State Consumer Disputes Redressal Commission
Pramerica Life Insurance Ltd. vs Smt. Vijay Lakshmi Sharma & Anr. on 6 December, 2022
Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
FA/22/13 Vs. 06/12/2022
Smt. Vijay Lakshmi Sharma & Anr.
AFR / NAFR
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Date of Institution: 19/01/2022
Date of Final Hearing: 30/11/2022
Date of Pronouncement: 06/12/2022
APPEAL No.- FA/22/13
IN THE MATTER OF :
Pramerica Life Insurance Limited
(Formerly Known as DHFL Pramerica Life Insurance Company Ltd.),
Office at: 4th Floor, Building No.9, Tower-B,
Cyber City, DLF City Phase-III,
GURUGAON - 122 002 HARYANA
Through: Shri Abhay Tiwari, Advocate
... Appellant.
Vs.
1. Smt. Vijay Lakshmi Sharma,
W/o. Late Kamlesh Sharma,
H. No.306, Village- Silhati, Post Silhati,
KAWARDHA - 491 995 (CHHATTISGARH)
Through: Shri N. D. Manikpuri, Advocate
... Respondent No.1.
2. Indusind Bank, Kawardha Branch,
Above Bank of Baroda, Raipur Road, Kawardha,
Vill. & Post Kawardha,
Dist. KABIRDHAM (CHHATTISGARH)
Through: Shri Santosh Tiwari, Advocate
... Respondent No.2.
CORAM: -
HON‟BLE SHRI JUSTICE GAUTAM CHOURDIYA, PRESIDENT
HON‟BLE SMT. RUCHI GOEL, MEMBER
HON‟BLE SHRI GOPAL CHANDRA SHIL, MEMBER
HON‟BLE SHRI PRAMOD KUMAR VARMA, MEMBER
PRESENT: -
Shri Abhay Tiwari, Advocate for the appellant.
Shri N. D. Manikpuri, Advocate for the respondent No.1.
Shri Santosh Tiwari, Advocate, for respondent No.2.
JUDGEMENT
PER: - JUSTICE GAUTAM CHOURDIYA, PRESIDENT This appeal, filed under Section 41 of the Consumer Protection Act 2019 (hereinafter called ―the Act‖ for short), is directed against order ALLOWED Page 1 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
FA/22/13 Vs. 06/12/2022 Smt. Vijay Lakshmi Sharma & Anr.
dated 26/11/2021 passed by District Consumer Disputes Redressal Commission, Kabirdham (hereinafter referred as ―District Commission‖ for brevity), in Complaint Case No.CC/2021/01 filed by the complainant/respondent No.1 herein, whereby the opposite party No.1/appellant herein was held deficient in service and partly allowing the complaint the opposite party No.1/appellant Insurance Company was directed to pay the opposite party No.2/respondent No.2 Bank, the remaining amount of loan obtained by the deceased Kamlesh Sharma. It was also directed that if the loan amount has been repaid by the complainant to the opposite party No.2 Bank, then the opposite party No.1 Insurance Company shall pay the amount of loan to the complainant / respondent No.1 adjusting the amount of premium Rs.31,349.06 returned by the insurance company. Apart from that the opposite party No.1/appellant insurance company was also directed to pay the complainant Rs.50,000/- as compensation for mental agony and Rs.3,000/- as cost of litigation. Feeling aggrieved, the Insurance Company has preferred this appeal.
2. In nutshell the undisputed facts of the case are that the complainant's husband Late Kamlesh Sharma purchased an Ashok Leyland Truck bearing registration No.CG 09 JG 6579 after obtaining loan from the opposite party No.2/ respondent No.2 Bank. The respondent No.2 Bank, after obtaining premium, got the vehicle insured from Cholamandalam Insurance Company for the period between 31/01/2019 to 30/01/2020. For the purpose of security of the loan amount of Rs.31,00,000/- a life insurance cover of the deceased Kamlesh Sharma under group scheme was also obtained by the respondent No.2 Bank from the opposite party No.1/ appellant herein Insurance Company, for which ALLOWED Page 2 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
FA/22/13 Vs. 06/12/2022 Smt. Vijay Lakshmi Sharma & Anr.
premium was taken from the deceased husband of the complainant. Insurance certificate was issued by the opposite party No.1/ appellant Insurance Company and the period of coverage was 02/02/2019 to 01/02/2021. During the period of insurance cover, on 14/08/2019 the insured Kamlesh Sharma husband of the complainant died. Intimation was given to the insurance company, who assured the complainant that as per the insurance policy the remaining amount of loan will be paid by the opposite party No.1, Insurance Company to the opposite party No.2 Bank. But the opposite party No.1 Insurance Company by letter dated 29.11.2019 informed the complainant that benefit of the insurance cover under Group Credit Life Insurance cannot be given to her and the actual premium Rs.31,349.06 paid by the deceased Kamlesh Sharma, was refunded to the opposite party No.2 Bank. Therefore, alleging deficiency in service on the part of the Insurance Company in repudiating the claim and not depositing the entire balance amount of loan under the insurance cover, complaint was filed before the District Commission. Before District Commission both the opposite parties appeared and filed their written version and defended their case. Learned District Commission in the impugned order has held the Insurance Company deficient in service and directed them as aforesaid in paragraph No.1.
3. Before the District Commission in its written version, the opposite party No.1/appellant herein has mainly raised the ground that at the time of filling the proposal form for insurance cover, the deceased Kamlesh Sharma gave wrong information regarding his medical history and he concealed the material fact that he was suffering from heart disease, hypertension and diabetes mellitus. The life assured has failed to observe the principle of utmost good faith i.e. doctrine of uberimafides at the time of ALLOWED Page 3 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
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taking policy. Citing a number of judgements of Hon'ble Supreme Court and Hon'ble National Commission, the Insurance Company has contended that the words in an insurance contract must be given paramount importance and interpreted as expressed without any addition, deletion or substitution. Therefore, the insurance company has repudiated the claim as per the terms and conditions of the policy and has not committed any deficiency in service.
4. The opposite party No.2/respondent No.2 herein Bank apart from the admitted facts has replied in its written version that they have performed its duties as per the terms and conditions of the loan scheme and in which they have not committed any deficiency in service. If on account of any fault of the deceased or the complainant, the claim has been repudiated by the Insurance Company, then the opposite party No.2 Bank is not liable.
5. We have heard the arguments advanced by all parties, perused the record.
6. It is not in dispute between the parties that deceased Kamlesh Sharma obtained loan from the opposite party No.2/respondent No.2 to purchase a vehicle bearing registration No.CG 09 JG 6579. It is also not in dispute that for the purpose of security of the loan amount, a life cover policy of the borrower deceased Kamlesh Sharma was taken under a group scheme under DHFL PRAMERICA GROUP CREDIT LIFE + for the period between 02/02/2019 to 01/02/2021. During that period of insurance cover, the insured Kamlesh Sharma suddenly died on 14/08/2019.
ALLOWED Page 4 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
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7. We have gone through the entire record of the District Commission. The complainant in support of her case, except policy documents, repudiation letters, copy of death certificate of the deceased, has filed her affidavit and of Mahavir Sahu who was working as driver with the complainant since last few years and who was employed by the deceased Kamlesh Sharma himself. Mahariv Sahu in his affidavit has supported the facts of the complaint and stated that it was in his knowledge that vehicle was purchased by the deceased with the help of loan, at the time of purchase of vehicle he was with the deceased, before him the vehicle was got insured and at that time the deceased Kamlesh Sharma was informed that for the security of financed amount of Rs.31,00,000/- it is compulsory to purchase group credit life insurance under group scheme and for which premium of Rs.31,349/- was collected from deceased Kamlesh Sharma and insurance was purchased for the period between 02/02/2019 to 01/02/2021.
8. Whereas the opposite party No.1/appellant Insurance Company in support of their case has filed the copy of welcome letter with certificate of insurance as Annexure OP1/C, copy of investigation report dated 06/12/2019 as Annexure OP1/E, supported with affidavit of the investigator, copy of a Discharge Summary of the deceased Kamlesh Sharma dated 21/11/2017 Annexure OP1/D, issued by Ramkrishna Care Hospital, Copy of letter of repudiation dated 29/11/2019 etc.
9. On perusal of Discharge Summary dated 21/11/2017, issued by the Department of Cardiology, Ram Krishna Care Hospital, Raipur, it appears that deceased Kamlesh Sharma, the husband of the complainant, was admitted in the Hospital on 18/11/2017 with problem of ―excessive ALLOWED Page 5 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
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sudden onset of breathlessness, dull chest pain, swelling in b/l lower limb‖. Medical history has been mentioned as ―k/c/o DM2, HTN‖ i.e. diabetes mellitus 2, hypertension. Primary diagnosis has been mentioned as ―Dialated Cordiomyopathy (Ischaemia), congestive cardiac failure, EF - 20-25%, severe triple vessel disease ADV myocardial viability assessment, k/c/o Diabetes Mellitus, Hypertension‖. Further on the second page of the Discharge Summary, under Course In Hospital, it has been mentioned that the patient came to the emergency department, detailed investigations were done and a working diagnosis of DCM congestive cardiac failure was made and treatment was immediately started according to advice of cardiologist and he was shifted to ICU under strict monitoring, CAG was done, beter which revealed severe TVD. He was advised for myocardial viability assessment. Today patient is being discharged with advice to come for regular follow up and to continue with prescribed medicines and then Investigation Details are mentioned. Post Discharge Instructions, ―DIET AND PRECAUTIONS AS ADVISED, FLUID RESTRICTION UP TO 1.2 LITRES PER DAY‖ and then some medicines have also been prescribed. Follow up instructions are given as ―COME FOR FOLLOW UP AFTER 15 DAYS, MYOCARDIAL VIABILITY ASSESSMENT, REFER TO DR. SOMA RAJU FOR FURTHER MANAGEMENT‖. It is apparent from the above Discharge Summary and entries made therein, that the deceased Kamlesh Sharma was suffering severe triple vessel disease and in fact he suffered congestive cardiac failure for which he was treated, admitted in ICU and further procedures were adopted between 18/11/2017 to 21/11/2017.
10. The Insurance Company opposite party No.1/appellant has also brought on record copy of the application form, Annexure OP1/B, filled ALLOWED Page 6 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
FA/22/13 Vs. 06/12/2022
Smt. Vijay Lakshmi Sharma & Anr.
by the life assured for obtaining the life insurance cover. In the
application, there is a detailed Medical Questionnaire, under which there are as many as 08 (eight) questions regarding detailed medical history of the proposed life assured, which were replied in negative by unanimously ticking the ―No‖ column against all the questions. There was question regarding heart disease, diabetes & blood pressure also, which was replied in ‗No'. Even the question ―During the last 5 years have you undergone any major surgery or been hospitalized for more than one week? was also replied as ―No‖. Just below the Medical Questionnaire, a Declaration printed in that form was signed by the deceased Kamlesh Sharma. The Declaration given in the application form is to the effect that :-
―I, hereby declare that the information provided in this form or otherwise is true to the best of my knowledge and that I have not withheld any material information that may influence the assessment or acceptance of this application. I agree that this form will constitute part of my application for insurance(s) and that failure to disclose any material fact known to me may invalidate my insurance(s). I understand that in case of fraud or misrepresentation by me, the Policy shall be cancelled by paying surrender value, if any. Subject to the same being established by the Company in accordance with Section 45 of the Insurance Act 1938.-----―.
The life assured has also signed the declaration that : -
―I hereby declare that the content of the form and document has been fully explained to me and I have fully understood the significance of the proposed contract‖
11. Section 45 of the Insurance Act 1938 as amended by Insurance Laws (Amendment) Act, 2015 envisages as follows : -
―45. (1) No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.ALLOWED Page 7 of 12
Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
FA/22/13 Vs. 06/12/2022 Smt. Vijay Lakshmi Sharma & Anr.
(2) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:
Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based.
Explanation I.--For the purposes of this sub-section, the expression "fraud" means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy:--
(a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;
(b) the active concealment of a fact by the insured having knowledge or belief of the fact;
(c) any other act fitted to deceive; and
(d) any such act or omission as the law specially declares to be fraudulent.‖
12. The words used in the declaration made in the application form also attracts the definition of ‗Fraud' under Section 17 & ‗Misrepresentation' under Section 18 of The Indian Contract Act, 1872 which are as under : -
―17. „Fraud‟ defined.- ‗Fraud' means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract :-
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it; (4) any other act fitted to deceive;
(5) any such act or omission as the law specifically declares to be fraudulent.
Explanation.- Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence, is, in itself, equivalent to speech.
―18. "Misrepresentation" defined.- ―Misrepresentation‖ means and includes-
ALLOWED Page 8 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
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(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage of the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.
13. Collective bear reading of the Discharge Summary of the deceased Kamlesh Sharma, the application form filled by him, declaration signed by him, Section 45 of the Insurance Act 1938 as amended by Insurance Laws (Amendment) Act 2015, Section 17 & 18 of the Indian Contract Act 1872 shows that repudiation of insurance claim by the opposite party No.1/appellant herein was done as per the policy conditions and there is nothing on record to show any deficiency in service on their part.
14. The Discharge Summary dated 21/11/2017, Annexure OP1/D clearly shows that the deceased Kamlesh Sharma suffered congestive cardiac failure for which he was treated, admitted in ICU and further procedures were adopted between 18/11/2017 to 21/11/2017. This fact was suppressed by the deceased. In the application form filled for obtaining life insurance cover, all the questions regarding existing diseases as well as previous treatments and hospitalization have been replied in ‗No' by the deceased Kamlesh Sharma, which amounts suppression of material facts regarding his health condition and treatment. Whereas, just below the Medical Questionnaire on the same page, he declared that he has given all the information to the best of his knowledge and nothing has been concealed. He also declared that the said form will constitute as part of application form for insurance policy ALLOWED Page 9 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
FA/22/13 Vs. 06/12/2022 Smt. Vijay Lakshmi Sharma & Anr.
and any event of failure to disclose any material fact will invalidate the insurance itself. He has also declared that he understood in case of any fraud or misrepresentation by him the policy will be cancelled with payment of its surrender value, if any. Further he has also declared that the content of the form and document has been fully explained to him and he has fully understood the significance of the proposed contract.
15. Section 45 of the Insurance Act 1938 also is of no help the complainant as in the present case the insured died within six months of taking the insurance policy. The policy coverage commenced on 02/02/2019 and thereafter on 14/08/2019 the insured Kamlesh Sharma died. Section 45 of the Insurance Act 1938, as amended, starts with ―No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy‖. It is not a case where after expiry of three years the incident of death of the insured occurred, in fact he died within six months of commencement of insurance cover, so the benefit of this clause also cannot be given to the complainant.
16. Learned counsel for the appellant has relied upon judgement of Hon'ble Supreme Court in the case of Satwant Kaur Sandhu Vs. New India Assurance Company Limited, (2009) 8 SCC 316 and judgement of Hon'ble National Commission in the case of New India Assurance Co. Ltd. Vs. Shri Vishwanath Manglunia (RP No.164/2006). He argued that a contract of insurance is based on utmost good faith on the principle of uberrimafides and in the instant case the life assured breached this basic principle of insurance contract by suppressing the material facts regarding his previous treatment of heart disease and the fact that he was suffering ALLOWED Page 10 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
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diabetes mellitus, hypertension. This suppression of material facts vitiates the subject policy, renders it invalid, void ab-initio and unenforceable.
17. We are respectfully agree with the principle laid down by the Hon'ble Apex Court in the case of Santawant Kaur Sandhu (Supra) wherein it was held that ―In a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a ―material fact‖ - If the proposer has knowledge of such fact, he is obliged to disclose it to insurer particularly while answering questions in the proposal form - Any inaccurate answer to said questions will entitle the insurer to repudiate its liability under the policy‖.
18. Undoubtedly, the contract of insurance is based on utmost confidence and good faith between the parties, in respect of the facts stated in the proposal form, as well as in the insurance policy and the parties mutually believe on the version of each other in respect of those facts. If the agreement of insurance is made on the basis of the facts, which were incorrect, then definitely the Insurance Company was having right to avoid it's liability, on the ground of fraud and suppression of material facts at the time of making proposal for the contract of insurance.
19. The proposal form also has declaration of the deceased insured, duly signed, to the effect that in case any of the statement made in the proposal form, is found false or incorrect or untrue, then the contract of insurance shall be invalidated. He also declared that the content of the form and document has been fully explained to him and he had fully understood the significance of the proposed contract. These declarations ALLOWED Page 11 of 12 Appeal No.: Pramerica Life Insurance Limited Date of Pronouncement:
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authorize the insurance company to avoid its liability under the insurance policy as it absolutely became null and void on the basis of deliberate suppression of material facts by the deceased insured for obtaining the insurance cover. We find that the learned District Commission has erred in allowing the insurance claim as well as the complaint of the complainant and passing the impugned order as aforesaid in para No.1, which needs to be set aside.
20. Therefore, this appeal succeeds and is allowed. The order passed by District Commission is set aside and the complaint of the complainant/respondent No.1 herein is dismissed. Parties shall bear their own cost of this appeal as well as of the complaint before the District Commission.
(Justice Gautam Chourdiya) (Smt. Ruchi Goel)
President Member
/12/2022 /12/2022
(Gopal Chandra Shil) (Pramod Kumar Varma)
Member Member
/12/2022 /12/2022
Pronounced On: 6th December 2022
ALLOWED Page 12 of 12