High Court of KeralaSingle Judge2017-09-19Writ petitions dismissed

Life Insurance Corporation of India v. Avinash P. Kammath

Case / Petition Number:WP(C).No. 7128 of 2016 (M)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Anu Sivaraman
Judgment Date: 2017-09-19
Court Decision / Holding: Writ petitions dismissed; Ombudsman and Permanent Lok Adalath orders directing payment of maturity sums are sustained; LIC is directed to pay maturity benefit in accordance with the policy, after accounting for any amounts already paid.
Final Disposition: Writ petitions dismissed

Parties to the Case

Appellants / Petitioners

Life Insurance Corporation of India

Respondents

Avinash P. Kammath

Legal Representation & Advocates

Counsels for Petitioners

• Sri Lal George

Counsels for Respondents

• Sri G. Krishnakumar
• Smt. M. L. Remya

Case Synopsis & Summary

These writ petitions, filed by the Life Insurance Corporation of India (LIC), challenge orders of the Insurance Ombudsman and the Permanent Lok Adalat directing payment of the maturity sum under Jeevan Saral policies issued to the respondents. LIC contends that the policy documents contained an obvious error—omission or incorrect depiction of the maturity amount in Exhibit P2—and that the maturity sum was to be calculated from the basic premium along with a provided table (Exhibit P1); the higher figure shown as a death benefit is irrelevant to maturity. The LIC argues the error was a clerical/typographical mistake and that it had already informed insureds of the error and taken steps to rectify it. It relies on an Apex Court order in SLP No. 9484 of 2009 to contend that where a policy is vitiated by an error, no amount would be payable, and on the doctrine of undue enrichment (K.S. Satyanarayana v. V.R. Narayana Rao) to resist liability beyond entitlement. Respondents, on the other hand, contend that the policies were issued in 2004 and the contracts had long since matured, with the error undisclosed for over a decade; they rely on decisions like Abubacker v. L.I.C. of India and Santosh Kumar Gupta to argue that insurers cannot dispute such contracts after two years unless misrepresentation/suppression by insured is proven. The court notes the absence of prior intimation and emphasizes that the contracts were concluded long ago, yet the Ombudsman/Lok Adalat findings are supported by substantial evidence. Ultimately, the court upholds the Ombudsman/Lok Adalat orders and dismisses the petitions, allowing payment of maturity benefits as determined, subject to deductions for amounts already paid.

Provisions of Law Cited

Section 45 of the Insurance Act, 1938

Legal Doctrines & Maxims

Doctrine of undue enrichment

Submissions & Arguments

Contentions of Appellants / Petitioners

LIC contends that Exhibit P2 contains an obvious error in the maturity sum assured; the correct computation is to be derived from the basic premium and the table appended to Exhibit P1; the higher maturity figure shown is a result of a mistake; the correction of the policy’s maturity figures was not properly communicated to the insured and in any event the contract is governed by mature liability; it relies on Apex Court SLP No. 9484 of 2009 to argue that a policy vitiated by error should not attract payment of erroneous amounts and invokes the doctrine of undue enrichment to avoid paying more than the insured’s premium justly entitles them to. LIC asserts that the orders of Ombudsman/Lok Adalat are therefore erroneous and must be set aside.

Contentions of Respondents

The respondents argue that the policies were issued in 2004; the maturity amounts were determined by the policy terms; the contracts are concluded and binding; an error in the policy cannot be used to deny payment after more than a decade; they contend that the insurer cannot repudiate a policy after two years under Section 45 of the Insurance Act, 1938 in the absence of suppression or misrepresentation; they rely on Abubacker v. L.I.C of India and Santosh Kumar Gupta to argue that maintainability should not be defeated by mere clerical errors after long lapse; the omnibudsman orders directing payment should be sustained as the policyholders are entitled to the maturity sums as per the original terms of the policy.

Cited Precedents (4)

Case Name	Citation	Treatment	Explanation
S.L.P. No. 9484 of 2009	S.L.P. No. 9484 of 2009	Distinguished	Court cites Apex Court’s ruling to emphasize how errors in policy documents can affect payable amounts, but distinguishes the facts of that case from the present situation (timing of correction and the nature of the error).
K.S. Satyanarayana v. V.R. Narayana Rao	AIR 1999 SC 2544	Mentioned Only	Cited to discuss the doctrine of undue enrichment; court does not adopt the line enshrined there as controlling, but references it in the context of argument.
Abubacker v. L.I.C of India	1983 KLT 492	Distinguished	Cited to argue that insurer cannot dispute policy after certain period under Section 45; however, court distinguishes on facts and the present action involves a different set of circumstances.
Santosh Kumar Gupta v. Indian Life Insurance Corporation	2000 KHC 4077	Distinguished	Cited as a precedent on Section 45; court distinguishes it, given the long time since policy issuance and the particular circumstances of the present case.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **TUESDAY, THE 19TH DAY OF SEPTEMBER 2017/28TH BHADRA, 1939** ## **WP(C).No. 7128 of 2016 (M)** **---------------------------** **PETITIONER :** **----------------------** **LIFE INSURANCE CORPORATION OF INDIA, REPRESENTED BY ITS MANAGER (LEGAL AND HPF), DIVISIONAL OFFICE, JEEVAN PRAKASH, M.G. ROAD, ERNAKULAM- 682 011.** **BY ADV. SRI.LAL GEORGE** **RESPONDENT :** **------------------------** **AVINASH.P KAMMATH, HOUSE NO. 8/2168 ''SAKETHAM'', KILIKAR ROAD, KOCHI - 682 002.** **BY ADVS. SRI.G.KRISHNAKUMAR SMT.M.L.REMYA** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30-08-2017, ALONG WITH WPC.NO. 7754/2016 AND CONNECTED CASES, THE COURT ON 19-09-2017 DELIVERED THE FOLLOWING:** **sts** ## **WP(C).No. 7128 of 2016 (M)** ## **----------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS ----------------------------------------** - **P1TRUE COPY OF THE CIRCULAR DATED 12/02/2004.** - **P2TRUE COPY OF THE POLICY ISSUED TO THE RESPONDENT** - **P3TRUE COPY OF THE CIRCULAR DATED 27/07/2015** - **P4TRUE COPY OF THE CIRCULAR DATED 25/08/2015** - **P4(A)- TRUE COPY OF THE COVERING LETTER, FORWARDING EXT-P4 CIRCULAR** - **P5TRUE COPY OF THE COMPLAINT DATED 27/08/2014** - **P6TRUE COPY OF THE OBJECTION/NOTE DATED 27/10/2014 FILED BEFORE THE INSURANCE OMBUDSMAN.** - **P7TRUE COPY OF THE AWARD DATED 09/03/2015 PASSED BY THE INSURANCE OMBUDSMAN.** **RESPONDENT(S)' EXHIBITS** **----------------------------------------** - **R(A)TRUE COPY OF THE COVERING LETTER DATED 30/03/2015 OF THE HON'BLE INSURANCE OMBUDSMAN.** - **R(B)TRUE COPY OF MY CONSENT LETTER SUBMITTED ON 16/04/2015 TO THE PETITIONER.** **/TRUE COPY/** **P.S.TO JUDGE** **sts** ## **ANU SIVARAMAN, J.** **----------------------------------------------W.P(C).Nos. 7128 of 2016, W.P(C).Nos. 7754 of 2016, W.P(C).Nos. 8982 of 2016, W.P(C).Nos. 12959 of 2016, W.P(C).Nos. 13650 of 2016, W.P(C).Nos. 18748 of 2016, W.P(C).Nos. 28989 of 2016, W.P(C).Nos. 21888 of 2017 & W.P(C).Nos. 21889 of 2017. ----------------------------------------------Dated this the 19[th] day of September, 2017** ## **JUDGMENT** These writ petitions are filed by the Life Insurance Corporation of India challenging the proceedings of the Insurance Ombudsman and the Permanent Lok Adalath, which directed the payment of maturity sum assured in the policy issued to the party respondents in these writ petitions. The contention of the petitioner is that they had issued Jeevan Saral Policies to the party respondents. Exhibit P2 in these cases is the policy document issued to the party respondents. It is stated that by an inadvertent error, the maturity sum assured was either omitted to be shown or wrongly shown in the policies. It is submitted that going by Exhibit P1 communication issued by the LIC, it is clear that the maturity sum assured was to be calculated on the basis of the basic premium and a table _**WP(C).7128/16**_ 2 was provided which showed the maturity sum assured. A higher sum was provided as death benefit. The party respondents had approached the Permanent Lok Adalat and the Insurance Ombudsman claiming the balance of the maturity sum assured going by Exhibit P2 document received by them. This was sought to be defended by the LIC stating that the omission or the wrong inclusion of the amount of maturity sum assured in Exhibit P2 was only a mistake and that on noticing the same, the LIC had taken steps to inform the insured persons of the error that had crept into Exhibit P2 and similar documents. It is contended that the maturity sum would be proportionate to the premium paid and would be different in each case in accordance with the premium selected by the insured. It is contended that the death benefit would remain constant, but the maturity benefit would be a much lower sum going by the conditions of the policy. The Insurance Ombudsman and the Permanent Lok Adalath considered the objections raised by the LIC. It was found that the policies were issued more than a decade ago. It was also found that the policies amounted to concluded contracts between the parties and the insurer could not rely on a mistake admittedly committed by it to contend that the amount stated in the policy _**WP(C).7128/16**_ 3 as maturity benefit is not payable. The petitioner Corporation was therefore directed to make payments of the maturity benefits less any amounts already paid. These orders are under challenge in these writ petitions. 2. It is submitted by the learned counsel for the petitioner that the policy documents contained an obvious error and no amount would be payable only on account of the typographical error which had been occurred in Exhibit P2. The learned counsel relied on an order of the Apex Court in SLP.No. 9484 of 2009 to contend that where the policy was vitiated by an error, no amount would be payable on account of such an error. I immediately noticed that, that was a case where a policy was issued on 20.3.2004 with an incorrect figure which was corrected within the year and a new policy document showing the amounts actually payable had been issued to the insured. Learned counsel also relies on a decision of the Apex Court in _**K.S.Satyanarayana v. V.R.Narayana Rao**_ [AIR 1999 SC 2544] to contend that the doctrine of undue enrichment would come into operation in this case and the respondents are not entitled to amounts greater than their entitlement in accordance with the premium paid by them. 4 _**WP(C).7128/16**_ 3. The learned counsel appearing for the party respondent in W.P(C).No.7754 of 2016 has placed several decisions with regard to the maintainability of the writ petition as against a private individual. I am of the opinion the said question does not arise in this writ petition because what is under challenge are orders issued by the permanent Lok Adalath or the Insurance Ombudsman. 4. Learned counsel for the respondents contended that the policies in question were taken in 2004 and the alleged mistake had been pointed out by the LIC for the first time in September 2015. It is contended that in a contract of insurance once the contract is concluded, the insurer cannot repudiate the same after more than a decade on the ground that there was some error in the facts and figures shown in the policy document. The leaned counsel relies on a decision of a Division Bench of this in _**Abubacker v. L.I.C of India**_ [1983 KLT 492], to contend that no insurer can dispute any policy issued by it after two years of it's issue in terms of Section 45 of the Insurance Act, 1938 in cases except where there is suppression or misrepresentation by the insured on material facts. The learned counsel also relied on a decision of the _**Santosh Kumar**_ 5 _**WP(C).7128/16**_ _**Gupta v. Indian Life Insurance Corporation**_ [2000 KHC 4077] to contend that going by Section 45 of the Insurance Act, 1938, the policy cannot be called in question by the insurer on the ground of any mistake after the lapse of two years from the date on which it was effected. 5. In the instant case, it is clear that the policies are issued in the year 2004 or immediately thereafter. The conditions contained in Exhibit P1 are in the nature of an intra organisational communication. The petitioner has no case in these writ petitions that the table appended to Exhibit P1 was ever made available to the party respondents or that the calculation on which maturity sum assured would be payable had been explained to them. In the absence of any material to show such intimation, the LIC would be bound by the facts and figures as contained in Exhibit P2 document. As noticed earlier, the correction of the conditions of policy was made known to the party respondents only after an interval of nearly 11 years. These facts have been taken note of by the Ombudsman as also the Permanent Lok Adalath for directing the payment of the amounts due as maturity benefit to the party respondents. In the facts and circumstances as disclosed above, I am not convinced that the orders passed by the Permanent Lok 6 _**WP(C).7128/16**_ Adalath or the Insurance Ombudsman are vitiated by any illegality or improper exercise of power. The orders being perfectly sustainable in facts and law, the challenge raised has to fail. The writ petitions fail and are accordingly dismissed. **ANU SIVARAMAN JUDGE** _vgs_