*THE HONOURABLE SRI JUSTICE L.NARASIMHA REDDY + WRIT PETITION No.30815 of 2010 %16.06.2011 #Shajauddin Ahmed Jeddy. ..Petitioner. Vs. $ State of Bank of India Life Insurance Company Ltd. ..Respondent. !Counsel for the petitioner : Sri Nasaruddin Ahmed Jeddy ^Counsel for the Respondent : Sri G.Ananda Kumar <Gist : >Head Note: ?Cases Referred: 1. CDJ 2000 SC 633 2. AIR 1997 SC 1125 THE HON’BLE SRI JUSTICE L. NARASIMHA REDDY WRIT PETITION No.30815 of 2010 ORDER: The petitioner had a brother, by name Zaheeruddin Ahmed Jeddy. The respondent canvassed the launching of “SBI Life – Horizon”, a unit linked life insurance policy. Zaheerudin Ahmed Jeddy (hereinafter referred to as “insured”) has taken a policy by paying a premium of Rs.12,000/-. The maturity value of the policy was Rs.1,20,000/-, subject to risk. The petitioner was shown as nominee. The acceptance of the proposal and taking out the policy was confirmed through a letter, issued in May, 2006 by the Vice-President (Operations) – the respondent. The insured died on 15.10.2007, due to fall into a lake. The petitioner informed the same to the respondent through a covering letter, dated 25.10.2008. Through letter, dated 12.12.2008, the respondent repudiated the policy, on the ground that the insured suppressed certain relevant facts. The basic premium was refunded through a cheque, after certain deductions. The petitioner filed C.C.No.66 of 2009 before the District Consumer Forum-III, Hyderabad. The respondent opposed the same mainly on the ground that the insured suppressed certain relevant facts. The Forum dismissed the C.C., through order dated 09.04.2009. The petitioner filed F.A.No.381 of 2009 before the A.P. State Consumer Disputes Redressal Commission, Hyderabad. The appeal was dismissed on 22.11.2010. The petitioner contends that the State Bank of India is the creation under an Act of Parliament, a premier banking institution owned by the Government of India, and answers the description of ‘State’ as defined under Article 12 of the Constitution of India. On that basis, he contends that it is amenable to the jurisdiction of this Court. He submits that the policy document, as well as the annexure, that incorporated the conditions, is clear to the effect that the ‘Horizon’ policy is different in many respects from other policies. It is stated that a specific clause is incorporated to the effect that, in case an insured commits suicide in a sane or insane condition within one year from the date of policy that it would become void, meaning thereby that if the suicide takes place after one year, the policy has to be honoured and implemented. It is also pleaded that the repudiation was made on the basis of certain information gathered behind back of the petitioner that too pertaining to a person by name Zaheeruddin, and not Zaheer Ahmed Zeddy. The respondents filed a counter-affidavit, raising an objection as to the maintainability of the writ petition, on the ground that the respondent is not a State as defined under Article 12 of the Constitution of India and that the subject matter of the writ petition is contractual in nature. The respondent admits that the policy was taken in the name of the insured and that the information as to his death was received. It is, however, stated that the insured suppressed vital information pertaining to the nature of treatment taken for mental disorder, before subscribing to the policy. Learned counsel for the petitioner and the learned counsel for the respondent addressed extensive arguments, on the lines indicated above. They have also placed reliance upon the concerned provisions of law and precedents on the subject. At the outset, the objection raised by the respondent, as to the maintainability of the writ petition, needs to be dealt with. The objection is three-fold. The first is that the respondent is not amenable to writ jurisdiction. The second is that the subject-matter of the writ petition is an indemnity contract and the adjudication thereof cannot take place in a writ petition. The third is that the petitioner had already availed the remedies under the Consumer Protection Act up to the stage of appeal and has approached the National Commission for future remedies. So far as the first contention is concerned, it is too late in the day to undertake verification as to the nature of an entity vis-à-vis definition of State under Article 12 of the Constitution of India. With each passing year, the definition got expanded and the number of entities answering the description “instrumentalities of the State”, increased. Through the process of interpretation by the constitutional Courts, the tests laid therefor, namely deep and pervasive control of the agency by the State, the public finances being handled by the agency, its having been created under a statute, are all manifestly present in case of the respondent. Admittedly, it is a creation under an Act of Parliament and it is not only a Nationalised Bank, but also is completely owned by the Government of India. Therefore, the first facet of the objection can be rejected without much of further discussion. Coming to the second facet, it is no doubt true that the policy partakes the character of contract between the insured and the insurer. However, its implementation is governed by the laws enacted by the Parliament. The very fact that an Insurance Regulatory and Development Authority is created under a statute discloses the nature of importance given to the activity of the insurance, and its public nature. In Life Insurance Corporatin of India v. Smt.Asha Goel[1], the Hon’ble Supreme Court was dealing with a case in which the Bombay High Court entertained a writ petition, wherein the repudiation of an insurance policy was assailed. After discussing various aspects of the matter, the Hon’ble Supreme Court held that the writ petition is not a proper remedy, wherever recording of oral and documentary evidence becomes necessary to determine the issue. Ultimately, the judgment rendered by the High Court was upheld and the LIC was directed to pay the amount covered by the policy. One of the factors that appear to have weighed with the Supreme Court was the nature of public activity undertaken by the LIC. The discussion in this regard was summed up in para 17 of the judgment as under: “In course of time the Corporation has grown in size and at present it is one of the largest public sector financial undertakings. The public in general and crores of policyholders in particular look forward to prompt and efficient service from the Corporation. Therefore, the authorities in-charge of management of the affairs of the Corporation should bear in mind that its credibility and reputation depend on its prompt and efficient service. Therefore, 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. It should not be dealt with in a mechanical and routine manner.” This trend setting observation of the Apex Court, squarely applies to the case on hand. As a matter of fact, the activity undertaken by the respondent has a greater public impact or participation, compared to the one of LIC. Its premier activity is banking and it is only in the recent past, that it has taken up the activities pertaining to Mutual funds and insurance also. So far as the 3rd facet is concerned, the fact that the petitioner had approached the District Forum and State Forum, cannot be treated as a factor against him. Section 3 of the Consumer Protection Act makes it clear that the remedies created under the Act are in addition to and not to the exclusion of other remedies. Further, the petitioner suffered bereavement, on account of the death of his brother is about one lakh. He had already incurred considerable expenditure in pursuing the remedies, requiring him to approach the National Tribunal, at Delhi to pursue the remedy for a relatively small amount may not be a sound proposition, when taking justice to the door steps of the aggrieved persons is the order of the day. The instance of the High Court refusing to exercise jurisdiction under Article 226 of the Constitution of India, on the ground that the petitioner had an alternative remedy, is mostly a matter of convenience, than lack of jurisdiction. The Courts or Tribunals that are created under the various enactments, to adjudicate the disputes of the respective categories; are better suited to record evidence and appreciate the same from the factual and legal point of view. It is only at a later stage in the proceedings, that parties can approach the High Courts. Even where the Parliament sought to exclude the jurisdiction of the High Courts, and confer such jurisdiction upon the Tribunals, has provided for, under Articles 323-A and B of the Constitution of India, the Constitutional Bench of the Hon’ble Supreme Court in L. Chandra Kumar v. Union of India[2] held that the power of judicial review of the High Courts under Article 226 is part of basic structure. Their Lordships observed, in paragraphs 78 and 79, as under: …We, therefore, hold that the power of judicial review over legislative action vested in the High Courts under Article 226 and in this Court under Article 32 of the Constitution is an integral and essential feature of the Constitution, constituting part of its basic structure. Ordinarily, therefore, the power of High Courts and the Supreme Court to test the constitutional validity of legislations can never be ousted or excluded. We also hold that the power vested in the High Courts to exercise judicial superintendence over the decisions of all Courts and Tribunals within their respective jurisdictions is also part of the basic structure of the Constitution. This is because a situation where the High Courts are divested of all other judicial functions apart from that of constitutional interpretation, is equally to be avoided”. The process, which the orders passed by the Tribunals, must land in the High Courts, was indicated. When such is the approach towards an enactment, which specifically excluded the jurisdiction of the High Courts, one just cannot assume that the provisions of the Consumer Protection Act denude the High Courts, of their power of judicial review. It is a matter of convenience for the parties, that they can approach the National Tribunal, Constituted under the said enactment. However, it is difficult to discern that the High Court cannot exercise judicial review in respect of a matter, which has already been adjudicated by the fora, which are subordinate to the High Court and functioning within its jurisdiction. Now on merits: The respondent, which is a premier bank, in the country, in the recent past, has diversified its activities. One of such activities is the launching of Unit linked Life Insurance Policy, named ‘Horizon’. In one of the brochure taken out by it, the respondent explained the purport of such policies, as under: “Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. SBI Life Insurance Company Ltd is only the name of the Insurance Company and Horizon, is the name of Unit Linked Life Insurance Contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your insurance agent or the Intermediary or policy document from the insurer. The various funds offered under this contract are the names of funds and do not in any way indicate the quality of these plans, their future prospects and returns.” The insured was found dead in a lake on 15.10.2007 and the same was informed to the petitioner. This Court is not immediately concerned with the circumstances under which the death occurred. Even if it is a suicide, the respondent cannot avoid its liability. In a booklet forwarded to the insured, the respondent has furnished the purport of the “amendment to Horizon policy.” “7. Clause 13 of Schedule II of the Policy (Suicide) stands replaced by the following: If the Life Assured, whether sane or insane, commits suicide, within one year from the Date of issue of the policy, the policy shall be void. In such event, the Fund Value, prevalent on following basis, subject to deduction of appropriate expenses i.e. stamp duty expenses, medical expenses, actual commission paid and Rs.200 towards administrative expenses shall be refunded, and all benefits under the policy will cease. - If the suicide intimation is received by the Company before 4.15 pm of any day, - the Closing NAV of the same day will apply for the calculation of the Fund Value; and - If the suicide intimation is received by the Company after 4.15 pm of any day, the Closing NAV of the next working day will apply for the calculation of the Fund Value.” From this, it is clear that the policy would become void, if only an insured, whether sane or insane, commits suicide, within one year from the date of issue of policy. Once the suicide or death takes place after one year, the respondent cannot avoid the policy. Another indication from this clause is that the insurer being or turning out to be insane, is not, by itself, a disqualification for taking out a policy; The clause is also silent as to whether the insanity can be referable to period anterior or posterior to the date of the policy. That, however, is a different aspect. The respondent repudiated the policy, on the basis of some information said to have been received by it, from Asha Hospital, Banjara Hills. According to it, the Hospital record revealed that the insured took treatment for mental disorder, in the year 2006 and that in the application, he has stated that he did not suffer any mental disorders in the past. This is the only basis on which the policy was repudiated. At the outset, it needs to be observed that the information or record was procured by the respondent without any reference to the petitioner. The Hospital record was of a person by name Mr.Zaheeruddin. The insured was Zaheer Ahmed Zeddy. In case the respondent entertained any doubt, as to the information furnished by the insured, they could have cross verified the same with the petitioner. The respondent ought to have been careful and cautious, particularly when the insured is not available for eliciting any information. The rights that have accrued under a policy, cannot be taken away just on the basis of assumptions. Further, the predominant factor underlying the policy is investment in the units, than coverage of risk of the insured and the same is evident from the information furnished by the respondents. They subjected the insured to medical examination before issuing the policy. If they were to have depended upon the information furnished in the application form, without any further examination, there could have been some possibility to accuse the insured of suppression of facts. It is not in dispute that the insured was examined by the doctor nominated by the respondent and the policy was issued on being satisfied about the fulfilment of the relevant parameters. It is not uncommon that many deceases remain unnoticed, till they assume serious proportions. Nobody commits suicide just to pave the way for the nominee in the policy, to receive the assured amount. The approach of the respondent was not only hyper-technical, but also bereft of any reliable and valid material. Hence, the writ petition is allowed and the respondent is directed to pay the amount covered by the policy to the petitioner within a period of two months. There shall be no order as to costs. _______________________ L. NARASIMHA REDDY, J Date:16.06.2011 L.R. copy to be marked. GJ [1] CDJ 2000 SC 633 [2] AIR 1997 SC 1125