National Consumer Disputes Redressal
Sunita Devi vs Branch Manager, Life Insurance ... on 20 August, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 3234 OF 2018 (Against the Order dated 13/09/2018 in Appeal No. 1606/2007 of the State Commission Uttar Pradesh) 1. SUNITA DEVI W/O. LT. NARENDRA KUMAR PANDEY, R/O. C/O. SRI ANIL KUMAR MISRA, KATHOTA POST GOPIGANJ, TEHSIL GYANPUR, DISTRICT-SANT RAVIDAS NAGAR BHADOHI, UTTAR PRADESH ...........Petitioner(s) Versus 1. BRANCH MANAGER, LIFE INSURANCE CORPORATION OF INDIA & ANR. BRANCH GYANPUR, DISTRICT SANT RAVIDAS NAGAR BHADOHI UTTAR PRADESH 2. LIFE INSURANCE CORPORATION OF INDIA SENIOR DIVISIONAL MANAGER, THROUGH DIVISIONAL OFFICE JEEWAN PRAKASH POST BOX NO. 1, 1155B 121120, GAURIGANJ VARANASI UTTAR PRADESH ...........Respondent(s)
BEFORE: HON'BLE MRS. JUSTICE DEEPA SHARMA,PRESIDING MEMBER HON'BLE MR. C. VISWANATH,MEMBER For the Petitioner : Mr. B. K. Upadhyay, Advocate For the Respondent : Mr. Arvind Kumar, Advocate Dated : 20 Aug 2019 ORDER The present Revision Petitions, under Section 21(b) of the Consumer Protection Act, 1986 (for short "the Act") have been filed against the order dated 13.09.2018 of the Hon'ble Mr. Akhtar Hussain Khan, President of the State Consumer Disputes -3- Redressal Commission, Lucknow, Uttar Pradesh (for short "the State Commission") in Appeal No.1493 of 2011 filed by the complainant Smt. Sunita Devi and Appeal No.1606 of 2007 filed by Life Insurance Corporation of India. Both the parties filed Appeals against the order of the District Consumer Disputes Redressal Forum, Santravidas Nagar, Bhadohi, Gyanspur (for short "the District Forum") dated 20.06.2007 in Complaint No.37 of 2007.
2. The chronology of the events in this matter are that the Complainant had filed Complaint No.37 of 2007 before the District Forum which was partly allowed by the District Forum vide order dated 20.06.2007. This order was impugned by the Complainant as well as the Insurance Company by way of Appeals No.1493 of 2011 and 1606 of 2007. The matter was listed before the Bench consisting of two members. While Sh. Gowardhan Yadav, Member had allowed the Appeal No.1493 of 2011 filed by the Complainant and dismissed the Appeal No.1606 of 2007 of the Insurance Company vide order dated 10.07.2008, the other Member of the Bench Mr.Udai Shanker Awasthi allowed the Appeal No.1606 of 2007 of the Insurance Company and dismissed the Appeal No.1493 of 2011 of the Complainant. Since there was difference of opinion between the two members of the State -4- Commission, the matter was referred to the President of the State Commission and the President vide the impugned order concurred with the findings of Mr. Udai Shanker Awasthi, thereby dismissing the Appeal of the Complainant and allowing the Appeal of the Insurance Company.
3. The present Revision Petition, therefore, has been filed by the Complainant alleging that the majority order in the present case is illegal and certain relevant documents part of the record were not considered while passing the impugned order.
4. The brief facts of the case are that the husband of the complainant had purchased two life insurance policies no.281211963 and 281311970 from the Insurance Company for ₹1,00,000/- and ₹50,000/- on 25.11.1997 and at that time he was medically examined by the authorised doctor of the Insurance Company. The premium towards these policies could not be paid and so in the year 2001, both the policies lapsed. An application for the revival of the policies was filed on 19.06.2002. The insured, i.e. Sh. Narendra Kumar underwent the medical test by authorised doctor of the Insurance Company and both the policies were revived on 19.06.2002 w.e.f. the earlier date 25.11.1997 on which -5- date these were issued. Unfortunately, the insured, i.e., Sh.Narendera Kumar died on 24.05.2005 and the Complainant being his nominee filed the claim for both the policies.
5. The Insurance Company, however, approved only ₹34,300/- for the policy of ₹1,00,000/- and ₹10,750/- for the policy of ₹50,000/- and vide two letters of even date, dated 24.11.2005, cancelled the revival of the insurance policies on the ground that the insured had concealed the material facts relating to his health at the time of the revival of the policies.
6. The Complainant filed the Complaint alleging that non-payment of the amounts under the life insurance policies of her husband amounts to deficiency in service. It is further alleged that there was no concealment relating to the health conditions of the insured. It is submitted that the insured had undergone kidneys' transplantation on 03.07.2000 and a claim had been filed with the Insurance Company on 24.01.2001 for the expenses incurred by the insured for such transplantation. The Insurance Company however rejected the claim stating that kidneys' transplantation was not covered under the policies. It is submitted and argued that the information regarding the kidneys transplantation of the insured was very well within the knowledge of the Insurance -6- Company at the time when they had revived the policies. It is submitted that the Insurance Company cannot now state that the deceased/insured had concealed any fact relating to his medical condition while applying for revival of the lapsed policies. It is submitted that the revival application was moved on 19.06.2002 and the policies were revived on the same date after medically examining the insured and after being satisfied about his health condition. It is further submitted that the insured had died on 24.05.2005, i.e., after almost three years of the revival and that the premium of all the three years since the date of revival had been duly paid and accepted by the Insurance Company. It is submitted that the findings of the majority that the insured had violated the terms and conditions of Section 45 is therefore incorrect finding and liable to be set aside. Reliance is placed on "Life Insurance Corporation of India & Ors. Vs. Bimla Devi III (2009) CPJ 370 (NC)", "SBI Life Insurance Co. Ltd. Vs. Baijnth Tanti, II (2018) CPJ 95 (NC) and "Life Insurance Corporation of India & Anr. Vs. Gowramma, III (2009) CPJ 25 (NC)".
7. Learned counsel appearing for the Insurance Company has submitted that the insured had, at the time of revival of his policies, filled up a proposal form in which he had had not disclosed about -7- his kidneys' transplant. In the proposal form, he had clearly stated that he had never suffered with any disease which should require one week treatment and had not been admitted or undergone an investigation of ECG, X-ray, screening, blood test or urine test and thus he had concealed the material facts and made a false representation which led to revival of the policies by the Insurance Company. It is submitted that the Insurance Company learnt about this fact only after a claim was received from the nominee of the insured. It is submitted that in these circumstances, the Insurance Company has rightly rejected the claim since the revival had been sought by misrepresentation and concealing the material facts and that under Section 45 of the Insurance Act, the Insurance Company is within its right to terminate the revival within three years from the date of its revival of the policies. Reliance is placed on the judgement of "Mithoolal Nayak vs. Life Insurance Corporation Of India, AIR 1962 SC 814 (V 49 C 117)".
8. We have given thoughtful consideration to the arguments of learned Counsel and have perused the records.
9. The concurrent finding of facts are that the insured Narendra Kumar Pandey, husband of the Petitioner, purchased two life insurance policies from Life Insurance Corporation of India on -8- 25.11.1997. The insured could not deposit the premium on 25.11.2001 due to some monetary problem and both the policies thus lapsed. The insured applied for revival of both the policies vide form dated 19.06.2002. His medical check-up was done by the authorised Doctor of the Insurance Corporation. After he was found fit, the policies were revived on 19.06.2006. He expired on 24.05.2005 due to pain in stomach. Petitioner, being the nominee, filed her claim with the Insurance Company and she was given ₹34,300/- against one policy and ₹10,750/- against the second policy on the ground that her husband had concealed the fact of transplantation of kidneys which he underwent before revival of his lapsed policies. She thereafter filed a Complaint. Her contention in the Complaint was that at the time when her husband purchased the policies he was not suffering with any ailment. The policies were purchased in the year 1997 and it was in the year 2000 that her husband developed some kidney problem for which he underwent an operation in City Civil Hospital, Ahmadabad. He informed the Respondents about this operation and also asked for refund of the expenses incurred in the said operation which was declined by the Respondents. It is submitted that the Respondents, therefore, were very well aware of this operation at -9- the time when they revived their policy. It is submitted that even at the time of revival of the policies, it was almost three years thereafter that she had lost her husband. Both the policies lapsed on account of non-payment of the premium. Revival of his policies was allowed after his medical examination by the Doctor appointed by the Respondents. The Doctor, therefore, found him hale and hearty at the time when the policies were revived.
10. The question is whether at the time when the insured applied for revival, he concealed the factum of his illness and if yes, does it in any way affect the validity of the policies which were issued to him in the year 1997. There is no allegation/plea of any fraud/concealment of any pre-existing disease at the time of the issuance of the original policies. The Hon'ble Supreme Court has clearly held in the case of "Mithoolal Nayak vs. Life Insurance Coporation of India, AIR 1962 State Commission 814" that a policy under Section 45 of the Insurance Act can be terminated within the statutory period provided under Section 45 and this period has to be counted from the date on which the policy was originally effected and not from the date of revival of the policy. In para (7) of the said judgment, Hon'ble Supreme Court has observed as under:
-10-"We shall presently consider the evidence, but it may be advantageous to read first Section 45 of the Insurance Act, 1938, as it stood at the relevant time. The section, so far as it is relevant for our purpose, is in these terms:
"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 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 or that it suppressed facts which it was material to disclose.
It would be noticed that the operating part of S.45 states in effect (so far as it is relevant for our purpose) that no policy of life insurance effected after the coming into force of the Act shall, after the expiry of two years from the date on which it was effected, be called I 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; the second part of the section is in the nature of a proviso which creates an exception. It says in effect that if the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose -11- 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 or that it suppressed facts which it was material to disclose, then the insurer can call in question the policy effected as a result of such inaccurate or false statement. In the case before us the policy was issued on March 18, 1945 and it was to come into effect from January 15, 1945. The amount insured was payable after January 15, 1968 or at the death of the insured, if earlier. The respondent company repudiated the claim by its letter dated October 10, 1947. Obviously, therefore, two years had expired from the date on which the policy was effected. We are clearly of the opinion that S.45 of the Insurance Act applies in the present case in view of the clear terms in which the section is worded, though learned counsel for the respondent company sought, at one stage, to argue that the revival of the policy some time in July, 1946 constituted in law a new contract between the parties and if two years were to be counted from July, 1946, then the period of two years had not expired from the date of the revival. Whether the revival of a lapsed policy constitutes a new contract or not for other purposes, it is clear from the wording of the operative part of Section 45 that the period of two years for the purpose of the section has to be calculated from the date on which the policy was originally effected; in the present case, this can only mean the date on which the policy (Ex.P-2) was effected. From that date a period of two years had clearly expired when the respondent company repudiated the claim. As we think that Section 45 of the Insurance Act applies in the present case, we are relieved of the task of examining the legal position that would follow as a result of inaccurate statements made by the insured in the proposal form or the personal statement etc. in a case where Section 45 does not apply and where the averments made in the proposal form and in the -12- personal statement are made the basis of the contract.
(Emphasis supplied)
11. The principle of law laid down by the Hon'ble Supreme Court in Mithoolal Nayak's case (supra) clearly envisages that the period within which the Insurance Company is authorised to cancel the policy under Section 45 of Insurance Act has to be reckoned from the date the policy was originally issued and not from any other date. However, the final findings of the Hon'ble Supreme Court in Mithoolal Nayak's case (supra) are due to the peculiar facts of that case which are entirely different from the facts of the given case. In that case, as apparent from the facts, the factum of the existence of disease was concealed by the insured at the time when he originally filled the proposal form. It is apparent that in that case, the insured had applied for the first time vide a proposal form which he filed in December 1942. He was examined by the Doctor and the Doctor gave his report that the insured was suffering with some disease. On receiving this report, the Insurance Company asked the insured to get himself examined by a panel of Doctors, which the insured failed to comply and hence his proposal form lased for want of medical examination. After -13- about 1½ years the insured again filled a second proposal form on 16.07.1944 and he again concealed the pre-existing disease. Even the Doctor who examined him had given the report that the insured was not suffering with any disease. The facts proved on record clearly show that in the year 1943, the insured was taken to Doctor Laxman for treatment and he had undergone treatment in the hands of Doctor Laxman and this fact was concealed by the insured at the time when he filled the proposal form on 16.07.1944. Doctor Laxman had been examined by the Insurance Company and based on his evidence, Hon'ble Supreme Court has held that the insured had been suffering with disease at the time of filling his proposal form and this fact since had been concealed by him while submitting the proposal form, the policy had been obtained by fraud. In the present case, there is no contention of the Insurance Company that at the time when the two insurance policies were taken by the insured, he was suffering with some disease and that he had fraudulently concealed this fact. Hon'ble Supreme Court has clearly held in the case of Mithoolal Nayak's case (supra) that on the revival, the policy relates back to the date on which it was issued if there was no suppression of material fact or if there is nothing on record to show that the policy had been obtained by -14- fraud, the policy cannot be repudiated under Section 45. The period stipulated under Section 45 has to be counted from the date of issuance of the original policy and not from the date of its revival.
12. In view of this settled proposition of law, the impugned order is hereby set aside as being contrary to the settled proposition of law.
13. The finding of Sh. Gowardhan Yadav, Member of the State Commission is as per the settled proposition of law. We hereby issue the following directions.
14. The Respondents are hereby directed to give sum assured in the policy no.281311963 and 281311970 and bonus thereon within two months along with interest @ 9% p.a. from the date of filing of the Complaint to the date of actual payment to the Complainant.
15. The Revision Petition stands disposed of in the above terms.
......................J DEEPA SHARMA PRESIDING MEMBER ...................... C. VISWANATH MEMBER