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Introduction
Insurance is a promise of the Insurance Company to the Policy Holder that in case something happens to him, the Company will provide him support and he will not be left in the lurch. This support can be in varied forms. One kind of support can be when a person is sick and served with a hefty Hospital bill; the Insurance Company can soften the blow by paying the medical bills or a part of it. Another kind of support is when a bread winner for a family dies; the Insurance Company can provide a fixed amount(called Insurance Claim) to his/her family so that the family members can sustain their life. Of course the death of a near one cannot be compensated by any amount of money, but the value of timely financial help cannot be overstated also.
Due to these abovementioned reasons the Insured or Policy Holder pays timely premiums in the hope of saving for a rainy day. But if Insurance Company denies the payment of your medical bills or denies money to a family after the death of the Policy Holder, then what are the remedies available to him or his family members. Going to Court and filing a simple civil case will take years for disposal and will not provide quick help. In these cases Writ Petition is an appropriate remedy as it is both and efficacious and expeditious.
In this Article we will see how Supreme Court held that Writ Petition against LIC (or for that matter any other Government Company or Department) is maintainable and a party have the right to approach High Court of a State directly rather than filing a case and waiting for years for its disposal.
On a different note I would like to also say that this judgment is also important due to the fact that it is applicable against other government companies and even government departments also and that is precisely the reason why the Writ Jurisdiction of a High Court is invoked when a government contract is not given to its rightful claimant or when a student is not admitted to a government school despite being entitled to the same.
Brief Facts
In this case the Petitioner approached directly the Bombay High Court under Article 226 of Constitution of India against LIC’s refusal to give her insured money which LIC should have released to her after her husband’s death. In Appeal before the Division Bench (Two Judge Bench) the LIC’s contented that the Writ Petition is not maintainable against it, but the Bombay High Court stated that wife can approach the High Court in its Writ Jurisdiction and Writ Petition is maintainable. Against this decision of the Bombay High Court, LIC appealed to the Supreme Court of India where the LIC took the following grounds.
LIC’s Arguments
The First ground taken by the LIC (or generally any other Government Organisation) is that civil disputes like insurance claims, contractual rights arising out of tenders etc. involve disputed questions of fact which cannot be examined by a High Court in its Writ jurisdiction as evidence is necessary to decide a disputed question of fact. (For example let’s say a Policy Holder was suffering from Leukaemia when he took a life insurance policy but neither he knew about it nor anything was diagnosed in the medical tests done by the Insurance Company. On the Insured’s death the Policy Holder’s wife says that at the time of filling up the insurance policy form, Policy Holder did not know about any disease which he was suffering from but the LIC says that he knew about it. Then both parties have to examine and cross examine the witnesses to prove their respective version. In the trial courts it is called “Leading Evidence”). As a Writ Petition is not maintainable where facts are in dispute, High Court’s jurisdiction to entertain such claims in its Writ Jurisdiction is often questioned by government authorities like DDA, MCD etc. Also Section 45 on the Insurance Act does not allow LIC to raise any dispute after 2 years of taking out a policy by a Policy Holder except in cases of fraud. Insurance companies take advantage of this provision stating that the Policy Holder have withheld some information about his disease or doctor’s visits and on this ground they say a fraud was committed by the Insured ( see my Article ) and as “whether there was a fraud or not” can only be proved by way of evidence, Writ Petition is not the correct remedy. According to LIC and other government companies claims of this nature should be filed in the form of Civil Suits in the Trial Courts as evidene can be taken by them and they are appropriate forums for claims against LIC.
The Second contention of LIC is that one cannot directly approach a High Court for issuance of a Writ of Mandamus against it for release of the insurance amount. If the family member of the deceased want the insurance amount than they must approach Civil Courts first (also called the Subordinate Courts like Tis Hazari Courts, Patiala House Courts, Saket Courts etc.) and file a Civil Suit in order to get the insurance claim.
Thirdly LIC says, that when there is alternative fora like consumer commissions (like NCDRC, SCDRC etc.) available it will be wrong for a High Court to proceed under Article 226 of the Indian Constitution against State Corporations.
Fourthly and lastly, the LIC’s case against parties directly approaching the High Court of a State is that when LIC issues a life insurance policy to the insured, he/she enters into a contract with that person and adjudication of a contractual dispute cannot be done in the Writ Jurisdiction of a High Court.
Answer to LIC’s Contentions
Now let’s deal with these arguments one by one.
So far as the First argument about the evidence and disputed question of facts is concerned it is always open for a High Court to take evidence for a limited purpose. Like Bombay High Court can direct the Court Registrar General to take evidence in a Writ Petition also (Kindly read the Chapter titled “Right to Judicial Remedies” in H.M. Seervai’s “Constitutional Law of India: A Critical Commentary” where he comments on this procedural aspect). Moreover through my own experience, I have seen that if there is disputed question of fact in a Writ Petition, Delhi High Court directs the Petitioners and Respondents to furnish Affidavits and Counter Affidavits respectively. Even if a fact is disputed by a party after the Petition is filed then Delhi High Court often directs the party to file Additional Affidavits to clear any doubts about it. This is because an affidavit is a solemn statement given by a party and if a lie is stated thought it, then the said party is liable to be punished for perjury, which is a crime under Section 193 of Indian Penal Code punishable with 7 years of imprisonment. Also if a person produces a fabricated document in the Court then the proceedings under Section 340 Criminal Procedure Code can be initiated against him/her. So, there are adequate safeguards against the any party lying before the Court and hence the disputed questions can also be adjudged by way of these procedures in a High Court.
The second argument of the LIC can be answered by the following reasoning. As most of us know that filing a Civil Suit/case in a Subordinate Court and getting something out of it is a long and tiresome process as it may take more than 3 to 5 years, to say the least, to get insurance money. And let’s not forget to mention the Regular First Appeals, Regular Second Appeals and Special Leave Petitions which are available to insurance companies in case they lose in the Subordinate Courts. So if the High Courts provide justice quickly, a party have a right to approach them.
The third reasoning of the LIC on the ground that of existence of an alternative remedy of consumer forums is available doesn’t apply as LIC is not only a major player in the insurance sector but also a Government Corporation and hence amenable to the direction of the High Court in its Writ Jurisdiction. So going to alternative forums should be a choice of the Insured or Insured’s family and not a coercion.
The fourth argument of the LIC require some understanding of the Contract which the Policy Holder and LIC are entering into. The contract of life insurance is governed by Uberrima Fides which translates to “utmost faith”. It’s an exception to general law of contract as generally contracting parties are not required to communicate things which are extraneous to the execution of a contract between them. But in a contract of insurance which is governed by utmost faith it is expected of the parties to disclose each and every fact which is necessary for the other party to determine whether they want to enter into the contact of insurance or not. It is a higher standard of disclosure. That’s why it is called “Uberrima Fides”. So parties are bound to communicate every fact and circumstance which influences the decision of the other party and one party cannot say that ‘I can hide some information because it is not relevant to the contract’. This kind of higher standard of disclosure requirements are generally found in cases of Guardian and Ward and Settlor and Trustee. So an Insurer can take the ground that as the information about some illness was hidden from it, the Insurer can deny the claim of insured’s family (which mainly include the wife, children or parents of the deceased). But what LIC is forgetting is that Uberrima Fides is not a one sided doctrine and it also applies to LIC. This means that if the insured have the duty to disclose all the information to the LIC then LIC also have to act in utmost faith and should not deny the claim of his dependents after his death. Uberrima fides does not apply only to the Insured but to the Insurer as well.
Finally, On these grounds the Supreme Court held that a Writ Petition against LIC is maintainable in the High Court.
Conclusion
So through the above Article we saw that the Insured (in case of Medical or other insurance) or Insured’s family (in case of Life Insurance) have a right to approach High court against LIC. As Writ Petition takes less time for its completion, the Insured or Insured’s family can have the money which is rightfully theirs in time as the rigmarole of evidence is not there. Even the aim of the insurance companies should also be to give insurance claim in time rather than delaying them on futile grounds, so that people don’t have to run from pillar to post to get the insurance money which is rightfully theirs.