State Consumer Disputes Redressal Commission
Life Insurance Corporation Of India vs Smt. Saroj Bala on 10 January, 2014
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
First Appeal No.696 of 2013
Date of institution : 26.06.2013
Date of decision : 10.01.2014
1. Life Insurance Corporation of India, 99 A, Guru Nanak Colony,
Rajpura, District Patiala through its Branch Manager.
2. Life Insurance Corporation of India, Divisional Office, Sector
17, Chandigarh through its Divisional Officer through
authorized signatory, Harihara Sudhan, Manager Legal, Life
Insurance Corporation of India, Divisional Office, Sector 17-B,
Chandigarh.
.......Appellants- Opposite Parties
Versus
Smt. Saroj Bala widow of Late Shri Vijay Kumar Kochhar, r/o
H.No.124, Street No.A-1/5, Guru Nanak Nagar, Patiala.
......Respondent- Complainant
First Appeal against the order dated
17.05.2013 of the District Consumer
Disputes Redressal Forum, Patiala.
Quorum:-
Hon'ble Mr. Justice Gurdev Singh, President.
Shri Baldev Singh Sekhon, Member.
Mrs. Surinder Pal Kaur, Member.
Present:-
For the appellants : Shri O.P. Sharda, Advocate. For the respondent : Shri Parshotam K. Garg, Advocate. JUSTICE GURDEV SINGH, PRESIDENT :
Vijay Kumar Kochhar (deceased) purchased life insurance policy bearing No.165050321 on 24.5.2011 from the opposite parties (LIC) and the sum assured was Rs.3,50,000/-. The mode of payment of the premium was half-yearly and he paid the first First Appeal No.696 of 2013. 2 premium of Rs.25,000/-. He appointed his wife, Saroj Bala, complainant, as his nominee. On 9.11.2011 he died due to sudden heart attack and the complainant, being the nominee, demanded from LIC the sum assured i.e. Rs.3,50,000/-, by submitting his death certificate. She was asked to submit the necessary documents for claiming the said amount and she did accordingly. She received a letter dated 31.7.2012 from the LIC regarding the amount of Rs.3,50,000/- but only a cheque of Rs.19,870.36P was sent along with that letter. She asked the LIC to pay the total amount of Rs.3,50,000/-. In the complaint filed by her under Section 12 of the Consumer Protection Act, 1986, before the District Consumer Disputes Redressal Forum, Patiala (in short, "District Forum"), she averred that her genuine request to pay the balance amount of Rs.3,30,129.64P was not accepted by the LIC, though she had been visiting its office for almost one year. She has been cheated and deceived with a mala fide intention and the same caused mental agony and harassment to her. In spite of the issuance of the legal notice, the LIC has failed to pay the assured amount, which amounts to unfair trade practice. She prayed for the issuance of following directions to it:-
i) to pay Rs.3,30,129.64P along with interest at the rate of 24% per annum from the date of death of her husband till the realization of that amount;
ii) to pay Rs.5,000/- as the expenses incurred by her for visiting its office during the period of one year; First Appeal No.696 of 2013. 3
iii) to pay Rs.1,00,000/- as compensation for the mental tension and agony suffered by her on account of the deficiency in service and unfair trade practice;
iv) to pay Rs.15,000/- as cost of litigation.
2. The LIC filed the written reply in which it averred that Vijay Kumar (insured) took the insurance policy by concealing the material facts regarding his ill health, earlier treatment taken by him and the consultation obtained from the medical man while submitting the proposal form on 17.5.2011. He had given the answers to the following questions mentioned in column No.6 of the proposal form:-
Question Answer A) During the last five years, did you consult a No
Medical Practitioner for any ailment requiring treatment for more than a week?
B) Have you ever admitted to any Hospital or No Nursing Home for General check-up, observation, treatment or operation?
C) Have you remained absent from place of work No on grounds of health during the last 5 years?
E) Are you suffering from or have you ever suffered No from diabetics, tuberculosis, high blood pressure, low blood pressure, cancer, epilepsy, hernia, hydrocele, leprosy or any other disease?
I) What has been your usual state of health? Good First Appeal No.696 of 2013. 4 During investigation, it came to light that he was suffering from Rheumatoid Arthritis since 1997 and had undergone joint replacement surgery of right knee in 2010. He was well qualified and was M.Sc. LL.B. and was serving as T.A. Grade-I in Food Corporation of India. He availed of medical leave for 46 days from 1.6.2010 to 16.7.2010. He concealed all this material information, which was very much necessary to be disclosed by him to assess the risk for acceptance of the proposal. Had he disclosed these facts, it must have resorted to additional requirements, such as test for RA factor, Haemo Gram, Deformity questionnaire etc. He died within five months and fifteen days of the date of taking the policy in question. As a result of concealment of all these facts in the proposal form, the contract of insurance becomes void ab initio and no such insurance amount can be claimed under the policy. It was a case of intentional non-disclosure of material information; which resulted in wrong acceptance of the proposal. The claim made by the complainant was correctly repudiated, vide letter dated 31.7.2012. After the repudiation of the claim, bid value of the Units held under the policy amounting to Rs.19,870.36P was paid to her. No doubt, the sum of Rs.3,50,000/- was mentioned in the letter dated 31.7.2012 but the same was wrongly mentioned as the letter was generated through module but the same was manually corrected and the net amount of the cheque was corrected to Rs.19,870.36P. The amount of Rs.3,30,129.64P was corrected to nil but inadvertently that correction skipped, which resulted in the mentioning of the amount of the cheque as Rs.3,50,000/-. The First Appeal No.696 of 2013. 5 complainant cannot take benefit of the incorrect statement made in that letter. There was neither any deficiency in service nor any unfair trade practice on its part and the complainant is not entitled to any such amounts as mentioned in the complaint.
3. Both the sides produced evidence in support of their respective averments before the District Forum, which after going through the same and hearing learned counsel on their behalf allowed the complaint with costs of Rs.3500/-, vide order dated 17.5.2013 and directed the LIC to make the payment of Rs.3,30,129.64P along with interest @ 9% per annum from the date of the legal notice i.e. 15.12.2012 till final payment. Feeling aggrieved by the order, the opposite parties/LIC has preferred the present appeal.
4. We have heard learned counsel for both the sides and have carefully gone through the records of the case.
5. It was submitted by the learned counsel for the LIC that it was not the case of LIC before the District Forum that the assured was suffering from pre-existing disease. The claim of the complainant was repudiated on the ground that the insured concealed the material facts in the proposal form, which was submitted by him for obtaining the policy and had he disclosed those facts the LIC before issuing the policy would have resorted to more tests etc. It was wrongly concluded by the District Forum that the claim of the complainant could not have been repudiated as there was no nexus between the deformity of the right knee and the death of the insured and that there was no suppression of material matter and that the suppression was in no way fraudulent on the part of the insured. First Appeal No.696 of 2013. 6 The District Forum failed to appreciate the fact that the insured was a well qualified person having educational qualification of M.Sc. LL.B and was serving as TA Grade-I in the FCI. It was well within his knowledge that few months before the submission of the proposal form, he had undergone for right knee replacement and he had obtained medical leave from his employer. While giving answers to the queries contained in the proposal form, he concealed all these material facts. On account of making false statements in the proposal form, the contract of insurance became void as per the declaration furnished by him in that proposal form itself. The complainant after his death was not entitled to the amount so assured and was entitled to only the bid amount of the units and that amount was duly paid to her. The LIC is not bound by the contents of the letter dated 31.7.2012 in which it was wrongly mentioned that the total sum assured (Rs.3,50,000/-) was payable to the complainant. The correction made in that letter and the sending of the cheque of the amount so mentioned in the letter itself shows that the complainant was entitled to only that much amount and the LIC never decided to pay the total sum of Rs.3,50,000/-. In support of his submissions he placed reliance on the following judgments:-
i) 2009(4)CLT 398 (SC) (Satwant Kaur Sandhu v. New India Assurance Company Ltd.) ;
ii) 2008(3)CPC 248 (SC) (P.C. Chacko and another v.
Chairman, Life Insurance Corporation of India and others);
iii) 2011(2) CLT 281 (NC) (LIC of India v. Dalbir Kaur); First Appeal No.696 of 2013. 7
iv) 2010(1)CLT 481 (Sangeeta Kaushik and others v. Life Insurance Corporation of India and others).
6. On the other hand, it was submitted by the learned counsel for the complainant that after duly interpreting the law on the point by referring to different citations the District Forum correctly concluded that the claim of the complainant was not correctly repudiated by the LIC. It was correctly held that the replacement of the right knee was not a disease and the same never contributed to the death of the insured, which was on account of heart attack and that there was no suppression of material matter and there was no suppression which may be said to be fraudulent on his part. It was also correctly concluded by the District Forum that the contents of the letter dated 31.7.2012 operate as an estoppel against the LIC in which it was clearly mentioned that the claim for Rs.3,50,000/- has been allowed and the amount of that cheque was being enclosed along with that letter. The repudiation of the claim was never conveyed to the complainant and it was correctly concluded by the District Forum that in the absence of the postal receipts it cannot be held that any such letter of repudiation was sent to the complainant. There is no ground for setting aside the well reasoned order of the District Forum. He placed reliance on the following judgments in support of the submissions made by him before us:-
i) 2012(2) R.C.R. Civil 237 (Baljit Kaur v. Life Insurance Corporation of India);
ii) 2011(2) C.L.T. 538 (Life Insurance Corporation of India v. Sheetla Devi);First Appeal No.696 of 2013. 8
iii) 2011(8) R.C.R. (Civil) 2533 (Orissa) (Anupama Behera & others v. Divisional Manager, L.I.C. of India & another);
iv) 2009(3) C.L.T. 229 (NC) (New India Assurance Co.
Ltd. v. Arunaben Jayantibhai Shah);
v) 2009(3) C.L.T. 359 (Life Insurance Corporation of India v.
Kamala Gupta);
vi) 2008(3) C.L.T. 650 (NC) (Life Insurance Corporation of India & Ors. v. Kunari Devi);
vii) 2007(2) C.L.T. 405 (LIC of India v. Patel Ganesh Bhai Ramji Bhai);
viii) 2007(3) C.L.T. 480 (LIC of India & Ors. v. Kucherlapti Krishna Kumari).
7. The District Forum only recorded the submissions made by the learned counsel for the parties regarding the suppression of the matter regarding the knee replacement of the insured and his having obtained the medical leave from 1.6.2010 to 16.7.2010 but it did not record the definite finding regarding those issues. From the evidence produced on the record before the District Forum, it stands proved that the insured was suffering from Rheumatoid Arthritis and was suffering from joint deformities and got replaced his right knee. Those facts stand proved from the Certificate of Hospital Treatment Ex.OP-11. No efforts were made by the complainant for proving that the insured was not suffering from these ailments and had gone for knee replacement. As per the said Certificate, he remained admitted in the hospital from 1.6.2010 to 9.6.2010. The LIC also First Appeal No.696 of 2013. 9 proved on record the Certificate Ex.OP-5, which was issued by the employer of the insured. As per this Certificate, he availed medical leave for 46 days (from 1.6.2010 to 16.7.2010). Still to questionnaires, as mentioned in para no.2, he gave answers in the negative. He was asked if he remained absent from the place of work during the last 5 years and that whether he remained admitted in any hospital for treatment or operation? He gave reply in 'No'. Thus, he suppressed the information so required from him. It cannot be said that it was not the material information as there was a purpose of including all these questionnaires in the proposal form. Before insuring the life of the insured, the LIC wanted to be sure that he was not suffering from any such ailment, which may accelerate or in any way contribute to his death. Had he disclosed these facts, the LIC might have refused to accept the proposal or might have undergone for more tests before issuing the policy. The question would have been different if the insured was an illiterate person not knowing fully the fact of giving wrong answers to these questions. He was holding educational qualification of M.Sc. LL.B. and was serving as T.A. Grade-I in the FCI. He had full knowledge of the consequences of giving wrong answers and from the circumstances of the present case, it can easily be inferred that he fraudulently concealed the material matter/information from the LIC by giving false answers.
8. The proposal form so filled up by the insured at the time of obtaining the policy was proved as Ex.OP-1; which also contains a declaration which was duly signed by him. As per that declaration, First Appeal No.696 of 2013. 10 the statements and the answers were given by him after fully understanding the questions and the same were true and complete in every particular. He had also agreed and declared that those statements and declaration shall be the basis of the contract of insurance between him and the LIC and that if any untrue averment is contained therein the contract shall be absolutely null and void.
9. The expression 'material fact' was interpreted by the Hon'ble Supreme Court in Satwant Kaur Sandhu's case (supra). It was held therein that in contract of insurance any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a 'material fact'. If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering question in the proposal form. Needless to emphasize that any inaccurate answer will entitle the insurer to repudiate its liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance. In P.C. Chacko's case (supra) 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.696 of 2013. 11 of materiality must be disclosed otherwise there is good ground for rescission.
10. Like the present case in Dalbir Kaur's case (supra) 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 above said questions as mentioned in para no.2. 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. In Sangeeta Kaushik's case (supra), the life assured concealed the material fact of the disease of Dibetes Mellitus Type II from which he was suffering while filling the proposal form. It was held by this Commission that it was a serious disease and the concealment amounted to suppression of material fact.
11. In the judgments so cited by the learned counsel for the complainant, the repudiation of claim made by the Insurance Company on the ground that the insured was suffering from pre- existing diseases at the time of taking the insurance policy was held to be illegal on the ground that there was no nexus between the cause of death and the said pre-existing disease. Those judgments have no application to the facts of the present case. As already said above, the LIC has not repudiated the claim of the complainant on First Appeal No.696 of 2013. 12 the ground that the insured was suffering from any such pre-existing disease and the same was repudiated on the ground that he concealed material information with a fraudulent intention and that information was bound to affect the mind of the LIC so as to accept or reject the proposal submitted by the insured. The LIC was very much right in repudiating the claim of the complainant on the ground that the insured concealed the matter/information, which was material to be disclosed and the concealment was with a fraudulent intention.
12. We do not find any merit in the submission of the learned counsel for the complainant that the contents of the letter dated 31.7.2012 proved on the record as Ex.C-3 will operate as an estoppel against the LIC in denying the claim of Rs.3,50,000/- to the complainant. The explanation regarding the wrongly mentioning of that amount has been furnished by LIC. It is very much clear from the contents of the letter Ex.C-3 itself that the amount of Rs.3,30,129.64P has been struck down and the total amount of Rs.3,50,000/- has been changed to Rs.19,870.36P and even the cheque Ex.C-4 was only of that amount. We find the contention of the LIC that the letter in the form of module was prepared and thereafter corrections were made therein, is correct. The contents of the letter, which were duly corrected will not operate as an estoppel against the LIC.
13. In view of our above discussion, this appeal is hereby accepted, the order of the District Forum is set aside and the complaint filed by the complainant is dismissed. First Appeal No.696 of 2013. 13
14. The LIC deposited the sum of Rs.25,000/- at the time of filing of the appeal on 26.6.2013. The LIC further deposited sum of Rs.1,75,191.82P on 10.7.2013. Both these sums along with interest which has accrued thereon, if any, shall be remitted by the registry to the LIC by way of a crossed cheque/demand draft after the expiry of 45 days.
15. The arguments in this case were heard on 6.1.2014 and the order was reserved. Now, the order be communicated to the parties.
16. The appeal could not be decided within the statutory period due to heavy pendency of court cases.
(JUSTICE GURDEV SINGH) PRESIDENT (BALDEV SINGH SEKHON) MEMBER (MRS. SURINDER PAL KAUR) January 10, 2014 MEMBER Bansal