State Consumer Disputes Redressal Commission
Senior Branch Manager, vs Sukanti Panigrahy, on 4 December, 2020
STATE CONSUMER DISPUTES REDRESSALCOMMISSION,ODISHA,CUTTACK
FIRST APPEAL NO. 147 OF 2005
(From an order dated 29.11.2004 passed by the District Forum,
Ganjam at Berhampur in C.D. Case No. 25 of 2003)
1. Senior Branch Manager,
Life Insurance Corporation of India,
Berhampur Branch (1), Church Road,
Berhampur - 1, Dist - Ganjam
2. Divisional Manager,
Life Insurance Corporation of India,
Berhampur Division, Church Road,
Berhampur - 1, Dist - Ganjam
... Appellants
Vrs.
Sukanti Panigrahy,
W/o Late Ramakrushna Panigrahy,
Resident of Hatibandha Sahi,
Po - Berhampur, Ps - B.N.Pur,
Dist - Ganjam
...
Respondent
____________
For the appellants : M/s S.K.Mohanty & Associates
For the respondent : M/s G.K.Nayak & Associates
_____________
P R E S E N T:
THE HON'BLE DR. JUSTICE D.P.CHOUDHURY, PRESIDENT
AND
DR. S.MOHANTY, MEMBER
2
DATED THE 12th OCTOBER, 2020
ORDER
DR. D.P. CHOUDHURY J., PRESIDENT The captioned appeal is directed u/s 15 of erstwhile Consumer Protection Act, 1986 (hereinafter called the Act) against the impugned order dated 29.11.2004 passed by the learned District Forum, Ganjam at Berhampur in C.D. Case No. 25 of 2003 directing the OPs to settle the complainant's claim forthwith and pay the total sum assured of Rs.40,000/- under the policy to the complainant. The OPs were further directed to pay compensation of Rs.5,000/- besides Rs.500/- towards cost of litigation within month to the complainant failing which the amount would carry interest at the rate of 9% per annum till payment is fully made. Parties to this appeal shall be referred to with reference to their respective status before the District Forum.
3FACTS:-
2. The factual matrix leading to the case of the complainant is that the deceased assured being husband of the complainant purchased life insurance policy bearing No.570851987 with Money Back facility for assured sum of Rs.40,000/- having quarterly premium payable for Rs.733/-. It commenced from 28.11.2001 and maturing on 28.11.2021, but the life assured died on 11.12.2001 after 13 days of commencement of the LIC policy. So the complainant lodged claim before the OPs claiming the assured amount. The OPs repudiated the claim stating that he has got chronic alcoholism and due to alcoholism, he has fallen certain times. The OPs have also informed that the deceased assured has suppressed such material fact for which he is not entitled to any relief. The complainant showing such repudiation being deficiency of service on the part of the OP filed complaint before the learned District Forum, Ganjam at Berhampur. Hence, the complaint. 4
3. Per contra, the OPs filed written version stating that the complaint is not maintainable and there is no cause of action to file the complaint. They admit that the life assured has purchased the policy for assured sum of Rs.40,000/-. It was issued on 4.12.2001 but the life assured died on 11.12.2001.
According to them, on investigation, they found that in the Bed Head Ticket dated 10.12.2001 the hospital authority has mentioned that the complainant has history of chronic alcoholism and head injury by fall but the said fact has not revealed from the proposal form as the life assured has answered in negative to the questionnaires such as (a) Did you ever have any accident or injury? (b) Do you use or have you ever used (i) Alcoholic Drinks, (ii) Narcotics, (iii) Any other drugs, (iv) Tobacco in any form? Since the diseased has deliberately withheld the material fact ad upon revealing such fact there was occasion for the OPs to decide whether to accept the proposal or not, there is breach of insurance contract. Thus, the OPs have got every right to call the policy in 5 question as death occurs within two years. Therefore, the OPs averred in the written version that in repudiating the claim they have no any deficiency of service. So the complaint has no merit and it should be dismissed.
DECISIONS OF ERSTWHILE DISTRICT FORUM:-
4. Learned District Forum after analysising the evidence of both the parties allowed the complaint and the operative portion of the impugned order is extracted below:-
" xxx xxx xxx In the result, we direct the OPs to settle the complainant's claim forthwith and pay the total sum assured of Rs.40,000/-under the policy to the complainant. The OPs are also directed to pay a compensation of Rs.5000/- to the widow complainant who suffered materially for such non-payment over the period of years and besides, a sum of Rs.500/- towards litigation cost. We do not allow any interest on the sum assured under the circumstances. The total amount as mentioned in this order has to be paid by the OPs to the complainant within a month of receiving the order copy from the Forum, failing the amount shall carry 9% interest till payment is fully made."6
SUBMISSIONS
5. Learned counsel for the appellants challenging the order of the learned District Forum submitted that the impugned order of the learned District Forum is wrong, illegal and completely one sided inasmuch as the impugned order itself is against the letter and spirit of section - 45 of the Insurance Act and the law laid down by the Hon'ble Apex Court in this regard.
6. It is also submitted by the learned counsel for the appellants that learned District Forum has erred in law by observing that the Bed Head Ticket clearly shows that the life assured was suffering from Hepatic Encephalopathy and upper GI bleeding but ignored to observe the endorsement of the Doctor maintaining front page of the Bed Head Ticket which shows that the life assured has got history of chronic alcoholic and has fallen several times. Learned District Forum ought to have read the document as a whole but not read the document in a piecemeal manner.
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7. Learned District Forum has erred in law to consider that the policy was just purchased 8 to 9 days before the death and no such time has passed for non-application of section - 45 of Insurance Act, 1938.
8. Learned counsel for the appellants submitted that since the appellants being insurer have proved all the ingredient of section - 45 of the Act, learned District Forum ought to have rejected the complaint and passed order in favour of the OPs. However, he submitted to set aside the impugned order by allowing the appeal. Learned counsel for the appellants while submitting to allow the appeal relied upon decision reported in AIR 2009 SC Page 2039 in the case of Reliance Life Insurance Co Ltd and another vrs. Rekhaben Nareshbhai Rathod where Their Lordships observed that non-disclosure of material facts in the proposal form entitled the insurer to repudiate the claim under the policy.
9. The respondent has appeared but did not participate in the hearing. However, the argument of the respondent is 8 available in the DFR and his submission before the learned District Forum is considered while disposing the appeal. POINTS FOR DISCUSSION
10. The main point for consideration in this case is whether the complainant has proved the deficiency of service of the OPs in repudiating the claim of the complainant. SUBMISSIONS
11. It is admitted fact that the deceased assured has purchased the policy in question from the OPs on 28.11.2001. It was 20 years Money Back Policy with profits and accident claim benefits. It is not in dispute that the deceased assured expired on 11.12.2001 at MKCG Medical College and Hospital, Berhampur.
12. The complainant has produced the Medical Attendance Certificate and the Certificate of Hospital Treatment and both the documents show that the primary cause of death was Hepatic Encephalopathy but the secondary cause was Upper GI 9 Bleeding. It appears that he was admitted on 10.12.2001 and expired on 11.12.2001. The Medical Certificate has been given by Dr.Ganeswar Sethi, Medical Officer of Department of Medicine. He has not been examined. It is further available from the document that the life assured has history of headache and fever for five days before being admitted. The Medical Attendance Certificate shows that Dr Sethi is not usual Medical Attendant of the diseased, but the Medical Attendant who attended the deceased continued treatment of the deceased in consultation with Dr Sethi. However, such documents do not show that the deceased insured has history of alcoholism.
13. The written version shows that the life assured has submitted the proposal form clearly stating therein that he has no any use of alcohol drinks, narcotics or any other drugs, tobacco in any form. Such proposal form was signed by him in presence of the agent of the LIC and the Doctor of LIC. The Bed Head Ticket of deceased shows that the life assured was 10 admitted complaining hepatic fever for last five days. At the same time, it also shows that death was due to Hepatic Encephalopathy. It is also revealed from the front page of the Bed Head Ticket that he was having chronic alcoholism and history of fallen several times and on oral examination alcoholic smell was coming. The treating Doctor has mentioned such facts. Dr Sethi has also admitted in the Medical Attendant Certificate that he was not directly treating the patient but the concerned Doctor was treating the deceased. So the Bed Head Ticket showing the history recorded by the Doctor on the first appearance of the patient before doctor assumes interference. The signature of the Doctor is available in the Bed Head Ticket. Hepatic Encephalopathy is also a fever related to the liver. When the question was asked that are you ever used alcohol or drug but he refused so and it was only recorded on 28.11.2001 which is just nine days before the death. So there is reason to believe that the deceased assured had conscious such fact 11 while giving statement in the proposal form. Let us discuss the law in this regard.
14. Now issue is whether the insured has suppressed the pre- existing disease and making false statement. In the decision of Mithoolal Nayak vrs. Life Insurance Corporation of India AIR 1962 Supreme Court 814, it has been held by the Hon'ble Apex Court which is as follows:-
" xxx xxx xxx The three conditions for the application of the second part of Section 45 are
a) the statement must be on a material matter or must suppress facts which it was material to disclose,
b) the suppression must be fraudulently made by the policy holder and
c) the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose."
15. With due regard to the decision, it can be safely observed that within two years of commencement of policy the insurer have right to revoke the policy as per unamended Section 45 of Insurance Act, 1938. But onus lies on the insurer to prove all 12 the pre-conditons before calling the policy in question within two years.
16. The said decision has also been followed in the case of Reliance Life Insurance Co.Ltd & another (Supra). The onus lies on the insurer to prove the aforesaid three conditions precedent to apply section 45 of said Act. Again question raised with regard to the meaning of "material fact." In this regard also in the decision Reliance Life Insurance Co.Ltd and another (Supra) Their Lordships observed as follows:-
"xxx xxx xxx Contracts of insurance are governed by the principle of utmost good faith. The duty of mutual fair dealing requires all parties to a contract to be fair and open with each other to create and maintain trust between them. In a contract of insurance, the insured can be expected to have information of which she/he has knowledge. This justified a duty of good faith, leading to a positive duty of disclosure. The duty of disclosure in insurance contracts was established in a King's Bench decision in Carter v. Boehm, where Lord Mansfield held thus:13
"Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only; the underwriter trusts to his representation, and proceeds upon confidence that he does "not keep back any circumstance in his knowledge, to mislead the underwriter into a belief that the circumstance does not exist, and to induce him to estimate the risqué, as if it did not exist."
It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost fare must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as breach of the duty of good faith and will render the policy voidable by the insurer. The system for adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement."
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17. So with due regard to the aforesaid decision, we find, in the instant case, the suppression as to use of alcohol or drug by the concerned life assured is definitely the material suppression barely eight days before the commencement of the policy. Had there been disclosure of such fact the OPs must not have allowed the policy to be purchased. Now the alcohol and drug are the main cause for creating menace in the society and carrying the country towards anarchy and despotism. The drugs or alcoholism are all reasons for committing suicide in the society and it has increased to considerable length of domestic violence. Many celebrities are repeatedly ending the lives being saddled with the drugs or too much alcohol. At the stage of pandemic COVID also uses of such contrabond articles have been totally prohibited to take as there is high risk to live who takes liquor and drugs. The Regulatory Authority is breaking their head to detect such offences.
18. Be that as it may, withholding the material suppression certainly the breach of policy contract. The contract of 15 insurance is based on the principle of "Uberrima fides" i.e based on most abdudant good faith and trust, and the insured must observe most perfect good faith towards the insurer. The learned District Forum has not disclosed the case in this regard. They have simply taken a piece of Bed Head Ticket and observed that the death was caused due to Hepatic Encephalopathy. It must be remembered that Bed Head Ticket should have been read as whole to find out the purpose for which it is maintained.
19. Be that as it may, we are unable to agree with the finding of the learned District Forum in this regard and hereby observe that the insurer has discharged the onus by proving that the life assured while purchasing the policy has withheld or suppressed the material fact and made misstatement so as to allow the insurer to call the policy in question within two years. Hence, we are of opinion that complainant has failed to prove deficiency of service on the part of the OPs which repudiating the claim.
16CONCLUSION
20. In view of aforesaid discussion, we are of the view that the impugned order is palpably wrong and not sustainable in law for which it should be set aside and we do so.
21. The appeal stands allowed. No cost.
Free copy of this order be supplied to both the parties. DFR be sent back forthwith.
Statutory amount deposited be refunded to the appellants with interest accrued thereon, if any on proper identification.
Cuttack October 12, 2020 ................................
(Dr.D.P.Choudhury J) President .....................
(Dr.S.Mohanty) Member 17