State Consumer Disputes Redressal Commission
Lic Of India ,Div.Manager & Ors. vs Bhikalal Goyal on 15 July, 2009
BEFORE THE CONSUMER DISPUTES REDRESSAL COMMISSION, RAJASTHAN, JAIPUR APPEAL NO: 1041/2008 1. Life Insurance Corporation of India, through Divisional Manager Jeevan Prakash, Bhawani Singh Road, Jaipur 2. Br. Manager LIC of India, Khan Bhankari Road, Dausa. Opposite parties -appellants Vs. Bhikalal Goyal s/o Dwarka Prasad r/o Jain Mohalla, Teh. Sikrai Distt. Dausa, Raj. Complainant-respondent Date of judgment 15.7.09 Before: Mr.Justice Sunil Kumar Garg- President Mrs.Vimla Sethia-Member Mr.J.P.Sharma counsel for the appellants Mr. Chandra Prakash Vashishatha counsel for the respondent JUDGMENT
BY THE STATE COMMISSION, (PER HON. MR.JUSTICE SUNIL KUMAR GARG, PRESIDENT 2 This appeal has been filed by the appellants LIC against order dated 24.4.08 passed by the District Forum, Dausa in complaint no. 290/2007 by which the complaint of the complainant was allowed in the manner that the appellants were directed to pay a sum of Rs. 50,000/- the amount of the LIC policy alongwith interest @ 9% p.a. w.e.f. 15.1.07 and further to pay a sum of Rs. 1000/- as costs of litiation.
2. It arises in the following circumstances-
That the complainant respondent had filed a complaint before the District Forum, Dausa on 20.12.07 inter alia stating that his son Pradeep Kumar, now deceased had taken a Money Back Life Insurance Policy for a sum of Rs. 50,000/- from the appellants bearing policy no. 195001350 and a proposal form was filled in up by the deceased on 7.11.04 and the policy had come into force w.e.f. 28.10.04 and since at the time of taking the policy the age of the deceased was 15 years, therefore, being the natural guardian the complainant respondent was the nominee and the policy was for 20 years and the same was to be matured on 28.4.2024. It was further stated in the complaint that the deceased had died on 24.3.05 due to high fever and after the death of the deceased claim was preferred by the complainant respondent being the natural guardian and nominee of the deceased before the office of the appellants but that claim was repudiated by the appellants through letter dated 15.1.07 on the ground that at the time of taking the policy in question the deceased had filled in up a declartion form regarding his health on 7.11.05 in which he had not mentioned that he was suffering from 3 any kind of disease but they had the sufficient proof to prove the fact that prior to one year before he proposed the policy, he was suffering from swelling U.E.Fistula for which he had consulted a medical man and had taken treatment from the hospital and undergone for operation of Fistula and since these facts were not disclosed by the deceased in his declaration form on 7.11.04 at the time of taking the policy, therefore, the deceased was guilty of suppression of material facts regarding his health. Thereafter the present complaint was filed.
A reply was filed by the appellants on 18.1.08 and they have taken the same pleas which were taken by them in the repudiation letter dated 15.1.07. It was further stated in the reply that prior to giving the declaration regarding his health on 7.11.04 the deceased was admitted in the SMS Hospital, Jaipur on 12.8.04 where the diagnosis which was made by the doctors was Swelling upper end- Fistula (Lt.), Pain, swelling upper end leg bone and he was suffering from the disease of Cancer and since these facts were not disclosed by the deceased in his declaration form dated 7.11.04, and further the death of the deceased had taken place due to cancer, therefore, it was a case of suppression of material facts regarding health on the part of the deceased and it was prayed that claim was rightly repudiated by the appellants and complaint be dismissed.
After hearing the parties the District Forum, Dausa through impugned order dated 24.4.08 had allowed the complaint inter alia holding that -
4(i) That the appellants had failed to prove the fact that the deceased had died because of Cancer and since the cause of death of the deceased was mentioned as Pyrexia , therefore, it was not a case of suppression of material facts regarding health on the part of the deceased.
(ii) That the appellants were not justified in repudiating the claim of the complainant respondent and it had amounted to deficiency in service on the part of the appellants.
Aggrieved from that order dated 23.9.05 passed by the District Forum, Bikaner , this appeal has been filed by the appellants.
3. In this appeal the main contention of the learned counsel for the appellants is that before issuance of policy in question, the deceased had given declaration regarding his health on 7.11.04 in which he had stated that he was not suffering from any kind of disease but the appellants had the sufficient proof to prove the fact that the deceased was admitted in the SMS Hospital, Jaipur on 12.8.04 and undergone for operation of Fistula on 16.8.04 and he was discharged on 17.8.04 and since these facts were not disclosed by the deceased deliberately in his declaration form on 7.11.04 , therefore, he was guilty of suppression of material facts regarding health and thus on that ground the claim of the complainant respondent was rightly repudiated by the appellants through letter dated 15.1.07 and the District Forum had committed serious error and illegality in decreeing the claim of the complainant respondent. Hence the impugned order could not be 5 sustained and liable to be quashed and set aside and this appeal deserves to be allowed.
4. On the other hand, the learned counsel appearing for the respondent has supported the impugned order of the District Forum .
5. We have heard the learned counsel for the appellants as well as for the respondent and gone through the entire materials available on record.
6. There is no dispute on the point that the deceased had taken a Money Back Life Insurance Policy for a sum of Rs. 50,000/- from the appellants bearing policy no. 195001350 on 28.10.04.
7. There is also no dispute on the point that at the time of taking insurance policy , a declaration was made by the deceased and in that declaration on 7.11.04, he had not mentioned that he was suffering from any kind of disease or had taken any treatment from any hospital.
8. There is also no dispute on the point that deceased had died on 24.3.05 meaning thereby within two years of the sissuance of the policy.
9. There is no dispute on the point that the claim of the above mentioned policy was repudiated by the appellants through letter dated 15.1.07 on the grounds mentioned therein.
10. On file there is a prescription slip of Dr.R.C.Banshiwal dated 20.7.04 which shows that the deceased had consulted him 6 and the doctor had referred the case to Bhagwan Mahaveer Cancer Hospital and Research Centre, Jaipur for FNAC .
Note- There is nothing on record to show that after the case was referred by Dr. Banshiwal, the deceased was admitted in Bhagwan Mahaveer Cancer Hospital, Jaipur or not.
11. On file there is an admission card of the SMS Hospital, Jaipur dated 12.8.04 by which the deceased was ordered to be admitted in NW I Unit II and thereafter he was admitted in the hospital.
12. On file there is a bed head ticket of the SMS Hospital, Jaipur which shows that the deceased was admitted in the hospital on 12.8.04 and Swelling U.E Fistula (Lt.) was found diagnosed and he was discharged on 17.8.04 and in the bed head ticket it was also mentioned that the consent for surgery had been taken.
13. On file there is operation record of the SMS Hospital, Jaipur which clearly shows that the deceased was being operated on 16.8.04 and biopsy was also done.
14. Thus, in the facts and circumstances just narrated above, the question for consideration is whether the findings recorded by the District Forum by which complaint was allowed could be sustained or not and whether the repudiation of the claim of the complainant respondent by the appellants was justified or not.
On suppression of material facts
15. It may be stated here that it is the fundamental principle of 7 insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally and in this respect, the decision of the Hon'ble Supreme Court in M/s.Modern Insulators Ltd. Vs. Oriental Insurance Co. (AIR 2000 SC 1014) may be referred to.
16. The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. In this respect, the decision of the Hon'ble Supreme Court in LIC Vs. Smt. G.M.Channabasemma (1996 (III) CPJ 8 (SC) may be referred to where it was held that the burden of proving that the insured had made false representation and suppressed material facts is undoubtedly on the LIC of India. Furthermore, mere concealment of some facts will not amount to concealment of material facts and if there is fraudulent suppression of material facts in the proposal, the policy could be vitiated otherwise not.
17. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.
18. The Hon'ble National Commission in National Insurance Co. Ltd. Vs. Bipul Kunda (2005 CTJ 377 (CP) (NCDRC) ) has held that for repudiating a claim of an insured, it is for the insurer to show that a sttement on a fact, which was material for the policy, had been suppressed by the insured and that statement was fraudulently made by him/her with the knowledge of the falsity of that statement.
819. As already stated above, the death of the deceased had taken place within two years of the issuance of the policy.
20. It may be stated here that where the insurer wishes to call ain question a policy within two years of its being effected, it is enough if the insurer is in a position to show 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 is inaccurate or false.
21. It may further be stated here that even if the death takes place within two years, mis-representation, if any, that should be material in the sense of having some effect upon life expectation whether direct or indirect and if it is found material, that defence could be taken by the Insurance Company, not otherwise.
22. The word "misrepresentation" means suggestio falsi, in matter of substance essentially material to the subject, whether by acts or by words, by manoeuvres, or by positive assertions or material concealment (suppressio veri) whereby a person is misled and damnified.
23. The word "fraud" means a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter. In this respect, the decision of the Hon'ble Supreme Court in Ram Preeti Yadav Vs. UP Board of High School & Intermediate Education and ors. (JT 2003 (Supp.I) SC 25 ) may be referred to.
24. It is well settled that misrepresentation itself amounts to 9 fraud in some cases.
25. The word "misconduct" means an act or conduct in the nature of a breach of trust or an act resulting in loss to other party.
26. The word "suppression of fact" envisages a deliberate or conscious omission to state of fact with the intention of deriving wrongful gain. In this respect, the decision of the Hon'ble Supreme Court in Collector of Customs Calcutta Vs. Tin Plate Co. of India Ltd. ( (1997) 10 SCC 538 ) may be referred to.
27. Keeping the above legal position and definitions in mind, if the facts of the present case are examined, it clearly appears that the appellants LIC have proved the facts by producing cogent and reliable evidence that prior to filling in up the declaration form on 7.11.04, the deceased was having some problem of Fistula in left leg for which he had consulted medical man and had gone for operation in the SMS Hospital, Jaipur on 16.8.04 for the disease of Fistula and thus it could be held that these facts were intentionally, knowingly and deliberately not disclosed by the deceased in his declaration form dated 7.11.04 and thus, it was a case of suppression of material facts regarding health on the part of the deceased.
28. In our considered opinion, looking to the fact that the declaration from regarding health was filled in up by the deceased on 7.11.04 in which he had stated that he was not suffering from any kind of disease but from the record which had been mentioned above, it is very much clear that the deceased was having some problem of swelling U.E Fistula (Lt.) for which he had first consulted Dr. R.C. Banshiwal on 20.7.04 and thereafter he was 10 admitted in the SMS Hospital, Jaipur on 12.8.04 and was discharged on 17.8.04 and operation had taken place on 16.8.04 and biopsy was also done.
29. It may further be stated here that suppression of the fact of operation, whether it was for the serious disease or not, would certainly amount to suppression of material facts regarding health on the part of the deceased, if the same was not mentioned in the declaration form regarding health which was filled in up at the time of taking the policy and since in this case the deceased had suppressed the fact of operation of Swelling U.E. Fistula (Lt.) and therefore, it was a case of suppression of material facts regarding health on the part of the deceased and for that the law laid down by the Hon'ble Supreme Court in the case of P.C. Chacko and anr. Vs. Life Insurance Corporation of India and ors. decided on 20.11.07 ( AIR 2008 SC 424 ) may be referred to.
30. In this case no doubt biopsy was done but what was the report of the biopsy had not been produced and in absence of that case of cancer could not be found established but since prior to giving the declaration regarding health on the part of the deceased , the deceased had gone for operation on 16.8.04 while being admitted in the SMS Hospital, Jaipur and since this fact was not mentioned by the deceased in the declaration form dated 7.11.04 , therefore, from every point of view it would amount to suppression of material facts regarding health on the part of the deceased.
31. For the reasons stated above, it is held that repudiation of claim of complainant respondent by the appellants through letter dated 15.1.07 on ground of suppression of material facts 11 regarding health by the deceased was justified and no illegality or irregularity has been committed by the appellants in repudiating the claim of complainant respondent and in view of this, the findings of the District Forum decreeing the claim of the complainant respondent could not be sustained and the same are liable to be quashed and set aside as they are wholly illegal, erroneous and perverse one and the appeal deserves to be allowed.
Accordingly, the appeal filed by the appellants LIC is allowed and the impugned order dated 24.4.08 passed by the District Forum, Dausa is quashed and set aside and the complaint filed by the complainant respondent stands dismissed.
Member President