Madras High Court
R.Subbulakshmi vs Regional Manager on 10 February, 2017
Author: M.Govindaraj
Bench: M.Govindaraj
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 10.02.2017 RESERVED ON : 02.11.2016 PRONOUNCED ON : 10.02.2017 CORAM THE HONOURABLE MR.JUSTICE M.GOVINDARAJ W.P.(MD) No.928 of 2009 R.Subbulakshmi ... Petitioner -vs- 1.Regional Manager LIC of India Southern Zonal Office 102, Anna Salai Chennai-2 2.The Zonal Manager Southern Zonal Office LIC Building, Anna Salai P.B.No.2450 Chennai-600 002 3.The Senior Divisional Manager Divisional Office ?Jeevan Prakash? P.B.No.183, Tirunelveli-627 002 ... Respondents PRAYER: Writ Petition is filed under Article 226 of the Constitution of India for issuance of writ of certiorarified mandamus calling for the entire records connected with the impugned order passed by the third respondent, dated 10.03.2004, and quash the same and to direct the respondents to pay the accrued amount of the policy for a sum of Rs.2,00,000/- with interest from the date of representation to the petitioner. !For Petitioner : Mr.S.N.Ravichandran ^For Respondents : Mr.G.Prabhu Rajadurai :ORDER
The prayer in this writ petition is for issuance of a writ of certiorarified mandamus to quash the impugned order, dated 10.03.2004, passed by the third respondent and to direct the respondents to pay the assured sum of Rs.2,00,000/- with interest from the date of the petitioner's claim till the date of payment.
2. The petitioner's husband had taken an Insurance Policy, on 24.01.2001, bearing No.320861997, for a term of 16 years, from the respondent Corporation. The sum assured was Rs.2,00,000/- and the date of maturity is 24.01.2017. The premium was Rs.3,307/-. Till the death of her husband, the premium was regularly paid. All of a sudden, the petitioner's husband fell ill and he was admitted in the Government Hospital on 07.05.2002 and it was found that he was suffering from Broncho Pneumonia / Immuno Deficiency disease and in spite of treatment, he died on 13.05.2002. The petitioner, being his wife, had made a claim before the third respondent. But, the third respondent, vide order, dated 10.03.2004, repudiated her claim for withholding material information. It was further stated that in the proposal for assurance, dated 10.01.2001, her husband had answered ?No? against the question that ?Have you ever received or at present availing / undergoing Medical advice, treatment or tests in connection with Hepatitis B or AIDS related conditions??.
3. Further, according to the third respondent, the petitioner's husband had consulted with a medical man and taken treatment, but, he did not disclose the said fact in his proposal and he had given a false answer. Therefore, in view of the deliberate misstatements and withholding the material information, he had violated the policy conditions.
4. Aggrieved by the repudiation of her claim, the petitioner had preferred an appeal before the second respondent. The appeal was not disposed of for a long time and therefore, she was constrained to issue a legal notice on 07.02.2006 and thereafter, the matter was referred to the Zonal Claims Review Committee. Even then, her appeal was not considered. Thereafter, she had issued another legal notice, on 27.03.2007, to the respondents 2 and 3. Thereafter, the third respondent, vide proceedings, dated 24.04.2007, informed the petitioner that the Zonal Claims Review Committee had decided to uphold the decision of repudiation. Aggrieved by the same, the petitioner is before this Court.
5. According to the petitioner, her husband was hale and healthy at the time of submitting proposal and he had never suffered any illness much less Broncho Pneumonia / Immuno Deficiency disease. The repudiation is made on the basis of hearsay evidence, without any basis therefor. Moreover, the repudiation is belated and barred under Section 45 of the Insurance Act, 1938 (hereinafter, it may be referred to as ?the Act?). The insurance policy was taken on 24.01.2001 and the two years period for repudiation was lapsed as early as on 23.01.2003. If at all the third respondent wanted to repudiate the claim, he could have repudiated the claim on or before 23.01.2003. But, it was repudiated only on 10.03.2004. Therefore, the repudiation by the third respondent is illegal.
6. The respondents have filed a counter affidavit stating that on a local enquiry and from the statements obtained from the persons known to the petitioner's husband, it was found out that the petitioner's husband was suffering from AIDS for about three years prior to his death. Therefore, they came to the conclusion that the petitioner's husband had suppressed his illness and gave a false information in his proposal for assurance on 10.01.2001. Hence, the repudiation of the petitioner's claim is very much legal. In support of their contentions, they have produced certificate of treatment from the Medical Officer, Government Hospital, Radhapuram and the statements of three individuals.
DISCUSSION:
7. From the perusal of the certificate of treatment, it is seen that the date of first consultation of the petitioner's husband was on 07.05.2002, the date on which, he was admitted in the Hospital. The nature of complaint was fever and the duration of the illness was three months. The Doctor had also opined that the duration of the illness was only three months. The previous medical history and the treatment were all not known to the Medical Officer. Even the statements obtained from the private individuals also show that the deceased was a good person having no bad habits. But, they had stated that the petitioner's husband was suffering from AIDS for the past three years.
Another person had stated that the petitioner's husband had taken treatment for six months before his death. One Raj, a neighbor, had stated that the petitioner's husband had no bad habits and he had suffered illness only for 3 to 4 months before his death. Therefore, on fact, it is found that the petitioner's husband had suffered illness only three months before his death.
SUBMISSION OF RESPONDENTS:
8. The learned counsel appearing for the respondents, in support of his contentions, has placed reliance upon the decision in Life Insurance Corporation of India v. Asha Goel, reported in AIR 2001 SC 549, wherein it is held that where a claim by an insured or a nominee is repudiated raising a serious dispute and the Court finds the dispute to be a bona fide one, which requires oral and documentary evidence for its determination, then the appropriate remedy is a civil suit and not a writ petition under Article 226 of the Constitution of India.
DISCUSSION:
In the same decision, it is held that repudiation of claim by an insurer merely on the ground that the deceased had withheld correct information regarding his health condition at the time of effecting insurance policy is not proper. It is also held that mere inaccuracy of falsity in respect of some recitals or items in the proposal is not sufficient. The burden of proof is on the insurer to establish these circumstances and unless the insurer is able to do so, there is no question of the policy being avoided on the ground of misstatement of facts.
SUBMISSION OF PETITIONER:
9. The learned counsel for the petitioner would further submit that the insurer cannot be permitted to raise plea regarding non-furnishing of information, after the death of insured and in support of his contention, he has placed reliance upon the decision in M.Manimekalai v. The Insurance Ombudsman, reported in 2016 (1) CTC 391.
In the said decision, after relying several decisions and after referring to Section 45 of the Act, three important ingredients held to be proved by the insurer, namely, (a) Policy holder suppresses material facts that he was required to disclose or statement made by policy holder suppresses material matter; (b) Such suppression must be fraudulent; and (c) Policy holder makes such statement knowing it to be false at the time of making it or with knowledge of suppression.
10. The decision in G.Muthupackiam v. Zonal Manager, L.I.C. of India, reported in 2014 ACJ 1401 has elaborately dealt with an identical issue and wherein, it is held that the burden is on the part of the insurer to prove that there was suppression of material fact and the said suppression was made fraudulently. The expression fraudulently connotes deliberate and intentional falsehood or suppression and some strong material is required before concluding that the policyholder had played a fraud on the Corporation.
11. From the materials produced by the third respondent, it is seen that the Doctor, at the first instance, had stated that the petitioner's husband was suffering illness only for three months before the date of admission. But, there is no medical records to show that the deceased was consulting the medical man or he was undergone treatment. The flimsy evidence produced by the respondents is not credible and it does not disclose any material suppression, much less fraudulently.
12. In The Life Insurance Corporation of India v. S.Anusuya Bai, reported in 2010 (1) CTC 192, it is held that the burden of proof is on the insurer to prove the three ingredients postulated under Section 45 of the Act. In sofar as the present case is concerned, this Court does not find that the respondents have proved any material suppression much less the material suppression, which was fraudulently made by the policyholder and it was suppressed by the insured knowing well that it was false. Moreover, as per Section 45 of the Act, repudiation should be made within two years from the date of assurance. Admittedly, as per the statement made in the counter affidavit, the repudiation was made only after three years viz., 10.03.2004. Therefore, the repudiation is bad under Section 45 of the Act.
13. Further, the respondents are not in a position to prove the falsity. They have tried to show that there are material suppression. But, the statements obtained from the strangers, who had no knowledge of the policyholder's health condition, nature and details of the illness, would go to show that it is only a hearsay evidence and there is no definite conclusion that the said persons had knowledge about the illness and that will not lead to definite conclusion and there were suppression of material facts. Therefore, it can be safely presumed that question of falsity does not arise.
14. In Kalyani Achi v. Life Insurance Corporation of India, reported in 1979 Mad LW 662, it is held that there must be a satisfactory proof that the assured was suffering from ailments, which means there must be proof of proper diagnosis and there must also be further proof that the Doctor had communicated to the assured that he was suffering from a particular disease or the assured himself know that he was suffering from those ailments and that it is only if such knowledge is made out that question of a failure to disclose at all would arise. But, in the present case, as already mentioned above, there is no proof that the assured was suffering from any ailment at the time of taking Policy or at the time of revival of Policy. In the event of failure in paying the premium, the Insurance Company may refuse to pay the maturity amount. In such circumstances, the Corporation cannot be permitted to raise a plea regarding non-furnishing of information to the Corporation after the death of the insured.
15. In view of the foregoing discussions, this Court is of the view that the third respondent has failed to show that there were material suppression or the insured was fraudulently had taken policy knowing well that he was suffering from illness and hence the repudiation of the petitioner's claim is not sustainable.
16. In the result, the writ petition is allowed and the impugned order, dated 10.03.2004, passed by the third respondent is quashed and the respondents are directed to pay the assured sum of Rs.2,00,000/- with interest from the date of the petitioner's claim till the date of payment. No costs.
To
1.Regional Manager LIC of India Southern Zonal Office 102, Anna Salai Chennai-2
2.The Zonal Manager Southern Zonal Office LIC Building, Anna Salai P.B.No.2450 Chennai-600 002
3.The Senior Divisional Manager Divisional Office ?Jeevan Prakash?
P.B.No.183, Tirunelveli-627 002.