State Consumer Disputes Redressal Commission
Rameshwari Devi vs Lic Of India on 27 May, 2010
APPEAL NO: 1494/2006 Rameshwari Devi w/o late Sh. Jairamaram r/o Kishanpura Post Chhoti Khatu Tehsil Didwana Distt. Nagaur. Complainant-appellant Vs. 1. Life Insurance Corporation of India through General Manager, Bima Bhawan, Bima Marg, Mumbai. 2. Sr.Divisional Manager Life Insurance Corporation of India Divisional Office- Jeevan Prakash P.B.No. 66, Jaipur Road, Bikaner. 3. Br.Manager, Life Insurance Corporation of India Br.Office- Didwana, Nagaur. Opposite parties-respondents 27.5.2010 Before: Mr.Justice Sunil Kumar Garg-President Mrs.Vimla Sethia-Member
Mr.Shashi Kumar Pareek- Member 2 Mr.Gopal Shastri counsel for the appellant Mr.Sandeep Saxena counsel for the respondents BY THE STATE COMMISSION This appeal has been filed by the complainant appellant against order dated 19.7.06 passed by the District Forum, Nagaur in complaint no. 64/2006 by which the complaint of the complainant appellant was dismissed.
2. It arises in the following circumstances-
That the complainant appellant had filed a complaint against the respondents LIC before the District Forum,Nagaur on 20.4.06 inter alia stating that her husband Jairamaram, now deceased had taken LIC policy known as Money Back Policy from the respondents for a sum of Rs.50,000/- bearing policy no.500518570 on 22.4.99 and that policy had come into force w.e.f 28.3.99. It was further stated in the complaint that the deceased had died on 30.7.05 and after the death of the deceased claim was preferred by the complainant respondent being the wife and nominee of the deceased before the office of the respondents but that claim was repudiated by the respondents through letter dated 28.2.06 on the ground that at the time of revival of the policy on 23.7..05 the deceased had filled in up a fresh declartion form regarding his health 3 in which he had not mentioned that he was suffering from any kind of disease but they had the sufficient proof to prove the fact that prior to revival of the policy i.e on 23.7.05 the deceased was a patient of Chronic Renal Failure ( CRF ) and he was got admitted in Santokba Durlabhji Hospital, Jaipur on 14.12.04 and he was discharged from the hospital on 21.12.04 and he had taken the treatment of CRF from that hospital and since these facts were not disclosed by the deceased in his fresh declaration form on 23.7.05 at the time of revival of the policy, therefore, the deceased was guilty of suppression of material facts regarding his health and thus the repudiation of claim of the complainant appellant was not justified.
It was further stated in the complaint that the cause of death of the deceased was heart failure and not CRF and thus, from that point of view also claim of the complainant appellant was wrongly repudiated by the respondents . Thereafter the present complaint was filed.
A reply was filed by the respondents on 31.5.06 and in the reply they have taken the same pleas which were taken by them in the repudiation letter dated 28.2.06 . Apart from that it was stated in the reply that even prior to the last revival of the policy i.e on 23.7.05, the policy in question was revived by the deceased on 21.5.01 and 7.2.03 and since the deceased had died on 30.7.05 within seven days of the last revival 4 of the policy and further prior to 23.7.05 the deceased was got admitted in Santokba Durlabhji Hospital, Jaipur on 14.12.04 and he was discharged from the hospital on 21.12.04 and the disease of CRF was diagnosed by the doctors of that hospital and since these facts were not disclosed by the deceased in his fresh declaration form on 23.7.05 at the time of revival of the policy, therefore, it was a case of suppression of material facts regarding health on the part of the deceased and it was prayed that complaint of the complainant be dismissed as claim of the complainant was rightly repudiated by the respondents.
After hearing the parties, the District Forum, Nagaur through impugned order dated 19.7.06 had dismissed the complaint inter alia holding-
(i) That since in this case;
initially the policy was taken by the deceased on 28.3.99 and he had died on 30.7.05 i.e after five years of issuance of the policy, therefore, if some payment had been made by the LIC that was correctly made by the LIC.
(ii) That the respondents were justified in repudiating the claim of the complainant appellant on ground of suppression of material facts regarding health on the part of the deceased.
5Aggrieved from the said order dated 19.7.06 passed by the District Forum, Nagaur this appeal has been filed by the complainant appellant.
3. In this appeal, the main contention of the learned counsel for the appellant complainant is that no doubt the deceased was admitted in Santokba Durlabhji Hospital, Jaipur on 14.12.04 and he was discharged from the hospital on 21.12.04 and the disease of CRF was diagnosed by the doctors of that hospital but at the time of discharge it was mentioned that he was improving from that disease, therefore, if at the time of last revival i.e on 23.7..05 all the questions were answered in negative by the deceased, it could not be inferred that there was suppression of material facts regarding health on the part of the deceased and hence, repudiation of claim of the complainant appellant by the respondents through letter dated 28.2.06 was wholly illegal and arbitrary and in view of this the findings of the District Forum dismissing the complaint of the complainant appellant could not be sustained as they suffer from basic infirmity, illegality and perversity and it was prayed that appeal be allowed.
4. On the other hand, the learned counsel appearing for the respondents has supported the impugned order of the District Forum.
5. We have heard the learned counsel for the appellant as well as for the respondents and have gone through the entire materials available on record.
66. There is no dispute on the point that the deceased had taken LIC policy from the respondents for a sum of Rs.50,000/- bearing policy no.500518570 on 22.4.99 and that policy had come into force w.e.f 28.3.99 and the same was revived on 21.5.01 , 7.2.03 and 23.7.05.
7. There is also no dispute on the point that at the time of last revival of the policy a fresh declaration was made by the deceased and in that declaration on 23.7.05 , he had not mentioned that he was suffering from any kind of disease and all the questions were answered in negative by the deceased.
8. There is also no dispute on the point that deceased had died on 30.7.05 meaning thereby within seven days of the last revival of the policy.
9. There is no dispute on the point that the claim of the above mentioned policy was repudiated by the respondents through letter dated 28.2.06 on the grounds mentioned therein.
10. On file there is a bed head ticket of Santokba Durlabhji Hospital, Jaipur which shows that the deceased was admitted in the hospital on 14.12.04 and he was discharged from the hospital on 21.12.04 and the deceased of CRF was diagnosed by the doctors of that hospital though in the bed head ticket it was mentioned that he was improving from that disease.
711. Thus, in the facts and circumstances just mentioned above, the question for consideration is whether the findings recorded by the District Forum could be sustained or not or whether the repudiation of the claim of the complainant appellant by the respondents was justified or not.
On Insurance law
12. It may be stated here tht it is the fundamental principle of 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.
13. 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 8 suppression of material facts in the proposal, the policy could be vitiated otherwise not.
14. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.
15. In Life Insurance Corporation of India & ors. Vs. Asha Goel (Smt.) & anr. ( (2001) SCC 160 ), it was held by the Hon'ble Supreme Court that the contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material (sic material fact ) must be disclosed, otherwise there is good ground for recession of the contract. If there are any misstatement or suppression of material facts, the policy can be called in question and for determination of the question whether there has been suppression of any material fact, it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person.
16. 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.
917. As already stated above, the death of the deceased had taken place within one month of the revival of the policy.
18. It may be stated here that where the insurer wishes to call in 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.
19. 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.
20. 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 positiveassertions or material concealment (suppressio veri) whereby a person is misled and damnified.
21. 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 10 Board of High School & Intermediate Education and ors. (JT 2003 (Supp.I) SC 25 ) may be referred to.
22. It is well settled that misrepresentation itself amounts to fraud in some cases.
23. 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.
24. 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.
25. Before proceeding further something should be said about the distinction between Renewal and Revival of the policy.
26. The term " renewal" means renewal of the policy on existing terms and condition of a thing or in other words, extension upon the same terms as the old contract. The renewal of the policy means that the policy is renewed within the stipulated period and in such case, it was in force and it had not lapsed on any of the grounds and further, in cases of renewal of the policy, no further declaration could be sought. But the cases of ' revival' stand on different footings. The 11 case of revival arises only when a policy had lapsed or expired due to many reasons, one of the reasons may be non-payment of premium in time.
27. It may be stated here that since the present case is a case of revival of the policy, the question arises whether revival should be treated as fresh contract or not. After expiry of the policy, if the party chooses to revive the contract of insurance, revival is clearly in law a fresh contract and this Commission has taken the same view in the case of LIC Vs. Munni Bano reported in (2005) 4 CPJ 228 and thus in the present case the revival of the policy would amount to a fresh contract and that is why at the time of last revival of the policy i.e on 23.7.05 , a fresh declaration was given by the deceased regarding his health.
28. It may be stated here that in the present case last revival was made on 23.7.05 by the deceased and in the declaration form regarding health several questions were asked about the illness and the deceased had answered all the questions in negative. This is one of the aspects of the matter.
29. The other aspect in this case is that on file there is a bed head ticket of Santokba Durlabhji Hospital, Jaipur which shows that the deceased was admitted in the hospital on 14.12.04 and he was discharged from the hospital on 21.12.04 and the deceased of Chronic Renal Failure ( CRF ) was diagnosed by the doctors of that hospital though in the bed head ticket it was mentioned that he was improving from that 12 disease but the word ' Chronic Renal Failure ' clearly shows that the disease of kidney was an old one and that could not develop within a year or two, therefore, from that point of view also it could be said that the deceased was aware of the fact that he was suffring from chronic trouble of kidney prior to last revival of the policy on 23.7.05 and if any misstatement is made in respect of such type of diseases by the person seeking insurance, in such case, it can be believed that knowingly the person taking out the insurance has made misstatement.
30. It may further be stated here that the well settled law in the field of insurance is that contracts of insurance including the contracts of lifte assurance are contracts uberrima fides and every fact of materiality must be disclosed otherwise there is good ground for rescission. And this duty to disclose continues upto the conclusion of the contract and covers any material alteration in the character of the risk which may take place between the proposal and acceptance.
31. Taking into consideration that aspect also when all the answers were given in negative by the deceased at the time of last revival on 23.7.05 but on the contrary there is ample evidence to prove the fact that the deceased was admitted in Santokba Durlabhji Hospital, Jaipur on 14.12.04 and he was discharged from the hospital on 21.12.04 and the disease of CRF was diagnosed by the doctors of that hospital and therefore, from every point of view the present case would be a case of suppression of material facts regarding health on the 13 part of the deceased as at the time of last revival of the policy on 23.7.05, the deceased had not mentioned that he was a patient of kidney trouble.
32. It may further be stated here that kidney trouble could not be said to be a minor ailment but there are certain diseases such as kidney, heart and brain and they are connected with the life span of a person and if any misstatement is made in respect of such type of diseases by the person seeking insurance, in such case, it can be believed that knowingly the person taking out the insurance has made misstatement. But if any one suffers from temporary illness such as fever, cough, cold etc., and the same was not mentioned at the time of taking insurance, it cannot be stated in true sense that a misstatement in respect of the state of health has been made by the person seeking insurance
33. Thus, non-mentioning of the disease of kidney in the declaration form which was filled in up by the deceased at the time of last revival of the policy on 23.7.05 would certainly amount to suppression or concealment of material facts or mis-statement in real sense.Simply because in the bed head ticket of the Santokba Durlabhji Hospital, Jaipur at the time of discharge on 21.12.04 , it was mentioned that he had improved, that would not make any difference as the disease of chronic renal failure would remain as an existing disease even prior to admission in the hospital on 14.12.04 and after discharge from the hospital on 21.12.04.
1434. Further on point that the deceased had died because of heart attack and there was no nexus between the cause of death of the deceased and the disease of CRF, it may be stated here that all deaths may be attributed to one of three proximate causes, namely, coma, syncope or asphyxia. Since life is maintained by the interdependent action of the brain, the heart, the kidney and the lungs, the arrest of the function of one of them is quickly succeded by the arrest of the function of the others, and life ceases.
Determination of death
35. Death is determined by the entire and permanent cessation of circulation and respiration. Ordinarily, these signs are considered sufficient to determine that death has actually taken place, but these alone should not be relied on, as absolute signs to avoid premature burial or cremation.
36. It is incorrect to write ' heart failure' or 'cardiac failure' or cardiopulmonary arrest' without mentioning the underlying pathological cause, which might be 'coronary artery disease' or 'rheumatic vlve lesions' or 'senile myocardial degeneration' + renal failure. It should be remembered that every one dies of 'cardiopulmonary arrest' or 'heart failure' or 'cardiac failure' which simply means cessation or circulation and respiration leading to somatic and then cellular death.
37. The cause of death is recorded according to international 15 conventions;
the sequence being that adopted by the World Health Organisation.
38. The symptomatology or modes of death, eg. cardio-respiratory failure, asthenia, or asphyxia, 'coma' 'angina', cancer or tumour' without specifying its site or nature, 'apoplexy', 'catarrh', 'congestion'. 'debility', 'asthenia'. 'organic disease', ' toxaemia', 'sepsis' and 'haemorrhage' should not be recorded as the cause of death, without mentioning the underlying pathological cause.
39. Thus, it can be concluded that cardiac arrest itself cannot be treated as cause of death without mentioning the underlying pathological cause.
40. It may be stated here that since in this case though the immediate cause of death of the deceased was cardiac arrest but the pathological cause must have been renal failure, therefore, the argument of the learned counsel for the complainant appellant that the death of the deceased was due to heart attack and not renal failure could not be accepted and the same is rejected.
41. So far as the question of payment of bonus etc. on the ground that policy had run for more than five years is concerned, it may be stated here that while deciding the complaint of the complainant appellant the District Forum had mentioned in para 5 of the order that the payment had been made by the respondents to the complainant appellant.
1642. For the reasons stated above, it is held that repudiation of claim of complainant appellant by the respondents through letter dated 28.2.06 on ground of suppression of material facts regarding health by the deceased was justified and no illegality or irregularity has been committed by the respondents in repudiating the claim of complainant appellant and in view of this the findings of the District Forum dismissing the complaint of the complainant appellant are liable to be confirmed as they are based on correct appreciation of entire materials and evidence available on record and they do not suffer from any basic infirmity,illegality or perversity and this appeal deserves to be dismissed.
Accordingly, the appeal filed by the appellant is dismissed.
Member
Member President
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