National Consumer Disputes Redressal
Life Insurance Corporation Of India vs Smt. Neelam Sharma on 30 September, 2014
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 967 OF 2008 (Against the order dated 31.10.2007 in Appeal No. 727/2001 of the Rajasthan Bengal State Consumer Disputes Redressal Commission) Life Insurance Corporation of India Senior Divisional Manager Divisional Office Rana De Marg, Alwar Gate Ajmer Through Assistant Secretary Northern Zonal Office Jeevan Bharti, Connaught Circus New Delhi Petitioner Versus Smt. Neelam Sharma W/o Late Krishanavtar Sharma R/o 268/F/45-E, Mehandipur Near Balaji Pushkar Road, Kotra Ajmer (Rajasthan) Respondent BEFORE: HONBLE MR. JUSTICE D.K. JAIN, PRESIDENT HONBLE MR. VINAY KUMAR, MEMBER For the Petitioner : Mr. Ashok Kashyap, Advocate with Mr. Prem Chandra, Advocate For the Respondent : NEMO Pronounced on 30th September, 2014 ORDER
D.K. JAIN, J, PRESIDENT
1. The Life Insurance Corporation of India (for short the Insurance Company) has preferred this Revision Petition, under Section 21(b) of the Consumer Protection Act, 1986 (for short the Act), challenging order dated 31.10.2007, passed by the Rajasthan State Consumer Disputes Redressal Commission (for short the State Commission) in Appeal No. 727 of 2001. The State Commission, while reducing the rate of interest on the amount of compensation, has upheld order dated 31.03.2001, passed by the District Consumer Disputes Redressal Forum at Ajmer (for short the District Forum) in Complaint No. 33 of 2001.
The District Forum had directed the Insurance Company to pay to the Respondent/Complainant the assured amount of Rs.1,00,000/- with 12% interest from the date of maturity of the insurance policies besides Rs.2000/- as compensation for mental agony and Rs.1000/- as litigation costs.
2. The facts, in brief, giving rise to the present Revision Petition, are that the Respondent is the widow of Late Krishanavtar Sharma (for short the Insured), who, on 28.05.1998 and 30.03.1999, had taken two life insurance policies from the Insurance Company, each in the sum of Rs.50,000/-.
During the validity period of the said policies, on 31.12.1999 the Insured died because of a heart-attack.
3. On the death of her husband, the Respondent, being the nominee under the said insurance policies, preferred a claim with the Insurance Company. However, by letter dated 05.09.2000, the claim was repudiated on the ground that the deceased Insured had suppressed material information regarding his health, at the time of taking the life insurance policies in question. According to the Insurance Company, as per the information available with them, two years prior to taking the policies in question the deceased Insured had been suffering from Amoebic Liver Abscess and had also been hospitalized in connection with the same from 06.06.1997 to 29.06.1997, but these material facts were not disclosed by the deceased Insured in the proposal form and, therefore, it was not liable to pay the assured amount under the said policies.
4. Alleging deficiency of service, the Respondent filed a complaint before the District Forum, inter-alia praying for direction to the Insurance Company to honour her claim. Upon consideration of the evidence adduced by the parties and relying on the principles relating to misstatement or suppression of facts enunciated by the Honble Supreme Court in Life Insurance Corporation of India & Others Vs. Asha Goel (Smt.) & Anr. [(2001) SCC 160], the District Forum observed that the disease, due to which the Insured had died, was temporary in nature and there was no nexus between it and the death of the Insured, and the Insurance Company had considered the matter, ignoring the terms and conditions of the policies, with its narrow and negative approach. The District Forum came to the conclusion that there was no suppression of any material fact by the Insured and, therefore, in not settling the claim of the Respondent, there was deficiency of service on the part of the Insurance Company. The District Forum, thus, allowed the complaint and awarded the aforesaid amounts.
5. Being aggrieved, the Insurance Company preferred Appeal before the State Commission. On a re-appraisal of the entire material on record, the State Commission has observed that certain diseases relating to kidney, heart and brain are connected with the life span of a person and if any misstatement is made in respect of such diseases, it can be believed that the person taking the insurance policy has knowingly made misstatement but conversely if any one suffers with temporary diseases, viz., relating to fever, cough, cold etc., and the same were not mentioned by the Insured, the Insurance Company cannot escape its liability on the ground of such suppression of material facts. According to the State Commission, non-mentioning of the disease Amoebic Liver Abscess, with which the Insured was suffering, in the declaration form, did not amount to suppression or concealment of material fact or misstatement. It has, thus, been held that the Insurance Company was not justified in repudiating the claim. However, finding the interest awarded by the District Forum to be on the higher side, the State Commission has reduced the same to 9% per annum from 12% per annum. Hence, the present Revision Petition by the Insurance Company.
6. Though on some earlier dates the Respondent was represented by a Counsel but subsequently no one has turned up on her behalf. Accordingly, we have heard Mr. Ashok Kashyap, learned counsel for the Insurance Company and perused the documents, including the indoor admission ticket dated 26.05.1997 issued at the time of the admission of the Insured in Jawahar Lal Nehru Hospital; his leave record.
7. The question for consideration is as to whether or not there was suppression of any material fact by the Insured, having material bearing on the repudiation of the claim by the Insurance Company under the two life insurance policies?
8. In Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, it has been observed by the Supreme Court that the expression material fact is to be understood in general terms to mean as any fact which would influence the judgment of a prudent Insurer, in deciding whether to accept the risk or not. If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Any inaccurate answer will entitle the Insurer to repudiate their liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance, which is based on the principle of utmost faith uberrima fides. Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. (See: United India Insurance Co. Ltd. Vs. M.K.J. Corporation [(1996) 6 SCC 428].
It has also been emphasized that it is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known.
9. Bearing in mind the afore-noted principle, governing a contract of insurance, we advert to the facts at hand. The relevant questions in the proposal form, on which strong reliance is placed by learned Counsel for the Insurance Company, and, which were required to be replied by the Insured, were:
(i) Whether during the last five years the Insured had been treated for more than a week in connection with any disease;
(ii) Whether the Insured had been admitted in any hospital for indoor treatment;
(iii) Whether during the last five years the Insured had taken any medical leave and remained absent from office.
10. Admittedly, all the questions were answered in the negative by the Insured. Undoubtedly, these were material facts and being within the knowledge of the Insured only, he was obliged to disclose the same correctly in the proposal form issued to him for the purpose of obtaining the policies in question. It is manifest from the material on record that during the period from 06.06.1997 to 29.06.1997 the Insured was admitted in Jawahar Lal Nehru Hospital at Ajmer, where he was diagnosed to be suffering with Amoebic Liver Abscess; he was also on medical leaves from 24.05.1997 to 30.05.1997 and again from 06.06.1997 to 29.06.1997. The two policies were obtained by the Insured on 28.05.1998 and 30.03.1999. At this juncture, it would also be relevant to refer to Condition No.5 of the insurance policies in question, which stipulates as under:
5. Forfeiture in certain events: In case the premiums shall not be duly paid or in case any condition herein contained or endorsed hereon shall be contravened or in case it is found that any untrue or incorrect statement is contained in the proposal, personal statement, declaration and connected documents or any material information is withheld, then and in every such case but subject to the provisions of Section 45 of the Insurance Act, 1938, wherever applicable, this policy shall be void and all claims to any benefit in virtue hereof shall cease and determine and all money that have been paid in consequence thereof shall belong to the Corporation excepting always in so far as relief is provided in terms of the Privileges herein contained or may be lawfully granted by the corporation. (emphasis added)
11. Having given our anxious consideration to the material on record, we are of the opinion that the answers given by the Insured in the proposal form were untrue to his knowledge. There was clear suppression of material facts in regard to the health of the Insured. It was not for the Insured to determine whether the information sought for in the aforesaid questionnaire was material for the purpose of the two policies. At any rate, the statements made in the proposal form were untrue and incorrect, falling foul of the above-extracted condition no. 5 in the policies. We are, therefore, of the opinion that the Insurance Company was justified in repudiating the claim of the Respondent.
12. Resultantly, the Revision Petition is allowed and the orders of the Fora below are set aside, leaving the parties to bear their own costs.
Sd/-
( D.K. JAIN, J. ) PRESIDENT Sd/-
( VINAY KUMAR ) MEMBER Mukesh