National Consumer Disputes Redressal
Life Insurance Corporation vs Gowramma on 11 May, 2009
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 2582 OF 2005 (From the Order dated 21.06.2005 in Appeal No. 141/2003 of Karnataka State Consumer Disputes Redressal Commission, Bangalore, Karnataka) LIFE INSURANCE CORPORATION OF INDIA AND ANOTHER PETITIONERS VERSUS GOWRAMMA RESPONDENT BEFORE: - HONBLE MR. JUSTICE ASHOK BHAN, PRESIDENT HONBLE MR. B.K. TAIMNI, MEMBER FOR THE PETITIONER : MR. ASHOK KASHYAP, ADVOCATE. FOR THE RESPON DENT : MR. K. MARUTI RAO, ADVOCATE FOR MR. I.S. CHOWDAPUR, ADVOCATE. PRONOUNCED ON : 11.05.2009 O R D E R
ASHOK BHAN J., PRESIDENT Life Insurance Corporation of India-petitioner herein, who was the Opposite Party before the District Consumer Disputes Redressal Forum, Gulbarga (hereinafter referred to as the District Forum for short), has filed the present Revision Petition.
Briefly stated, the facts of the case are: -
The husband of the Complainant-respondent herein, was carrying on Kirana Business at Mailapur, Tehsil- Yadagir and he insured his life with the petitioner on 28.06.1997 for a sum of Rs.1,00,000/-. Premium was to be paid @ Rs.1,419/- per quarter. According to the respondent, the deceased was paying premium regularly and the last premium was paid on 24.03.2000. Husband of the Complainant died on 08.05.2000. Respondent, being the nominee, claimed the insured amount. Petitioner repudiated the claim on the ground that deceased made deliberate misstatements and withheld correct facts regarding the state of his health. Thereafter, respondent filed a complaint before the District Forum.
On being noticed, the petitioner entered appearance and field written statement. The defense taken was that the deceased did not remit the quarterly premium on time. Intermittently, there were certain lapses but the installments were paid later on with late fee. As the deceased failed to pay one of the quarterly installments, the policy had elapsed which was got renewed only five months prior to his death.
It was further stated that insured had given a false declaration regarding the condition of his health at the time of revival of the Policy. Parties led their evidence. District Forum, vide its Order dated 31.12.2002, allowed the complaint and directed the petitioner to pay the insured amount of Rs.1,00,000/- along with interest @ of 12% p.a. from the date of filing of the complaint, i.e., 19.09.2001 till its realization to the Complainant. Rs. 2,000/- were awarded by way of compensation and Rs.500/- as costs.
Aggrieved against the Order passed by the District Forum, petitioner filed an Appeal before the Karnataka State Consumer Disputes Redressal Forum, Bangalore, Karnataka (hereinafter referred to as the State Commission for short). The State Commission, by the impugned Order, has dismissed the Appeal. Submission advanced on behalf of the petitioner that the deceased had not paid the quarterly premium installment due on 28.03.2000 and, therefore, the same had lapsed, was rejected by the State Commission observing thus:-
Though on 28.03.2000 is the due date, still it was open for the insured to pay the premium with in the grace period. If the insured fails to pay the premium even before the expiry of the grace period U/s 50 of the Insurance Act, the Insurance Company is required to intimate whether the policy was lapsed or not. In the instant case, there is no such intimation by the OP. If that is so, it is clear the Insurance Company kept the policy alive as on the date of the death of the insured. Taking this fact in to consideration, the DF is right in allowing the complaint. The husband of the complainant, from the evidence it is seen, died on account of the cancer.
According to the Insurance Company the fact of he suffering from cancer has not been disclosed. In order to establish this fact, the Insurance Company had not filed any affidavit of a Doctor.
It is not disputed before us that the Policy was not repudiated on the ground that at the time when initial Policy was taken, there was any misrepresentation or initial concealment of facts by the deceased. In the present case, two years had elapsed after the issuance of the Policy and the burden to prove that the deceased had concealed the facts was on the Insurance Company in terms of Section 45 of the Life Insurance Act, 1938.
Shri Ashok Kashyap, learned Counsel appearing for the petitioner, relying upon a Judgment passed by a 4-Member Bench of this Commission in L.I.C. of India and Another v. Parveeen Dhingra reported in II (2003) CPJ 70 (NC), contended that the revival of the Policy constituted new contract between the parties and two years have to be counted from the date of revival of the Policy. This submission cannot be accepted in view of the law laid down by the Honble Supreme Court of India in Mithoolal N ayak v. Life Insurance Corporation of India reported in AIR 1962 Supreme Court 814 in which Honble Supreme Court has clearly held that for purposes of Section 45 of the Life Insurance Act, 1938, the period of two years 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, Honble Supreme Court observed as under: -
7. We shall presently consider the evidence, but it may be advantageous to read first s. 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 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 S. 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 thin that S. 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 S. 45 does not apply and where the averments made in the proposal form and in the personal statement are made the basis of the contract.
(Emphasis supplied) In view of the law laid down by the Supreme Court of India, no reliance can be placed upon the Judgment of this Commission in Parveeen Dhingras case (supra). Judgment of the Supreme Court in Mithoolal Nayaks case (supra), perhaps, was not brought to the notice of the 4-Member Bench which heard Parveeen Dhingras case (supra). The Judgment of the Supreme Court being binding on all the Courts and Tribunals has to be preferred and followed.
The onus to prove that the deceased had suppressed the facts was on the petitioner after the lapse of two years from the date of issuance of the Policy, which the petitioner has failed to discharge by leading any evidence. The evidence on record shows that the deceased was suffering from cancer in the year 1999, which was 3 years after the taking of the original Policy. There was no suppression of facts at the time of taking of the Policy in the year 1996.
For the reasons stated above, we do not find any substance in this Revision Petition and dismiss the same. No costs.
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(ASHOK BHAN J.) PRESIDENT . . . .
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(B.K. TAIMNI) MEMBER REVISION PETITION NO.
2582 OF 2005 (From the Order dated 21.06.2005 in Appeal No. 141/2003 of Karnataka State Consumer Disputes Redressal Commission, Bangalore, Karnataka) LIFE INSURANCE CORPORATION OF INDIA AND ANOTHER PETITIONERS VERSUS GOWRAMMA RESPONDENT Draft Order in the above matter is sent herewith for your kind perusal. If approved, the same may be listed for pronouncement.
(ASHOK BHAN J.) President 07.05.2009 Honble Mr. B.K. Taimni, Member