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Smt. Gouri Sethi v. Divisional Manager Of L.I.C And Ors.
Structured Summary of the Court Opinion
Factual and Procedural Background
The deceased, Surendra Sethi, was employed as a Gate Keeper in S.E. Railway (Kharagpur Division). He obtained a life insurance policy (Policy No. 580885328) for Rs. 50,000 effective 28-12-1994, naming the petitioner as nominee. He paid premiums (Rs. 2,260) until his death on 13-4-1996 from cardiac vascular arrest and hemiplegia. The petitioner made multiple representations to the opposite parties seeking settlement of the policy proceeds, served a notice through an advocate on 22-2-1997, and ultimately filed a writ petition directing the opposite parties to release the assured amount.
Opposite parties 1 to 3 (the insurer) filed a counter affidavit asserting that the deceased made false statements and suppressed material facts (physical deformity, actual age, and medical leave) in the proposal form; they also contended that disputes arising from a contract of insurance should not be adjudicated in a writ forum. Opposite party No. 4 (the employer, S.E. Railway) filed a separate counter affidavit providing the deceased's leave and medical attendance records and contended the railways were not responsible for non-disbursement if the insurer declined payment.
Legal Issues Presented
- Whether a writ petition is maintainable to enforce a claim arising from a life insurance contract, or whether the dispute must be determined by a civil suit (i.e., the question of maintainability of writ jurisdiction in contract-based insurance disputes).
- Whether the insurer may repudiate the policy after two years on the ground of allegedly false or inaccurate statements or suppression of material facts in the proposal form, as governed by Section 45 of the Insurance Act.
- Whether the specific facts alleged by the insurer (suppression of medical history, physical deformity, and misstatement of age) were materially relevant to the risk and sufficient to justify repudiation of the policy.
Arguments of the Parties
Petitioner's Position
- The petitioner (nominee) sought release of the assured amount under the deceased's LIC policy after the insurer failed to settle the claim despite representations and a formal notice.
Opposite Parties 1 to 3 (Insurer)
- Asserted that the deceased made false statements and suppressed material facts (physical deformity, actual age, medical leave and answers to proposal form questions Nos. 17–22), which, if disclosed, would have led to rejection of the proposal.
- Contended that the dispute arises from a contract between the policyholder and LIC and therefore cannot be adjudicated in a writ forum; reliance was placed on State of Bihar v. Jain Plastics and Chemicals Ltd. (AIR 2002 SC 206) to argue non-maintainability where factual controversies requiring evidence exist.
- Submitted that the insurer is entitled to repudiate the policy because of the alleged false/inaccurate statements in the proposal form.
Opposite Party No. 4 (Employer / S.E. Railway)
- Denied that the deceased had a physical deformity affecting his fitness for the safety-category post (such posts are filled only after certification of sound physique by a Government doctor).
- Filed detailed leave/absence/sick records documenting multiple spells of sick leave and absences (ten spells summarized in the opinion) and maintained that the Railways were not responsible for any non-disbursement by the insurer.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| State of Bihar v. Jain Plastics and Chemicals Ltd., AIR 2002 SC 206 | Principle that writ jurisdiction may be inappropriate where the dispute depends upon contested facts and evidence; maintainability of a writ petition must be assessed on the nature of dispute and inquiry required. | The court considered this authority but distinguished it: here there was no serious dispute necessitating oral evidence and the documentary record was sufficient, so the writ petition was held maintainable in the present facts. |
| Life Insurance Corporation of India v. Janaki Ammal, AIR 1968 Madras 324 | Authority for the proposition that after the two-year period under Section 45 of the Insurance Act, an insurer can avoid a policy only for suppression of illness that affects the expectation of life; trivial or temporary illness is insufficient. | The court applied this principle to hold that the illnesses and medical treatment shown in the record (acid peptic disease, allergic conditions, and a limited period of hypertension) did not demonstrably affect expectation of life at the time the policy was taken; hence they did not justify repudiation under Section 45. |
Court's Reasoning and Analysis
The court proceeded through the following analytical steps, relying only on the materials and arguments set out in the record:
- Maintainability of Writ: The court acknowledged the general principle (as highlighted in State of Bihar v. Jain Plastics) that writ jurisdiction should not be used where disputed facts requiring extensive oral evidence must be resolved. The court then examined the facts of this case and concluded that no serious factual dispute requiring oral evidence had been raised by the opposite parties; the documentary material on record was sufficient to decide the lis. Therefore, the writ petition was held maintainable in the circumstances of this case.
- Statutory Burden Under Section 45: Noting Section 45 of the Insurance Act, the court explained that since the insurer sought to repudiate the policy more than two years after it was effected, the burden lay on the insurer to show that a statement was false or facts were suppressed which were material to the risk and fraudulently made (i.e., the policy-holder knew of their falsity at the time).
- Examination of Medical and Service Records: The court examined the employer's leave and medical records provided by opposite party No. 4 and the report of the Medical Officer of S.E. Railway. It found that the Medical Officer specifically stated he never treated the deceased for any heart ailment during his tenure (28-4-1991 to 12-4-1996), although records showed treatment for acid peptic disease, allergic conditions, and a period of hypertension. The counter affidavit of opposite party No. 4 did not specify the particular disease for each medical leave spell beyond the leave entries themselves.
- Application of Janaki Ammal Principle: The court applied the rule from Life Insurance Corporation v. Janaki Ammal that suppression of illness after the two-year limitation can justify avoidance only if the illness affects the insured's expectation of life. The illnesses shown (acid peptic disease and allergic conditions) were held not to affect life expectancy. For hypertension, the court found no material establishing that hypertension existed prior to or on the date the policy was effected (30-11-1994).
- Physical Deformity and Timing of Hemiparesis: Regarding alleged physical deformity and limping, the Medical Officer's report and employer records indicated the deceased suffered hemiparesis for two months before death (from 14-2-1996) and was able to walk with support; this condition therefore post-dated the date when the life was assured and could not have been a material concealment at the time of proposal. The court also observed that the safety-category post occupied by the deceased required certification of sound physique, undermining the contention of pre-existing deformity at the time of proposal.
- Age Discrepancy: The insurer relied on a Voter Identity Card suggesting the deceased was 60 as on 1-1-1994 while the proposal form showed age 45 on 30-11-1994. The court reasoned (on the basis of the employment status and superannuation rules as reflected in the record) that the voter card age could not be treated as correct in the face of other service facts: if the deceased had been 60 on 1-1-1994, he could not have lawfully been in service until his death in 1996. Thus the court did not accept the voter card age as dispositive on the question of material misstatement.
- Conclusion from Evidence: Considering the documentary record, statutory burden under Section 45, the timing of medical conditions, and the absence of satisfactory proof that any suppression materially affected life expectancy at the time the policy was taken, the court concluded the insurer had not discharged its burden to justify repudiation of the policy.
Holding and Implications
Holding: The writ petition is allowed. The court directed opposite parties 1 to 3 (the insurer) to release the claim of the petitioner within two months of receipt of the order.
Implications:
- Direct effect: The insurer is ordered to pay the assured amount to the petitioner within the stipulated two-month period; the petitioner's claim as nominee is recognized and granted.
- On legal principle: The court applied Section 45 of the Insurance Act and relevant case law to hold that repudiation after the two-year period requires proof that the suppressed or misrepresented facts were material and affected life expectancy. On the facts here, that standard was not met.
- No broad precedent claim: The opinion resolves the dispute on the particular facts and documentary record before the court. The court distinguished authority on maintainability where factual controversy is substantial, but made a factual finding that the present case did not present such a controversy. The opinion does not purport to lay down any new, sweeping legal principle beyond its application of existing law to these facts.
Note: This summary is strictly based on the content of the provided court opinion and does not add information beyond what appears in that text.
R.N Biswal, J.:— Late Surendra Sethi, the husband of the petitioner who was serving as a Gate Keeper in S.E Railway, Bala sore, (Kharagpur Division) assured his life for Rs. 50,000/- (Fifty thousand only) under Opp. Party No. 1, with effect from 28-12-1994 vide Policy No. 580885328, which was to mature on 28-12-2009, wherein the petitioner was shown as nominee. He went on depositing the premium of Rs. 2260/- till his death, on 13-4-1996, due to cardiac vascular arrest and Hemiplegia. The petitioner made several representations to the opp. parties for settlement of the assured value of the L.I.C policy undertaken by deceased husband, but to no effect. Ultimately she served a notice on opp. party No. 2, through her advocate on 22-2-1997, in response to which he sought for some documents with intention to delay the matter. So she filed the writ petition to direct the opp. parties to release the assured amount in her favour.
2. In their counter affidavit opp. parties 1 to 3 contended that the writ petition should be dismissed inasmuch as the deceased suppressed the facts of his physical deformity, actual age and the medical leave, which he availed prior to taking the policy, besides answering to question Nos. 17 to 22 of the proposal form falsely, in negative. Had he disclosed the fact of availing medical leave, his physical deformity and actual age and answered question Nos. 17 to 22 of the proposal form correctly, the proposal would not have been accepted. It is the further case of the opp. parties that since the policy is a pure contract between the policy holder and the L.I.C, the relief sought for cannot be enforced in a writ forum. Hence they prayed to dismiss the writ petition.
Opp. party No. 4 in a separate counter affidavit averred that late Surendra Sethi before his death held one of the safety category posts which is only held by a person with sound physique after being duly certified as such by the Government doctor. So there was no question of any physical deformity of the life assured. However, basing on his service record, opp. party No. 4 gave details of his leave/absence/sick period as follows:
1) 24-5-1992 to 3-6-1992 - 9 days sick leave 2) 11-1-1993 to 24-1-1993 - 14 days sick leave 3) 6-6-1993 to 20-6-1993 - 15 days leave 4) 15-8-1993 to 9-9-1993 - 5 days leave 5) 1-9-1993 to 9-9-1993 - 9 days leave 6) 2-4-1995 to 25-4-1995 - sick commuted leave 24 × 2 = 48 days. 7) 26-4-1995 to 17-5-1995 - 22 days sick leave 8) 14-2-1996 to 15-2-1996 - 2 days absent 9) 26-3-1996 to 30-3-1996 - 5 days leave 10) 31-3-1996 to 12-4-1996 - 13 days sick.
Opp. Party No. 4 contended that the railways being no way responsible for non-disbursement of the assured money, if any, in favour of the petitioner, the case is liable to be dismissed against him.
3. Learned counsel appearing for opp. party Nos. 1 to 3 submitted that since the L.I.C policy was a contract between the policy holder and the Corporation, the dispute cannot be decided in a writ forum. In support of his submission he relied upon the decision in State of Bihar v. Jain Plastics and Chemicals Ltd., AIR 2002 SC 206. In this case the appellant invited tender for supply of P.V.C pipes and fittings and the tender of the respondent-Company was accepted. Respondent-Company delayed the supplies for which appellant terminated the contract and purchased fittings at a higher price. While paying the final bill to the respondent, the difference of amount, which required to be incurred by the appellant, was deducted. It was pleaded on behalf of the respondent-Company that since the appellant did not supply the road permits, the respondent could not supply the P.V.C pipes and fittings in time. The question was whether non-supply of road permits by the appellant would justify the breach of contract by the respondent? Since it would depend upon facts and evidence, it was held in the said decision that the writ petition was not maintainable. The writ jurisdiction under Article 226 of the constitution of India is very vast. The Constitution does not lay any fetter in exercising this extraordinary jurisdiction. So, it cannot be said that in no case this Court can entertain a writ petition to enforce a claim arising out of contract. Determination of the question of maintainability of the writ depends on consideration of several factors, like, the nature of dispute raised, the nature of enquiry necessary for determination of the dispute etc. In a case, where the claim of an insured or a nominee raises serious dispute and it is found that the dispute is genuine and it requires oral and documentary evidence, then the appropriate remedy is Civil suit and not a writ petition. The matter is to be considered in the facts and circumstances of each case. In the case at hand, as would be discussed now, no serious dispute requiring oral evidence is raised on behalf of the opp. parties. The documents filed by the parties are sufficient to decide the lis. As such, in our view the writ petition is maintainable.
4. Learned counsel for opp. parties 1 to 3 submitted that the deceased life assured gave false statements to the questionnaire in the proposal form vide Sl. No. 11 by answering “NO” and suppressed his age and physical deformity. He drew our attention to the questionnaire in Sl. No. 11 of the proposal form and the answer the given thereto by the life assured. The questinnaire and the answers are quoted hereunder:—
Personal History Answer ‘Yes’ or ‘No’ If ‘Yes’, please give full details (a) During the last five years did you consult a Medical Practitioner for any ailment requiring treatment for more than a week? NO (b) Have you ever been admitted to any hospital or nursing home for general check up, observation, treatment or operation? NO (c) Have you remained absent from place of work on grounds of health during the last 5 years? (d) Are you suffering from or have you ever suffered from aliments pertaining to Liver, Stomach, Heart, Lungs, Kidney, Brain or Nervous system? NO (e) Are you suffering from or have you ever suffered from Diabetes, Tuberculosis, High Blood Pressure, Low Blood Pressure, Cancer, Epilepsy, Hernia, Hydrocoele, Leprosy or any other disease? NO (f) Do you have any bodily defect or deformity? NO (g) Did you ever have any accident or injury? NO (h) Do you use or have you ever used alcoholic drinks, narcotics or any other drugs? NO (i) What has been your usual state of health? GOOD
He further submitted that as found from the counter affidavit of opp. party No. 4, the employer of the life assured, the latter took leave in six different spells on medical ground, but he suppressed it in the proposal form. Similarly, even though the age of the deceased was 60 years as on 1-1-1994 as found from the Voter Identity Card (Annexure A/1) he falsely stated in the proposal form that he was aged 45 years on 30-11-1994, when the proposal was made. Furthermore, as per the report of the Medical Officer, S.E Railway, he was limping and taking the help of a stick to walk, but he suppressed it in the proposal form. Again as found from the report of the Medical Officer, S.E Railway, the life assured was suffering from Acid Peptic disease for the period 24-5-1992 to 3-6-1992, Allergic from 1-9-1993 to 9-9-1993, Hypertension from 2-4-1993 to 17-5-1995 and general debility from 31-3-1996 to 12-4-1996. So, learned counsel for opp. party No. 1 to 3 submitted that the statements of the life assured leading to the issue of the policy being false and inaccurate, the insurer can repudiate the policy.
5. It is profitable to quote here Section 45 of the Insurance Act which reads as follows:—
“Policy not to be called in question on ground of misstatement after two years.— 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 or that it suppressed facts which it was material to disclose:
Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.”
6. In the case at hand since the opp. parties 1 to 3 repudiate the claim of the petitioner two years after the commencement of the Insurance policy, burden lies on them to prove that the life assured made false or inaccurate statements on a material matter or suppressed facts, which it was material to disclose. In its counter affidavit opp. party No. 4 did not disclose the specific disease, for which the life assured took leave on medical ground in six different spells. The Medical Officer, S.E Railway in his report specifically opined that he never treated the deceased for any heart ailment, for which he died, during his tenure from 28-4-1991 to 12-4-1996. Of course, the report shows that he treated him for Acid Peptic disease from 14-5-1982 to 3-6-1992, allergic from 1-9-93 to 9-9-1993 and Hypertension for the period 2-4-1995 to 17-5-1995.
7. In the case of Life Insurance Corporation Of India v. Janaki Ammal, AIR 1968 Madras 324, referring several decisions of different High Courts and Supreme Court a Division Bench of Madras High Court held as follows:—
“Thus, there is ample authority for the proposition that, an insurer could avoid a contract of insurance after the expiry of period of two years mentioned in the first part of Section 45 of the Insurance Act only on the ground of suppression of illness, which affects the expectation of life of the insured and not mere temporary or trivial illness and that unless the disease he was suffering from is clearly established and it is also established that disease would have a material bearing on the insurability of the policy holder, the policy cannot be invalidated.”
As per this decision suppression of illness not affecting the expectation of life cannot be a ground to repudiate the policy. In the case at hand, the life assured was said to have undergone treatment by the Medical Officer, S.E Railways for Acid Peptic disease, and Allergic, which cannot be said to have affected the expectation of life. He was also treated by the same doctor for hypertension from 2-4-1995 to 17-5-1995. The life of the deceased having been assured on 30-11-1994, it cannot be said that he was suffering from Hypertension on that date (30-11-1994) or prior to it, in absence of any other material. With regard to physical deformity of the life assured, it is found from the report of the Medical Officer, S.E Railway that the deceased was limping and taking the help of a stick to walk. As discussed earlier, it was averred by opp. party No. 4 in the counter affidavit that the post held by the life assured was under safety category. Persons with sound physique and after being duly certified as such by the Railway doctor are only appointed in such category of posts. As found from the certificate of the hospital treatment of the deceased (Annexure-2 series) he was suffering from Hemiparesis since two months before his death, but he was able to walk with support. In other words the deceased suffered from the said disease from 14-2-1996 till he expired on 13-4-1996. As such he was not limping on the date when his life was assured or prior to it. If in fact he was limping and taking the help of a stick to walk it could not have escaped from the notice of the Medical Examiner in whose presence the proposal form was filled up. As regards the age of the life assured, it is an admitted fact that he died while in service. If, in fact he was aged 60 years on 1-1-1994, he would have completed 62 years by the time of his death, on 23-4-1996 and in that event he would not have been allowed to continue in service after the age of superannuation. So the age of the deceased as reflected in the Voter Identity Card cannot be accepted as correct. There is no dispute regarding the contract of life assurance between late Surendra Sethi and the Corporation and the claim of the petitioner as nominee therein.
8. Therefore, under such facts and circumstances the writ petition is allowed and opp. parties 1 to 3 are directed to release the claim of the petitioner within a period of two months of receipt of this order.
P.K Mohanty, J.:— 9. I agree.
Petition allowed.
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