National Consumer Disputes Redressal
Lic Of India vs Francis Antony D'Souza on 19 September, 2011
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO.527 of 2007 (Against the order dated 23.09.2006 in Appeal No.898/2005 of the State Commission, Karnataka) Life Insurance Corpn. of India Petitioner Vs Francis Antony Dsouza Respondent BEFORE : HONBLE MR. JUSTICE ASHOK BHAN, PRESIDENT HONBLE MRS.VINEETA RAI, MEMBER For Petitioner : Mr.Ashok Kashyap, Advocate For Respondent : Mr.Senthil Jagadeesan, Advocate Pronounced on 19th September, 2011 ORDER
PER VINEETA RAI, MEMBER The Life Insurance Corporation of India (hereinafter referred to as the Petitioner) has filed this revision petition being aggrieved against the order of the State Consumer Disputes Redressal Commission, Karnataka (hereinafter referred to as the State Commission) wherein Francis Antony Dsouza was the Respondent.
The facts of the case according to the Respondent who was the original complainant before the District Forum, are that the Respondents deceased wife Marisa Flora Dsouza had obtained a life insurance policy from the Petitioner/Insurance Corporation on 30.05.1995 for a sum of Rs.3 lakhs with a maturity date of 31.05.2020 and for which premium due had been paid. The insuree died on 27.10.1995 and the Respondent being the nominee filed a claim for Rs.3 lakhs from the Petitioner/Insurance Corporation. After several reminders and letters, Respondent was informed on 09.01.1997 that the claim had been repudiated since the deceased/insuree had withheld material information regarding her health at the time of taking the policy by replying in the negative to specific questions that she had not been diagnosed for any ailment requiring treatment for more than a week and that her general state of health was good. According to the Respondent, these were correct answers because only ailment in March, 1995 for which she had consulted was family doctor for a severe cold. Also prior to taking the insurance policy, on the advice of doctor the deceased had undergone tests including Endoscopy, Barium Meal swallow test and ultra-sonography of the abdomen which revealed no abnormalities.
It was only on 21.07.1995 (i.e. more than 1 months after taking the insurance policy) that the doctors of Kasturba Hospital at Manipal diagnosed that the Respondents wife was suffering from Adenocarcenoma (Cancer). Alleging deficiency in service on the part of the Petitioner, Respondent filed a complaint before the District Forum requesting that Petitioner be directed to pay the Respondent the assured sum of Rs.3 lakhs along with compensation of Rs.10,000/- with interest @ 18% from 27.10.1995 till the date of payment and litigation costs as well as any further relief that the Forum may deem fit to grant.
The above contentions of the Respondent were denied by the Petitioner who stated that there was documentary evidence that the deceased/insuree had been consulting doctors for several weeks prior to 30.05.1995 (i.e. the date of insurance proposal form) for severe cough, breathlessness, difficulty in swallowing food and was detected as suffering from acute tracheo-bronchitis, Oesophagitis and Dysphaegia and these facts were withheld by her in the insurance proposal form. Therefore, the claim was rightly repudiated on grounds of suppressing material facts pertaining to serious ailments. Insurees death just four months after her taking insurance policy further confirms these facts.
The District Forum after hearing both parties dismissed the complaint by holding that the Petitioner had produced sufficient material on record to show that the insuree had suppressed material facts in the proposal form and, therefore, the repudiation was justified and there was no deficiency in service.
Aggrieved by this order, Respondent filed an appeal before the State Commission which allowed the same with the following observations:
The OP produced Exhibit R-5 before the District Forum which was the out-patient record of the insured maintained at the K.M.C. Hospital, Attavara, Mangalore. The said Certificate revealed that the Insured had history of cough and breathlessness for about two weeks. Further, it is seen that the disease was diagnosed as dysphagia. Therefore, it cannot be said positively that the Insured was suffering from Cancer. According to the complainant, the insured came to know that she was suffering from Cancer only on 21.07.1995 from the report of Biopsy. This was subsequent to the issuance of the Policy. From these documents it is clear that the Insured had no knowledge of any disease prior to the filing of the proposal form and, accordingly, it cannot be said that the Insured had suppressed the fact that she was suffering from any disease in the proposal form.
The State Commission, therefore, directed the Petitioner/Insurance Corporation to pay the Respondent Rs.3 lakhs along with interest @ 6% per annum from the date of complaint till realization.
Hence the present revision petition.
Counsel for both parties made oral submissions.
Counsel for Petitioner drew our attention to the out-patient medical record from Kasturba Hospital, Mangalore dated 09.03.1995 i.e. more than two months prior to the taking of the insurance policy by the insuree which showed that the insuree had been visiting the hospital with complaints of cough and breathlessness from 9th March, 1995 to 20th May, 1995 and a diagnosis of her suffering from dysphagia etc. was made. Thus, it is clear from this record that the insuree had been under treatment in this hospital for about 70 days whereas in her proposal form, she had clearly stated that during the last 5 years she had not consulted any medical practitioner for any ailment requiring treatment for more than one week. She had also categorically stated that her general state of health was good which is belied by the above medical records. Since, insurance is a contract entered into good faith between the two parties concerned, its breach as in the instant case, would justify the repudiation of the claim by the Petitioner/Insurance Corporation.
Counsel for Respondent on the other hand while admitting that the insuree was an out-patient as contended by the Petitioner, stated that these were for minor ailments and this fact is confirmed by diagnostic tests undertaken by her at the instance of the Petitioner which confirmed that she had no major ailment. It was only in July, 1995 that she was detected with cancer and she came to know about it on 21.07.1995. Therefore, the Petitioner had wrongly repudiated the Respondents justified insurance claim as a nominee of the deceased/insuree.
We have heard the learned Counsel for both parties and have gone through the evidence on record.
It is not disputed that in the insurance proposal form of the Petitioner, insuree had replied by stating No i.e in the negative to all questions pertaining to her personal medical history and specifically in two columns, namely; that she had not consulted a medical practitioner for any ailment requiring treatment for more than one week and that her general state of health was good. The evidence produced by the Petitioner in the form of the O.P.D. medical history of the deceased/insuree on the other hand clearly and undeniably confirms that the insuree had in fact regularly visited a doctor for about 70 days with complaints of difficulty in swallowing for which she was treated. It is also in evidence that she continued treatment in the same hospital as an out-patient even after taking the insurance policy and as per the case history recorded on 6th July, 1995, her medical condition had aggravated and she had lost about 10 Kgs. in the last six months. In July, 1995 she was detected with suffering from Cancer and died on 27.10.1995 i.e. within 5 months of taking the insurance policy. Respondents contention that the claim was wrongly repudiated because at the time when insuree took the insurance cover, she did not have cancer is not relevant here because the claim was repudiated on the grounds that the insuree gave incorrect replies regarding her state of health and suppressed material facts in the insurance proposal form. In this connection, the Honble Supreme Court in Satwant Kaur Sandhu Vs. New India Assurance Co. has observed as follows:
it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties. Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain from his ignorance of that fact and his believing the contrary.
The Honble Supreme Court also quoted MacGillivray on Insurance Law (Tenth Edition) which has summarized the assureds duty to disclose as under:
.the assured must disclose to the insurer all facts material to an insurers appraisal of the risk which are known or deemed to be known by the assured but neither known nor deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms.
In the instance case, there was clearly non-disclosure of facts by the insuree as discussed earlier. Therefore, respectfully following the judgments of the Honble Apex Court, we are of the view that the Petitioner/Insurance Corporation was justified in repudiating the insurance claim of the Respondent and, therefore, committed no deficiency in service.
We, therefore, set aside the order of the State Commission and accept the revision petition with no order as to costs.
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(ASHOK BHAN J.) PRESIDENT Sd/-
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(VINEETA RAI) MEMBER /sks/