhospital, history was recorded on the basis of information supplied byFaijal Ahmed i.e. her brother. He has filed an affidavit before the StateCommission stating that, he had informed to concern Doctor at KEMhospital that DLA suffers from Diabetes since last 15 to 20 Months, which {5} wp 5628.24.odthas been wrongly recorded as 15 to 20 years. Mr. Mayure further pointsout that cause of death of DLA is un-concerned with Diabetes Mellitus.Therefore, relying upon the information in consultation sheet of KEMHospital, no inference of suppression of material information could havebeen drawn. The National Commission has rightly observed that suchconclusion was wrong, consequently, allowed the complaint. He wouldsubmit that this Court, in exercise of writ jurisdiction may not enter intothe factual aspects of the matter No jurisdictional can be found in theimpugned order. In support of his contentions, he relied upon thejudgment of this Court in the matter of Asha Goel Vs. LIC, reported inAIR 1986 Bom. 412. 7. Having considered the submissions advanced by the learnedadvocates appearing for the respective parties, and after going throughmaterial on record, issue as regards to the correctness of order passed bythe National Commission in exercise of appellate jurisdiction is raised forconsideration before this Court in exercise of Writ jurisdiction underArticle 227 of the Constitution of India. The conspectus of thejurisdiction of this court under Article 227 of the Constitution has beenexplained by the Supreme Court in the case of, Estralla Rubber DassEstate (P) Ltd AIR 2001 SC 3295 which has been consistently followedtill date and recently reiterated in the case of Garment Craft Vs. PrakashChand Goyal AIR 2022 SC 422, wherein the Apex Court observed thus :-“The High Court exercising supervisory jurisdiction does notact as a court of first appeal to re-appreciate, reweigh theevidence or facts upon which the determination underchallenge is based. Supervisory jurisdiction is not to correctevery error of fact or even a legal flaw when the final {6} wp 5628.24.odtfinding is justified or can be supported. The High Court isnot to substitute its own decision on facts and conclusion,for that of the inferior court or tribunal. The jurisdictionexercised is in the nature of correctional jurisdiction to setright grave dereliction of duty or flagrant abuse.”8.Considering the aforesaid parameters of jurisdiction of thisCourt, whether any jurisdictional error occurred in impugned order whileallowing appeal of Respondent-complainant needs to be examined. Thepetitioner contends that although DLA was suffering from diabetesMellitus for more than 15 to 20 years, false statement was made inproposal form limiting period of such ailment to one year only. Suchstatement amounts to flagrant non disclosure of material fact. To supportsuch contention, heavy reliance is placed on the observations of theSupreme Court of India, in case of Reliance Life Insurance vs. RekhabenRathod (supra), wherein, court observed thus :-“Contracts of insurance are governed by the principle ofutmost good faith. The duty of mutual fair dealing requires allparties to a contract to be fair and open with each other tocreate and maintain trust between them. In a contract ofinsurance, the insured can be expected to have information ofwhich she/he has knowledge. This justifies a duty of goodfaith, leading to a positive duty of disclosure. The dutyof disclosure in insurance contracts was established in a King’sBench decision in Carter v Boehm19, where Lord Mansfieldheld thus:-Insurance is a contract upon speculation. The special facts,upon which the contingent chance is to be computed, lie mostcommonly in the knowledge of the insured only; the under- {7} wp 5628.24.odtwriter trusts to his representation, and proceeds uponconfidence that he does not keep back any circumstance in hisknowledge, to mislead the under-writer into a belief that thecircumstance does not exist, and to induce him to estimate therisk, as if it did not exist. It is standard practice for the insurerto set out in the application a series of specific questionsregarding the applicant's health history and other mattersrelevant to insurability. The object of the proposal form is togather information about a potential client, allowing theinsurer to get all information which is material to the insurerto know in order to assess the risk and fix the premium foreach potential client. Proposal forms are a significant part ofthe disclosure procedure and warrant accuracy of statements.Utmost care must be exercised in filling the proposal form. Ina proposal form the applicant declares that she/he warrantstruth. The contractual duty so imposed is such that anysuppression, untruth or inaccuracy in the statement in theproposal form will be considered as a breach of the duty ofgood faith and will render the policy voidable by the insurer.The system of adequate disclosure helps buyers and sellers ofinsurance policies to meet at a common point and narrowdown the gap of information asymmetries. This allows theparties to serve their interests better and understand the trueextent of the contractual agreement.The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur(supra) 2009 AIR SCW 7213―there is a clear presumption that {8} wp 5628.24.odtany information sought for in the proposal form is material for the purpose of entering into a contract of insurance. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on alteredterms.”Similar observations can be found in the case of P. J. Chacko (supra),wherein, the Apex Court observed in para. 16 as under :-“16.The purpose of taking a policy of insurance is not, inour opinion, very material. It may serve the purpose ofsocial security but then the same should not be obtainedwith a fraudulent act by the insured. Proposal can berepudiated if a fraudulent act is discovered. The proposermust show that his intention was bonafide. It must appearfrom the face of the record. In a case of this nature, it wasnot necessary for the insurer to establish that thesuppression was fraudulently made by the policy holder orthat he must have been aware at the time of making thestatement that the same was false or that the fact wassuppressed which was material to disclose. A deliberatewrong answer which has a great bearing on the contract ofinsurance, if discovered may lead to the policy being vitiatedin law.”9.In the present case, petitioner relied on consultation sheetof DLA, dated 12.9.2012 at KEM Hospital, Mumbai, wherein, whilerecording history of illness, it is recoded that DLA was suffering fromDiabetes Mellitus for 15 to 20 years. Pertinently, DLA made a specificstatement that she was suffering from diabetes in her proposal form. {9} wp 5628.24.odtHowever, the period of ailment is stated to be one year prior to the dateof proposal. In pursuance of the said proposal, Special Medical reportwas called pertaining to sugar levels and 17 other different tests. Themedical examination report from Consultee Doctor was also called. Herecorded observations on health parameters and reported that DLA washealthy. Consequently, proposal was processed and accepted leading toissuance of life insurance cover.10.Apparently, there is no suppression of material fact thatwould have affected decision making of LIC while assessing insuranceproposal. Pertinently, the DLA died of Chronic renal failure on 20.9.2012i.e. after 14 months of commencement of the policy. The NationalCommission elaborately considered the aforesaid aspects. Except recordof KEM Hospital in form of Consultation Sheet, no other material isplaced on record to justify contention of the petitioner that the DLA wassuffering from Diabetes Mellitus for more than 15 to 20 years. Thestatement made in the consultation sheet has been refuted on behalf ofthe complainant and clarificatory affidavit of Mr. Faijal Ahmed (brotherof DLA) has been filed before the State Commission explainingcircumstances leading to incorrect recording of information inconsultation sheet of KEM Hospital. To controvert such statement, noevidence is brought on record by petitioner. Mr Faizal Ahemed is notsubjected to cross examination. The person who recorded information inconsultation sheet of KEM hospital not examined to prove correctness ofinformation recorded. No material or medical reports to substantiateadverse medical condition of DLA and its suppression is brought onrecord.
Decision
{10} wp 5628.24.odt11.Considering the aforesaid facts and legal position, nojurisdictional error is found in the view taken by the NationalCommission. No case is made out for interference under Article 227 ofthe Constitution of India. In the result, writ petition stands dismissed. [S.G. CHAPALGAONKAR] JUDGE grt/-