Life Insurance Corporation of India v. Asha Goel, AIR 2001 SC 549

Late Naval Kishore Goel, the husband of the first respondent, was a Labour Officer with M/s Digvijay Woollen Mills Limited at Jamnagar. He submitted a proposal for a life policy at Meerut on 29 May 1979. It was accepted and a policy for Rs 1,00,000 was issued.

He died on 12 December 1980 at the age of 46, leaving a wife, a daughter and a son. The cause of death was certified as acute myocardial infarction and cardiac arrest.

His widow, the nominee, informed the Divisional Manager, submitted the claim with the papers required, and asked for payment. By a letter of 8 June 1981 the Divisional Manager repudiated liability on the ground that the deceased had withheld correct information about his health when effecting the insurance: he had described his usual state of health as good; had said he had not consulted a medical practitioner within the last five years for an ailment requiring treatment for more than a week; and had answered in the negative the question whether he had been absent from work on health grounds in the last five years.

Having failed to obtain relief from the Corporation, the widow filed a writ petition under Art. 226 seeking a mandamus directing payment of the sum assured with accruing benefits.

1. Is a writ petition under Art. 226 maintainable to enforce a claim under a contract of life insurance?
2. What must an insurer establish before repudiating under s. 45?

The jurisdiction under Art. 226 is extraordinary, wide and expansive, and the Constitution places no fetter on it; it is left to the discretion of the High Court. It therefore cannot be laid down as a general proposition that in no case may a High Court entertain a writ petition to enforce a claim under a life policy.

But the discretion is to be exercised on principle, and the Court laid down the working rules:

• Ordinarily the High Court should not entertain a writ petition under Art. 226 for the mere enforcement of a claim under a contract of insurance.
• Where a plea of fraud is pleaded by the insurer and on examination is found prima facie to have merit, and oral and documentary evidence may become necessary to determine the issue, a writ petition is not an appropriate remedy.
• Against that stands the prejudice to a claimant who is driven to long-drawn litigation in the civil court — a factor the court must weigh.

The same reasoning governs the consumer forum, which is likewise a summary jurisdiction and unsuited to a claim requiring a trial of disputed fact.

The Court restated the three conditions from Mithoolal Nayak and added the point on which most repudiations fail: mere inaccuracy or falsity in respect of some recitals or items in the proposal is not sufficient. The burden of proof is on the insurer to establish the circumstances required by s. 45, and unless the insurer is able to do so there is no question of the policy being avoided on the ground of misstatement of facts.

The Court observed that the approach of the Corporation in the matter of repudiation of a policy admittedly issued by it should be one of extreme care and caution, and that it should not be dealt with in a mechanical and routine manner.

Asha Goel also refines the duration of the duty of good faith. The duty continues right up to the conclusion of the contract, and it implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. That is a more precise statement than the general proposition that the duty runs from proposal to conclusion, and it is the form to use.

It is the case to close on. Use Mithoolal for the conditions, Krishna Wanti Puri and Dipashri for the two outcomes on the evidence, and Asha Goel for the burden, the standard of conduct expected of the insurer, and the choice of forum.