Delhi High Court
Twenty First Century Media ... vs New India Assurance Company Ltd ... on 29 August, 2017
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 29.08.2017
+ LPA 354/2016
TWENTY FIRST CENTURY MEDIA PRIVATE LIMITED
..... Appellant
Through: Mr. Amit Sibal, Senior Advocate
with Ms. Meghna Mishra, Mr. Rohan Sharma,
Mr. Dheeraj P. Deo and Mr. Tahir Ashraf
Siddiqui, Advocates
versus
NEW INDIA ASSURANCE COMPANY LTD (NIA)
..... Respondent
Through: Mr. Pankaj Seth, Advocate
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K. GAUBA
MR. JUSTICE S. RAVINDRA BHAT
%
Facts
1. The appellant is aggrieved by the decision of the learned Single Judge
dated 30.03.2016, by which its writ petition was dismissed. Its claim in the
writ petition was that the refusal to cover an event, which had been insured,
is arbitrary and unreasonable.
2. The appellant, a private company is engaged in event management
business. On 13.09.2010, a letter was issued to one M/s. Prerana
International by the Goa Cricket Association in pursuance of a tender floated
by it, granting "instadia" advertising rights for the cricket match to be played
between India and Australia on 24.10.2010.On 24.09.2010 itself, M/s.
Prerana entered into an Instadia Advertising Agreementwith the appellant by
sub-contracting its rights as a successful bidder, to the appellant. The
appellant, on 15.10.2010 entered into an insurance contract agreement
policy with New India Assurance Company Limited (hereafter "insurer") to
cover for the loss of revenue for the matches to be played during the India
versus Australia One Day International (ODI) series from 17.10.2010 till
24.10.2010 (this included both the match at Goa to be played on 24.10.2010
as well as the match to be played at Kochi on 17.10.2010).
3. The petitioner paid the premium amount of ₹3,24,284/-. The insurer
thereafter provided the appellant with the terms and conditions of the policy.
On 17.10.2010, the ODI to be held at Kochi was called off due to heavy
rain. The appellant accordingly claimed insurance cover with the insurer
invoking the clause of the insurance document, which covered the standard
fire and special perils, including cover for rain causing cancellation of the
match. It appears that this claim was duly settled between the parties and the
insurer paid the appellant the sum that was due as the insurance amount. At
the same time however, on 18.10.2010, the insurer sent an endorsement to
the petitioner which stated:
"Notwithstanding anything herein contained to the contrary, it
is hereby declared and agreed that the perils of storm, cyclone,
typhoon, tempest, hurricane, tornado, flood, inundation, rains,
bad pitch conditions and wet ground conditions are hereby
deleted from the scope of within mentioned policy for Goa ODI
match to be played on 24.10.2010."
On 24.10.2010, the ODI at Goa also got cancelled due to heavy rain.
The petitioner on 25.10.2010 wrote a letter to the insurer requesting it to
settle the claim under the policy. The insurer vide letter dated 27.10.2010
rejected the claim of the appellant by referring to the earlier endorsement it
had sent on 18.10.2010, by which cover for cancellation of the match due to
rain was deleted from the scope of the insurance policy.
Contentions
4. The appellant's grievance is that the impugned order, is erroneous.
Learned senior counsel Mr. Amit Sibal appearing for the appellant contends,
that the insurer is an instrumentality of the State under Article 12 of the
Constitution and has to act reasonably and bona fide. It is contended that
deleting the rain cover from the insurance policy, after the insurer had paid
the premium amount, was illegal and arbitrary. The insurer's actions, says
Mr. Sibal, were mala fide since after the Kochi ODI was cancelled due to
rain, and it had to pay the insurance amount to the appellant, it decided to
unilaterally revoke the rain cover from the insurance policy so as to escape
the rain cover liability for the Goa event. It is contended that such arbitrary
and unilateral action on the part of the insurer violates Article 14 of the
Constitution and makes out a fit case for exercise of jurisdiction of this
Court under Article 226.
5. The impugned judgment, as it holds that the dispute is primarily a
money claim and therefore not subject matter of Article 226, is questioned.
It is argued that the primary relief sought was the quashing of the arbitrary
and unilateral endorsement schedule dated17.10.2010 issued by the insurer
and the subsequent letters dated 27.10.2010 and 04.10.2011. The writ
petition was not instituted as a money claim per se but was merely a
consequential relief to the primary prayer of the appellant for issuance of
writ or a direction/order in the nature of writ quashing the Endorsement
Schedule dated 20.10.2010 and which did not involve any complex/disputed
questions of fact or require evidence in trial.
6. The finding of the impugned judgment as to the absence of public law
character of the dispute is questioned. It is contended that condoning the
actions of the insurer would create a wrong precedent and discourage
companies like the appellant from providing services essential for generating
revenues from international public sport matches such as cricket, which in
turn would hamper the growth of sports. Especially, in the context of a game
like cricket, allowing such actions by the insurer affects the larger public
interest. Reliance was placed on behalf of the appellant on the Division
Bench decision of this Court in Rahul Mehra v. Union of India, (2004) 114
DLT 323:
"To say that cricket is a great game would be a value judgment
for there may be people who regard it as an abomination. But,
to say that cricket is a craze in India, would not be far from the
truth. Indeed, it is a passion, an obsession. A victory by the
Indian team sends a thrill of exhilaration amongst the masses.
Equally, a defeat brings despair and gloom. And, in extreme
cases, anger, violence and riots. Every nuance of the game is
debated, every umpiring decision is dissected and every ball
bowled and run taken is watched by millions with rapt attention.
To say that the Indian public is vitally interested in the game
and the fate of its team would be an understatement."
7. The appellant placed reliance on the decision in ABL International v.
Export Credit Guarantee Corporation of India, (2004) 3 SCC 553 to
contend that writ jurisdiction under Article 226 can be exercised even in
contractual matters. Reliance is also placed on Joshi Technologies
International Inc. v. Union of India, (2015) 7 SCC 728, specifically on the
following part of the decision-
"[....] No doubt, there is no absolute bar to the maintainability
of the writ petition even in contractual matters or where there
are disputed questions of fact or even when monetary claim is
raised."
The appellant contends that in the present case, there are no disputed
questions of fact and the insurance policy has been placed on record.
Moreover, in cases of a concluded contract such as the present one, it would
not be open to the insurer to plead mistake as a ground to preclude exercise
of writ jurisdiction. It is also argued that in the insurance sector, the
government has not entirely opened the playing field to private players and
in such a situation, there is a higher duty of fairness and a higher burden of
acting reasonably, that is placed on the public authority. In the present case,
on the strength of the insurance cover, the appellant entered into a number of
contracts with other agencies and companies in relation to the event
management of the cricket match that was to be held in Goa and incurred
significant expenditure in respect of the same. Finally, it is urged that
relegation of the appellant to civil courts would cause serious prejudice on
account of delay and that in any case, the availability of an alternative
remedy would not preclude writ jurisdiction when it is evident that the acts
of the public agency were arbitrary, unreasonable and mala fide.
8. The respondent urges that this appeal is not maintainable as the matter
essentially is a contractual dispute. The insurers deny that there was any
mala fides on their part in the deletion of the clause from the insurance
policy. It is urged that at the request of the appellant with the concerned
branch office of the insurer company for obtaining Standard Fire and Special
Perils Policy covering the Kochi and Goa ODI matches, the said branch
office forwarded the proposal to the regional office of the company. On
examination of the proposal, the competent authority at the regional office
informed the branch office that cover is to be given as per Standard Fire and
Special Perils Policy, but the said branch misconstrued the cover and they
also allowed rain cover along with perils as per the policy. The insurer
realized the mistake when it received an intimation of claim from the
appellant after the cancellation of the Kochi ODI match due to rain. While
the insurer settled the claim of the appellant for that match, having realized
its mistake it immediately notified the appellant of the same and by an
endorsement notice dated 18.10.2010, clarified that the inclusion of rain
cover was done mistakenly and the same was accordingly withdrawn. It is
contended that the same was done much before the Goa ODI match, which
was scheduled on 24.10.2010.
9. The learned counsel contends therefore that the single judge's order
does not call for any interference. It is contended that the claim of the
appellant is essentially a contractual one and is a money claim that has been
dressed up as a writ petition merely because the insurance provider is an
instrumentality of the State. It is further submitted that withdrawal of a
particular coverage from the policy, much prior to the commencement of the
risk does not amount to an act that is in violation of the tenors of Article 14
of the Constitution. Since the relief claimed by the appellant is essentially
one of damages for breach of contract, it is argued that the appellant must be
relegated to pursue civil proceedings in respect of the same. If the court
were to entertain writ proceedings in such matters, it would open the
floodgates to frivolous litigations whereby parties in order to avoid trial and
circumvent the delays inherent in normal civil proceedings, would invoke
the extraordinary writ jurisdiction of this court and claim what are
essentially contractual remedies.
Decision and Reasoning
10. The law relating to the exercise of writ jurisdiction in case of
contractual matters, where one of the contracting parties is an
instrumentality of the State within the meaning of Article 12 of the
Constitution, has received extensive judicial scrutiny. Before proceeding to
the merits of this case, it would therefore be appropriate and necessary to
recount some of the principles that have emerged from various decisions of
the Supreme Court on this aspect. In Life Insurance Corporation of India v.
Escorts Limited, AIR 1986 SC 1370, the Supreme Court held:
"Broadly speaking, the Court will examine actions of State if
they pertain to the public law domain and refrain from
examining them if they pertain to the private law field. The
difficulty will lie in demarcating the frontier between the public
law domain and the private law field. It is impossible to draw
the line with precision and we do not want to attempt it. The
question must be decided in each case with reference to the
particular action, the activity in which the State or the
instrumentality of the State is engaged when performing the
action, the public law or private law character of the action
and a host of other relevant circumstances."
Similarly, in Bareilly Development Authority v. Ajay Pal Singh,
(1989) 1 SCR 743, the Court noted:
"20. This finding, in our view, is not correct in the light of the
facts and circumstances of this case because in Ramana
Dayaram Shetty's case there was no concluded contract as in
this case. Even conceding that the BDA has the trappings of a
State or would be comprehended in 'other authority' for the
purpose of Article 12 of the Constitution, while determining
price of the houses/flats constructed by it and the rate of
monthly installments to be paid, the 'authority' or its agent after
entering into the field of ordinary contract acts purely in its
executive capacity. Thereafter the relations are no longer
governed by the constitutional provisions but by the legally
valid contract which determines the rights and obligations of
the parties inter-se. In this sphere, they can only claim rights
conferred upon them by the contract in the absence of any
statutory obligations on the part of the authority (i.e. BDA in
this case) in the said contractual field.
21. There is a line of decisions where the contract entered into
between the State and the persons aggrieved is non-statutory
and purely contractual and the rights are governed only by the
terms of the contract, no writ or order can be issued under
Article 226 of the Constitution of India so as to compel the
authorities to remedy a breach of contract pure and simple :
Radhakrishna Agarwal v. State of Bihar (1977) 3 SCR 249;
Premji Bhai Parmar v. Delhi Development Authority (1980) 2
SCR 704 and D. F. O. v. Biswanath Tea Company Ltd. (1981) 3
SCR 662."
In National Highways Authority of India v. Ganga Enterprises, (2003)
7 SCC 410, it was held:
"It is settled law that disputes relating to contracts cannot be
agitated under Article 226 of the Constitution of India. It has
been so held in the cases of Kerala SEB v. Kurien E. Kalathil
(2000) 6 SCC 293, State of U.P. v. Bridge and Roof Company
(India) Ltd. (1996) 6 SCC 22 and Bareilly Development
Authority v. Ajai Pal Singh(1989) 2 SCC 116. This is settled
law. The dispute in this case was regarding the terms of offer.
They were thus contractual disputes in respect of which a writ
court was not the proper forum. Mr. Dave, however, relied
upon the cases of Verigamto Naveen v. Govt. of A.P.(2001) 8
SCC 344 and Harminder Singh Arora v. Union of India (1986)
3 SCC 247. These, however, are cases where the writ court was
enforcing a statutory right or duty. These cases do not lay down
that a writ court can interfere in a matter of contract only. Thus
on the ground of maintainability the petition should have been
dismissed."
11. These decisions evidence the initial trend of the Courts to not exercise
their power of judicial review in writ jurisdiction to examine what are
essentially contractual disputes. The scope of writ jurisdiction in contractual
matters was somewhat expanded - and on behalf of the appellant significant
emphasis was placed on this decision - in the case of ABL International
(supra). In this case, the Court held:
"19. Therefore, it is clear from the above enunciation of law
that merely because one of the parties to the litigation raises a
dispute in regard to the facts of the case, the court entertaining
such petition under Article 226 of the Constitution is not always
bound to relegate the parties to a suit. In the above case of Smt.
Gunwant Kaur (supra), this Court even went to the extent of
holding that in a writ petition, if facts required, even oral
evidence can be taken. This clearly shows that in an
appropriate case, the writ court has the jurisdiction to entertain
a writ petition involving disputed questions of fact and there is
no absolute bar for entertaining a writ petition even if the same
arises out of a contractual obligation and or involves some
disputed questions of fact.
29. From the above discussion of ours, following legal
principles emerge as to the maintainability of a writ petition:-
(a) In an appropriate case, a writ petition as against a
State or an instrumentality of a State arising out of a
contractual obligation is maintainable.
(b) Merely because some disputed questions of facts arise
for consideration, same cannot be a ground to refuse to
entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of
monetary claim is also maintainable."
12. The decision in ABL (supra) however was later considered by the
Supreme Court in Noble Resources Ltd. v. State of Orissa, (2006) 10 SCC
236 and it was held:
"Although the scope of judicial review or the development of
law in this field has been noticed hereinbefore particularly in
the light of the decision of this Court in ABL International Ltd.
(supra), each case, however, must be decided on its own facts.
Public interest as noticed hereinbefore, may be one of the
factors to exercise power of judicial review. In a case where a
public law element is involved, judicial review may be
permissible."
The law on this question was again comprehensively reviewed by the
Supreme Court in State of Kerala v. M.K. Jose, (2015) 9 SCC 433. After
citing a catena of previous decisions of the Apex Court, the Court held:
"We have referred to the aforesaid authorities to highlight
under what circumstances in respect of contractual claim or
challenge to violation of contract can be entertained by a writ
court. It depends upon facts of each case. The issue that had
arisen in ABL International (supra) was that an instrumentality
of a State was placing a different construction on the clauses of
the contract of insurance and the insured was interpreting the
contract differently. The Court thought it apt merely because
something is disputed by the insurer, it should not enter into the
realm of disputed questions of fact. In fact, there was no
disputed question of fact, but it required interpretation of the
terms of the contract of insurance. Similarly, if the materials
that come on record from which it is clearly evincible, the writ
court may exercise the power of judicial review but, a pregnant
one, in the case at hand, the High Court has appointed a
Commission to collect the evidence, accepted the same without
calling for objections from the Respondent and quashed the
order of termination of contract. The procedure adopted by the
High Court, if we permit ourselves to say so, is quite unknown
to exercise of powers under Article 226 in a contractual matter.
We can well appreciate a Committee being appointed in a
Public Interest Litigation to assist the Court or to find out
certain facts. Such an exercise is meant for public good and in
public interest. For example, when an issue arises whether in a
particular State there are toilets for school children and there
is an assertion by the State that there are good toilets, definitely
the Court can appoint a Committee to verify the same. It is
because the lis is not adversarial in nature. The same principle
cannot be taken recourse to in respect of a contractual
controversy. It is also surprising that the High Court has been
entertaining series of writ petitions at the instance of the
Respondent, which is nothing but abuse of the process of
extraordinary jurisdiction of the High Court. The Appellate
Bench should have applied more restraint and proceeded in
accordance with law instead of making a roving enquiry. Such
a step is impermissible and by no stretch of imagination
subserves any public interest."
13. Therefore, it is clear that subsequent decisions have restricted the
holding in ABL International (supra) to the peculiar facts in that case and
have reiterated the limited nature of writ jurisdiction- specifically, how it
should not be exercised in contractual matters even if an instrumentality of
the State is involved. For instance, in Rajasthan State Industrial
Development and Investment Corporation v. Diamond and Gem
Development Corporation, (2013) 5 SCC 470, the Court after reviewing a
number of its previous decisions starting from Bareilly Development
Authority (supra) held:
"14. It is evident from the above, that generally the court should
not exercise its writ jurisdiction to enforce the contractual
obligation. The primary purpose of a writ of mandamus, is to
protect and establish rights and to impose a corresponding
imperative duty existing in law. It is designed to promote justice
(ex debito justiceiae). The grant or refusal of the writ is at the
discretion of the court. The writ cannot be granted unless it is
established that there is an existing legal right of the applicant,
or an existing duty of the Respondent. Thus, the writ does not
lie to create or to establish a legal right, but to enforce one that
is already established. While dealing with a writ petition, the
court must exercise discretion, taking into consideration a wide
variety of circumstances, inter-alia, the facts of the case, the
exigency that warrants such exercise of discretion, the
consequences of grant or refusal of the writ, and the nature and
extent of injury that is likely to ensue by such grant or refusal.
15. Hence, discretion must be exercised by the court on grounds
of public policy, public interest and public good. The writ is
equitable in nature and thus, its issuance is governed by
equitable principles. Refusal of relief must be for reasons which
would lead to injustice. The prime consideration for the
issuance of the said writ is, whether or not substantial justice
will be promoted. Furthermore, while granting such a writ, the
court must make every effort to ensure from the averments of
the writ petition, whether there exist proper pleadings. In order
to maintain the writ of mandamus, the first and foremost
requirement is that the petition must not be frivolous, and must
be filed in good faith. Additionally, the applicant must make a
demand which is clear, plain and unambiguous. It must be
made to an officer having the requisite authority to perform the
act demanded. Furthermore, the authority against whom
mandamus is issued, should have rejected the demand earlier.
Therefore, a demand and its subsequent refusal, either by
words, or by conduct, are necessary to satisfy the court that the
opposite party is determined to ignore the demand of the
applicant with respect to the enforcement of his legal right.
However, a demand may not be necessary when the same is
manifest from the facts of the case, that is, when it is an empty
formality, or when it is obvious that the opposite party would
not consider the demand."
In a recent decision in Joshi Technologies (supra), the Supreme Court
laid down the following principles in relation to exercise of writ jurisdiction
in contractual matters:
"Further legal position which emerges from various judgments
of this Court dealing with different situations/aspects relating
to the contracts entered into by the State/public Authority with
private parties, can be summarized as under:
(i) At the stage of entering into a contract, the State acts
purely in its executive capacity and is bound by the
obligations of fairness.
(ii) State in its executive capacity, even in the contractual
field, is under obligation to act fairly and cannot practice
some discrimination.
(iii) Even in cases where question is of choice or
consideration of competing claims before entering into
the field of contract, facts have to be investigated and
found before the question of a violation of Article 14
could arise. If those facts are disputed and require
assessment of evidence the correctness of which can only
be tested satisfactorily by taking detailed evidence,
involving examination and cross-examination of
witnesses, the case could not be conveniently or
satisfactorily decided in proceedings under Article 226 of
the Constitution. In such cases court can direct the
aggrieved party to resort to alternate remedy of civil suit
etc.
(iv) Writ jurisdiction of High Court under Article 226
was not intended to facilitate avoidance of obligation
voluntarily incurred.
(v) Writ petition was not maintainable to avoid
contractual obligation. Occurrence of commercial
difficulty, inconvenience or hardship in performance of
the conditions agreed to in the contract can provide no
justification in not complying with the terms of contract
which the parties had accepted with open eyes. It cannot
ever be that a licensee can work out the license if he finds
it profitable to do so: and he can challenge the
conditions under which he agreed to take the license, if
he finds it commercially inexpedient to conduct his
business.
(vi) Ordinarily, where a breach of contract is complained
of, the party complaining of such breach may sue for
specific performance of the contract, if contract is
capable of being specifically performed. Otherwise, the
party may sue for damages.
(vii) Writ can be issued where there is executive action
unsupported by law or even in respect of a corporation
there is denial of equality before law or equal protection
of law or if can be shown that action of the public
authorities was without giving any hearing and violation
of principles of natural justice after holding that action
could not have been taken without observing principles
of natural justice.
(viii) If the contract between private party and the
State/instrumentality and/or agency of State is under the
realm of a private law and there is no element of public
law, the normal course for the aggrieved party, is to
invoke the remedies provided under ordinary civil law
rather than approaching the High Court Under Article
226 of the Constitutional of India and invoking its
extraordinary jurisdiction.
(ix) The distinction between public law and private law
element in the contract with State is getting blurred.
However, it has not been totally obliterated and where
the matter falls purely in private field of contract. This
Court has maintained the position that writ petition is not
maintainable. Dichotomy between public law and private
law, rights and remedies would depend on the factual
matrix of each case and the distinction between public
law remedies and private law, field cannot be
demarcated with precision. In fact, each case has to be
examined, on its facts whether the contractual relations
between the parties bear insignia of public element. Once
on the facts of a particular case it is found that nature of
the activity or controversy involves public law element,
then the matter can be examined by the High Court in
writ petitions Under Article 226 of the Constitution of
India to see whether action of the State and/or
instrumentality or agency of the State is fair, just and
equitable or that relevant factors are taken into
consideration and irrelevant factors have not gone into
the decision making process or that the decision is not
arbitrary.
(x) Mere reasonable or legitimate expectation of a
citizen, in such a situation, may not by itself be a distinct
enforceable right, but failure to consider and give due
weight to it may render the decision arbitrary, and this is
how the requirements of due consideration of a
legitimate expectation forms part of the principle of non-
arbitrariness.
(xi) The scope of judicial review in respect of disputes
falling within the domain of contractual obligations may
be more limited and in doubtful cases the parties may be
relegated to adjudication of their rights by resort to
remedies provided for adjudication of purely contractual
disputes."
It is clear from these decisions of the Supreme Court is that the Court
should rarely, if ever, exercise its writ jurisdiction in contractual matters,
even though it may involve an instrumentality of the State. Contractual
disputes, especially where they involve complicated questions of fact, are
best left to civil courts to adjudicate in their jurisdiction.
14. In the present case, the appellant contends that the insurer's actions in
deleting a particular clause from the insurance policy were arbitrary and
unreasonable within the meaning of Article 14 of the Constitution. In reply
to this, the insurer contends that there was an inadvertent error on the part of
the concerned branch office of the insurer and they mistakenly allowed rain
cover along with perils as per Standard Fire and Special Perils Policy. On
discovering this mistake however, the insurer contends that it immediately
corrected the same and thereafter notified the petitioner about this change.
Moreover, the insurer contends that the petitioner did not object to this at the
time but subsequently, once the match at Goa was cancelled because of
heavy rain, brought this claim regarding arbitrary and mala fide deletion of
the particular clause in the insurance policy. The appellant, however
contends that it immediately protested regarding the deletion of the clause.
What is clear therefore, is that this is a purely contractual dispute; an
insurance policy is ultimately a private contract between two parties.
Moreover, there are disputed facts in the present case, i.e. the parties differ
on certain crucial questions of fact as well. In such a situation, it would not
be appropriate for the Court to exercise its writ jurisdiction to decide
questions of fact and provide remedies to the appellant that are essentially
contractual in nature.
15. The learned Single Judge in his order noted that the insurer had
pleaded mistake and in line with the decision of the Supreme Court in LIC of
India v. Asha Goel, (2001) 2 SCC 160, where the Court had refused to
entertain writ proceedings on grounds that the insurer had pleaded fraud,
jurisdiction under Article 226 had to be rejected. The relevant portion of the
single judge's order reads:
"The petitioner herein has not placed the insurance policy on
record. It is thus not known whether the same provides for
arbitration. There is also a material factual dispute whether the
petitioner protested against the Endorsement dated 17th
October, 2010 prior to the cancellation of the match scheduled
on 24th October, 2010; while the petitioner claims to have done
so the respondent strongly refutes. We also do not know what
were the other terms and conditions of the policy and whether
the same permitted deletion of a peril prior to occurrence of
loss attributable thereto. The effect if any of the instructions
alleged to have been issued by the Competent Authority of the
respondent at the Regional Office and in contravention whereto
the policy is stated to have been issued can also not be
considered and adjudicated without examination and cross
examination of witnesses and which is not the domain of writ
jurisdiction. Not only so, the assessment of monetary claim if
any to which the petitioner may be entitled to also requires trial
and neither does the claim has any public law character nor is
any exceptional case for entertaining contractual claim in writ
jurisdiction made out. Supreme Court, in LIC of India vs. Asha
Goel (2001) 2 SCC 160 also held that where plea of fraud is
pleaded by Insurer, writ should not be entertained; here the
respondent has pleaded mistake."
The Single Judge therefore relied on the decision in Asha Goel
(supra), to dismiss the writ petition as questions of fact were involved and
the claim was not of a public law character. The relevant portion of the
decision in Asha Goel is extracted below:
"10. Article 226 of the Constitution confers extraordinary
jurisdiction on the High Court to issue high prerogative writs
for enforcement of the Fundamental Rights or for any other
purpose. It is wide and expansive. The Constitution does not
place any fetter on exercise of the extraordinary jurisdiction. It
is left to the discretion of the High Court. Therefore, it cannot
be laid down as a general proposition of law that in no case the
High Court can entertain a writ petition under Article 226 of
the Constitution to enforce a claim under a life insurance
policy. It is neither possible nor proper to enumerate
exhaustively the circumstances in which such a claim can or
cannot be enforced by filing a writ petition. The determination
of the question depends on consideration of several factors,
like, whether a writ petitioner is merely attempting to enforce
his/her contractual rights or the case raises important
questions of law and constitutional issues; the nature of the
dispute raised; the nature of inquiry necessary for
determination of the dispute etc. The matter is to be considered
in the facts and circumstances of each case. While the
jurisdiction of the High Court to entertain a writ petition under
Article 226 of the Constitution cannot be denied altogether,
Courts must bear in mind the self-imposed restriction
consistently followed by High Courts all these years after the
constitutional power came into existence in not entertaining
writ petitions filed for enforcement of purely contractual rights
and obligations which involve disputed questions of facts. The
Courts have consistently taken the view that in a case where for
determination of the dispute raised, it is necessary to inquire
into facts for determination of which it may become necessary
to record oral evidence a proceeding under Article 226 of the
Constitution is not the appropriate forum. The position is also
well settled that if the contract entered between the parties
provides an alternate forum for resolution of disputes arising
from the contract, then the parties should approach the forum
agreed by them and the High Court in writ jurisdiction should
not permit them to bypass the agreed forum of dispute
resolution. At the cost of repetition it may be stated that in the
above discussions we have only indicated some of the
circumstances in which the High Courts have declined to
entertain petitions filed under Article 226 of the Constitution
for enforcement of contractual rights and obligation; the
discussions are not intended to be exhaustive. This Court from
time to time disapproved of a High Court entertaining a
petition under Article 226 of the Constitution in matters of
enforcement of contractual rights and obligation particularly
where the claim by one party is contested by the other and
adjudication of the dispute requires inquiry into facts. We may
notice a few such cases; Mohammed Hanif v. The State of
Assam (1970) 2 SCR 197; Banchhanidhi Rath v. The State of
Orissa and Ors. AIR 1972 SC 843 ; Smt. Rukmanibai Gupta v.
Collector, Jabalpur and Ors. AIR 1981 SC 479; Food
Corporation of India and Ors. v. Jagannath Dutta and Ors.
(1993) 2 SCR 497; and State of H.P. v. Raja Mahendra Pal and
Ors. (1999) 2 SCR 323.
11. The position that emerges from the discussions in the
decided cases is that ordinarily the High Court should not
entertain a writ petition filed under Article 226 of the
Constitution for mere enforcement of a claim under a contract
of insurance. Where an insurer has repudiated the claim, in
case such a writ petition is filed the High Court has to consider
the facts and circumstances of the case, the nature of the
dispute raised and the nature of the inquiry necessary to be
made for determination of the questions raised and other
relevant factors before taking a decision whether it should
entertain the writ petition or reject it as not maintainable. It has
also to be kept in mind that in case an insured or nominee of
the deceased insured is refused relief merely on the ground that
the claim relates to contractual rights and obligations and he/
she is driven to a long drawn litigation in the civil court, it will
cause serious prejudice to the claimant/other beneficiaries of
the policy. The pros and cons of the matter in the context of the
fact situation of the case should be carefully weighed and
appropriate decision should be taken. In a case where claim by
an insured or a nominee is repudiated raising a serious dispute
and the Court finds the dispute to be a bona fide one which
requires oral and documentary evidence for its determination
then the appropriate remedy is a civil suit and not a writ
petition under Article 226 of the Constitution. Similarly, 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 for determination of the issue
raised then a writ petition is not an appropriate remedy."
16. Therefore, when a contractual dispute does not have an overriding
public law character or where public interest is not involved, or where
complicated questions of fact must be gone into- such as in that case where
the insurer had pleaded fraud, the Court must not exercise its writ
jurisdiction in deciding insurance claims and such cases must be relegated to
the civil courts. The appellant has urged that the single judge fell into error
in relying on Asha Goel (supra) as it dealt with the allegations of fraud
whereas in the present case, the insurer says there was an inadvertent
mistake on its part. There is no merit in the submission of the insurer.
No doubt Asha Goel (supra) concerned the allegation of fraud; nonetheless,
the principle that emerges from the decision is not restricted to allegations of
fraud only. In fact, the Court clearly noted that where questions of fact are
needed to be gone into and there is a dispute between the parties as to the
essential facts, then writ jurisdiction would be inappropriate. In the present
case, the insurer has pleaded mistake; the ruling in Asha Goel (supra) would
apply. There is a dispute on facts as well; in the circumstances even though
the appellant has produced the copy of the insurance policy document, that is
insufficient for the Court in exercise of its writ jurisdiction to decide the
present dispute. To agitate such a claim, the appellant has to be left to pursue
civil proceedings in the appropriate court of law.
17. In the circumstances, the appeal has to fail. It is therefore, dismissed,
without order as to costs. It is of course open to the appellant to bring a
claim before the appropriate court in civil proceedings. This judgment does
not in any manner affect the merits of those proceedings and all rights and
contentions of the parties are reserved.
S. RAVINDRA BHAT, J
R.K. GAUBA, J
AUGUST 29, 2017
