K.RAMASWAMY - (1.) LEAVE granted Delay condoned.
(2.) THE appeal and cross appeal arise from the Division Bench judgment of Gujarat High Court dated 31/01/1994 in Spl. Civil Application No. 2614 of 1980. On 25/08/1980 one Prof. Manubhai Shah Executive trustee of Respondent No. 1 and Mr. D. N. Dalal sought policies under Table 58. Similarly in December,1978 Respondent Nos 2 to 4 sought similar policies for convertible term insurance plans for different amounts. In September, 1980 Respondent Nos. 6 and 7 agents of the appellants when presented proposals to the LIC under Table 58 on behalf of individual respondents and promised to cover under Table 58 other 9 crores uninsured households, the LIC turned them down. Consequently after issuance of a notice through counsel on 14/09/1980, the respondents filed the above writ petition.THE conditions imposed and denial to accept policies sought under Table 58 were assailed arbitrary, discriminatory, violating Articles 14,19 (1) (g) and right to life in Article 21 of the Constitution. THE High Court while upholding that prescription of conditions, for 1st 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 conditions, namely, "Further, proposals 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 under Table 58" as subversive of equality and, therefore, constitutionally invalid. Accordingly, it was struck down. THE Corporation filed the appeal against the portion that was struck down and the respondents filed the cross appeal against the finding that went against them. Sri Harish Salve,learned Senior counsel for LIC contended that on acceptance of the proposals by the insurer in Life Insurance business, the policy holders gets rights in the policy. As the proposals of respondents 2 to 5 were rejected as not being in conformity with the conditions prescribed in Table 58, they cannot enforce any right flowing from Table 58 under Article 226. They cannot use judicial process to create rights in their favour unless a binding contract emerged by acceptance of the proposal of insurance and acted upon. No rights would flow to any party to the proposal to challenge the policy, its terms and plan of insurance. The writ petition under Article 226 of the Constitution is not maintainable to enforce contractual obligations. It is next contended that life Insurance policies are framed on actuarial considerations and worked out as per the needs of the policy to suit the interests of all those interested in obtaining a particular policy and their viability. The High Court was not justified in interfering with matters based on economic criteria and commercial contracts, in particular, after having recorded findings referred to hereinbefore in favour of the Corporation, the High Court committed error of law in declaring the offending portion of the policy as arbitrary and violative of Articles 14,19 and 21 of the Constitution. The actuarial principles are the calculations made by actuaries taking into consideration. (a) present condition of health and physical build of the life to be insured; (b) personal and family history, occupation, likelihood of any change in the occupation etc. the premium to be charged in a particular policy is calculated by actuarial method. These conditions have been imposed taking into consideration risk to be covered to see that the plan is successfully operated. The aforestated conditions are necessarily to forecast mortality among insured lives within a relatively narrow margin of error, depending upon general population statistics based on insured lives. The tables were framed to cover the risk of all classes of people to suit all the classes. There are several policies like endowment policy, annuity policy and whole life policy. These are again sub-divided into various plans of insurance. All policy holders under Table 58 have been treated as a class. Several conditions in the policy do disclose that they have been formulated to effectuate the policy under Table 58. Taking into consideration the minimum and maximum age enumerated therein, all the policy holders under Table 58 are treated as a class. Restrictions imposed or the terms and conditions contained therein are reasonable. There is no invidious discrimination meted out to the respondents. It is open to the policy holders to have term policy converted into endowment or whole life policy. The policy of denying convertible risk, policy to female lives before the expiry of two years of the term policy, all eligible persons are entitled to convert them into whole life policy or endowment policy before expiry of two years. The premium payable on the term policy is very marginal to benefit such of those persons at the threshold of their career. In the event of the said conversion there is no need for fresh medical report. Since the policy is commercial contract, the High Court has no power or jurisdiction to interfere with the contractual relations declaring them as invalid and unconstitutional.
(3.) SHRI Dhawan, learned senior counsel for the respondents resisted these contentions on the anvil of Article 25 of the Declaration of Human Rights, Article 7 of the International Convant on Economic and social Rights and in particular on the provisions of part III and the Directive principles of the Constitution which assure livelihood. This Court interpreted the world "life" under Article 21 broadly so as to render them socio-economic justice. Policy under Table 58 is cheaper. Having issued the policy, the appellant has to formulate its scheme in such a way that it is not inconsistent with the egalitarian social order which the Constitution seeks to achieve and the Court must be given effect to them. The interpretation sought to put up by the LIC depletes practical content of human rights in Part IV. Initially females were excluded to have insurance policy. By sustained public pressure, females were made eligible to have policy including term policy. Age was extended from 45 to 50 years. Similarly the respondent through is doing life insurance business, its policies must be conformity with the rights in Parts III and IV of the Constitution. It has no power to impose any unconstitutional conditions in the contract, no classification much less valid classification has ben made between salaried employees in Government, Semi-Government, organised sectors or reputed commercial organisations self-employed or unorganised sectors. The term insurance policy being cheaper premium helps large segments of poor and lower middle class persons. Sezhivan Committee on improvement of Insurance, the LIC recommended popularisation in urban and rural areas policies under Table 58. The whole life or endowment policies are not easily accessible to the poorer segments of the society. Only term insurance under Table 58 policy is more attractive and easily accessible to those segments of the society. Imposition of conditions including the one struck down by the High Court are, therefore, unconstitutional and impermissible. We have given our anxious and careful consideration to the respective contentions, since our answers to the questions involved are bound to have far reaching effect on the business of life insurance, we have minutely examined all the questions bearing in mind the larger public interest. Life insurance policies based on actuarial Tables and the policy Holders needs suited to their requirements. It appears that LIC has, in assessing the risk, taken into consideration the factors : (a) present condition of health and physical build of the person whose life has to be insured; (b) his/her personal history i.e., record of illness suffered in the past by person whose life has to be insured, risks to be covered and the person's habits in general; (c) family history i.e. record of heath and longevity of members of the family of the person to be insured; (d) occupation and environment of the person whole life has to be insured; and (e) the likelihood of any change in the occupation of the person whose life has to be insured, calculated to increase the risk of his/her life. Based thereon, the amount of premium would be charged depending upon whether a particular policy is term insurance or an endowment or whole life policy etc. based on actuarial method. The terms and conditions subject to which the risk is to be covered, undoubtedly, would play a vital role in deciding the amount of premium payable and the conditions on which the policy is to be issued. In that behalf, it would be necessary to foresee mortality among insured lives within a relatively narrow margin of error. The insurer, therefore would be entitled to devise its plans, relative terms and conditions, its advantages and other relevant factors. Therefore, the insurer would be entitled to specify eligibility criteria in various plans of life insurance. Each policy differ in its contents and conditions, the degree of risk, the amount of premium payable in that behalf and also mortality rate.;