Jagan Nath Goyal vs Life Insurance Corporation of India

M.L. Singhal, J.

This is a petition filed by petitioner (Shri Jagan Nath Goyal) against the (i) Life Insurance Corporation of India (LIC) through the Senior Divisional Manager, Sector 17, Chandigarh; and (ii) the Senior Manager, Life Insurance Corporation of India, Sangrur under Articles 226 and 227 of the Constitution of India seeking the issuance of appropriate writ, order or direction in the nature of certiorari quashing letter Annexure P6 dated 30.1.1996 vide which the benefit mentioned in para 11(b) of `Asha Deep'' policy No. 160148470 dated 15.8.1993 obtained by him was declined. He has further prayed for the issuance of mandamus directing the respondents to give him the benefit of para 11(b) of the said policy and to make him the payment. He has further prayed for striking down the condition enumerated in paragraph 11(a) of the said policy as the same is against the principles of natural justice and in negation of the aims and objects for which the LIC Act 1956 was enacted by the Parliament.

Briefly the facts are that Shri Surinder Sharma, Development Officer, LIC of India approached the petitioner and explained him the benefits of Asha Deep Policy with profits (with accident benefits) instituted by the LIC of India. He explained him that in the case of following contingencies namely ``If the life assured undergoes open heart bypass surgery, performed significantly narrowed/occulded coronary arteries to store adequate blood supply to heart and the surgery must have been proven to be necessary by motion of coronary angiography. All other operations for example angioplasty thrombolynin by coronary catheterisation) are specifically excluded, or (ii) the life assured undergoes Renal Dialysis or Renal Transplantation as a result of an end stage Renal Failure presented as choronic irreversible failure of both kidneys to function.

(iii) xxx xxx xxx xxx xxx xxx xxx

(iv) xxx xxx xxx xxx xxx xxx xxx

It was impressed upon him to obtain Asha Deep policy and if he obtained Asha Deep policy with accident benefits, he would be entitled to the benefits mentioned in the policy. Shri Surinder Sharma insured him and gave him Asha Deep policy bearing No. 160148470 of LIC operative with effect from 15.8.1993 for a sum of Rs. 1 lac. It is averred that the petitioner paid the required premium of Rs. 2885/ on 26.10.1993. It was first half yearly instalment. He opted to pay the premium in half yearly instalments i.e. in February and August every year. He paid first half yearly instalment of the premium amount on 26.10.1993 vide receipt Annexure P1. Thereafter, he paid the instalments regularly. In the month of August 1994, he could not deposit the instalment due. On 15.4.1995 he paid the two instalments amounting to Rs. 5987/ i.e. Rs. 5770/ plus interest to the LIC vide receipt Annexure P2. Next instalment was due in August 1995 and he paid the instalment vide receipt dated 16.8.1995 Annexure P3. He fell ill and was admitted in Ram Saran Dass Kishori Lal Charitable Trust Hospital, Amritsar on 5.12.1995 for kidney transplant. Kidney transplant was done on him on 21.12.1995. On 1.1.1996, he was discharged. Annexure P4 is the certificate dated 10.1.1996 issued to him by Dr. P.K. Sareen, Consultant Kidney Transplant Surgeon, R.K. Hospital, Amritsar. Vide letter dated 11.1.1996 Annexure P5, he requested the Branch Manager, LIC of India, Sangrur to make him payment per the terms of the policy. Request was declined vide letter dated 30.1.1996 Annexure P6 by the LIC. It is averred that while declining his request for giving him the benefit of the policy, the LIC misconstrued and misread the aims and objects of the `Asha Deep'' policy and as such letter Annexure P6 is not sustainable. He took this policy when he was told of the benefits and profits to be provided to him in the event of contingency. It is strange and unreasonable that LIC has refused to give him the benefit of the policy on the happening of contingency contemplated by para 11(b) of the said policy. It is averred that the action of the respondents in refusing him the benefits as mentioned in Para 11(b) of the said policy is arbitrary and against the principles of natural justice. Refusal to give him the benefits as per para 11(b) of the said policy is in negation of the object, letter and spirit of the insurance policy which is to serve the people at large and not to devour the money due to the life assured. Insurance company should not be allowed to enrich itself at the expense of the public at large by depriving the assured of the just benefits on some technicality. Policy should not be taken to have lapsed when the LIC had accepted the premium with interest.

Respondent LIC of India contested this petition urging that the life assured is entitled to one of the following two benefits subject to conditions and provisions mentioned in the policy if the policy remains in force for full sum assured :

(A) Sum assured with vested bonus, if any, on maturity or at his death, if earlier.

(b) In case of open heart surgery, Renal Dialysis or Rental Transplantation etc. 50% of sum assured immediately and 50% at maturity or death if earlier, and payment equal to 10% of sum assured every year and waiver of premiums subject to details mentioned in the policy. Paragraph 11(a) of policy provides that benefit (B) is not applicable if any of the contingencies occur before the expiry of one year reckoned from the date of policy or one year from the date of revival of the policy. In this case, the life assured paid one premium in February 1994 after obtaining the policy in August 1993 and did not pay the half yearly premium due on 15.8.1994 and 15.2.1995. Policy lapsed on account of nonpayment of half yearly instalment due on 15.8.1994. Policy became revived on 15.4.1995. Petitioner got kidney transplant done on 21.12.1995 i.e. within a year of the date of revival of the policy and as such life assured is not entitled to benefit (B) under the policy. Petitioner''s claim is not maintainable in law as the same is in disregard of the terms of the policy. Insurance policy created contractual obligations. Contractual obligations are incapable of being enforced through writ petition under Articles 226 and 227 of the Constitution of India. Petitioner should have approached the civil court where the questions of fact arising in this writ petition can be decided more effectively. Para 11(a) of conditions and privileges stipulates that benefit (B) is not admissible where contingencies as given in para 11(b) occur before the expiry of one year reckoned from the date of policy or one year from the date of revival of the policy. In nutshell the plea of LIC is that he is not entitled to the sum assured as he got renal transplant done within one year of the date of revival of the policy.

We have heard the learned counsel for the parties and have gone through the paper book.

Question that requires adjudication is whether the conditions incorporated in paragraph 11(a) of the `Asha Deep'' policy obtained by the petitioner on 15.8.1993 are unsustainable on account of its contravening the principles of natural justice and the objects for which the Life Insurance Act 1956 was enacted by the Parliament. In the insurance policy obtained by the petitioner, there is mention as to the events on the happening of which payments are to be made viz. if the policy is in force for full sum assured one of the two benefits (A) or (B) defined hereunder will be provided subject to the conditions mentioned herein. Either of the benefits is payable only once during the term of the policy.

Benefit (A) The sum assured with vested bonus, if any, is payable in the event of the life assured surviving the stipulated date of maturity or at his death, if earlier.

Benefit (B) If any one of the contingencies given in paragraph 11(b), subject however to the conditions mentioned in paragraph 11(a) of the ``Conditions and Privileges'''' within referred to occurs during the term of the policy, then the following benefits will be available :

(i) Immediate payment of 50% of the sum assured.

(ii) Payment of balance 50% of the sum assured along with vested bonuses, if any, in the event of life assured surviving the stipulated date of maturity or at his death, if earlier.

(iii) Payment of an amount equal to 10% of the sum assured, every year, commencing from the policy anniversary falling on or immediately after the date of eligibility for Benefit (B) and ending with the policy anniversary preceding the stipulated date of maturity or the date of death of the life assured, whichever is earlier.

(iv) Waiver of premiums, if any (including accident premium) due from the policy anniversary falling on or immediately after the date of eligibility for benefit (B).

Paragraph 11(a) of the policy reads as follows :

``Benefit (B) of the policy schedule is not applicable if any of the contingencies mentioned in paragraph 11(b) occurs (1) at any time on or after the date on which risk under this policy is commenced but before the expiry of one year reckoned from the date of this policy or (ii) one year from the date of revival.''''

It was submitted by the learned counsel for the petitioner that para 11(a) incorporated in this policy is against the principles of natural justice, and also against the object of the insurance policy. Contracts of insurance are uberrimaefide. Contracts of insurance persisted on the basis that every material fact is disclosed and its nondisclosure entitles the other party to avoid the contract in fact which tends to suggest that the life insured is likely to fall short of the average duration are material facts. Age, health, occupation, habits or pursuits or the previous history of the assured are material facts. In this case the petitioner took `Asha Deep'' policy and the sum assured was Rs. 1 lakh. Policy became operative with effect from 15.8.1993. Premium was payable half yearly. Petitioner paid second half yearly premium in February 1994. No half yearly premium was paid on 15.8.1994 and 15.2.1995. On account of nonpayment of half yearly premium that fell due on 15.8.1994, the policy lapsed. It became revived on 15.4.1995 after the petitioner had paid premium that had fallen due on 15.8.1994 and 15.2.1995. Petitioner got kidney transplant done on 21.12.1995 i.e. within one year of the date of revival of the policy. Contention of the insurance company is that Benefit (B) given in para 11(a) of the conditions and privilege of the policy is not available to the petitioner when he got kidney transplant done before the expiry of one year of the date of revival of the policy. Insurance is a matter of contract only. Petitioner entered into this contract of insurance with the insurance company with eyes open. When he entered into the contract of insurance with the insurance company, he was aware that he would not be entitled to benefit (B) of the policy schedule if he got kidney transplant done on him or underwent open heart bypass surgery performed on him within one year of the date of policy or within one year of the date of revival of the policy. In our opinion, this condition is quite valid and is in consonance with the principles of natural justice as if this condition were not there, a person would obtain such a policy and undergo open heart bypass surgery or kidney transplant with a period of one month or so and thereafter be around the insurance company for collection of benefit (B) as mentioned in para 11(a). Insurance companies deal with public money. Nobody should be allowed to enrich himself at the expense of the public. Those who are genuinely assured by the Life Insurance Corporation are entitled to reap the benefit of the policy but not those who obtain the policy and then pay the premium due, commence the policy and then discontinue the policy on the feeling that it is not beneficial. Premium fell due in August, 1994 and February, 1995. He paid premium that fell due in August, 1994 and February, 95 on 15.4.1995 together with interest on the premium amount and got kidney transplant done on him on 21.12.1995. Prior to 15.4.1995, he must have been suffering from some ailment of the kidney or in or about December, 1995, his kidney ailment must have become aggravated or else he would have waited for one year after 15.4.1995 for kidney transplant on him. Getting the policy revived on 15.4.95 when it had been discontinued after February 1994 raises one''s eye brows as to the bona fides in the revival of the policy. Incorporation of para 11(a) of the conditions and privileges of the policy providing that benefit (B) is not applicable if any of the contingencies enumerated there occur before the expiry of one year reckoned from the date of policy or within one year of the revival of the policy is quite just and equitable, more so, when this condition was accepted by the assured at the time when he took the policy on 15.8.1993 and paid the premium.

We do not see anything unconscionable so far as this condition incorporated in the insurance policy is concerned as the insurance companies deal with public money and their duty is that nobody enriches himself at the expense of public money and further only bona fide insurance policies are enforced against the Life Insurance Corporation.

For the reasons given above, this writ petition fails and is dismissed. No order as to costs.