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Dipashri Vs. Life Insurance Corporation of India and ors. - Court Judgment

LegalCrystal Citation
SubjectInsurance
CourtMumbai High Court
Decided On
Case NumberWrit Petn. No. 585 of 1980
Judge
Reported inAIR1985Bom192; 1984(2)BomCR155
ActsInsurance Act, 1938 - Sections 45
AppellantDipashri
RespondentLife Insurance Corporation of India and ors.
Appellant AdvocateP.K. Singhvi and;Geeta Ganapathy, Advs.
Respondent AdvocateF.H.J. Taleyarkhan and T.R. Andhyarujina, Advs.
Excerpt:
in the proposal form of the insurance policy, the deceased policy holder had started that the usual state of his health was good- the certificate issued by the employer of the deceased set out in detail, the ailments like influenza, dysentery, bleeding piles and fever suffered by the deceased before taking the policy and the sick leave secured by him from his office on production of medical certificate- the life insurance corporation relying on the said certificate claimed that the statements made by the deceased in the proposal form were fraudulent suppression of material facts and the policy was therefore repudiated- the widow of the deceased then filed writ petition- it was held that the mere failure to disclose in the proposal form the trivial ailments could not be construed as..........not disclose these facts in the personal statement form and instead gave false answers in terms of policy contract and the declaration contained in the form of proposal for assurance and personal statement, the corporation repudiates the claim and accordingly are not liable for any payment under the policy and all moneys paid as premiums under the policy stand forfeited. the petitioner appealed to the corporation that the corporation should not repudiate the contract and decline to pay the amount to the poor widow who had to bring up three minor children, including two daughters, in life. the petitioner pointed out her husband died at a very young age of 43 years and the corporation should not jump to the conclusion that the deceased was suffering from piles, giddiness and influenza.....
Judgment:
ORDER

1. It is unfortunate that the petitioner, a widow, is required to approach this Court for seeking relief against respondent No. 1-Life Insurance Corporation - for securing the amount under the policy taken out by her deceased husband and it is more regrettable that the Corporation should resist these proceedings and try to defeat the just claim of the widow on technical contentions.

2. The unfurling of the facts would disclose the sorrow plight of a young widow who had to bring up three minor children when her husband died in an unfortunate accident. The petitioner's husband was employed as a clerk in Mackinnon Mackenzie Private Limited for about 19 years. The deceased husband of the petitioner took out a double benefit policy while in the employment. The deceased husband submitted to respondent 1 a proposal for issue of an Endowment Policy under Table 25 for 20 years for Rs. 30,000/- on July 5, 1975. The monthly premiums of the said policy were to be paid directly through the salary saving scheme of Messrs. Mackinnon Mackenzie. The policy was taken out by the deceased husband as 'Provision for future' and the monthly premiums were paid regularly as per the contract of Insurance. Prior to the acceptance of the Policy by the Life Insurance Corporation, the deceased husband of the petitioner was examined by doctors on the panel of the Corporation and after the doctors certified about the sound health of the petitioner's husband, the proposal was accepted by the Corporation and the policy was issued on July 7, 1975. On Oct. 4, 1977, the petitioner's husband was removed to the Nursing Home and from there to Cooper Hospital but succumbed to his injuries on Oct. 8, 1977. The Coroner issued a certificate certifying that the death occurred due to texaemia following 50% burns sustained accidentally by the deceased. It is not in dispute that the burns were suffered in an accident when the Stove caught fire.

3. On Oct. 24, 1977, the petitioner addressed a letter to the Senior Divisional Manager - respondent 2 - requesting to settle the Insurance claim under the policy. The Agent of the Corporation who had insured the deceased also requested respondent 2 to pay the amount under the Policy. The Senior Divisional Manager called upon petitioner to fill up certain forms and return the same along with original Policy. The petitioner nominated by her husband as the person entitled to receive the amount. The petitioner carried the requirements of the Corporation but was informed by the Senior Divisional Manager by letter D/- Aug. 25, 1978 that the Corporation repudiates all liabilities under the policy as the deceased had deliberately made mis-statements and withheld material information regarding the health at the time of effecting assurance with the Life Insurance Corporation. The letter, inter-alia, recites that the answers to the following questions given by the deceased were incorrect and false :

Q. No. 4(d) Have you consulted a medical practitioner within the last five years? If so, give details.

Answers : No.

Q. No. 6 Have you ever suffered from any of the following ailments?

Q. No. 6(a) Giddiness, fits, neurasthenia, paralysis, insanity, nervous breakdown or any other disease of the brain or the nervous system.

Answer : No.

Q. No. 6(d) Sprue, Jaundice, Anaemia, Dysentery, Cholera, Abdominal pain, Appendicitis or any disease of the stomach, liver, spleen or intestine?

Answer : No.

Q. No. 8(b) Have you remained absent from your work on grounds of health during the last two years? If so, when, how long and what ailments?

Answer : No.

The letter further recites that the answers to the questions set out hereinabove were false and the Corporation holds indisputable evidence to establish that before the date of proposal, the deceased suffered from bleeding from fissure cuts, inflamed piles and rectum in April May 1972, from low blood pressure, giddiness and weakness in Dec. 1972 and from Influenza in July 1973, Nov. 1973, Sept. 1974, Nov. 1974 and Feb. 1975 for which the deceased was under treatment of doctors and had also availed of leave on Medical grounds. It was claimed by the Corporation that as the deceased die not disclose these facts in the personal Statement form and instead gave false answers in terms of Policy contract and the declaration contained in the form of proposal for assurance and personal statement, the Corporation repudiates the claim and accordingly are not liable for any payment under the policy and all moneys paid as premiums under the policy stand forfeited. The petitioner appealed to the Corporation that the Corporation should not repudiate the contract and decline to pay the amount to the poor widow who had to bring up three minor children, including two daughters, in life. The petitioner pointed out her husband died at a very young age of 43 years and the Corporation should not jump to the conclusion that the deceased was suffering from piles, giddiness and Influenza merely from the fact that the deceased had taken sick leave from his office.

4. At this juncture, it would be convenient to make reference to a certificate given by the Assistant Manager of Messrs. Mackinnon Mackenzie Private Limited and which was forwarded by the petitioner to the Corporation in pursuance of the demand made by the Corporation. The certificate sets out the sick leave obtained by the deceased while in employment and it would be convenient to set out the relevant portion of the certificate :

Sick leave 30 days 14-4-72 to Pain on a/c. Medical certificate 14-5-72 Piles produced. '' 8 days 18-12-72 to Hypertension Yes 26-12-72Sick 6 days 24-7-73 to Influenza Yes29-7-73'' 3 days 17-9-73 to Dysentery Yes19-9-73'' 9 days 20-11-73 to Influenza Yes 28-11-73'' 14 days 9-9-74 to Influenza Yes 22-9-74'' 2 days 5-11-74 to Fever Yes 6-11-74'' 7 days 26-11-74 to Influenza Yes1-12-74'' 7 days 17-2-75 to Influenza Yes23-2-75'' 2 days 21-7-75 to Diarrhoea Yes22-7-75'' 7 days 15-9-75 to Sprain in the leg Yes21-9-75'' 2 days 17-11-75 to Fever Yes 18-11-75 For privilege leave, staff are not required to submit any reasons. Casual leave and privilege leave are not granted when the staff become sick. They take sick leave as per the Company's rules.'

As per appeals made by the petitioner for grant of the amount under the policy fell on deaf ears, the petitioner was driven to file the present petition under Art. 226 of the Constitution of India in this Court on April 19, 1980 for writ of mandamus directing the respondents to pay the petitioner the amount due under the policy including all the benefits and bonuses accruing there on.

5. In answer to the petition, the respondents have filed return dt. July 31, 1980 sworn by Naresh Chander Gautam, Administrative Officer of the Corporation. The Corporation claims that the dispute pertains to contractual obligations and as such a right cannot be enforced in the writ petition. It is claimed that it would be a gross abuse to issue a high prerogative writ as claimed by the petitioner. it is further claimed that the remedy of the petitioner is to file a suit. On merits, it is claimed that the Corporation was perfectly justified in repudiating the contract as the deceased had made false statements as regards his health and in case the deceased had disclosed the correct facts of his ailments at the time of submitting the proposal papers, then the Corporation would not have entered on the risk. The Corporation further pleads that although the Corporation had in its possession indisputable evidence to hold that the deceased made false and inaccurate statements, the Corporation is not willing to give inspection of the evidence in its possession because it is extremely dangerous to disclose such evidence as it should be spirited away or destroyed. The Corporation declines to produce the evidence even in this petition and claims that the same would be produced from the proper custody when evidence is led in a suit which the petitioner should file. The Corporation, therefore, claims that the petition should be dismissed with costs.

6. Mrs. Singhvi, learned counsel appearing on behalf of the petitioner, submitted that the entire conduct of the Corporation, right from the inception till the hearing of the petition, smacks of high handedness and the public body like the Corporation should not indulge in raising false defences and defeating the claim of an unfortunate young widow with three minor children. The learned counsel urged that it is a common knowledge that while submitting the proposal, the insured does not refer to the trivial or minor ailments and it is futile on the part of the Corporation to claim that the amount under the policy cannot be claimed by the petitioner and the Corporation can repudiate the contract merely on the ground that the Corporation to claim that the amount under the policy cannot be claimed by the petitioner and the Corporation can repudiate the contract merely on the ground that the Corporation finds some material which possibly might indicate that the statements were inaccurate. Mrs. Singhvi submits, and in my judgment with considerable merit, that the mere fact that the sick leave was obtained by the deceased was suffering from serious ailment s and such ailments would have reduced his life span. It was also urged that the deceased died due to accidental fire and the ailment which the Corporation claims that deceased was suffering had no nexus to the death of the husband of the petitioner. Mrs. Singhvi placed strong reliance upon S. 45 of the Insurance Act which, inter alia, provides that the Policy cannot be called in question on the ground of mis-statement after two years. Shri Taleyarkhan, learned counsel appearing on behalf of the Corporation, on the other hand, submitted that the basis of the contract is the made by the insured and once it is found that the statement were not correct, then the contract is void and the Corporation is perfectly justified in repudiating the same. Shri Taleyarkhan places strong reliance upon the declaration made by the insured at the time of submitting the proposal form.

7. The first submission of Shri Taleyarkhan that it would be a gross abuse to issue a writ in favour of the petitioner is required to be repelled with the contempt it deserves. The Life Insurance Corporation is a public body and it is regrettable that such contentions are raised to defeat the claim of a poor widow. It has been repeatedly pointed out that the writ jurisdiction is exercised by the Courts for advancing the cause of justice and the public body like the Corporation should not raise frivolous defence to defeat the claim of a citizen on technical consideration. The contention that the dispute pertains to contractual obligations and, therefore, the petitioner should be driven to file a suit is repeatedly raised by the public corporations and it would be advantageous to refer to certain observations of the Supreme Court in the case of Gujarat State Financial corporation v. Lotus Hotels Pvt. Ltd. : AIR1983SC848 . Shri Justice Desai speaking for the Bench observed (at p.851):

'It was next contended that the dispute between the parties is in the realm of contract and even if there was a concluded contract between the parties about grant and acceptance of loan, the failure of the Corporation to carry out its part, of the obligation may amount to breach of contract for which a remedy lies elsewhere but a writ of mandamus cannot be issued compelling the Corporation to specifically perform the contract. It is too late in the day to contend that that the instrumentality of the State which would be 'other authority' under Art. 12 of the constitution can commit breach of a solemn undertaking on which other side has acted and then contend that the party suffering by the breach of contract may sue for damages but cannot compel specific performance of the contract.'

8. In spite of the dictum laid down by the Supreme Court on more than one occasion, it is unfortunate that the Corporation should raise such defence to refuse the claim. It is high time that the Corporation should mend its ways and desist from raising such technical contentions and wasting the time of the Court. The contention of the Corporation that the grant of relief to the petitioner would be a gross abuse of the powers is entirely misconceived. The corporation may very well choose to deny the relief to the citizen and defeat the justice, but in my judgment, the refusal of the Corporation to pay a pittance of an amount to the widow is, in fact, the gross abuse of powers.

9. Shri Taleyarkhan submitted that the printed form of proposal contains a declaration of the proposal and it reads as under :--

' I, Shri Vilas Anandrao Talpade the person, whose life is hereinbefore proposed to be assured, do hereby declare that the foregoing statements and answers are true in every particular and agree and declare that those statements and this declaration along with the further statements made or to be made before the Medical Examiner and the declaration relative thereto shall be the basis of the contract of assurance between me and the Life Insurance Corporation of India and that if any untrue averment be contained therein the said contract shall be absolutely null and void and all moneys which shall stand forfeited to the Corporation.'

The learned counsel urged that the contract between the Corporation and the deceased husband makes it clear that if any untrue averments are contained in the proposal, then the contract should be absolutely null and void and the amount of premium can be forfeited. It was urged that the deceased husband of the petitioner had made false statement as regards his health and before considering whether any such false statements were at all made, it would be appropriate to make reference to S. 45 of the Insurance Act, 1938. The relevant portion of this Section reads as under :

'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 it that the statement was false of that it suppressed facts which it was material to disclose.'

Section 43 of the Life Insurance Corporation of India Act, 1956, inter alia, provides that S. 45 of the Insurance Act shall apply to the Corporation as it applies to any other insurer, Shri Taleyarkhan did not dispute that under the provisions of S. 45 of the Insurance Act, it is not open for the Corporation to question any policy on the ground that the statement made in the proposal was inaccurate or false. Shri Taleyarkhan submits that the Corporation can repudiate the policy provided it is shown that such statement by the policy-holder was on a material matter and was fraudulently made. It is obvious that in view of the statutory provisions of S. 45 of the Insurance Act, it is not permissible for the Corporation to repudiate the policy merely on the ground that an inaccurate or false statement was made by the policy -holder at the time of taking out the policy. The power of the Corporation to repudiate the contract comes to an end after the expiry of two years from the date of commencement of the policy. The policy was taken out by the deceased husband of the petitioner on July 7, 1975 and the deceased died after the passage of two years from that date and obviously the provisions of S. 45 of the Insurance Act come into play.

10. The Supreme Court considered the ambit of S. 45 of the Insurance Act in the case of Mithoolal Nayak v. Life Insurance Corporation of India : AIR1962SC814 and laid down that the three conditions for the application of the second part of S. 45 are :

(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 of that it suppressed facts which it was material to disclose.

It is necessary now to ascertain whether the deceased made any inaccurate or false statement in the proposal submitted to the Corporation and even assuming that such statement was made weather the second part of S. 45 of the case. Column 4 of the proposal form requires the deceased to state what is the usual state of his health and the deceased had answered that it was good. The deceased had also answered that he had not consulted the Medical Practitioner within the last five years prior to the date of making the proposal. The deceased had also stated in Col.8 that he had not remained absent from the work on the ground of health during previous two years. The Corporation claims that all these statements were false or inaccurate and in support of the claim, the sole reliance by Shri Taleyarkhan is on the certificate issued by the employer and forwarded by the petitioner to the Corporation. It was urged that the certificate sits out in detail the ailments suffered by the deceased from April 14, 1972 onwards till Nov. 18, 1975 and the sick leave secured by the deceased from his office. Shri Taleyarkhan submits that the deceased had taken sick leave on production of medical certificate and that clearly establishes that the deceased was suffering from ailment and had consulted Medical Practitioner. It is impossible to accept the contention of Shri Taleyarkhan that the deceased had made deliberate false statements. In the first instance, it must be remembered that before the proposal of the deceased was accepted by the Corporation , a confidential report of the Medical Examiner was secured by the Corporation. The Medical Officer, Dr. Sushil Dipchand, is Doctorate in Medicine and is attached to the General Hospital at Borivli and is on the panel of Corporation. The confidential report submitted by the Medical Examiner was made available by Shri Taleyarkhan after I called upon the learned counsel to produce the original and the report unmistakably establishes that the deceased was enjoying sound health. The report was made by the Medical Examiner after examining the deceased toughly and it is obvious that the Corporation has not proceeded to accept the proposal of the deceased only on the statements made in the printed form but on the basis of the report received from the Medical Officer. Secondly, the deceased had disclosed in the proposal form that he was operated for appendicitis in the year 1959 and had not hidden the fact of operation from the Corporation. What is urged by Shri Taleyarkhan is that the deceased did not disclose that he was suffering from bleeding piles, hyper -tension and influenza.

11. Now, even assuming that the certificate issued by the employer is correct and the deceased had in fact secured sick leave on the relevant dates by production of Medical Certificate, it cannot be concluded that the deceased was in fact suffering from the bleeding piles or hyper-tension. In my judgment, the ailment of bleeding piles, influenza and dysentery are very minor and trivial ailments and the failure to disclose such ailments in the proposal form cannot be treated as a suppression of the relevant particulars. The deceased might have very well felt that it is not necessary to state that he had suffered from flue, dysentery or common cold because such ailment has no bearing whatsoever to the longevity of the person. It is well known that people in Bombay do not consult Medical Practitioners for such petty ailments like flue, fever or dysentery but the medical certificates are required to be produced before the employer in accordance with the service conditions and the mere fact that the medical certificate is produced for obtaining sick-leave cannot lead to the conclusion that the deceased had taken treatment from the Medical Practitioner. Shri Taleyarkhan made reference to paragraph 11of the return wherein it is claimed that the deceased was suffering from low blood pressure, giddiness and weakness in Dec.1972.There is no material on record whatsoever to substantiate this claim. The reliance on the certificate issued by the employer would not help the Corporation because the medical certificate issued in Dec.1972 merely recites that the deceased was suffering from hypertension. It nowhere refers to the deceased suffering from giddiness or blood pressure or weakness. The certificate discloses only one occasion in 1972 when leave was secured on ground of hypertension and piles. The Corporation has stoutly claimed that it is not bound to produce any material which it holds in support of the claim that the deceased had made false and inaccurate statements and the excuse given for such non production of evidence is that the disclosure may lead to the destruction or spiriting away of the said material. The corporation cannot take shield behind such vague excuses and sustain its claim that it holds undisputable evidence in its custody. It is obvious that the Corporation has no material in its custody save and except the certificate issued by the employer of the deceased. The action of the Corporation in concluding from that certificate that the deceased was suffering from serious ailments or illness and thereby repudiating the contract is wholly illegal. The Corporation has raised false bogie of inaccurate statements only to defeat the just claim of the poor widow and the action of the Corporation deserves to be deplored.

12. Even assuming that the deceased had made incorrect or false statements about his ailment, still that fact itself world not be suffice for the Corporation to repudiate the contract in view of the clear cut provisions of S. 45 of the Insurance Act. Realising this position, Shri Taleyarkhan urged that the suppression of ailment was a material matter and that fact was suppressed by the deceased fraudulently. It was urged that the deceased knew at the time of making the statement that it false and, therefore, it is open for the Corporation to repudiate the contract. In my judgment, the submission is entirely misconceived. In the first instance, there was no suppression whatsoever by the deceased. It was not necessary for the deceased to disclose trivial ailments like fever, flue or dysentery. There is nothing to warrant the conclusion that the deceased had consulted Medical Practitioner within five years prior to the taking out of the policy. The concept of consultation with the Medical Practitioner within five years prior to the taking out of the policy. The concept of consultation with the Medical Practitioner is entirely different from securing medical certificate on the ground that the person is down with fever. The perusal of the proposal form leaves no manner of doubt that it is not each and every petty ailment which has to be disclosed by the propos or and what is required to be disclosed is a serious ailment. The deceased was not suffering from any serious ailment and was a young man of 41 years age at the time of taking out of the policy. The Medical Practitioner on the panel of the Corporation had examined him and in these circumstances, it is futile for the Corporation to claim that the deceased was suffering from any serious ailment. In my judgment, the non-disclosure of the fact that the deceased was suffering from fever or down with flue on some occasions is not material matter and, therefore, the failure to disclose the same cannot be construed as suppression of the relevant fact. As laid down by the Supreme Court, it is not suppression of the fact which is sufficient to attract second part of S. 45 of the Insurance Act but what is required is that such suppression should be fraudulently made by the policy-holder. The expression 'fraudulently' connotes deliberate and intentional falsehood or suppression and some strong material is required before concluding that the policy-holder had played a fraud on the Corporation. In my judgment, on the facts and circumstances of the present case, it is impossible to come to the conclusion that the deceased had suppressed any material facts and such suppression was done fraudulently. The Corporation cannot deny its liability by raising hopeless defence that the deceased was suffering from fever, flue and dysentery from time to time. In my judgment, the second part of S. 45 of the Insurance Act is not, at all, attracted to the facts of the case and it is not open for the Corporation to repudiate the contract. The petitioner is entitled to the claim under the policy along with the bonuses and other benefits accrued thereon.

13. Mrs. Singhvi submits that the Corporation should be directed to pay the amount under the policy to the petitioner with interest and the Corporation should be saddled with compensatory costs for raising false and frivolous defence to defeat the just claim of the petitioner. in my judgment, the request made by the learned counsel is correct and deserves acceptance. The petitioner's husband died on Oct. 8, 1977 and the claim was lodged by the petitioner on Oct. 24, 1977. The Corporation raised false and frivolous pleas to deny the claim of the petitioner of a small amount though it is quite large to the petitioner, who, I am told, is serving as a maid servant to bring up her three minor children. The Corporation has enjoyed the advantage of the amount which was due to the petitioner and the Corporation is duty bound to pay the said amount with interest to the petitioner who was deprived of her just dues. In my judgment, the Corporation should pay the amount due under the policy along with interest at the rate of 15% from the date of lodging of the claim i.e. Oct. 24, 1977 till payment. The Corporation has not only denied payment to the petitioner but has also raised frivolous pleas in answer to the petition and has persisted in defending the petition without any just reasons. In my judgment, this is a fit case to award compensatory costs of Rs. 1,000/- to the petitioner in addition to the normal costs.

14. Accordingly, rule is made absolute and the respondents are directed to pay to the petitioner the amount due under Policy No. 18251483 issued on July 7, 1975 including all the bonuses and other benefits accrued thereon. The respondents shall also pay the interest on the said amount to the petitioner at the rate of 15% per annum from Oct. 24, 1977 till payment. The respondents shall pay the costs of the petition and in addition Rs. 1,000/- as compensatory costs. The respondents shall pay the amount to the petitioner within a period of two from today.

15. Rule made absolute.


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