Mithoolal Nayak Vs Lic

Facts in brief:
· Appellant (MithoolalNayak) took life insurance for sum of Rs 25000/- for life of one
MahajanDeolal. After the death of MahajanDeolal the claim was repudiated on the ground of
deliberate misstatement.
· Dr. Desai checked him and gave report that Mahajan looked 55 as opposed to what he had
claimed i.e. 45 years and suffered from Pneumonia. Company suggested check up from 2
other doctors.
· He has stated his answer in negative to the question when asked “whether he has
consulted a medical practitioner for treatment in last 5 years?”.
· Respondent company claims that his answer was lie because Dr. P.N. Lakshman, Japalpur
stated he treated Mahajan suffering from diarrhoea and panting from exertion.
· On the other hand Dr.Motilal, Brother of the appellant had stated in his report that Mahajan
was fit and healthy and suffered from no ailments.
· After his death, certificate of Dr. Clarke, showed that Mahajan’sdeath was caused by
Malaria followed by Diarrhoea and secondary anaemia. Supreme court upheld the
repudiation.

Issues in the case:

1. Whether the policy is void due to the suppression of material facts by Mahajan
Deolal?
The policy is void and liable to be repudiated because the insured had given negative
answers to the question that he had never received treatment for any illness.

Dr.Lakshman had stated on record that patient was brought to him by Dr.Motilal Nayak
himself. In his report Dr.Motilal Nayak had stated that he does not remember the deceased
to have ever consulted the doctor. There is no valid reason why Dr.Motilal would forget that
he himself took insured to Dr.Lakshman few months ago.

Deceased not only did not disclose the information of getting treated by the doctor but he
also made false statement that he has not been treated by any doctor. This shows that there
was intention of supressing the material fact deliberately and policy passes to be repudiated.
2. Whether the appellant is entitled to a refund of money, paid to insurance company?
Money was paid as premium because of the policy belonging to the company. Policy was
declared void because of suppression of facts. When the party to a contract breaches his
promise of the contract then the other party shall be discharged from the performance of his
part of the contract. The party guilty of fraud can not be entertained for the refund of money.

Life Insurance Corporation Vs Asha Goel

Brief facts of the case:
· Insurance policy was taken by the husband of the respondent and the insured died with 1
and half year of taking of the policy and the claim was repudiated on the ground of Non-
disclosure and withholding information regarding the health of the Insured.

· Writ petition was filed under Article 226 in High Court.

· Learned judge held that in view of question of maintainability held that liabilities of the
corporation under life insurance is statutory liability and writ petition can lie under article 226.
· Corporation stated that the claim was repudiated on the ground that deceased gave
incorrect answers because he stated that his health was good and he had no consulted a
medical practitioner within last 5 years, and also not remained absent from work on ground
of health for 13 daysfew year back.

· Corporation was not given the opportunity to lead the evidences by the single judge and
there was no enough record brought by corporation to establish conditions mentioned in the
second part of Sec. 45 of the Insurance act. 13 days leave could not be ground to draw
conclusion that deceased suffered from health ailment in 1976.

· The Division bench held that the corporation should be allowed to lead evidence because it
would be useful for their contention that policy was obtained by fraud. Fresh trial started.

Issues in the case:

1. Whether the high court should entertain writ petition with disputes regarding facts and
evidences ?
The High Court should not entertain the matter regarding contractual liability. In the case of
SMT. KiranSinhaVs LIC of Patna High Court writ jurisdiction no. 1620 of 1981 ,that Supreme
Court passed an order that “High Court could not have directed payment of money claimed
under Insurance policies in question in petition under Art. 226 of constitution. The only
remedy available to the Respondent in this case was suit before a civil court. The judgement
of High court is thus set aside.

In the following case, the appeal to division bench was allowed on the ground that
corporation was not allowed to lead evidence. This was allowed by the Division Bench. So,
when corporation when starts presenting evidence will defeat the position that states that if it
becomes necessary to inquire into evidences then the proceeding should not be entertained
under Art. 226 of constitution and the matter should go to alternate forum which is civil suit
and not writ petition under writ under High Court. The writ petition should be filed in such
cases where there is no dispute to the facts and no requirement to file evidences. Therefore
the matter should be entertained in civil suit and not in writ petition.

2. Whether the judgement of the division bench is right in cancelling the repudiating of the
claim?

The judgement of the division bench upholding the decision of single judge to pay the
claimed is supported because of the following points:
I. That the claim was repudiated on the ground Non-disclosure of medical history of the
ailment and the policy was repudiated after passing of the limitation period of 2 years. Where
Sec. 45 clearly states that claim cannot be brought in to questioning after period of 2 years
had expired from the date of issuance of the policy.

II. The defence taken under the second part of the policy cannot be supported because the
corporation has to prove that the deceased had made a false statement and such statement
was material in nature and was made fraudulently. The corporation submitted a claim form
B-1 that showed that the deceased suffered from Myocardial infarction given by the patient
to Dr.Kowde.

III. The thing to note is that the claim form B-1 came into the possession of the LIC after the
claim had been repudiated. Which shows that there was a clear hurry in the minds of the
corporation to repudiate the claim. Another thing to note is that Dr.Kowde is still working in
the hospital and for unknown reasons no affidavit by doctor was filed in court

IV. The petitioner (widow) had annexed 2 documents. Firstly, medical attendant’s certificate
by Dr. P.S. Kulkarni which states that he had no heart ailment prior to the policy and
secondly, another claim form B-1 obtained by Irwin group of hospital that showed he
suffered from no heart ailment.

It is clear from the following grounds that there is no sufficient evidences to prove that he
suffered from heart ailment. So there is no question of repudiation on grounds of Non-
disclosure by fraudulent means.Taking all points in mind the repudiation of claim seems to
be done unfairly, unjustly and arbitrarily. The claim should be passed.

NEW INDIA ASSURANCE COMPANY LTD. Vs. ZUARI INDUSTRIES

LTD. AND OTHERS
Facts of the Case:
The complainant (the respondent in this appeal) had taken insurance policies from the
appellant on 1-4-1998 in respect of its factory situated in Jauhri Nagar Goa. One policy was
a fire policy and the other was a consequential loss due to fire policy. On 8-1-1999 at about
3.20 p.m. there was a short-circuiting in the main switchboard installed in the sub-station
receiving electricity from the State Electricity Board, which resulted in a flashover producing
over currents. The flashover and over currents generated excessive heat. The paint on the
panel board was charred by this excessive heat producing smoke and soot and the partition
of the adjoining feeder developed a hole. The smoke/soot along with the ionized air travelled
to the generator compartment where also there was short circuiting and the generator power
also tripped. As a result, the entire electric supply to the plant stopped and due to the
stoppage of electric supply, the supply of water/steam to the waste heat boiler by the flue
gases at high temperature continued to be fed into the boiler, which resulted in damage to
the boiler. It is evident from the chain of events that the fire was the efficient and active
cause of the damage. Had the fire not occurred, the damage also would not have occurred
and there was no intervening agency which was an independent source of the damage.
Hence, the conclusion of the surveyors that the fire was not the cause of damage to the
machinery of the claimant cannot be agreed with.
The Insurance Company repudiated the claim of the respondent under ‘Fire Policy’ on the
ground that there was short-circuit in the main switchboard which caused a flashover and
there was no sustained fire.
The National Commission allowed the claim of the respondent and hence this appeal.
Issue:
Whether the flashover and fire was the proximate cause of the damage in question.
Judgment:
 Hon’ble Mr. Justice Markandey Katju Observed:
            "The Hon'ble Supreme Court has held that the duration of the fire is not relevant. As
long as there is a fire which caused the damage the claim is maintainable, even if the fire is
for a fraction of a second."
 
Conclusion:   
Hence, Court not agree with the conclusion of the surveyors that the fire was not the cause
of the damage to the machinery of the claimant and gave correct judgment.
R.C. Cooper v. Union of India
FACTS
In the year 1969 when the government of India nationalized 14 banks of India, RC Cooper at
that time had a major share in some of the banks and it affected him and he felt that as an
individual his fundamentals rights have been violated, he then filed a writ petition. The
government of India decided to nationalize banks in order to make banking available to most
parts of India.

ISSUE RAISED
In his writ Petition RC Cooper has stated that his fundamental rights were violated, he filed
this case not as a shareholder of the bank but as an individual citizen of the country. He said
that his fundamental rights under Article 14, Article 13, Article 19 and Article 31 were
violated.

JUDGEMENTS
Supreme Court said that the government has violated Article 31 because of the
compensation decided by the government. Supreme Court also said that the government
has also violated Article 14 in this case because the government only nationalized 14 banks
and gave their permission to the rest of the banks to work normally. Supreme Court also said
that any shareholder or director cannot file a petition that the company fundamental rights
have been violated but they can file a petition if the fundamental rights of the shareholder or
director is been violated as an individual. These judgements were passed with a majority of
10:1.

PRINCIPLE LAID DOWN

Supreme Court of India said that a person as a shareholder or a director of the company
cannot file a petition that his fundamental rights have been violated. Supreme Court laid
down the Effect test and overruled the object test.