State Consumer Disputes Redressal Commission
Lic Of India vs Smt.Kailash Kunwar on 21 May, 2010
BEFORE THE CONSUMER DISPUTES REDRESSAL COMMISSION, RAJASTHAN,JAIPUR APPEAL NO: 1197/2008 1. Life Insurance Corporation of India Nayi Sarak Nathdwara through Br.Manager 2. Life Insurance Corporation of India Divisional office Udaipur (Raj.) through Br.Manager. 3. Administrative Officer ( Marketing) Life Insurance Corporation of India Northern Zonal office, Jeevan Bharti PB no. 630 Cannaught Circus, New Delhi-110001. Opposite parties-appellants Vs. Smt. Kailash Kunwar w/o Late Sh.Ganpat Singh Village Vadiya P.O. Devli (Aua ) the. Maj Distt. Pali. Complainant-respondent Date of judgment 21.5.2010 Before: Mr.Justice Sunil Kumar Garg- President Mrs.Vimla Sethia-Member Mr.Shashi Kumar Pareek- Member 2 Mr.Sandeep Saxena counsel for the appellants Mr.Gaurav Jain counsel for the respondent JUDGMENT
BY THE STATE COMMISSION ( PER HON.MR.JUSTICE SUNIL KUMAR GARG, PRESIDENT) This appeal has been filed by the appellants LIC against order dated 27.5.08 passed by the District Forum, Rajsamand in complaint no.15/08 by which the complaint of the complainant respondent was allowed against the appellants in the manner that the appellants were directed to pay a sum of Rs. 3 lacs the amount of the policy within two months and further to pay a sum of Rs. 500 /- as cost of litigation.
2. It arises in the following circumstances-
That the complainant respondent had filed a complaint against the appellants LIC before the District Forum, Rajsamand on 23.11.06 inter alia stating that her husband Ganpat Singh, now deceased had taken a LIC policy from the appellants bearing no. 181932163 on 28.9.97 for a sum of Rs. 3 lacs. It was further stated in the complaint that the premium of the policy was to be deposited six monthly and the premium was for a sum of Rs. 1729/-. It was further stated in the complaint that the deceased had died on 29.5.05 because of high fever and he had died in the normal circumstances and after the death of the deceased claim was preferred by the complainant respondent being the wife and nominee of 3 the deceased before the office of the appellants but that claim was repudiated by the appellants through letter dated 31.3.06 on the ground that on 1.5.05 the policy of the deceased was revived and at the time of revival of the policy the deceased had filled in up a fresh declartion form regarding his health in which he had not mentioned that he was suffering from any kind of disease but they had the sufficient proof to prove the fact that prior to that the deceased was a patient of Cirrhosis of liver for which he had consulted the medical man and had taken the treatment from the doctor and since these facts were not disclosed by the deceased in his fresh declaration form on 1.5.05 at the time of revival of the policy in question , therefore, the deceased was guilty of suppression of material facts regarding his health. Thereafter the present complaint was filed.
A reply was filed by the appellants before the District Forum, Rajsamand on 4.3.07 and they have taken the same pleas which were taken by them in the repudiation letter dated 31.3.06. It was further stated in the reply that after taking the policy in question by the deceased, the same had lapsed thrice because of non-payment of the premium and the same was revived on 7.3.01, 1.11.01 and on 1.5.05.
It was further stated in the reply that the revival amounts a fresh contract of the policy, and if deceased 4 had filled in up a fresh declartion form regarding his health on 1.5.05 in which he had not mentioned that he was suffering from any kind of disease therefore, it was a case of suppression of material facts regarding health on the part of the deceased and in this respect the appellants had produced the record of Dr.Vyas Hospital & M.R.C.,Falana where the deceased was admitted on 13.4.05 and the he was discharged from the hospital on 14.4.05 and the disease of Cirrhosis of liver was diagnosed by the doctors of the hospital and further a certificate had been issued by the concerned doctor of that hospital in form no. 3816 in which it was also stated that the disease which was diagnosed by them on 13.4.05 was cirrhosis of liver though further investigation was ordered to be made and since in the declaration form which was filled in up by the deceased at the time of revival of the policy on 1.5.05, the deceased had not mentioned the disease of cirrhosis of liver, therefore, it was a case of suppression of material facts regarding health on the part of the deceased and it was prayed that claim was rightly repudiated by the appellants and complaint be dismissed.
After hearing the parties the District Forum,Rajsamand through impugned order dated 27.5.08 had allowed the complaint inter alia holding that -
5(i) That no doubt revival amounts a fresh contract of the policy and if wrong statement is made in the declaration form by one person at the time of revival, on that count claim could be repudiated.
(ii) Further on the point that whether on 13.4.05 the deceased was a patient of cirrhosis of liver or not, the District Forum had come to the conclusion that since the deceased was admitted in the hospital for investigation, therefore, in absence of the investigation report , it could not be said that the deceased was a patient of cirrhosis of liver and thus it could not be said that it was a case of suppression of material facts regarding health on the part of the deceased.
(iii) That the appellants were not justified in repudiating the claim of the complainant respondent and it had amounted to deficiency in service on the part of the appellants.
Aggrieved from that order dated 27.5.08 passed by the District Forum,Rajsamand , this appeal has been filed by the appellants.
3. In this appeal the main contention of the learned counsel for the appellants is that before revival of the policy 6 in question on 1.5.05 , the deceased was suffering from the disease of Cirrhosis of liver for which he took medical treatment from Dr.Vyas Hospital & M.R.C.,Falana where the deceased was admitted on 13.4.05 and the he was discharged from the hospital on 14.4.05 and the disease of Cirrhosis of liver was diagnosed by the doctors of the hospital and since these facts were not disclosed by the deceased deliberately in his fresh declaration form on 1.5.05 , therefore, he was guilty of suppression of material facts regarding health and thus on that ground the claim of the complainant respondent was rightly repudiated by the appellants through letter dated 31.3.06 and thus, the District Forum had committed serious error and illegality in decreeing the claim of the complainant respondent. Hence the impugned order could not be sustained and liable to be quashed and set aside and this appeal deserves to be allowed.
4. On the other hand, the learned counsel appearing for the respondent has supported the impugned order of the District Forum and it was prayed that appeal filed by the appellants be dismissed.
5. We have heard the learned counsel for the appellants as well as for the respondent and gone through the entire materials available on record.
6. There is no dispute on the point that the deceased had taken a LIC policy from the appellants bearing no.
7181932163 on 28.9.97 for a sum of Rs. 3 lacs and the same was revived thrice i.e. on 7.3.01, on 1.11.01 and on 1.5.05.
7. There is also no dispute on the point that at the time of revival of insurance policy , a fresh declaration was made by the deceased and in that declaration on 1.5.05 , he had not mentioned that he was suffering from any kind of disease or had taken any treatment from any hospital though some questions were asked whether he had taken treatment for any disease and all questions were answered in negative.
8. There is also no dispute on the point that deceased had died on 29.5.05 meaning thereby within one month of the revival of the policy.
9. There is no dispute on the point that the claim of the above mentioned policy was repudiated by the appellants through letter dated 31.3.06 on the grounds mentioned therein as stated above.
10. On file there is a record of Dr.Vyas Hospital & M.R.C.,Falna which shows that the deceased was admitted in that hospital on 13.4.05 and he was discharged from the hospital on 14.4.05 and the disease of Cirrhosis of liver was diagnosed by the doctor and treatment which was given to him shows that many injections were injected and many tablets were also given to the deceased.
11. On file there is a certificate issued by the doctor of 8 Dr.Vyas Hospital & M.R.C.,Falna in form no. 3816 of the appellants in which it was stated that when the deceased was admitted in the hospital on 13.4.05, he was a patient of Cirrhosis of liver and further on point that what was the condition of the deceased at the time of discharge i.e on 14.4.05, it was mentioned that he was admitted for investigation.
12. Thus, in the facts and circumstances just mentioned above, the question for consideration is whether the findings recorded by the District Forum could be sustained or not or whether the repudiation of the claim of the complainant respondent by the appellants was justified or not.
On Insurance law
13. It may be stated here tht it is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally and in this respect, the decision of the Hon'ble Supreme Court in M/s.Modern Insulators Ltd. Vs. Oriental Insurance Co. (AIR 2000 SC 1014) may be referred to.
14. The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the 9 insurer.
In this respect, the decision of the Hon'ble Supreme Court in LIC Vs. Smt. G.M.Channabasemma (1996 (III) CPJ 8 (SC) may be referred to where it was held that the burden of proving that the insured had made false representation and suppressed material facts is undoubtedly on the LIC of India. Furthermore, mere concealment of some facts will not amount to concealment of material facts and if there is fraudulent suppression of material facts in the proposal, the policy could be vitiated otherwise not.
15. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.
16. In Life Insurance Corporation of India & ors. Vs. Asha Goel (Smt.) & anr. ( (2001) SCC 160 ), it was held by the Hon'ble Supreme Court that 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 recession of the contract. If there are any misstatement or suppression of material facts, the policy can be called in question and for determination of the question whether there has been suppression of any material fact, it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person.
17. The Hon'ble National Commission in National 10 Insurance Co. Ltd. Vs. Bipul Kunda (2005 CTJ 377 (CP) (NCDRC) ) has held that for repudiating a claim of an insured, it is for the insurer to show that a sttement on a fact, which was material for the policy, had been suppressed by the insured and that statement was fraudulently made by him/her with the knowledge of the falsity of that statement.
18. As already stated above, the death of the deceased had taken place within one month of the revival of the policy.
19. It may be stated here that where the insurer wishes to call in question a policy within two years of its being effected, it is enough if the insurer is in a position to show 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 is inaccurate or false.
20. It may further be stated here that even if the death takes place within two years, mis-representation, if any, that should be material in the sense of having some effect upon life expectation whether direct or indirect and if it is found material, that defence could be taken by the Insurance Company, not otherwise.
21. The word "misrepresentation" means suggestio falsi, in matter of substance essentially material to the subject, whether by acts or by words, by manoeuvres, or by positive 11 assertions or material concealment (suppressio veri) whereby a person is misled and damnified.
22. The word "fraud" means a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter. In this respect, the decision of the Hon'ble Supreme Court in Ram Preeti Yadav Vs. UP Board of High School & Intermediate Education and ors. (JT 2003 (Supp.I) SC 25 ) may be referred to.
23. It is well settled that misrepresentation itself amounts to fraud in some cases.
24. The word "misconduct" means an act or conduct in the nature of a breach of trust or an act resulting in loss to other party.
25. The word "suppression of fact" envisages a deliberate or conscious omission to state of fact with the intention of deriving wrongful gain. In this respect, the decision of the Hon'ble Supreme Court in Collector of Customs Calcutta Vs. Tin Plate Co. of India Ltd. ( (1997) 10 SCC 538 ) may be referred to.
26. Before proceeding further something should be said about the distinction between Renewal and Revival of the policy.
1227. The term " renewal" means renewal of the policy on existing terms and condition of a thing or in other words, extension upon the same terms as the old contract. The renewal of the policy means that the policy is renewed within the stipulated period and in such case, it was in force and it had not lapsed on any of the grounds and further, in cases of renewal of the policy, no further declaration could be sought. But the cases of ' revival' stand on different footings. The case of revival arises only when a policy had lapsed or expired due to many reasons, one of the reasons may be non-payment of premium in time.
28. It may be stated here that since the present case is a case of revival of the policy, the question arises whether revival should be treated as fresh contract or not. After expiry of the policy, if the party chooses to revive the contract of insurance, revival is clearly in law a fresh contract and this Commission has taken the same view in the case of LIC Vs. Munni Bano reported in (2005) 4 CPJ 228 and thus in the present case the revival of the policy would amount to a fresh contract and that is why at the time of revival of the policy i.e on 1.5.05 , a fresh declaration was given by the deceased regarding his health.
29. It may be stated here that in the present case revival was made on 1.5.05 by the deceased is not in dispute and in the declaration form regarding health several questions were asked about the illness and the deceased had answered all the questions in negative. This is one aspect of the matter.
1330. The other aspect in this case is that on file there is a record of Dr.Vyas Hospital & M.R.C.,Falna which shows that the deceased was admitted in that hospital on 13.4.05 and he was discharged from the hospital on 14.4.05 and the disease of Cirrhosis of liver was clearly mentioned though on point that what was the condition of the deceased at the time of discharge i.e on 14.4.05, it was mentioned that he was admitted for investigation but from the record it is well established that the deceased was a patient of Cirrhosis of liver and further there are certain diseases such as kidney, heart, liver and brain and they are connected with the life span of a person and if any misstatement is made in respect of such type of diseases by the person seeking insurance, in such case, it can be believed that knowingly the person taking out the insurance has made misstatement.
31. It may further be stated here that the well settled law in the field of insurance is that contracts of insurance including the contracts of lifte assurance are contracts uberrima fides and every fact of materiality must be disclosed otherwise there is good ground for rescission. And this duty to disclose continues upto the conclusion of the contract and covers any material alteration in the character of the risk which may take place between the proposal and acceptance.
32. Taking into consideration that aspect also when the answer was given in negative and when there is ample evidence to prove the fact that the deceased was admitted in 14 Dr.Vyas Hospital & M.R.C.,Falna on 13.4.05 and he was discharged from the hospital on 14.4.05 and the disease of Cirrhosis of liver was diagnosed by the doctor i.e prior to filling in up the fresh declaration form dated 1.5.05 regarding his health, therefore, from every point of view the present case would be a case of suppression of material facts regarding health on the part of the deceased.
33. For the reasons stated above, it is held that repudiation of claim of complainant respondent by the appellants through letter dated 31.3.06 on ground of suppression of material facts regarding health by the deceased was justified and no illegality or irregularity has been committed by the appellants in repudiating the claim of complainant respondent and in view of this, the findings of the District Forum decreeing the claim of the complainant respondent could not be sustained and the same are liable to quashed and set aside as they are wholly illegal, erroneous and perverse one and the appeal deserves to be allowed.
34. Before parting with this appeal something should be said about the poor condition of a widow lady in India and in the present case also the complainant respondent is a widow lady.
35. That since in this case taking into consideration the the policy in question was taken by the deceased on 28.9.97 and he had died on 29.5.05 though last revival was made on 1.5.05 but the policy had run for near about seven years and in 15 such a case by strict application of law, the appeal is going to be allowed and complaint of the complainant is going to be dismissed on ground of suppression of material facts on the part of the deceased but the fact remains that a widow lady would suffer.
36. Further the question is whether the conscious allows that the complainant respondent should not be compensated in any manner, the answer is no and she should be compensated in any manner but now the position is very much clear that now it is the settled position of law by the Hon'ble National Commission that in such cases no order could be passed unless and until the counsel for the LIC gives consent and in this case the counsel for the LIC has not accorded his consent for granting ex-gratia payment.
37. In view of the discussions made above, this appeal filed by the appellants is allowed and the impugned order dated 27.5.08 passed by the District Forum, Rajsamand is quashed and set aside and the complaint of the complainant-respondent is dismissed but the observations made in the last para of this order are such observations which this Commission hopes that the same would touch the hearts of those persons who are in power of the LIC and this Commission further hopes that taking into consideration that 16 the policy in question was taken by the deceased on 28.9.97 and he had died on 29.5.05, some sort of relief would be provided by the appellants to the complainant respondent who is a poor and widow lady.
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