State Consumer Disputes Redressal Commission
1. M/S Birla Sun Life Insurance Co.Ltd ... vs Shaik Sirajunnissa W/O Shaik Ataullal, on 10 July, 2013
BEFORE THE CIRCUIT BENCH A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT VIJAYAWADA F.A.No.867 of 2012 AGAINST C.C.No.NO.339 OF 2011 DISTRICT FORUM-II VIJAYAWADA KRISHNA DISTRICT Between 1. M/s Birla Sun Life Insurance Co.Ltd., By its Managing Director, G Corp Tech Park 5 and 5th Floor Kasarwadavalli, Ghodbunder Road Thane-601, Mumbai 2. M/s Birla Sun Life Insurance Co.Ltd., By its Manager, Near Benz Circle, Opp: to ICICI Bank, Upstairs of Khazana Jewellery, M.G.Road, Vijayawada Appellants/opposite parties A N D Shaik Sirajunnissa W/o Shaik Ataullal, Housewife R/o 11-36B, Islampet, Near Police Station, Gannavaram Vijayawada-001, Krishna Dist. Respondent/complainant Counsel for the Appellant M/s D.V.Ramakrishna Sarma Counsel for the Respondents M/s B.Sambasiva Rao QUORUM: SRI R.LAKSHMINARSIMHA RAO, HONBLE MEMBER
& SRI THOTA ASHOK KUMAR, HONBLE MEMBER WEDNESDAY THE TENTH DAY OF JULY TWO THOUSAND THIRTEEN Oral Order ( As per R.Lakshminarsimha Rao, Member) ***
1. Feeling aggrieved by the order of the District Forum, the opposite party has filed appeal contending that the District Forum has not considered the evidence on record in correct perspective. It is contended that the insured submitted proposal after reading and understanding the contents of the applications and terms and conditions of the policy contract. It is contended that the insured had undergone treatment for cancer from 5.11.2009 to 01.06.2010. He was aware of the fact during reinstatement of the policy. He was in the habit of smoking for a period of 8 years which he did not reveal in the proposal. It is contended that material facts such such as the state of health of insured, his age, occupation and habits etc are within the knowledge of the insured and have a bearing on the risk of his life.
2. The point for consideration is whether the insured suppressed any material fact as regards his illness and treatment while obtaining insurance policy or at the time of revival of the insurance policy?
3. The respondent husband during his life time obtained three life insurance policies and of them, he surrendered one life insurance policy and in respect of another insurance policy which was in lapsed even during his life time, the appellant paid cash surrender value of Rs 24,868/-
on exgratia basis to the respondent.
4. The third insurance policy, i.e., the life insurance policy bearing number 003381352 was issued on 28.09.2009 on application dated 26.08.2009 submitted by the insured and he died of cancer on 01.08.2010. The life insurance policy was lapsed and the insured submitted certificate of insurability 26.05.2010 based on which the appellant had reinstated the insurance policy. The appellant repudiated claim on the premise that the insured concealed the fact of his suffering from cancer and treatment undergone therefor. The repudiation letter dated 31.08.2010 reads as under:
Since the Company has been misled to reinstate the Policy on the basis of false replies in the Certificate of Insurability for Reinstatement, we are hereby repudiating our liability under the Policy.
However, without admitting any liability under the Policy, we have decided to refund the Cash Surrender Value under the Policy as exgratia. Please find enclosed herewith our Cheque No.001280 for Rs.24,868.26 (Rupees Twenty Four Thousand Eight Hundred Sixty Eight and Paise Twenty Six Only)
5. The insured replied in negative to the question number XII) of the proposal relating to medical and personal history as follows:
XII) Medical and Personal History of the Life to be Insured A) Life Style Information
6) Do you smoke cigarettes/bidis or use of any other form of tobacco like pan gutkha etc No (D) Have you ever had or sought advice for the following
(e) Ulcer, Chronic, Diarrhea, hepatitis or jaundice or other liver or diagnosed disorders No
f) Cancer, tumor, thyroid disorder enlarged glands, enlarged lymph nodes No
5) Do you have any health symptoms or complalint for which the Physicians has not been consulted or treatment received.
No
6. The appellant contends that the claim investigation revealed that the insured was a smoker. The appellant had taken shelter under Section 45 of the Insurance Act which reads as under:
45.
Policy not to be called in question on ground of mis- statement after two years. No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground 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, was inaccurate or false, unless the insurer shows that such statement 2[ was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made] by the policy- holder and that the policy- holder knew at the time of making it that the statement was false 3[ or that it suppressed facts which it was material to disclose] 1[ Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.]
7. The Honble Supreme Court on interpretation of Section 45 of the Insurance Act has held that at any time within two years of the date of issue of the life insurance policy, the insurance company can repudiate claim in case of any inaccurate or false statement contained in the proposal. The Honble Supreme Court in Mithoolal Naik vs Life Insurance Corporation of India AIR 1962 SC 814 held the following three conditions for the application of second part of Section 45 of the Insurance Act;
(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.
8. Discharge Summary of the insured issued by Indo-American Cancer Institute & Research Centre, Hyderabad would show that the insured was admitted to the hospital on 19.04.2010 and he was discharged on 23.04.2010 and during his stay in the hospital, he was administered with Cisplatin-500mg, fluget-1000mg with supportive medicine. History of the patient is noted as Known case of Ca Hypo pharynx (post-RT) . The insured submitted certificate of insurability on 26.05.2010 which is silent of his suffering from cancer-Hypo pharynx and treatment he had undergone therefor in Indo-American Hospital. The insured answered in negative to the question nos. 8,10,11 and 13 in the certificate of insurability as under:
8Within the past 12 months have you used any products alcohol or nicotine No 10 Are you on a diet or taking any vitamin herbal, medicine reducing pills or other mediine of any kind?11
Have you ever been examined for or treated for high blood, pressure, stroke heart trouble, diabetes, cancer, tumour, chest pain, digestive tract disorder or had such treatment been recommended by Physicians or Other Practitioner No 13 Since the Applicatoin for this Policy, have you a.
Consulted any doctor or other health Practitioner No b.
Been told you or sought advice for any illness disease or injury No c.
Submitted to ECG, X-ray blood test or other tests?
No d.
Been submitted or been admitted/advised to be advised as inpatient in hospital or clinic except for pregnance birth or routine check up No
9. Thus, it is clear that the insured concealed the fact of his illness, i.e, cancer-hypo pharynx and the treatment he had undergone therefor and got revived the insurance policy. It is to be noted that revival of the insurance policy amounts to fresh policy for all practical purposes and any statement made by the insured for revival of the insurance policy attains significance as it is made basis for revival of the insurance policy . The ratio laid in the following decisions is applicable to the facts of the present case.
i) Life Insurance Corporation of India vs Asha Goel & another-AIR 2001 SC 549.
ii) Satwant Kaur vs New India Insurance Company Ltd- SC2776(2002)
10. The decision to repudiate the claim was taken by the respondent-insurance company based on the medical record . The appellant could not show how the order under appeal could be said to suffer from any infirmity.
11. The learned counsel for the respondent -insurance company has placed reliance upon the decision of the Honble Supreme Court in P.C.Chacko vs Life Insurance Corporation of India 2008(1)SCC 321 wherein the Supreme Court held The purpose for taking a policy of insurance is not, in our opinion, very material. It may serve the purpose of social security but then the same should not be obtained with a fraudulent act by the insured. Proposal can be repudiated if a fraudulent act is discovered. The proposer must show that his intention was bona fide. It must appear from the face of the record. In a case of this nature it was not necessary for the insurer to establish that the suppression was fraudulently made by the policy holder or that he must have been aware at the time of making the statement that the same was false or that the fact was suppressed which was material to disclose. A deliberate wrong answer which has a great bearing on the contract of insurance, if discovered may lead to the policy being vitiated in law.
12. In Satwant Kaur Sandhu vs New India Assurance Company Ltd IV(2009)CPJ 8(SC), the Apex Court considered the contract of insurance based on the principle of utmost good faith on the part of the assured to hold Thus it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for proposer to determine whether the information is sought for is material for the purpose of the policy or not.
13. In the aforementioned decisions the repudiation of the claim for non-disclosure of the material facts was held valid and sustainable. The facts of the aforementioned case and those of the present case are similar and as such the ratio laid down therein is applicable to the facts of the case on hand. In the case on hand the insured was suffering from cancer of hypo pharynx and he had not revealed the disease he was suffering from and the treatment he had undergone therefor at the time of obtaining the insurance policy.
14. In the result, the appeal is allowed setting aside the order of the District Forum. Consequently, the complaint is dismissed. No order as to costs.
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