National Consumer Disputes Redressal
Life Insurance Corporation Of India vs Jaswinder Kaur on 5 April, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 587 OF 2018 (Against the Order dated 28/11/2017 in Appeal No. 286/2017 of the State Commission Chandigarh) 1. LIFE INSURANCE CORPORATION OF INDIA H-39, CONNAUGHT PLACE NEW DELHI-110001 ...........Petitioner(s) Versus 1. JASWINDER KAUR W/O. LT. SH. GURBIR SINGH, R/O. HOUSE NO. 1815, SECTOR 34-D, CHANDIGARH ...........Respondent(s)
BEFORE: HON'BLE MR. ANUP K THAKUR,PRESIDING MEMBER HON'BLE MR. C. VISWANATH,MEMBER For the Petitioner : Mr. Kamal Gupta, Advocate For the Respondent : Mr. Jagan Nath Bhandari, Advocate Dated : 05 Apr 2019 ORDER C.VISWANATH The present Revision Petition is filed by the Petitioner under Section21(b) of the Consumer Protection Act, 1986 against Order passed by the State Consumer Disputes Redressal Commission, U.T. Chandigarh (hereinafter referred to as the "State Commission") in F.A. No. 286/2017 dated 28.11.2017.
In the Complaint, it was stated that in the year 2012 Respondent's husband Late Sh. Gurbir Singh Riar was issued a Life Insurance 'Jeevan Anand' Policy No. 165405996 with death sum assured of Rs.5,00,000/-.Under the said Policy, the Respondent was a nominee. The date of commencement of the Policy was 4.12.2012. Unfortunately, on 26.9.2015, due to unknown reasons the husband of the Respondent committed suicide. The Respondent lodged a claim with the Divisional Manager of LIC, but the same was erroneously rejected by the Petitioner, vide letter dated 24.06.2016, on the ground that the deceased concealed material facts at the time of buying the insurance policy. It was further stated that against order of the Divisional Manager of LIC, appeal was filed by the Respondent before the Zonal Manager, LIC of India, Zonal Office, New Delhi. The Zonal Office upheld the repudiation decision of the Divisional Office and dismissed the Appeal, vide order dated 9.11.2016. Respondent then filed an Appeal before the Claims Disputes Redressal Committee, LIC of India, but till date no decision has been taken by the aforesaid Committee. Hence Complaint was filed by the Respondent.
The Complaint was contested by the Petitioner stating that after the death of the deceased life assured (for brevity 'DLA'), a claim was lodged which was immediately examined and it was found that the DLA was suffering from Bipolar Disorder (a mental illness) and had taken treatment from different places and this material information had been deliberately suppressed by him while taking the Policy. In the proposal form made on 2.2.2012, while filling the questionnaire regarding his medical condition, he answered in the negative. However, the deceased remained hospitalised at Neuro Psychiatry and Drug Deaddiction Rehabilitation Centre during 2008 to 2009 and later in 2015. Hence, the claim of the Respondent was repudiated, vide letter dated 24.6.2016, pleading that there was no deficiency in service or unfair trade practice on the part of the Petitioner and prayed for dismissal of the Complaint. Petitioner further stated that the Fora below erred in interpreting Section 45 of the Insurance Act, 1938. According to Section 45 of the Act, which has been amended w.e.f. 26.12.2014, Policy is not to be questioned on ground of misstatement after three years. It was further stated that the State Commission and District Forum failed to appreciate the law laid down by this Commission in RP No.1987 of 2006, Kokilaben Narendrabhai Patel vs. LIC of India dated 5.4.2010. Both the Fora below further failed to appreciate the law laid down by this Commission in RP No.991 of 2010, LIC of India vs. Chhaya Hanmayya Ghante, dated 15.10.2014. In the said case, the Policy was questioned after two years and the Hon'ble Commission had observed that as the insured made untrue declaration, as such the orders of the Fora below were set aside and the Consumer Complaint was dismissed. In the present case, the Hon'ble Commission has referred the case of Mithoo Lal vs. LIC, AIR 1962 SC 814, Life Insurance Corporation of India vs. Asha Goel (2001) 2 SCC 160, PC Chacko & Anr. vs. Chairman of LIC of India & Anr. 2008 (1) SCC 321 and Satwant Kaur Sandhu vs. New India Assurance Co. Ltd. (2009) 8SCC 16, wherein it was held that the insured was under solemn obligation to make true and full disclosure of information which was within his knowledge, in the proposal form and withholding of such information or making misstatement was a fraudulent act and breach of principle of utmost good faith and the insurer was justified in repudiating the claim under the provisions of Section 45 of the Insurance Act, 1938. It was further submitted that both the Fora below erred in appreciating that life insurance agents do not act as an agent of LIC. The agents work on commission basis, and there was no relationship of employer-employee or master-agent between the LIC and the agents. That in LIC vs. M. Gowri & Ors. FA No.163/1993 this Commission had been pleased to hold that life insurance agent doesnot act as an agent ofLIC and acts as an agent of the insured for whose benefit the insurance is to be obtained. Further, in United Insurance Co. Ltd. vs. Harchand Rai Chandan Lal, AIR 2004 SC 4974, Hon'ble Supreme Court in para 13 observed that, "It is settled law that terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of policy and not with reference to the definition given in other laws. It is a matter of contract and in terms of the contract the relation of the parties shall abide and it is presumed that when the parties have entered into a contract of insurance with their eyes wide open, they cannot rely on definition given in other enactment."
Further in Para 17 of the said judgment, Hon'ble Supreme Court also observed that, "In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves."
Further in Para 18 of the said judgment, Hon'ble Supreme Court also observed that, "it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous."
The Forum, vide order dated 16.10.2017, partly allowed the Complaint in view of Section 45 of the Insurance Act, 1938. It is important to mention here that Section 45 of the Insurance Act, 1938, deals with policy not to be called in question on the ground of mis-statement after two years. A conjoint reading of Section 45 along with the material placed before the District Forum, showed that no policy of insurance can be repudiated after the expiry of two years by stating that fact was concealed and suppressed. The District Forum held that the Opposite Parties were bound to pay the insurance claim to the Complainant, which they failed to pay and were thus guilty of deficiency in service and unfair trade practice.
The District Forum directed the Petitioner to pay Rs.5,00,000/- being death claim of the deceased to the Complainant and Rs.25,000/- as Compensation for deficiency in service, unfair trade practice and mental agony suffered by the Respondent alongwith Rs.10,000/- towards cost of litigation. The above order was to be complied within 30 days of its receipt by the Petitioner. Thereafter, they shall be liable for an interest @12% p.a. from the date of institution of this Complaint, till it is paid, apart from cost of litigation Being aggrieved by the order of the District Forum, the Petitioner filed an Appeal before the State Commission. The State Commission, vide order dated 28.11.2017, dismissed the Appeal and upheld the order passed by the District Forum. It stated that the husband of the Respondent took the life insurance policy on 04.12.2012, whereas the husband of the Respondent died on 26.09.2015 i.e. after a period of more than two and a half years from the date of commencement of the policy Being aggrieved by the order passed by the State Commission, the Petitioner filed the present Revision Petition before this Commission.
According to the Respondent, the deceased was asked to simply put his signature on the proposal form and rest of the columns and answers were filled by the insurance agent. The entire proposal form was filled in the handwriting of the insurance agent. The deceased cannot be made responsible for concealing information, filed by the insurance agent.
The Petitioner quoted the following judgements in support of his written arguments:
In Life Insurance Corp. of India Vs. Bina Joshi (USCDRC) (Dehradun) 2008(52) R.C.R. (Civil) 243 where the entries are filled by agents, policyholders should not be blamed for concealing information-past history of the policy holder cannot be made basis for repudiation of claim, in the absence of affidavit of the certifying doctor.
In L.I.C. of India Vs. Promila Malhotra (N.CD.R.C.)2003 (2) ALT 11, it was observed that more than two years had elapsed between the date of issue of policy and the date of death, the policy could not be called in question by the insurer on the ground that the statement made in the proposal form or any report of the medical officers, or referee or friend of the insured or in any other documentof the company leading to issue of policy, was inaccurate or false unless the insurer showed that such information was on a material matterand it was fraudulently made by the policy-holder. The onus of proving all these facts was with the Insurer.
In Life Insurance Corporation of India Vs. Smt. Asha Goel, (SC) 2001(1) R.C.R. (Civil) 347 it was observed that Section 45 of the Insurance Act provides, inter alia , that 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 proposalfor 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 is suppressed facts which it was material to disclose.
In LIC of India Vs. Mohinder Kaur (NCDRC, New Delhi) : 2003(2) (C.P.J. 30) it was observed that "Repudiation of claim on the ground of concealment of material fact after two years of policy is prohibited. In Life Insurance Corporation of India Vs. Vimal Kumar: 2003 (2) ALT 31 in para 4 to 6 it has been observed that as per clause in policy claimant was not eligible for claim of suicidal death within one year -Insurance policy issued on 15.09.1990 in which date of commencement of risk was given 28.05.1990 when Ist premium was received-Death occurred due to suicide on 29.05.1991whereas policy commenced on 28.05.1990-Death was after one year from date of risk-Claim cannot be denied by L.I.C. - order of forum below directing L.I.C. to pay full benefit with 9% interest held to be justified.
In Life Insurance Corporation of India vs. Vimal Kumar: 2003 (2) ALT 31 it has been observed that as per clause in policy, claimant was not eligible for claim of suicidal death within one year. The insurance policy issued on 15.9.1990 in which date of commencement of risk was given 28.5.1990 when 1st premium was received-Death occurred due to suicide on 29.5.1991 whereas policy commenced on 28.5.1990-Death was after one year from date of risk-Claim cannot be denied by LIC-order of forum below directing LIC to pay full benefit with 9% interest held to be justified.
Heard the Learned Counsel for the Petitioner as well as the Respondent. Also carefully perused the orders of the Fora below.
The Respondent's husband took a life Insurance Policy on 4.12.2012 with death sum assured of Rs.5 lakhs wherein the Respondent was made the nominee. The Insured committed suicide on 26.9.2015 i.e. after two years nine months. The Respondent's claim was repudiated on 24.6.2016 on the ground that the deceased had concealed material fact while filling the proposal forum. The case of the Petitioner is that while filling the proposal form the medical information was wrongly filled and he suppressed information that he was suffering from Bipolar Disorder and the claim was rightly repudiated. Insurance is a contract of utmost Good Faith and the assured is under a mandate to make correct disclosures. Section 45 as amended on 26.12.2014 only provides not to call in question on ground of misstatement after three years.
The Respondent's contention was that the insurance agent was simply asked to append his signature and all other answers were filled in by the agent, in his own handwriting. The deceased cannot be held responsible for concealing any facts. This aspect is well covered by judgment in LIC vs. Bina Joshi where the entries filled by agents, the policy holders were not blamed for concealing information. Section 45 of the Insurance Act provides as follows:
"Policy not to be called in question on ground of mis-statement after two years
45. 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 statement made in the proposal 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:
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."
It is very clear that as per Section 45 of the Act in force when the proposal was made and Policy taken, no Insurance Policy can be repudiated after two years on the grounds of concealment/suppression of facts. The amendment to Section 45 providing a period of three years came later in 2014. The present case is covered by this section before its amendment and the deceased died after more than two years nine months after taking the Policy.
In view of the above, we confirm the orders of the State Commission and the District Forum and dismiss the Revision Petition.
...................... ANUP K THAKUR PRESIDING MEMBER ...................... C. VISWANATH MEMBER