State Consumer Disputes Redressal Commission
Smt Kailashi Bai vs / Lic on 13 March, 2020
M. P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PLOT NO. 76, ARERA HILLS, BHOPAL (M.P.)
FA No. 1283 /2013.
Smt. Kailashibai,
R/o Ganpati Mandir Road,
In front of Narsingh Mandir,
Janakpura, Mandsaur,
(M.P.). .... APPELLANT.
Versus
Life Insurance Corporation of India,
Divisional Office, Indore,
Through Branch Manager,
Life Insurance Corporation of India,
Transport Nagar, Mhow Neemuch Road,
Mandsaur (M.P.). . .... RESPONDENT.
BEFORE:
HON'BLE SHRI JUSTICE SHANTANU S. KEMKAR, PRESIDENT
HON'BLE DR. (SMT) MONIKA MALIK, MEMBER
HON'BLE SHRI S. S. BANSAL, MEMBER.
COUNSEL APPEARING FOR THE PARTIES :
SHRI VISHNU TIWARI, ADVOCATE ON BEHALF OF SHRI MOHAN CHOUKSEY,
LEARNED COUNSEL FOR THE APPELLANT.
SHRI JATIN ROHIT GUPTA, LEARNED COUNSEL FOR THE RESPONDENT.
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ORDER
(Passed on 13 /3 / 2020) The following order of the Commission was delivered by Dr. (Mrs) Monika Malik, Member :
1. This appeal by the complainant / appellant is directed against the order dated 15.5.2013 passed by the District Consumer Disputes Redressal Forum, Mandsaur (for short the "Forum) in Complaint Case No.280/2010 whereby the complaint filed by the complainant has been dismissed.
2. Briefly put, facts of the case as narrated by the complainant are that the complainant's late husband Shri Kailashchandra Joshi (hereinafter referred to as "deceased-insured") during his life time had obtained a Life Insurance Policy No.345958782 for sum assured of Rs.2,00,000/- in which the complainant was the nominee. The deceased-insured regularly paid the premium amount with respect to the aforesaid policy. The deceased insured died on 9.9.2009 due to heart attack regarding which the complainant filed a claim before the opposite party Insurance Company, which the Insurance Company denied stating that the deceased insured had already suffered from serious illness like jaundice before obtaining the policy
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cover. Alleging deficiency in service on part of the opposite party, the complainant filed the complaint before the Forum seeking relief.
3. The opposite party resisted the complaint stating that the deceased insured was suffering from enteric fever and jaundice before obtaining the insurance policy cover and had taken medical leave for treatment of the same. He had suppressed the material information in the aforesaid regard while filling up the proposal form for obtaining the insurance policy cover. Due to the material suppression on part of the deceased-insured, the insurance claim is not payable.
4. Heard. Perused the record.
5. Learned counsel appearing for the appellant vehemently argued that the deceased-insured died due to heart attack and the contention of the Insurance Company that he had suppressed material information regarding his illness is not sustainable. The Insurance Company has not been able to prove that the deceased-insured was suffering from any illness prior to obtaining the life insurance cover. Therefore, the repudiation of claim done by the Insurance Company is not justified. He argued that the impugned order deserves to be set-aside and the complainant deserves the claim amount stipulated under the insurance policy cover.
6. Learned counsel for the respondent Insurance Company argued that the deceased-insured was suffering from enteric fever and also -4- from jaundice before obtaining the aforesaid life insurance cover. He had obtained medical leave for treatment of the above illnesses in the duration from the year 2006 to 2009. However, he did not disclose regarding the same in the proposal form filled by him on 10.6.2009. Since it was an early death claim, the Insurance Company got the matter investigated after which the facts came in light. The contract of insurance is based on principle of utmost good faith. The deceased-insured had wrongly filled incorrect information in the proposal form, intending to obtain the life insurance cover, therefore, this appeal is liable to be dismissed.
7. As we carefully go through the repudiation letter dated 25.2.2010 we observe that the Insurance Company has repudiated the death claim of the deceased-insured stating that he was suffering from jaundice prior to obtaining the insurance cover and he had suppressed material information in this regard while filling up the proposal form. In the Employer's certificate which is available on record, there is a record of absence from duty of late Shri Kailashchandra Joshi for a period from the year 2005 to 2009. It is clear from this record issued by the Employer of the deceased-insured i.e. Principal, B.B. Government P.G. College, Jaora, M.P. that the deceased- insured had obtained medical leave of 35 days and another medical leave of 15 days in the year 2006. Further it is observed that he had obtained -5- medical leaves in the year 2008 and also in the year 2009. There are medical certificates issued by Dr. V. K. Singh confirming the fact that Late Shri Kailashchandra Joshi (deceased-insured) had suffered from enteric fever, viral fever and jaundice in the duration from the year 2006 to 2009. In these medical certificates the dates of medical leave and the days of absence from duties are clearly mentioned.
8. In view of the aforesaid discussion there is no reason to disbelieve that the deceased-insured, who was suffering from the illness like enteric fever and jaundice, had also taken medical leave for treatment of the same, but however, he had suppressed this fact while filling up the proposal form dated 10.6.2009 wherein he has replied in negative to the query in the Column 11 pertaining to his personal history.
9. When we go through the declaration made by the deceased-insured in the column 11, regarding personal history filled by him in the proposal form dated 10.6.2008, we observe his reply to the queries mentioned therein:
11 Personal History Answer 'Yes' or 'No' If yes please give full details
(a) During the last five years did you ever consult a Medical Practitioner for any No ailment regarding treatment for more than a week?
(b) Have you ever been admitted to any hospital or nursing home for general No checkup, observation, treatment or operation?
(c) Have you ever remained absent from
place of work on grounds of health No
during the last 5 years?
(d) Are you suffering from or have you ever
suffered from ailments pertaining to No
Liver, Stomach, Heart, Lungs, Kidney,
Brain or Nervous system?
(e) Are you suffering from or have you ever
suffered from Diabetes, Tuberculosis, No
High Blood Pressure, Cancer, Epilepsy,
Hernia, Hydrocele, Leprosy or any other
disease?
(j) What has been your usual state of Good
health?
10. Clearly the deceased-insured had suppressed material information regarding his health in the proposal form filled by him. He had also concealed the fact that he had consulted medical practitioner, for any ailment. The deceased-insured had stated that his usual state of health is good, which as evident from the evidence placed before us is a wrong declaration on his part.
11. In Life Insurance Corporation of India and Ors. Vs Asha Goel (Smt.) & Anr. (2001) 2 SCC 160, it was held:
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 rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration to the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive
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12. The Hon'ble Supreme Court in Satwant Kaur Sandhu Vs New India Assurance Company Limited (2009) 8 SCC 316 has observed:
"The term 'material fact' is not defined in the Insurance Act, 1938 and, therefore, it has been understood and explained by the courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact that goes to the root of the contract of insurance and has a bearing on the risk involved would be "material". The Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002 defines the word "material" to mean and include all "important", "essential" and "relevant information" in the context of guiding the insurer to decide whether to undertake the risk or not.
Thus 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 inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for the proposal form is material for the purpose of entering into a contract of insurance."
The Hon'ble Supreme Court in Satwant Kaur Sandhu Vs New India Assurance Company Limited (supra) has observed in Paragraph 12:
"Thus it needs little emphasis is 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 the proposer to determine whether the information sought for is material for the purpose of
- 8- the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment."
The Hon'ble Supreme Court further in para 19 has observed:
In this regard it would be apposite to make reference to Regulation 2(1)(d) of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002, which explains the meaning of term "material". The Regulation reads thus:
"2 Definitions--In these regulations, unless the context otherwise requires--
(a) xxx xxx xxx (b) xxx xxx xxx (c) xxx xxx xxx (d) "Proposal Form" means a form to be filled in by the proposer for
insurance for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.
Explanation:- "Material" for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer."
Thus the regulation also defines the word "material" to mean and include all "important", "essential" and "relevant" information in the context of guiding the insurer to decide whether to undertake the risk or not.
- 9- Therefore, the upshot of entire discussion is 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 particularly while answering to the questions in the proposal form.
Relying on the aforesaid judgment of the Hon'ble Supreme Court, the National Commission in Revision Petition No. 1585 of 2011 Life Insurance Corporation of India Vs Smt. Kusum Patro decided on 19th March 2012 has observed:
Fuller reading of the Apex Court's observations, particularly those in para.20 of the order in the Satwant Kaur Sandhu's case would leave no doubt that in not disclosing the facts of his March 1994 accident and subsequent in-patient treatment to the Insurance Company at the time of furnishing the details of personal history and also to the Medical Examiner for the third insurance policy obtained in February 1995, the deceased Narasingha Patro was guilty of knowingly withholding correct information about the status of his health. Hence the Insurer was within its rights to repudiate the insurance claim of his nominee subsequent to his death, even though the cause of the death had no medical nexus with the accident that he suffered or the consequential disability. In fact, the latter (i.e., presence or absence of any nexus between pre-insurance status of health of the life-to-be-assured and the cause/s of his post-insurance death) is of no consequence insofar as the observance of the duty of disclosure of all material facts while/before seeking an insurance coverage is concerned. As a result, the revision petition is allowed and the orders of the Fora below are set aside, leaving the parties to bear their own costs.
13. It is a settled position that the insured was under obligation to fill up the details correctly in the proposal form. Either the proposal for insurance would have been rejected or the insured would have been
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subjected to further investigations before providing the policy cover. The aforesaid discussion leaves no doubt that the deceased-insured had filled incorrect information in the proposal form, meant to obtain the insurance policy in question. Therefore, we are of a considered opinion that the respondent LIC cannot be held negligent in repudiating his death claim.
14. In view of the above, the order passed by the District Forum cannot be held to be improper or illegal and is therefore affirmed. This appeal being devoid of merits is dismissed. No order as to costs.
(Justice Shantanu S. Kemkar) (Dr. Monika Malik) (S.S. Bansal)
PRESIDENT MEMBER MEMBER
Phadke