THE HON'BLE SRI JUSTICE A.V. SESHA SAI
WRIT PETITION No.21044 of 2005
Between:
Birla Sun Life Insurance Company Limited, 6th Floor, Vamancentre, Makhwana Road, Off Andheri-Kurla Road, Near Marol Naka, Andheri (E), Mumbai-400 059 PETITIONER AND
1. The Insurance Ombudsman, 6-2-46, 1st Floor, Moin Court Lane, Opp. Saleem Function Palace, A.C. Guards, Lakdikapool, Hyderabad-500 004 and another.
RESPONDENTS ORDER:
This writ petition is filed under Article 226 of the Constitution of India, seeking a writ of Certiorari to call for the records, pertaining to the Award No.10/HYD-L-001-2005-06, dated 21.04.2005 passed by the Insurance Ombudsman, the 1st respondent herein, in respect of Policy No.215396 and to quash the same.
2. The petitioner is a company registered under Section 3 of the Insurance Act, 1938 (hereinafter called ‘the Act’) and is engaged in the business of life Insurance. One Sri S. Seetha Rama Raju, husband of the 2nd respondent submitted an application to the petitioner on 17.03.2004 for insurance on his life for a face amount of Rs.2,15,000/- under the petitioner-Company’s Flexi Save Plus Plan and the 2nd respondent was shown as nominee. Based on the medical information furnished by the insured, the petitioner issued policy No.215396 on 24.03.2004 in favour of the husband of the 2nd respondent. Subsequently, the husband of the 2nd respondent was reported to have died on 2.09.2004 due to cardio respiratory arrest i.e., within six months from the date of policy. The 2nd respondent lodged a claim in respect of the said policy and the petitioner-company vide letter dated 4.11.2004 repudiated the claim of the 2nd respondent, alleging suppression of material facts. Thereafter, the 2nd respondent lodged a complaint before the Insurance Ombudsman appointed under the Redressal of Public Grievances Rules, 1998, (hereinafter called ‘the Rules’) framed by the Central Government, under Sub-Section (1) of Section 114 of the Insurance Act, 1938. Resisting the same, the petitioner-company filed a written statement. The Insurance Ombudsman passed an award dated 21.04.2005, directing the petitioner-company to settle the claim of the 2nd respondent under the policy for full sum assured.
3. Calling in question, the validity and the legal acceptability of the said Award, the present writ petition has been filed.
4. Responding to the Rule Nisi issued by this Court, counter affidavits have been filed by respondents 1 and 2. It is stated in the counter affidavit filed by the 1st respondent that the Insurance Ombudsman is a Forum by itself to resolve the complaints as per the Rules and the same cannot be called as a party in any dispute before any legal authority or Court. It is also stated that on hearing both sides on merits, the complaint filed by the 2nd respondent was allowed, awarding the assured sum of Rs.2,15,000/-.
5. The counter filed by the 2nd respondent denies all the allegations made in the affidavit filed in support of the writ petition and also investigations said to have been made by the petitioner and also the neurological problems and hypertension of the husband of the 2nd respondent. It also states that her husband was hale and healthy and that the doctors of the petitioner-company also found him medically fit for obtaining insurance policy. It also justifies and totally supports the Award passed by the Ombudsman. It is also stated that the 2nd respondent filed a Consumer dispute before the District Consumer Forum, Visakhapatnam and that the same was allowed by the District Forum. Against the said order the petitioner-company preferred F.A.No.919 of 2009 before the State Commission under the Consumer Protection Act and that the said appeal was dismissed on 23.06.2011, confirming the orders passed by the District Forum, and that R.P.No.3142 of 2011 filed by the petitioner-company is pending before the National Commission.
5. Heard Sri E.S. Kumar, learned counsel for the petitioner, Sri G. Udayabhaskar Rao, learned counsel for the 1st respondent and Sri G. Ram Gopal, learned counsel for the 2nd respondent.
6. Contentions of learned counsel for the petitioner are –
a) The insured deliberately misrepresented and played fraud for obtaining the insurance policy.
b) The learned Arbitrator did not consider the material available on record from proper perspective.
c) Since the insured furnished wrong information with regard to his health condition, the petitioner-company is justified in repudiating the claim of the petitioner.
d) In view of the prescription, i.e. Ex.D dated 31.10.2003 and Doctor certificates, dated 30.09.2004 and 13.06.2007, the 2nd respondent is not entitled for any relief.
e) Since the deceased played fraud, the matter requires reconsideration by the 1st respondent- Ombudsman.
In support of his submissions and contentions, the learned counsel for the petitioner-company places reliance on the judgments reported in Satwant Kaur Sandhu v. New India Assurance
[1]
Company Limited , and United India Insurance Co. Ltd., v.
[2]
Rajendra Singh and ors. .
7. Contentions of Sri G. Ramgopal, learned counsel for the 2nd respondent.
a) The Award passed by the Ombudsman is perfectly justified and in conformity with the object of the Redressal of Public Grievances Rules, 1998.
b) The present writ petition is not maintainable against the Award of the Ombudsman, which is a fact finding authority under the statutory Rules.
c) Only after giving sufficient opportunity and after hearing all the stake holders, the Ombudsman held the repudiation as bad and improper, as such, the same is not liable for any interference of this Court.
d) In order to succeed in a Writ of Certiorari, the person applying for has to demonstrate the existence of jurisdictional error or violation of principles of natural justice, which are conspicuously absent in the present case.
e) The jurisdiction of this Court is not that of an appellate authority as such the re-appreciation of facts is impermissible.
f) In view of the orders passed in F.A.No.990 of 2009, confirming the orders passed by the District Consumer Forum, the stand of the writ petitioner is unsustainable.
The learned counsel for the 2nd respondent places reliance on the judgments of the Hon'ble Apex Court reported in Syed Yakoob v.
[3]
K.S. Radhakrishnan And Ors. and Mohd. Shahnawaz Akhtar
[4]
and Anr. v. First Additional District Judge, Varanasi and ors. .
8. In the light of the pleadings, submissions and contentions, now the issues, which this Court is called upon to deal with, are -
(i) Whether the order passed by the 1st respondent-Insurance Ombudsman is sustainable and tenable? and
(ii) Whether the order passed by the Ombudsman warrants any interference of this Court under Article 226 of the Constitution of India.
9. In the instant case there is absolutely no dispute with regard to the factum of issuing policy in favour of the husband of the petitioner for the face amount of Rs.2,15,000/-, the nomination of the same in favour of the 2nd respondent and the death of the husband of the 2nd respondent on 2.09.2004, i.e., within six months from the date of policy. When a claim was made by the 2nd respondent for the insurance amount, the petitioner-company refused to pay and repudiated the same vide letter dated 4.11.2004 by assigning the following reasons.
“We may, however state that our investigations have established that nearly six months prior to the application for insurance, the life to the insured has consulted a medical practitioner, in connection with the neurological problems and had also been suffering from hypertension, that he had failed to disclose this in the application for insurance.
We are therefore, satisfied that there has been suppression of material facts, which renders your claim liable to be repudiated, which hereby do.”
10. The Central Government with an object of resolving all the complaints relating to settlement of claims on the part of the Insurance Company in cost effective, efficient and impartial manner framed in the Redressal of Public Grievances Rules, 1998.
11. As per Rule 4 (f) of the Rules the Insurance Company will consist of LIC of India, General Insurance Corporation of India and its four subsidiaries and other insurance companies, which will be permitted to do the insurance business in future.
12. Rule 5 provides for Governing Body of Insurance Council and it reads as under.
“Governing body of Insurance Council:- (1) There shall be a governing body of the Insurance Council which shall consist of one representative from each of the insurance companies.
(2) The representatives of an insurance company shall ordinarily be Chairman or Managing Director or any one of the Directors of such company.
(3) The Governing body shall formulate its own procedure for conducting its business including the election of the Chairman:
Provided that the Chairman of the Life Insurance Corporation of India shall act as the first Chairman of the governing body.”
13. Rule 6 deals with Ombudsman and as per the same the Governing Body is the appointing authority for Ombudsman and Rules 12 and 13 deal with powers of Ombudsman and the manner in which complaint is to be made. Rule 14 stipulates that the Ombudsman shall deal with the issue fairly and equitably. Rule 15 deals with the situation where the complaint is settled by mutual agreement between the insurer and the complainant. Rule 16 deals with Award and the said provision reads as under.
“Award:- (1) Where the complaint is not settled by agreement under rule 15, the Ombudsman shall pass an award which he thinks fair in the facts and circumstances of a claim.
(2) An award shall be in writing and shall stated the amount awarded to the complainant.
Provided that Ombudsman shall not award any compensation in excess of which is necessary to cover the loss suffered by the complainant as a direct consequence of the insured peril, or for an amount not exceeding rupees twenty lakhs (including ex-gratia and other expenses), whichever is lower.
(3) The Ombudsman shall pass an award within a period of three months from the receipt of the complaint.
(4) A copy of the award shall be sent to the complainant and the insurer named in the complaint
(5) The complainant shall furnish to the insurer within a period of one month from the date of receipt of the award, a letter of acceptance that the award is in full and final settlement of his claim.
(6) The insurer shall comply with the award within 15 days of the receipt of the acceptance letter under sub- rule (5) and it shall intimate the compliance to the Ombudsman.”
14. Rule 16(1) obligates the Ombudsman to pass a fair award keeping in view the facts and circumstances behind a claim. As per Rule 16 (3) the Ombudsman shall pass award within three months from the receipt of the complaint and Rule 16(4) obligates the Ombudsman to send the award to complainant and Insurer named in the complaint. As per Rule 16 (5) the letter of acceptance needs to be furnished by the complainant to the insurer in full and final settlement. Rule 16 (6) in clear and unequivocal terms mandates the compliance of the award within 15 days of the receipt of the acceptance letter under Rule 16 (5) and also intimation of complaints to the Ombudsman. Rule 17, which deals with the consequences of non- acceptance of award, stipulates that in the event of absence of intimation of acceptance as per Rule 16(5) the Insurance Company need not implement the award.
15. The scheme of these Rules, which would be evident from a reading of the above Rules, clearly shows that these Rules are evidently made with an object of finalising the claims in an expeditious and effective manner and by minimising the expenditure for the claimants. Another important provision of law which is highly significant is Rule 19, which enables the Advisory Committee notified by the Government to review the performance of the Ombudsman.
16. In view of the in built mechanism provided under the Rules, the scope of Judicial Review under Article 226 of Constitution of India, in the considered opinion of this Court, is very limited and unless the findings and conclusions arrived at by the Ombudsman are patently unfair and palpably perverse and suffer from jurisdictional infirmities and in violation of the principles of natural justice, the award by the Ombudsman is not amenable to jurisdiction of this Court under Article 226 of the Constitution of India.
17. In the present case the petitioner-company repudiated the claim by way of letter dated 4.11.2004 and after giving a complete and full opportunity to all the stake holders, the Ombudsman passed the impugned order on 21.04.2005. A reading of the said award clearly demonstrates that the Ombudsman extensively, thoroughly and meticulously scanned the entire material made available and recorded a categorical finding that the evidence relied upon by the insurer is too flimsy to suffice for repudiation of the claim of the complainant. While referring to Section 45 of the Insurance Act, the Ombudsman also held that the insurer could not lead cogent and clear evidence and the repudiation is only a futile attempt. This Court fails to notice any perversity which warrants any interference of this Court under Article 226 of the Constitution of India. In the absence of any material irregularity in dealing with the matter, the petitioner-company can neither ask for setting aside the order nor request for remand.
18. The plea of fraud sought to be pressed into service before this Court is also not sustainable in the absence of any cogent and convincing material in support of the same.
19. In the case of Satwant Kaur Sandhu v. New India Assurance Company Limited (1 supra) the Hon’ble Apex Court at paragraph Nos.16, 18, 22, 24, 25, 26 & 27 held as under.
“16. The core question for consideration is whether the fact that at the time of taking out the mediclaim policy, the policy holder was suffering from chronic Diabetes and Renal failure was a material fact and, therefore, on account of non-disclosure of this fact in the proposal form, the respondent - Insurance Company was justified in law in repudiating the claim of the appellant?
18. A mediclaim policy is a non-life insurance policy meant to assure the policy holder in respect of certain expenses pertaining to injury, accidents or hospitalizations. Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment. (See: Joel Vs. Law Union & Crown Ins. Co.1).
The term "material fact" is not defined in the Act and, therefore, it has been understood and explained by the Courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be "material".
24. . In this regard, it would be apposite to make a reference to Regulation 2(1)(d) of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002, which explains the meaning of term "material". The Regulation reads thus:
"2. Definitions.--In these regulations, unless the context otherwise requires,--
(a) to (c) xxx xxx xxx (d) "Proposal Form" means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.
Explanation: "Material" for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer."
Thus, the Regulation also defines the word "material" to mean and include all "important", "essential" and "relevant" information in the context of guiding the insurer to decide whether to undertake the risk or not.
25. The upshot of the entire discussion is that in a Contract of Insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a "material fact". If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a Contract of Insurance.
26. Bearing in mind the aforestated legal position, we may advert to the facts in hand. As noted earlier, the proposal form contained the following two questions:
"10. Details of illness/would : Sound Health which may require treatment in near future 11. Details of Treatment/surgical : Nil operation in the last two months Details of Treatment Duration of Treatment From.....to......
Doctor / Hospital If fully recovered, attached certificate For attending Doctor/Surgeon"
Answers given by the proposer to the two questions were "Sound Health" and "Nil" respectively.
27. It would be beyond anybody's comprehension that the insured was not aware of the state of his health and the fact that he was suffering from Diabetes as also chronic Renal failure, more so when he was stated to be on regular haemodialysis. There can hardly be any scope for doubt that the information required in the afore- extracted questions was on material facts and answers given to those questions were definitely factors which would have influenced and guided the respondent - Insurance Company to enter into the Contract of Mediclaim Insurance with the insured. “ 2 0 . In the case of United India Insurance Co. Ltd., v. Rajendra Singh and ors. (2 supra) the Honble Apex Court at paragraph Nos.10, 11, 12, & 16, 17, 18 held as under.
“10. Learned Single Judge of the Allahabad High Court who dismissed the Writ petition as per a short order passed by him stated thus:
“Heard learned counsel for the petitioner. The present Writ petition has been filed against the order rejecting review application. There is no power of review in the Statute. Learned Counsel for the petitioner argues that fraud has been played. It is a question of fact, for which writ jurisdiction is not the proper forum. The petitioner may avail himself of such legal remedy as may be available to him. The writ petition is accordingly dismissed. There will be, however, no order as to costs.”
11. Thus the Tribunal refused to open the door to the appellant Company as the High Court declined to exercise its writ jurisdiction which is almost plenary for which no statutory constrictions could possibly be imposed. If a party complaining of fraud having been practised on him as well as on the court by another party resulting in a decree, cannot avail himself of the remedy of review or even the writ jurisdiction of the High Court, what else is the alternative remedy for him? Is he to surrender to the product of the fraud and thereby became a conduit to enrich the imposter unjustly? Learned Single Judge who indicated some other alternative remedy did not unfortunately spell out what is the other remedy which the appellant Insurance Company could pursue with.
12. No one can possibly fault the Insurance Company 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 the Insurance Company in approaching the Tribunal itself first. At any rate the High Court ought not have refused to consider their grievances. What is the legal remedy when a party to a judgment or order of court later discovered that it was obtained by fraud?
16. Therefore, we have no doubt that the remedy to move for recalling the order on the basis of the newly discovered facts amounting to fraud of high degree, cannot be foreclosed in such a situation. No court or tribunal can be regarded as powerless to recall its own order if it is convinced that the order was wangled through fraud or misrepresentation of such a dimension as would affect the very basis of the claim.
17. The allegation made by the appellant Insurance Company, that claimants were not involved in the accident which they described in the claim petitions, cannot be brushed aside without further probe into the matter, for, the said allegation has not been specifically denied by the claimants when they were called upon to file objections to the applications for recalling of the awards. Claimants then confined their resistance to the plea that the application for recall is not legally maintainable. Therefore, we strongly feel that the claim must be allowed to be resisted, on the ground of fraud now alleged by the Insurance Company. If we fail to afford to the Insurance Company an opportunity to substantiate their contentions it might certainly lead to serious miscarriage of justice.
18. In the result, we allow these appeals, set aside the impugned orders and quash the awards passed by the Tribunal in favour of the claimants. We direct the Tribunal to consider the claims put forth by the claimants afresh after affording a reasonable opportunity to the appellant Insurance Company to substantiate their allegations. Opportunity must be afforded to the claimants also to rebut the allegations.
21. In the case of Syed Yakoob vs K.S. Radhakrishnan And Ors., (3 supra) the Hon’ble Apex Court at paragraph No.7 held as under.
The question about the limits of the jurisdiction of High Courts in issuing a writ of certiorari under Art. 226 has been frequently considered by this Court and
the true legal position in that behalf is no longer in doubt. A writ of certiorari can be issued for correcting errors of jurisdiction committed by inferior courts or Tribunals; these are cases where orders are passed by inferior courts or tribunals without jurisdiction, or in excess of it, or as a result of failure to exercise jurisdictions. A writ can similarly be issued where in exercise of jurisdiction conferred on it, the Court or Tribunal acts illegally or improperly, as for instance, it decides a question without giving an opportunity to be heard to the party affected by the order, or where the procedure adopted in dealing with the dispute is opposed to principles of natural justice. There is, however, no doubt that the jurisdiction to issue a writ of certiorari is a supervisory jurisdiction and the Court exercising it is not entitled to act as an appellate Court. This limitation necessarily means that findings of fact reached by the inferior Court or Tribunal as a result of the appreciation of evidence cannot be reopened or questioned in writ proceedings. An error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, however grave it may appear to be. In regard to a finding of fact recorded by the Tribunal a writ of certiorari can be issued if it is shown that in recording the said finding, the Tribunal had erroneously refused to admit admissible and material evidence, or had erroneously admitted inadmissible evidence which has influenced the impugned finding. Similarly, if a finding of fact is based on no evidence, that would be regarded as an error of law which can be corrected by a writ of certiorari. In dealing with this category of cases, however, we must always bear in mind that a finding of fact recorded by the Tribunal cannot be challenged in proceedings for a writ of certiorari on the ground that the relevant and material evidence adduced before the Tribunal was insufficient or inadequate to sustain the impugned finding. The adequacy or sufficiency of evidence led on a point and the inference of fact to be drawn from the said finding are within the exclusive jurisdiction of the Tribunal, and the said points cannot be agitated before a writ court. It is within these limits that the jurisdiction conferred on the High Courts under Art. 226 to issue a writ of certiorari can be legitimately exercised (vide Hari Vishnu Kamath v. Syed Ahmed Ishaque ), Nagendra Nath Bora v. The Commissioner of Hills Division and Appeals, Assam ([1958] S.C.R. 1240.), and Kaushalya Devi v. Bachittar Singh .
22. While referring to the judgment in the case of Syed Yakoob vs K.S. Radhakrishnan And Ors. (3 supra) the Hon’ble Apex Court in the case of Mohd. Shahnawaz Akhtar and Anr. v. First Additional District Judge, Varanasi and ors (4 supra) at paragraph No.5 held as under.
“In our view, the High Court has transgressed the limits of the jurisdiction under Article 226 of the Constitution of India by purporting to reappreciate the evidence and coming to its own conclusion. The High Court has nowhere stated or concluded that the lower courts had committed an error of juridistion or that they had acted illegally and improperly. Further the High Court failed to notice that a case of casual licence was not pleaded or proved by Respondent 4. Therefore, it was not open to the High Court to make out a new case on behalf of the party in its writ jurisdiction under Article 226 of the Constitution.”
23. In view of the law laid down by the Apex Court in the above referred judgments, the parameters subject to which a writ in the nature of Writ of Certiorari can be issued, are as follows.
(i) For correcting errors of jurisdiction; ii) where the procedure adopted is in violation of principles of natural justice; iii) when there is an error of law, which is apparent on the face of the record, but not mere error of fact however it may appear to be; and iv) when the finding of fact recorded is in total derogation of material available on record.
24. In the instant case, none of the above contingencies are present, as such in the considered opinion of this Court the order passed by the 1st respondent Ombudsman, which is a fact finding authority, does not warrant any interference of this Court under Article 226 of the Constitution of India.
25. Another significant aspect, which needs mention at this juncture, is that the 2nd respondent approached the District Consumer Forum against which the petitioner-company approached the State Commission and the State Commission confirmed the order passed by the District Forum. With regard to another claim the State Commission passed an order and against which the petitioner-company carried the matter in F.A.No.239 of 2008 before the National Commission and the National Commission in its order dated 15.02.2013 observed as under:
“We wonder as to how the Insurance Company can file a writ petition in the High court against the order passed by the Insurance Ombudsman constituted under the Redressal of Public Grievances Rules. As per these Rules, the award passed by the Ombudsman is binding on the Insurance Company. Be that as it may, since the writ petition has already been entertained, we adjourn this case to await the decision of the High Court.
Counsel for the complainants/respondents has brought to our notice that after the decision of the Ombudsman, the respondents filed a complaint before the District Forum, which was allowed aggrieved against which the Insurance Company filed an appeal before the State Commission which was dismissed. Still not satisfied, petitioner/corporation filed Revision Petition No.3142/2011 which has been admitted because of the pendency of the First Appeal No.239 of 2008 (present appeal) on the same point.
Adjourned to await the decision of the writ petition pending in the Andhra Pradesh High Court. List as and when the writ petition is decided. Counsel for the parties are directed to bring it to the notice of the office as and when petition is decided for immediate listing of the appeal as well as the revision petition. Office is directed to list R.P. No.3142/2011 with the present appeal.”
26. In view of the above reasons and keeping in view the principles and parameters laid down by the Hon’ble Apex Court in the above referred judgments, this Court does not find any justification to interfere with the order passed by the 1st respondent- Ombudsman. This Court is also of the opinion that there are no merits in the present writ petition, warranting interference of this Court by way of judicial review under Article 226 of the Constitution of India, and the writ petition is liable to be dismissed.
27. Accordingly the Writ Petition is dismissed. No order as to costs. As a sequel, miscellaneous petitions, if any, shall stand closed.
8th July, 2014 JUSTICE A.V. SESHA SAI.
Js.
L.R. Copy to be marked
[1] 2009 (8) SCC 316
[2] 2000 (3) SCC 581
[3] AIR 1964 SC 477
[4] (2010) 5 SCC 510