State Consumer Disputes Redressal Commission
Sbi Life Insurance Co. Ltd. And Another vs Mrs Ranjna Bajaj on 24 November, 2023
ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, CHANDIGARH.
First Appeal No.1099 of 2022
Date of Institution: 14.12.2022
Reserved on : 17.11.2023
Date of Decision : 24.11.2023
1. S.B.I. Life Insurance Company Limited, through its authorized
officer, Central Processing Centre, 1st Floor, Kapson Bhavan,
Nai Mumbai-400614.
2. S.B.I. Life Insurance Company Limited, through its Senior
Branch Manager, 830, Mall Enclave, Civil Lines, Ludhiana.
.....Appellants/Opposite Parties
Versus
Mrs. Ranjna Bajaj aged 44 years, W/o Late Sh. Arun Bajaj, resident
of H.No.B.34.392, St. No.5, Pritam Nagar, Backside Malhi Farms,
Civil Lines, Ludhiana.
.....Respondent/Complainant
First Appeal under Section 41 of the
Consumer Protection Act, 2019 against
order dated 27.09.2022 passed by
District Consumer Disputes Redressal
Commission, Moga (Camp Court at
Ludhiana)
Quorum:-
Mr. H.P.S. Mahal, Presiding Judicial Member
Mrs. Kiran Sibal, Member Argued by:-
For the appellants : Sh. Rajneesh Malhotra, Advocate For the respondent : Sh. Piyush Sharma, Advocate ..................................................................................
KIRAN SIBAL, MEMBER
The instant appeal has been filed by the
appellants/opposite parties against the order dated 27.09.2022 First Appeal No.1099 of 2022 2 passed by District Consumer Disputes Redressal Commission, Moga, Camp Court at Ludhiana, (in short "District Commission"), whereby the complaint of the complainant under section 12 of the Consumer Protection Act, 1986 (in short 'C.P. Act') against opposite parties (in short "OPs") was partly allowed granting the following reliefs:-
"13. In view of the aforesaid facts and circumstances of the case, we partly allow the complaint of the Complainant and direct Opposite Parties-Insurance Company to pay Rs.12,37,830/- (Rupees twelve lakh thirty seven thousands eight hundred thirty only) to the complainant alongwith interest @ 8% per annum from the date of filing of this complaint i.e. 30.10.2017 till its actual realization. The compliance of this order be made by the opposite parties within 60 days from the date of receipt of copy of this order, failing which the complainant shall be at liberty to get the order enforced through the indulgence of District Consumer Disputes Redressal Commission, Ludhiana."
2. It would be apposite to mention that hereinafter the parties will be referred, as have been arrayed before the District Commission.
3. The briefs facts for disposal of this appeal are that the husband of the complainant; namely, Sh. Arun Bajaj (hereinafter referred to as "DLA"), had availed a loan from State Bank of Bikaner and Jaipur, Sahnewal Branch, Ludhiana and in order to secure the said loan, he purchased an insurance policy from the OPs on 23.10.2015 i.e. "Rin Raksha Group Insurance Scheme" under First Appeal No.1099 of 2022 3 Master policy No.70000011401, for the sum assured of Rs.12 Lakhs. Unfortunately, the DLA in the mid night of 12.01.2016, had fallen from the bed and then became unconscious. The complainant took him to Dayanand Medical College & Hospital, Ludhiana but the doctors of the said hospital declared him as brought dead giving the cause of his death as natural death. The complainant lodged a death claim with the OPs under the insurance policy in question. But the OPs, vide letter dated 06.04.2016, had repudiated the claim of the complainant on the ground that the DLA was suffering from Pre- existing disease. However, the OPs have refunded the premium amount of Rs.6,636/- vide cheque bearing No.194096 dated 31.03.2016. The complainant alleged that the repudiation of the claim by the OPs was totally against law and facts as her husband neither expired on account of any alleged ailment nor he was having any pre-existing disease. He had not committed any breach of doctrine of utmost good faith as alleged by the OPs. Alleging deficiency in service on the part of the OPs the complainant filed a consumer complaint before the District Commission and sought directions against the OPs to pay a total sum of Rs.18,36,600/-, which includes Rs.12,37,830/- as Principal amount, Rs.2,48,770/- as interest, Rs.3,00,000/- as compensation and Rs.50,000/- as cost of litigation.
4. Upon notice, OPs appeared and filed their joint written reply by raising certain preliminary objections, which are not required to be reproduced here for the sake of brevity. On merits, the OPs First Appeal No.1099 of 2022 4 stated that the DLA had availed a loan from State Bank of Bikaner and Jaipur and had applied for Group Insurance Policy in question to secure the said loan. The OPs further stated that in the life insurance contract, there is a positive duty of the proposer to disclose all facts material to the risk being proposed, accurately and fully. Every fact is material which would influence the judgment/assessment of risk by an insurer in fixing the premium or determining whether he will undertake the risk or not. Concealment is the failure of the insured to reveal a material fact to the insurer. The suppression of material information is fatal to the contract of insurance, which is based on the principle of "Utmost Good Faith". The DLA was reported to have died on 13.01.2016. The policy resulted in a claim in just 2 months and 21 days. During the assessment of the claim, it was revealed that the DLA was suffering from Heart Disease prior to the date of commencement of the insurance cover but he did not disclose the same in the proposal form and procured the insurance policy fraudulently. Accordingly, the claim under the policy was repudiated on legal and valid grounds on the basis of suppression of material facts. The same has been intimated to the complainant vide claim repudiation letter dated 06.04.2016 and further the premium under the policy amounting to Rs.6636/- was refunded. After denying the other averments made in the complaint, the OPs prayed for dismissal of the complaint.
5. The parties led evidence in support of their respective contentions before the District Commission. The District First Appeal No.1099 of 2022 5 Commission, after going through the record and hearing learned counsel for the parties partly allowed the complaint of the complainant, vide impugned order as above. Feeling aggrieved against the order, the present appeal has been filed by the appellants/OPs.
6. We have heard learned counsel for the parties and have also gone through written arguments submitted by them and the record of the case.
7. Learned counsel for the appellants vehemently contended that the District Commission, while passing the impugned order has erroneously ignored that the DLA was suffering from heart disease and was also taking treatment for the same, prior to taking the policy. The DLA was very well aware that he was suffering from a heart disease and was under treatment for the same, but he did not disclose these material facts regarding his bad health and diseases in the Membership/Proposal form while applying for the insurance policy. The learned counsel further contended that the District Commission has failed to take into consideration that for getting the insurance cover, the Life Assured needs to submit a declaration of good health (DOGH) along with other details in the membership form, confirming that he/she is in sound health and does not suffer from any illness or critical illness. The Member is duty bound to disclose every factual information in the declaration of good health whether he/she considers it as material or not. Any suppression of material fact in the DOGH will constitute a breach of First Appeal No.1099 of 2022 6 'Doctrine of Utmost Good Faith'. Thus if the Life Assured does not reveal correct information and subsequently the insurer comes to know about the same, the insurer is well within his rights to repudiate the claim under any insurance cover so granted on the basis of such proposal. As there was non disclosure of the material facts, the claim of the respondent/complainant was rightly repudiated. In support of his contentions, the learned counsel for appellants/OPs relied upon the judgment of Hon'ble Apex Court in the case of 'P.C. Chacko and Another V. Chairman Life Insurance Corporation of India and other,' (2008) 1 SCC 321 and Judgment of Hon'ble National Commission in the case of 'LIC Versus Krishan Chander Sharma- II(2007) CPJ-51 (NC) and prayed for acceptance of the present appeal by setting aside the impugned order.
8. On the other hand, the learned counsel for the respondent/complainant has vehemently contended that the impugned order passed by the District Commission is well reasoned, logical and a detailed one. The same has been passed keeping in view all the facts and circumstances of the case and the material produced in evidence by both the parties, have been gone through minutely. The learned counsel further argued that it has been categorically contended by the appellants/OPs in their reply that in group insurance, the privity of contract is between the Master policy holder and the insurer. In the present case the insurer is the appellants and the master policy holder is State Bank of Bikaner and Jaipur, therefore the terms and conditions are binding upon the First Appeal No.1099 of 2022 7 appellants and State Bank of Bikaner and Jaipur only because when there is no privity of contract between the appellants and the DLA. The learned counsel further argued on the similar lines as stated in the complaint and prayed for dismissal of the present appeal.
9. We have given our thoughtful consideration to the contentions raised by the learned counsel for the parties.
10. It is an admitted fact that DLA purchased an insurance policy from the OPs on 23.10.2015 i.e. "Rin Raksha Group Insurance Scheme" under Master policy No.70000011401, Ex. R-3, to secure the loan taken from Bank. The case of the respondent/complainant is that the DLA died on 13.01.2016 and it was a natural death. The complainant lodged the claim with the appellants/OPs but the same has been repudiated by them, vide repudiation letter dated 06.04.2016, Ex.C-3, on the ground that the DLA was suffering from Heart Disease prior to the date of commencement of the insurance cover but he did not disclose the same at the time of entry into the scheme. Alleging deficiency in service on the part of the appellants/OPs, the respondent/complainant filed consumer complaint before the District Commission, which has been partly allowed, vide impugned order as above. Challenging the said ordere, present appeal has been filed by the appellants/OPs.
11. The grievance of the appellants/OPs is that the District Commission, while passing the impugned order has erroneously ignored their objection that the DLA was suffering from heart disease and was also taking treatment for the same, prior to taking the policy. First Appeal No.1099 of 2022 8 The appellants/OPs submits that the DLA did not disclose this material fact in the membership/proposal form at the time of taking the policy and also suppressed the same in DOGH and thus committed the breach of the doctrine of "Utmost Good Faith", therefore, they rightly repudiated the claim of the respondent/complainant.
12. Now, the foremost point for consideration before us is whether the appellants/OPs are justified in repudiating the claim of the complainant on the ground of concealment of material facts with regard to pre-existing disease or not?
13. The stand of the appellants/OPs, in support of repudiation of the claim, is that on receipt of claim intimation, being an early death claim, a detailed investigation was carried out by the investigation agency of the appellants. It was established from the medical records that the DLA was having pre-existing heart disease and he had taken treatment for the same in the year 2012, but the said fact was concealed by him at the time of filling up the proposal form. Therefore, the DLA was guilty of suppressing material particulars regarding his health, which should have been disclosed by him at the time of filling up the proposal form. On the other hand, the respondent/complainant has submitted that the DLA had died a natural death and there was no nexus of alleged Pre-existing disease with the death of DLA. To determine this controversy, we have perused the pleadings and entire evidence on record. A perusal of repudiation letter dated 06.04.2016, Ex. R-7 shows that First Appeal No.1099 of 2022 9 the claim of the respondent/complainant was repudiated on the ground that as per medical record of the DLA, he was suffering from Heart disease and was taking treatment for the same prior to the date of enrollment of policy and the said fact was not disclosed by him at the time of filling up the proposal form. A perusal of Membership/Proposal form dated 23.09.2015, Ex. R-1, shows that under the heading '7.Medical Questionnaire' a specific question was put to the DLA that "Have you ever been treated for or told that you have diabetes or raised blood sugar, high blood pressure, heart attack, chest pain or any heart disease, stroke/paralysis or any other disorder of the circulatory system.............? The DLA had answered as "No". However, the perusal of Discharge Summary, Ex R-5, shows that the DLA; namely Arun Bajaj, age 39 years was admitted in Dayanand Medical College & Hospital 'Unit- Hero DMC Heart Institute' on 20.04.2012 and was discharged on 26.04.2012. Under the heading 'Diagnosis' it is mentioned "CAD-Acute Inferior & RV MI - Thrombolysed with STK on 20.04.2012- LV Dysfunction, EF=42%". Even under the heading "Hospital Course", it is mentioned as under:-
"Hospital Course: Patient presented with acute inferior & RV MI. Patient was thrombolysed with STK on 20.04.2012 as relatives did not opt for primary PTCA. Patient was managed with LMWH, antiplatelets, nitrates, statins, Ace-inhibitors and other supportive measures. Echo was done which showed RWMA with EF=42%.
Patient has been advised coronary angiography, but patient and his relatives want to get it done on later date. Patient is now being discharged in stable condition."First Appeal No.1099 of 2022 10
In the light of the above discharge summary relied upon by the appellants/OPs, we have no hesitation to arrive at the conclusion that the DLA was certainly having a heart disease and for the treatment of the said disease, he remained admitted in the said hospital w.e.f. 20.4.2012 to 26.04.2012. A person would only get admitted in a hospital if there is some medical ailment for which intense medical treatment is required. The appellants/OPs have been duly able to establish by leading cogent evidence in the shape of medical record of the DLA that he had undertaken the treatment for heart disease in the year 2012 and the said fact has been concealed by him at the time of filling up the proposal form. During the course of arguments, the learned counsel for the respondent/complainant has contended that the membership form had been submitted by the DLA on 23.09.2015 and the medical report being relied upon by the appellants pertains to 20.04.2012, which is beyond the period of 3 years of signing the declaration of good heath, therefore the said medical record cannot be relied upon.
The said contention of learned counsel for the respondent/complainant is not acceptable as the claim has been repudiated by the appellants/OPs on the ground of concealment of material facts, which has been duly proved on record by them as discussed above. The District Commission has overlooked the report of the investigating agency supported by the medical record of the DLA. The District Commission, while passing the impugned order, has observed that in the absence of any affidavit of investigator and First Appeal No.1099 of 2022 11 the affidavit of treating doctor of the hospital, reliance cannot be placed on these documents. But we are not in agreement with the said observation of the District Commission as in the present case the respondent/complainant herself placed on record the said medical record/discharge summary as Ex. C-2 and there is no dispute with regard to the authenticity of the said medical record. Hence, it is not mandatory to file an affidavit of the treating doctor as well as of the investigator, who relied upon the said medical record while investigating the matter.
14. It is a settled principle of law that insurance is a contract between the insured and the company and it has to be interpreted as per the terms and conditions of the document evidencing the contract. The information given in the proposal form by the DLA is against the Doctrine of 'Utmost Good Faith', therefore, it would be safe to conclude that the DLA was guilty of suppressing material facts with regard to his pre-existing diseases as he was suffering from heart disease before the date of filling of proposal form. We are also fortified with the recent judgment passed by the Hon'ble Supreme Court in the case titled as "Bajaj Allianz Life Insurance Co. Ltd. Vs. Balbir Kaur" in Civil Appeal No.3397 of 2020( Arising out of SLP(C) No.10652 of 2020) decided on 09.10.2020, wherein similar issue has been discussed by the Hon'ble Apex Court and observed as under:-
"9. A contract of insurance is one of utmost good faith. A proposer who seeks to obtain a policy of life insurance is duty First Appeal No.1099 of 2022 12 bound to disclose all material facts bearing upon the issue as to whether the insurer would consider it appropriate to assume the risk which is proposed. It is with this principle in view that the proposal form requires a specific disclosure of pre-existing ailments, so as to enable the insurer to arrive at a considered decision based on the actuarial risk. In the present case, as we have indicated, the proposer failed to disclose the vomiting of blood which had taken place barely a month prior to the issuance of the policy of insurance and of the hospitalization which had been occasioned as a consequence. The investigation by the insurer indicated that the assured was suffering from a pre-existing ailment, consequent upon alcohol abuse and that the facts which were in the knowledge of the proposer had not been disclosed."
15. Further, it was categorically held by the Hon'ble Supreme Court in Satwant Kaur Sandhu Vs. New India Assurance Company Ltd. (IV) (2009) CPJ 8 (SC) that where there is concealment of fact regarding the health of the insured, which was in his/her knowledge, the same amounts to suppression of material fact and the Insurance Company is justified in repudiating the Insurance Contract.
16. In P.C. Chacko & Anr. v. Chairman, Life Insurance Corporation of India & Ors. 2008(3) CPC 248 (SC) also, the insured had undergone thyroid operation, which was not disclosed by him at the time of obtaining the policy and he died within six months after taking that policy. It was held therein that the deliberate wrong answer may lead to policy being vitiated in law. The contract of insurance was held to be null and void and the repudiation of the claim was upheld. It was held therein that it is a well settled law in the field of insurance that contracts of insurance including the contracts of life assurance are contacts uberrima fides and every fact First Appeal No.1099 of 2022 13 of materiality must be disclosed otherwise there is good ground for rescission.
17. In LIC of India v. Dalbir Kaur 2011(2) CLT 281 (NC) before taking the insurance policy, the insured had undergone treatment as an inpatient in Sony Nursing Home from 8.5.1999 to 16.5.1999 and from 1.2.2002 to 28.2.2002. He was also an outpatient in the same Nursing Home till 22.4.2012 and it was also on the record that he had been sanctioned two months' earned leave from 11.4.2002. While filling up the proposal form, he had given answers in the negative to the relevant questions. It was held by the Hon'ble National Commission that the Insurance Company was entitled to repudiate the insurance claim as the declaration made by the insured was found to be false.
18. Still further, in Maya Devi v. Life Insurance Corpn. of India 2011 (3) CPJ 43 (NC), it was held by the Hon'ble National Commission that insurance policy is an agreement of utmost good faith between the insurer and the insured and breach by suppressing material facts on the part of the insured would result in repudiation of claim by the insurer.
19. In view of the law laid down in the above noted authorities as well as in view of our above discussion, we are of the considered opinion that the Deceased Life Assured had suppressed the material information with regard to his pre-existing diseases, while filling up the Proposal Form. Had he given the correct information with regard to any previous ailment, the insurance First Appeal No.1099 of 2022 14 company would have assessed the proposal form accordingly and taken a decision to accept or reject the said proposal for insurance. Therefore, the claim of the respondent/complainant has been legally and rightly repudiated by appellants/OPs. Accordingly, we find force in the contentions raised by the appellants and the impugned order of the District Commission is liable to be set aside.
20. Sequel to our above discussion, we allow the appeal of the appellants/OPs and the impugned order of the District Commission is hereby set aside and complaint filed by the respondent/complainant is hereby dismissed.
21. The appellant had deposited a sum of Rs.8,69,058/- at the time of filing of the appeal with this Commission. This amount, along with interest which has accrued thereon, if any, shall be remitted by the Registry to appellants/OPs by way of demand draft/crossed cheque after the expiry of 45 days from the date of receipt of certified copy of this order, in accordance with law.
22. The appeal could not be decided within the stipulated period due to heavy pendency of Court cases.
(H.P.S. MAHAL) PRESIDING JUDICIAL MEMBER (KIRAN SIBAL) MEMBER November 24, 2023.
(Dv)