State Consumer Disputes Redressal Commission
Kalpana Murji Patel vs Bharati Axa Life Insurance Ltd on 31 August, 2023
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IN THE TAMILNADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
CHENNAI.
Present: Hon'ble THIRU. JUSTICE R. SUBBIAH : PRESIDENT
THIRU R. VENKATESAPERUMAL : MEMBER
C.C. No. 45 of 2018
DATED THIS THE 31st DAY OF AUGUST 2023
Mrs. Kalpana Murji Patel,
Aged about 38 years,
W/o Late Mr.Murji Punja Patel,
Residing at No.80/93, Flat No.4A
4th Floor, Palace Regency,
Purasawakkam High Road,
Keliys, Kilpauk,
Chennai - 600 010. .. Complainant
- Vs -
Bharti AXA Life Insurance Ltd.,
Represented by its Managing Director,
Having its registered office at:
Unit No.601 & 602,
6th Floor, Raheja Titanium
Off Western Express Highway,
Goregaon (E), Mumbai - 400063. .. Opposite Party
Counsel for the Complaint : M/s. Karthik Raganathan
Counsel for the Opposite Party : Set Ex pate.
This Complaint is coming before us for final hearing today, on
08.08.2023, and on hearing the arguments of the counsel for the
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Complainant and upon perusing the material records, this Commission made
the following :-
ORDER
R.SUBBIAH J., PRESIDENT This Complaint has been filed under Section 17 of the Consumer Protection Act, 1986 for the following reliefs as against the Opposite Party :-
(a) Direct the opposite party to pay the insurance claim of the Complainant as per the policy number 10000066 with ID:
RLCPCHE000273117 for INR 40,00,000/- that was repudiated due to a deficiency of service on the part of the Opposite Party;
(b) Direct the opposite party to pay compensation of Rs.1,00,000/- in addition to payment of the claim amount, for negligence shown by it which led to severe mental and physical agony and injury to the Complainant and her family members majorly comprising of senior citizens and children, who also are beneficiaries under the insurance policy.
2. The case of the complainant is that the she is the wife of late Mr.Murji Punja Patel. Her husband had taken a Life Insurance Policy from the opposite party on May 23, 2014 under Policy No.10000066 with Member ID RLCPCHE000273117 for Rs.40,00,000/-. Her husband died on April 08, 2016. The Complainant being entitled to insurance claim as per the policy, she filed a claim with the opposite party to recover the assured sum by the 3 opposite party. But to the complainant's utter shock and surprise, the opposite party through their letter dated November 23, 2016, repudiated the claim unilaterally alleging that the complainant's husband had given false and misleading information at the time of issuance of the policy, stating that he had suppressed the fact that he had been suffering from Diabetes Mellitus, Coronary Artery Disease, Old myocardial Infarction and had undergone Angioplasty 12 years ago. The opposite party had mentioned in its repudiating letter that the complainant's husband had answered 'No' to certain questions pertaining to the prior health information which includes heart related diseases i.e. the insured had answered 'No' to certain questions which ask whether the insured suffered from any previous heart related problems. It is further stated that had the opposite party known about the previous heart related problems of the insured, it would not have issued the insurance policy to the insured.
3. To the repudiation letter issued by the opposite party, the complainant through her advocate issued a legal notice dated March 22, 2017, responded appropriately and thereby clarified that the repudiations were illegal and not as per law. As a routine practice, the complainant's husband was required to fill questionnaire given by the opposite party at the time of entering into the aforesaid insurance policy. The content of the questionnaire was entirely in English; however, the complainant's husband i.e. insured had signed the policy in Gujarati. The questionnaire form does 4 not state anywhere that the insured was explained about the questionnaire in a language other than English more specifically because the insured signed the questionnaire in Gujarati. The opposite party did not take any measures to ensure whether the insured understood the questions in choosing the options either as 'yes' or 'no' such that the insured was aware of the consequences of his answers. In failing to do so, the opposite party had indulged in unfair trade practice and more specifically by trying to take advantage of its own mistake.
4. Further, it is evident that the opposite party had not taken any precautions such as to conduct health checkups before issuing high value insurance policy, thus, amounting to negligence on the part of the opposite party since relying only on the answers given in the questionnaire will give much scope to it to later repudiate the insurance policy on frivolous reasons since the questions put to the insured at the time of granting the insurance majorly contains questions which may lead to an unfair advantage to opposite party as the questionnaire contemplates only a 100 per cent perfectly fit person to take insurance policy. Therefore, there is possibility of genuine misstatement since the questionnaire puts certain questions which are humanly not possible to fulfil, and thereby, these genuine misstatements can be misused by opposite party to unjustly forfeit the premiums paid in the name of misstatement and suppression of facts. The failure on the part of 5 the opposite party to have standard health check up measures before issuing high value insurance policy is negligence on its part.
5. Furthermore, the policy was taken by the complainant's husband on May 23, 2014. The opposite party repudiated the policy by its letter dated November 28, 2016, crossed the limitation period of two years from the date of the policy. As per Section 45 of the Insurance Act, 1938, the time period to repudiate or to call in question any insurance policy is only two years from the date of the policy. Therefore, the letter dated November 28, 2016, issued by the opposite party is not in compliance as per the requirement of Section 45 and hence the same is invalid. It appears that as if the opposite party had cancelled the aforesaid policy on the basis of conjectures and surmises and without any supporting evidences. Since the repudiation letter issued by the opposite party is not as per Section 45 of the Insurance Act, 1938, a legal notice was issued to the opposite party on March 22, 2017. The opposite party replied to the said legal notice through its advocate vide legal notice dated April 04, 2017, which was posted on April 10, 2017 justifying the repudiation of the policy for the very same reasons. There had been gross negligence on the part of the opposite party. Hence, the complainant had filed the complaint for the reliefs stated supra.
6. Though notice was served on the Respondent, Respondent has not chosen to appear before this Commission. Hence, the Respondent was set ex parte and Mr.M.B.Raghavan was appointed as Amicus Curiae. 6
7. In order to substantiate the case and claim, along with proof affidavit, 6 documents were filed on the side of the Complainant and they were marked as Exs.A1 to A6.
8. When the matter was taken up for consideration counsel for the complainant has submitted that Insurance Policy was taken by the complainant's husband on May 23, 2014, which is much before the amended Insurance Act, 1938 which came into force only from December, 2016. As per Section 45 of the Insurance Act, 1938, the opposite party have right to repudiate the concerned policy within two years from the date of inception of the policy. But in the instant case the repudiation letter of the opposite party was sent on November 28, 2016, it is after two years and 6 months from the date of the policy, repudiation crossed the limitation period of two years from the date of inception of the said policy. If the opposite party wants to put the policy in question after two years then it is required to "show" that the statement made by the insured was misleading and had suppressed the material facts. But as per Section 45, opposite party is required to "show" in repudiation letter i.e. establish with the help of evidences in the repudiation letter itself that the insured had heart related problems even before taking the policy and that it was suppressed by the insured which is the requirement of Section 45 of the Insurance Act, 1938. Since the opposite party has not produced any such materials along with the repudiation letter but had only cancelled the policy based on conjectures and suppositions and without any 7 supporting evidence, the repudiation letter issued by the opposite party is not as per old Section 45 of the Insurance Act, 1938 and, is thus invalid. Therefore, the policy continued to exist and the opposite party is required to make the insurance payments to the complainant as per the policy. The complainant had explained these aspects in the legal notice sent to the opposite party on March 22, 2017. The opposite party sent a reply dated April 04, 2017, justifying the repudiation of policy for the very same reasons. The repudiation letter does not fulfill the requirements of Section 45 by producing the evidences of suppression of material fact by the insured. Therefore there is deficiency of service on the part of the opposite party. Thus, prayed for a direction to the opposite party to pay the insurance policy amount of Rs.40,000/- due to a deficiency of service on the part of the opposite party; to pay a compensation of Rs.1,00,000/- in addition to payment of the claim amount, for negligence shown by it which led to severe mental and physical agony and injury to the complainant and her family members majorly comprising of senior citizens and children, who are beneficiaries under the insurance policy and for costs.
9. Learned counsel for the Complainant in support of his contentions also relied upon the judgment in:
(i) Kulla Ammal vs. The Oriental Government Security Life Assurance Co. Ltd. 68 LWJ 912;8
(ii) LIC Vs. Bhogadi Chandravathamma AIR 1970 SCC OnLine AP 173;
(iii) Jasmine Ebenezer Arthur Vs. HDFC ERGO General Insurance Company Limited and Ors. 2019 SCC OnLine Mad 2246;
(iv) Bharat Watch Co. Vs. National Insurance Company Limited (2019) 105 taxmann.com 321 (SC);
(v) LIC Vs. Manjula Mohanlal Joshi AIR 1975 Ori 116.
10. Learned Amicus Curiae also made a detailed submission with regard to the legal aspects by relying upon Section 45 of the Insurance Act, 1938. The contract of insurance is a contract uberrima fide and the Life insured has duty to fully and correctly answer questions and disclose information required in the proposal. Failure to do so would amount to misrepresentation and entitle the insurer to deny liability. Section 45 of the Insurance Act restricts the right of the insurer to dispute the validity of a policy on the ground of incorrect or false statement after two years from the date of insurance, unless they show that it suppressed facts which were material to disclose. While the restriction of two years applies generally to any incorrect or false statement in the proposal, it will not apply if the insurer can show that there was suppression of "material facts".
11. The complainant has disputed that the proposal was not explained to the signatory. The complainant's allegation of non-explanation of contents of the proposal remains undisputed by the opposite party. The opposite 9 party Insurance Company cannot deny a claim on the ground of false statements in the proposal after two years of insurance, unless they show that it was on material fact. The burden of proof is statutorily on the opposite party. Since the opposite party has remained ex parte and neither pleaded nor proved that there was suppression of material facts in the proposal, the denial on the ground of false statements after two years may be construed contrary to Section 45 of the Insurance Act, 1938 and therefore the denial of claim is not sustainable. Thus, he argued about the legal position in this case.
12. In view of the above submissions, the following points arise for consideration:- Though very more contentions were raised in the complaint the main issue in this case revolves upon the question as to whether the denial of the claim is in violation of Section 45 of the Insurance Act, 1938? If this question is decided that would suffice to decide the issue involved in this case.
13. It is the case of the complainant at the time of taking insurance policy with the opposite party complainant's husband/deceased had signed in the filled questionnaire dated 23.05.20114, containing reply regarding his health. Complainant's husband/insured died on 08.04.2016 due to acute AWMI (Anterior Wall Myocardial Infarction) and other ailments as per Death Certificate issued by Apollo Hospital Ex.A.3. A claim was made by the 10 complainant to the opposite party to recover the assured sum by the opposite party.
14. But the said claim was repudiated by the opposite party vide letter dated November 28, 2016, unilaterally, alleging that the complainant's husband has given false and misleading information at the time of issuance of policy and that he suppressed the fact that he has been suffering from Diabetes Mellitus, Coronary artery disease, Myocardial Infarction and undergone Angioplasty 12 years prior to insurance, which information has not been disclosed in the questionnaire. The opposite party had further stated that they would not have issued the policy had this information been disclosed in the questionnaire. Therefore, there is suppression of material facts.
15. But it is the reply of the complainant that the repudiation letter dated 28.11.2016 is in violation of Section 45 of the Insurance Act, 1938. If there is any document or evidence regarding false statement relating to the health of the insured/complainant's husband, the same would be in violation of Section 45 of the Insurance Act, 1938. In this regard counsel for the complainant further submitted that Section 45 of the Insurance Act imposes restrictions on the right of insurer to dispute the validity of a policy. While Section 45 was amended with effect from 26.12.2014, the present policy was issued on 23.05.2014 which is governed by the provision before amendment. Since the denial is after 2 years 6 months from the date of issuance of policy 11 the insured must show that the denial was on a material matter or suppressing of facts which were material to disclose and that it was fraudulently made by the statement of fact or that had suppressed fats which it was material to disclose.
16. Section 45 restricts the right of insured on the ground of incorrect or false statement unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose. In the instant case, the complainant has disputed that proposal was not explained to the signatory. The said statement of the complainant remained undisputed by the opposite party. The burden of proof lies upon the opposite party by producing tangible evidence. But the opposite party have not chosen to appear before this Commission to prove the same by producing tangible evidence to show that it is false statement and contrary to Section 45 of the Insurance Act, 1938. Therefore, denial of the claim is not legally sustainable in the absence of any material to disclose from the side of opposite party that the complainant has suppressed the material facts and the policy-holder knew at the time of making it that the statement was false.
17. It is pertinent to note that the Hon'ble Supreme Court in the case of Kulla Ammal (died) and others vs. The Oriental Government 12 Security Life Assurance Co., Ltd., reported in 68 L.W. 912, has held that:
"Though a contract of insurance is in law regarded as based on a complete and truthful disclosure of all the fats by an insured on questions put to him,the doctrine of uberrimae fidei is certainly not intended to be one-way traffic but called for a reciprocal".
18. Section 45 of the Insurance Act, 1938 provided that after expiry of two years from the date of policy validity of any statement made in proposal or any report of medical officer shall not be called in question. It can be questioned only if some information fraudulently concealed from insurer. In the instant case, two years had expired from the date of policy was effected. The opposite party has not only failed to discharge the burden arising under Section 45 of the Insurance Act, but the complainant has positively proved that the policy was not vitiated by any of the circumstances mentioned in Section 45 of the Act.
19. Old Section 45: Policy not to be called in question on ground of mis-statement after two years.
" No policy of Life Insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer or referee, or friend of the insured, or in any other document leading to the issue of the policy was inaccurate or false, unless the insurer shows that such 13 statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose".
For the foregoing reasons, we are of the considered view that the opposite party has remained ex parte and neither pleaded nor proved that there was suppression of material facts in the proposal, the denial on the ground of false statements after two years is construed contrary to Section 45 of the Insurance Act, 1938 and therefore the denial of claim is not sustainable. Consequently, we are inclined to allow the complaint.
20. In the result, the Complaint as against the opposite party is allowed. The opposite party is directed to pay Rs.40,00,000/- (Rupees Forty Lakhs only) to the complainant along with Rs. 1,00,000/- (Rupees one lakh only) for mental agony and Rs.25,000/- (Rupees Twenty Five Thousand only) as costs, within a period of two months from the date of receipt of a copy of this order, failing which, the said amount shall carry interest at the rate of 9% per annum from the date of the complaint till the date of realization.
R. VENKATESAPERUMAL R.SUBBIAH
MEMBER PRESIDENT
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LIST OF DOCUMENTS MARKED ON THE SIDE OF THE COMPLAINANT Sl.No. Date Description of Documents Ex.A.1. 23.05.2014 Copy of life insurance policy taken from Opposite Party under policy number 10000066.
Ex.A.2. 23.05.2014 Copy of self-filed questionnaire filed by Complainant with regard to life insurance policy taken from opposite party.
Ex.A.3. 08.04.2016 Copy of death certificate of Complainant's husband i.e. the insured.
Ex.A.4. 28.11.2016 Copy of repudiation letter issued by Opposite Party. Ex.A.5. 22.03.2017 Copy of legal notice issued by Complainant through her advocate to Opposite Party.
Ex.A.6. 04.04.2017 Copy of reply notice issued by Opposite Party through its Advocate.
R.VENKATESAPERUMAL R.SUBBIAH, J
MEMBER PRESIDENT
Index : Yes/ No
GR/SCDRC/Chennai/Orders/August/2023