State Consumer Disputes Redressal Commission
Lic Of India vs Santosh Devi on 16 November, 2022
FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022
IN THE DELHI STATE CONSUMER DISPUTES REDRESSAL
COMMISSION
Date of Institution: 05.09.2013
Date of hearing: 15.09.2022
Date of Decision: 16.11.2022
FIRSTAPPEAL NO.961/2013
IN THE MATTER OF
LIFE INSURANCE CORPORATION OF INDIA,
Through Its Authorized Representative
Ms. Nandita, Manager (Legal & H.P.F.)
Office At: Divisional Office-I,
25, Kasturba Gandhi Marg, New Delhi.
(Through: Mr. Neeraj Tyagi, Advocate)
...APPELLANT
VERSUS
MRS. SANTOSH DEVI,
W/o Late Mr. Prem Singh,
R/O Village And Post Office Ujwa,
New Delhi.
(Through: Mr. Raghubir Singh, AR of Respondent)
...RESPONDENT
CORAM:
HON'BLE JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
HON'BLE MS. PINKI, MEMBER (JUDICIAL)
Present: None for the Parties.
PER: HON'BLE JUSTICE SANGITA DHINGRA SEHGAL,
PRESIDENT
ALLOWED PAGE 1 OF 10
FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022
JUDGMENT
1. The facts of the case as per the District Commission record are:
"The present complaint was filed by Smt. Santosh Devi w/o deceased Prem Singh as one of his legal heir. Late Prem Singh was insured with the OP on 17.5.08 in the sum of Rs.1,00,000/- and paid a premium of Rs. 11,625/-. The policy papers 3.6.08. were received on It is alleged that the agent of the OP did not visit nor the information was sought which required to be filled in the application for insurance. Prem Singh died on 28.8.08. The complainant lodged the claim with the respondent which was repudiated illegally. The complainant alleged that if the OP was having any doubt about the health of the husband of the complainant or that he was medically unfit then the premium received by the OP should have been returned to the insurer before issuing the policy; the matter should have been investigated by the agent of the respondent before issuing the policy. She filed this complaint on the ground of deficiency in service as well as unfair trade practice adopted by the respondent and sought a direction for payment of Rs.2,00,000/- alongwith interest @ 18% per annum, she also claimed a sum of Rs.50,000/- towards damages."
2. The District Commission after taking into consideration the material available on record passed the order dated 17.06.2013, whereby it held as under:
"We have very carefully perused the documents placed on record, Sh. S.K. Singh, Advocate appeared on 1.4.11 for filing evidence on behalf of OP. He filed the affidavit of Mr. Panday alongwith documents. The documents alongwith affidavit were numbered from serial no. 1 to 36 only, but no Exhibit no. was written by the learned advocate on any of these documents. Neither copy of the policy nor copy of proposal form was filed by the learned counsel, instead he filed three unnumbered pages which are "conditions and privileges within referred TC". These are the terms and conditions of the policy only but copy of the policy is not on record. Similarly no copy of the proposal form which is Ex-OP- 1/B is on record. These documents start from repudiation letter and only in the repudiation letter the questions and answers in para no.11 of the proposal | form are reproduced. All other documents are the medical and leave record of the deceased from different hospitals which establishes beyond any shadow of doubt that the policy was obtained by the deceased ALLOWED PAGE 2 OF 10 FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022 after concealing material information because since 2004 he was a heart patient, several times he was admitted in Metro Khetrapal Hospital, Aggrasen Hospital and Kukreja Hospital with different ailments and remained on leave from his office. Photocopies of all the medical and fitness certificates produced by him are on record but after giving our thoughtful consideration to the whole matter and after scrutinsing each and every paper filed by the respondent we have come to the conclusion that a complaint u/s.12 of the Consumer Protection Act is a quasi judicial proceeding where strict rules of Civil Procedure Code and Indian Evidence Act are not applicable but inspite of that the advocates appearing on behalf of the parties/their ARS have to be vigilant only to see that the basic documents on which they are relying must be filed in the forum proceedings. A list of documents or atleast the number of pages which they are filing as evidence must be mentioned. Simply writing in the affidavit that such and such document is marked as Exhibit does not prove that document unless atleast a photocopy of that documents is filed. The contents of the proposal form cannot be read from the repudiation letter. Respondent has to file the proposal form to prove its contents. The advocates appearing on behalf of insurance companies, whether it be LIC or any other insurance company, take the things for granted for which the insurance companies lose the cases even when they have a genuine defence and public money is being wasted in that manner. We have perused the report of the investigator in this case who made an observation that the agent and development office appeared to be in connivance with the deceased at the time of issuance of the policy and there is an endorsement in Hindi on the photocopy of the repudiation letter wherein some officer has raised the querries from the investigating officer that whether he is in possession of any document to that effect or not. The complainant alleged that the agent never even came to see her husband. The proposal form was never filled by her husband and no querry was ever made by the agent from her husband at the time of filing the proposal form. Under these circumstances the importance of proposal form became more. Without seeing the proposal form that in whose writing it is filled, whether it is signed by the proposer or not, we cannot jump to the conclusion that any false information was given by the proposer in this case and unless proved to the contrary, we have no reason to disbelieve the complainant that no wrong information was given by her husband. Whatever information was given in the proposal form was in the knowledge of the proposer. It was the agent himself who answered all the questions of para no.11 of the proposal form.
ALLOWED PAGE 3 OF 10 FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022
Under the facts and circumstances we hold that as the respondent has failed to prove that any material information was concealed by the complainant, we allow the complaint hereby directing the respondent to pay the sum of Rs.1,00,000/- to the complainant alongwith interest @ 6% per annum from the date of filing of the complaint till realization. Considering the facts and circumstances of this case we are not inclined to pay any damages to the complainant. Copy of this order be sent to the head office of the LIC in Connaught Place for information."
3. Aggrieved by the aforesaid order of the District Commission, the Appellant/Opposite Party has preferred the present appeal, inter-alia, contending that District Commission failed to appreciate that the insured is under the solemn obligation to provide full disclosure of the material fact which is relevant for the insurer while accepting the proposal form. The Appellant further contended that the claim of the Respondent was rejected on the ground of concealing the material facts in the proposal form. Therefore, the District Commission failed to observe that the claim was rightly repudiated by the Appellant. Pressing the aforesaid grounds, the Appellant prayed for setting aside the impugned judgment passed by the District Commission.
4. During the course of proceeding, notice was issued to the Respondent who marked her appearance through Mr. Raghuvir Singh, AR of the Respondent and was directed to file the reply to the present Appeal. The Respondent failed to file the reply before this Commission. However, the written submissions have been filed by the Respondent wherein she denied all the contentions of the Appellant and submitted that the District Commission order does not suffer any infirmity and also does not call for any interference by this Commission.
5. We have perused the material available on record.
6. The main question for consideration before us is whether the Appellant was right in repudiating the claim of the Respondent on the basis of concealment of material facts in the proposal form.
ALLOWED PAGE 4 OF 10 FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022
7. To resolve this issue, we deem it appropriate to refer to the dicta of the Hon'ble National Commission in Complaint Case no. 92 of 2010 titled as Manmohan Nanda vs. United India Insurance Co. Ltd. and Ors. decided on 22.05.2015, which reads as follows:
"10. .....In our opinion, it was obligatory on the part of the complainant to have disclosed about the treatment being taken by him, while filling the proposal form. The complainant may have been taking the treatment as a preventive measure against some diseases but he should have faithfully declared such fact at the time of taking the insurance policy.
Xxxx xxxx xxxx xxxx
17. Based on the discussion above, it is made out that the insurance company rightly repudiated the claim of the complainant taking the plea that the complainant had not disclosed true and complete picture about his health condition at the time of taking the policy and the exclusion clause under the policy was attracted in the case as complainant was taking medical treatment for a pre- existing disease. We, therefore, do not find any merit in this complaint and the same is ordered to be dismissed with no order as to costs."
8. Additionally, it is imperative to refer to the First Appeal no. 323 of 2019 titled as Seema Begum vs. HDFC Standard Life Insurance Company Limited and Ors. decided on 15.01.2020, wherein the Hon'ble National Commission while dealing with the similar case, has held as follows:
6. ........The proposal contained all the personal details of the deceased including that he was an under-matriculate. However, though he was required to disclose in case he had ever suffered from a heart ailment, the answer given by him was in negative. He was also required to disclose if he had ever undergone X-ray or any other investigation in last five years. He was therefore, duty bound to disclose that he had undergone an Echo test at Khanna ALLOWED PAGE 5 OF 10 FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022 Nursing Home. The said information however, was concealed by him, he having replied in negative to the question which required him to disclose any X-ray or other investigation during last five years.
Xxxx xxxx xxxx xxxx
8. Be that as it may, what is important is that a contract of insurance being based on utmost good faith, it was the bounden duty of the insured to disclose the ailment from which he was suffering at the time the proposal was submitted by him. A reference in this regard can be made to the recent decision of the Hon'ble Supreme Court in LIC of India v. Manish Gupta, MANU/SC/0599/2019 : VI (2019) SLT 409 : III (2019) CPJ 31 (SC), Civil Appeal No. 3944 of 2019, decided on 15.4.2019. In Manish Gupta (supra), the proposal form required a disclosure as to whether the proposer had suffered from cardiovascular disease, he responded in negative to the said question. The complainant underwent a surgery, submitted a claim which was repudiated on the ground that he was suffering from a pre-
existing illness. Upholding the repudiation of the claim, the Hon'ble Supreme Court inter alia held as under:
"Moreover, non-disclosure of any health event is specifically set out as a ground for excluding the liability of the insurer."
"A contract of insurance involves utmost good faith. In Satwant Kaur Sandhu v. New India Assurance Company Ltd., this Court has held thus:
"... Thus, it needs little emphasis 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 ALLOWED PAGE 6 OF 10 FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022 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. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment."
In Reliance Life Insurance Co. Ltd. & Anr. v. Rekhaben Nareshbhai Rathod, MANU/SC/0593/2019 : IV (2019) SLT 235 : II (2019) CPJ 53 (SC), Civil Appeal No. 4261 of 2019, decided on 24.4.2019, the Hon'ble Supreme Court inter alia observed as under:
"26...............It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information ALLOWED PAGE 7 OF 10 FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022 asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement. The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) "there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance". Each representation or statement may be material to the risk. The Insurance Company may still offer insurance protection on altered terms.
29. We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form................."
9. The learned Counsel for the appellant/complainant submits that the online proposal was submitted by the agent and not by the insured himself. The aforesaid contention however, did not find favour in the above referred decision of the Hon'ble Supreme Court and was expressly rejected.
10. The learned Counsel for the appellant also submits that additional premium was charged from the deceased considering the state of his health as reflected in the Echo report dated 18.1.2016. However, I find no such averment in the Consumer ALLOWED PAGE 8 OF 10 FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022 Complaint. Therefore, no note of the said averment can be taken at this stage.
11. The deceased had died within two years of submitting the proposal form and in fact, within twelve days from the date of the policy. He having withheld a material information with respect to the state of his health and such withholding of information having influenced the decision of the insurer on the question as to whether the insurance cover should be given to him or not, the insurer is not liable to make payment to the complainant in terms of the insurance policy taken by her."
9. From the aforesaid dicta, it is clear that If the insured failed to disclose or deliberately concealed material facts about a pre-existing disease for which he or she was receiving medical treatment prior to purchasing the life insurance policy, the insurance company may reject his or her claim on the basis of non-disclosure of such material facts. Returning to the facts of the present case, deceased husband of the Respondent failed to disclose the pre-existing disease at the time of purchasing the life insurance policy from the Appellant and deliberately concealed the said facts while filling out the proposal form, resulting into repudiation of claim by the Appellant vide letter dated 30.09.2009.
10. From the aforesaid discussion, we hold that the repudiation of claim by the Appellant was in accordance and in consonance with the laws laid down by the Hon'ble National Commission. Furthermore, the proposal form which is filed by the Appellant before this Commission shows that the Respondent's deceased husband has concealed the fact that he was suffering from pre-existing disease namely 'HTN Coronary Artery Disease with old AWMI and post PTCA' before filling the proposal form.
11. Therefore, in view of the above discussion and relying upon the aforesaid legal position, we set aside the order dated 17.06.2013, passed by the ALLOWED PAGE 9 OF 10 FA - 961/2013 LIC OF INDIA VS. MRS. SANTOSH DEVI D.O.D.: 16.11.2022 District Consumer Disputes Redressal Commission - III, Janakpuri, New Delhi - 110058.
12. Accordingly, the present Appeal stands allowed.
13. Application(s) pending, if any, stand disposed of in terms of the aforesaid judgment.
14. A copy of this judgment be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986. The judgment be uploaded forthwith on the website of the commission for the perusal of the parties.
15. File be consigned to record room along with a copy of this Judgment.
(JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (PINKI) MEMBER (JUDICIAL) Pronounced On:
16.11.2022
ALLOWED PAGE 10 OF 10