The Punjab & Haryana High Court has reaffirmed the limited supervisory scope of Article 226, refusing to disturb the factual findings of consumer fora even where an insurer alleges mis-selling. By upholding the National Consumer Disputes Redressal Commission’s modified refund order, the judgment delineates the boundary between appellate review and supervisory oversight.
Background & Facts
The Dispute
The petitioners, INDUSIND NIPPON LIFE INSURANCE CO. LTD. and an associate, faced multiple consumer complaints alleging that a life-insurance policy was mis-sold as a fixed-deposit scheme. The respondents, including Daljeet Singh Cheema and others, claimed that the insurer’s representatives induced them by misrepresentation.
Key Facts
- 26 December 2018: Respondent No. 1 submitted a proposal for the "Reliance Nippon Life Fixed Savings Plan" covering his son Sandeep Singh Cheema.
- 28 December 2018: Policy issued with a monthly premium of Rs 20,000 for a 12-year term.
- Up to 2021: Respondent paid 27 premiums totaling Rs 5,40,000.
- Post-2021: Premium payments defaulted; policy lapsed.
- Consumer complaint: Filed alleging the policy was mis-sold as a fixed-deposit and seeking full refund of the deposited amount with interest.
- 10 November 2023: District Consumer Disputes Redressal Commission (DCDRC-II, UT Chandigarh) allowed the complaint, ordering refund of the deposited amount with 9% per annum interest, compensation and litigation costs.
- 8 October 2024: State Consumer Disputes Redressal Commission (SCDRC) rejected the petitioner's first appeal.
- Subsequent appeal: National Consumer Disputes Redressal Commission (NCDRC) modified the order, setting aside compensation and costs but maintaining refund of the deposited premium with interest at 12% per annum.
Procedural History
- 22 January 2026: Order dated 22.01.2026 (the impugned order) passed by the consumer forum.
- 8 October 2026: Order dated 08.10.2026 passed by the consumer forum.
- 10 November 2023: Order dated 10.11.2023 passed by the consumer forum (refund order).
- 24 August 2026: High Court delivered the present common order disposing of all writ petitions.
Parties' Positions
- Petitioner (Insurer): Argues that the policy terms, including a 15-day free-look period, bind the respondent; after lapse due to non-payment, the insurer cannot be held liable for alleged mis-selling. Relied on Deddappa v. The Branch Manager, National Insurance Co. (2008) 2 SCC 595.
- Respondent: Contends that the policy was obtained through misrepresentation and unfair trade practice, rendering the contract void ab initio and entitling them to a full refund with interest.
Relief Sought
- Petitioner: Quash the order dated 22.01.2026 and the subsequent orders dated 08.10.2026 and 10.11.2023; seek dismissal of the writ petitions.
- Respondent: Maintain the refund order with interest; seek compensation and costs.
The Legal Issue
The central question was whether the High Court, exercising its supervisory jurisdiction under Article 226 of the Constitution, could set aside the orders of consumer fora on the ground of alleged mis-selling when those fora had already found misrepresentation and modified the relief to a refund with 12% interest.
Arguments Presented
For the Petitioner
- The insurance contract is a contract of indemnity; its terms, including the free-look clause, must be strictly construed.
- The policy had lapsed after the respondent defaulted on premium payments; therefore the insurer cannot be held liable for alleged mis-selling.
- Relied on Deddappa v. The Branch Manager, National Insurance Co. (2008) 2 SCC 595, asserting that courts cannot impose liability on insurers absent fraud or misrepresentation at the time of contract formation.
For the Respondent
- The insurer’s representatives induced the respondent by misrepresenting the policy as a fixed-deposit scheme, constituting an unfair trade practice under the Consumer Protection Act, 2019.
- The contract was void ab initio due to misrepresentation, entitling the respondent to a full refund of premiums paid with interest.
- The NCDRC’s modification of the order to a 12% interest rate was appropriate and did not suffer from jurisdictional error.
The Court's Analysis
The Court began by noting the common factual and legal matrix across the multiple writ petitions and therefore adopted a single order for convenience. It emphasized that the High Court’s jurisdiction under Articles 226 and 227 is supervisory and not a substitute for an appellate forum. The Court held that it cannot re-appreciate evidence or overturn factual findings of specialised consumer tribunals absent a clear jurisdictional flaw, perversity, or manifest illegality.
"This Court does not find any ground to exercise extraordinary writ jurisdiction to interfere in the impugned orders."
The Court observed that all three consumer fora - District, State and National - had examined the evidence and concurred that the policy was obtained through misrepresentation, rendering the contract void. The NCDRC’s modification, which retained the refund of the deposited premium with interest at 12% per annum while setting aside compensation and costs, was deemed legally sound. The Court rejected the petitioner's reliance on Deddappa, distinguishing that case on the basis of a motor-accident claim involving a dishonoured cheque, whereas the present matter involved alleged mis-selling at inception.
Consequently, the Court found no jurisdictional infirmity in the consumer forum orders and declined to intervene. It reiterated that supervisory jurisdiction is circumscribed and cannot be employed to disturb consistent factual findings of specialised forums.
The Verdict
The writ petitions were dismissed with no order as to cost. The refund order of the deposited premium of Rs 5,40,000 with interest at 12% per annum, as modified by the NCDRC, stands. The compensation and litigation costs previously awarded were set aside. All pending miscellaneous applications, if any, were disposed of.
What This Means For Similar Cases
Supervisory Jurisdiction Is Not Appellate Review
- Practitioners must recognise that Article 226 cannot be used to re-evaluate factual determinations of consumer tribunals.
- Grounds for interference are limited to jurisdictional error, perversity or manifest illegality.
Deferential Treatment of Consumer Forum Findings
- Evidence and findings recorded by District, State and National Consumer Disputes Redressal Commissions are given high deference.
- Appeals should focus on legal errors, not on re-litigation of facts.
Misrepresentation Vitiates Insurance Contracts
- If an insurer’s agent misrepresents the nature of a policy, the contract may be declared void ab initio.
- Refund of premiums with appropriate interest is the typical remedy; compensation is discretionary and may be set aside on appeal.
