TaxTMI 
TaxTMI 
2019 (4) TMI 881
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....sis of the third writ petition. The first and third writ petition are at the behest of a partnership firm and their partners are claiming that the partnership firm carries on business of mobilizing investable funds of the general public in various schemes of the financial institutions and debentures of large corporate houses. The second writ petition is at the behest of a person, who has claimed that there exists a contract for insurance between him and the insurance company. All the petitioners have claimed that, the insurance company is not entitled to cancel the existing contract of insurance. Learned Senior Advocate appearing for the petitioner in the third writ petition has submitted that, the insurance company wanted to enlarge the number of persons covered by Group Janata Personal Accident (J.P.A.) Insurance Policy. The insurance company had issued a letter dated October 8, 1997 in this regard. J.P.A. Policy was brought into being noting the competition in the market. J.P.A. Policy brought into being was for a long term of 15 years with the entire premium being paid up front. The writing dated October 8, 1997 does not contain any clause by which, the insurance company can c....
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....of India, has acted arbitrarily. The insurance company has misutilized its dominant bargaining position and has sought to foist an unreasonable decision upon the petitioner and the beneficiaries of J.P.A. Policy. Such an action by the insurance company must be quashed. Learned Senior Advocate appearing for the petitioner has drawn the attention of the Court to the letter dated August 1, 2002 and submitted that, such a letter was issued to the partnership firm why no individual cancellation letter has been issued to the policy holders. Therefore, the purported cancellation sought to be done by the impugned writing dated August 1, 2002 is not binding upon an individual policy holder. Learned Senior Advocate appearing for the petitioner has drawn the attention of the Court to the writing dated October 8, 1997 as well as the certificate of insurance and submitted that, the insurance company took the premium of J.P.A. Plocy for its entire period. After the insurance company having taken such premium from the respective policy holders, it is not entitled to cancel the policy before expiry of the entire period of the contract for insurance. The action taken by the insurance company stan....
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....es under Article 12 of the Constitution, is required to keep the directive principles of said policy in mind, while discharging its functions. He has submitted that, the impugned writing dated August 1, 2002 not being issued to individual policy holders, such a right cannot be said to have become effective. Moreover, although, the interim order granted in the writ petition expired on February 28, 2018, even then, the insurance company did not refund the pro rata insurance premia received from the individual policy holders. Relying upon Regulation 2(c) of the Insurance Regulatory and Development Authority (Protection of Policy Holders' Interest) Regulation, 2002, learned Advocate appearing for the insurance company has submitted that, the certificates of insurance issued in favour of individuals are the cover of insurance within the meaning of such regulation. The certificates of insurance were issued in favour of natural persons. None of such natural persons are not before the Writ Court. The beneficiary of the insurance cover is the partnership firm. Therefore, the first and the third writ petitions are not maintainable at the instance of the partnership firm. No interest of the ....
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....e insurance company has relied upon All India Reporter 1965 Supreme Court page 1288 (Central Bank of India, Ltd., Amritsar v. Hartford Fire Insurance Co. Ltd.) and All India Reporter 1966 Supreme Court page 1644 (General Assurance Society Ltd. v. Chandumull Jain & Anr.). He has also referred to Section 14 of the Insurance Regulatory and Development Authority Act, 1999. He has submitted that, the change of policy happened under statute and under the guidance of Insurance Regulatory and Development Authority (I.R.D.A.). Since the policy was changed under the directions of I.R.D.A., the principles of promissory estoppel are not attracted. In support of such contentions, he has relied upon 1989 Volume 2 Supreme Court Cases page 116 (Bareilly Development Authority & Anr. v. Ajai Pal Singh & Ors.), 1998 Volume 1 Supreme Court Cases page 572 (Sales Tax Officer & Anr. v. Shree Durga Oil Mills & Anr.) and All India Reporter 2011 Supreme Court page 3298 (A.P. Dairy Development Corporation Federation v. B. Narasimha Reddy & Ors.). The following issues have arisen for consideration in the three writ petitions:- (i) Are the writ petitions maintainable? (ii) Are the letters of cancellation ....
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.... Such notice shall be deemed sufficiently given if posted address to the Insured at the address last registered in the Company's books and shall be deemed to have been received by the Insured at the time when the same would be delivered in the ordinary course of post." J.P.A. Group Policy was initially for 15 years with a coverage of Rs. 10 lacs. By the impugned writing dated August 1, 2002, the insurance company has sought to cancel J.P.A. Group Policy and restrict the amount of coverage to Rs. 1 lac and the period of coverage to 5 years. That the insurance company and the partnership firm entered into memorandum of understanding is an admitted fact. That the partnership firm and the insurance company had acted on the basis of such memorandum of understanding, the partnership firm having mobilized business of insurance for the insurance company in the sense that, the partnership firm identified persons in favour of whom, J.P.A. Group Policy were issued by the insurance company is also an admitted fact. The insurance company had issued the certificates of insurance in favour of the natural persons covered under J.P.A. Group Policy. Such certificates of insurance contain the name....
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....io laid down in Marine Engineers & Ors. (supra), Maple Technologies (supra) and Bareilly Development Authority & Anr. (supra). Marine Engineer & Ors. (supra) has considered the nature of contracts that an instrumentality of a State under Article 12 of the Constitution enters into and the amenability of such contracts under Article 226 of the Constitution of India. It has noticed a Supreme Court decision and a High Court decision. It has held as follows:- "16. The Supreme Court in the well known case of Radha Krishna Agarwal v. State of Bihar (AIR 1977 SC 1496) examined different types of contracts in connection with the exercise of power under Article 226 of the Constitution and then it was said as follows: "The Patna High Court had, very rightly divided the types of cases in which breaches of alleged obligation by the State or its agents can be set up into three types. These were stated as follows: (i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 299 of the Cons....
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....tatutory 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 so as to compel authorities to remedy a breach of contract pure and simple. The contract between the parties is non-statutory and contractual in nature. No public element is involved. The policy was not open to the public at large. It was open to the categories of persons who had something to do with the partnership firm, a private party. The partnership firm, a private party, decided which person can approach the insurance company for the insurance cover. The public at large could not have obtained the J.P.A. Group Policy on their own. The partnership firm decided who could approach the insurance company for the Policy. The dealings of the private party in the facts of these cases cannot be construed to mean that public element is involved. In such circumstances the writ petitions are held to be not maintainable. The first issue is answered accordingly. Delhi Cloth & General Mills Ltd. (supra) has considered Section 115 of the Evidence Act, 1872. It has considered the principle of promissory estoppel and its applicabi....
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.... held that, terms and conditions prescribed in insurance policies of Life Insurance Corporation involve public element. An action of a State instrumentality having public element must be just, fair and reasonable in public interest and in consonance with the constitutional provisions and socio economic justice. It has considered a case where, the petitioner having applied for policies for convertible term insurance plan of different amounts and having presented proposal to the Life Insurance Corporation under Table 58, the same were turned down. This action of L.I.C. was challenged before the writ court. The High Court, after holding that, the prescription of conditions for first class lives as eligibility and other criteria laid down in the policy under Table 58 are neither unjust nor arbitrary, declared a part of the condition, namely, further proposal for assurance under the plan will be entertained only from persons in Government or quasi Government organisation or a reputed commercial firm which can furnish details of leave taken during the preceding year in Table 58, as subversive of equality, and therefore constitutionally invalid. Such a declaration by the High Court was up....
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..... Ltd. (supra). It has held that, where parties agree upon certain terms which are to regulate their relationship, it is not for the Court to make a new contract, however unreasonable, if the parties have not made it for themselves. The doctrine of promissory estoppel requires a party making promise to make good such promise, provided that, the promisee altered its material position to its prejudice acting on the promise, Promissory estoppel however does not apply to compel a Government body or a Government to carry out any representation or promise which is contrary to law or which was made outside their authority or power. A Government or a Government body can change its policy. The principles of promissory estoppel does not apply when there is a change of policy. Moreover, the Court should not bind the Government to its promise unless, it is necessary to prevent manifest injustice or fraud. In the present case, the parties are governed by the terms and conditions of J.P.A. Group Policy. The stand taken by the insurance company is that such policy underwent a revision subsequently and that, the insurance company changed its policy. The change in the policy is reflected in the w....