State Consumer Disputes Redressal Commission
Budhwanti vs Dhfl Pramerica Lic on 2 November, 2017
FIRST ADDITIONAL BENCH
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, SECTOR 37-A, DAKSHIN MARG, CHANDIGARH.
Consumer Complaint No.25 of 2016
Date of Institution: 27.01.2016
Order reserved on: 31.10.2017
Date of Decision : 02.11.2017
Budhwanti wife of Sh. Banarasi Dass, Resident of Manocha Niwas,
#50-Barari, PO Partap Nagar, Nangal, Ropar (Punjab)-140125.
.....Complainant
Versus
1. DHFL Pramercia Life Insuance Co. Ltd., 4th Floor, Building
No.9-B, Cyber City, DLF City, Phase-III, Gurgaon-122002
(Haryana).
2. DHFL Pramercia Life Insurance Co. Ltd., 1st Floor SCO 2941-
42, Sector 22-C, Chandigarh-160022.
.....Opposite parties
Consumer Complaint U/s 17(1)(a) of the
Consumer Protection Act, 1986 (as
amended up to date).
Quorum:-
Shri J. S. Klar, Presiding Judicial Member.
Smt. Surinder Pal Kaur, Member.
Present:-
For the complainant : Sh. B.S. Sodhi, Advocate For the opposite parties : Sh. Karan Nehra, Advocate ................................................................................................. J. S. KLAR, PRESIDING JUDICIAL MEMBER:-
The complainant has filed this complaint U/s 17(1)(a) of the Consumer Protection Act 1986 (in short the "Act) against OPs on the averments that her daughter-in-law Anita purchased two policies bearing no.123262 and 146146 for the sum assured of Rs.25 lakhs each and complainant Budhwanti was appointed as nominee in Consumer Complaint No.25 of 2016 2 above policies by the life assured Anita. It is further averred that Anita insured expired on 03.01.2015 due to jaundice/hepatitis. After her death, complainant lodged death claim against above policies, after completing all the formalities alongwith death claim papers, with OP no.2 on 01.05.2015, as nominee. It is further averred that deceased life assured (DLA) had paid the due premiums in time, but OPs wrongly and illegally declined the death claim on 12.08.2015, vide letter dated 12.08.2015 on the grounds that the DLA withheld her previous insurance policies's details in the proposal form, whereas DLA had fully disclosed the details of previous policies to the agent of OPs, who filed the form and non-disclosure of the previous policies is not a suppression of material facts warranting the repudiation of death claim. It is further averred that DLA had died after three years (approximately) from the date of issue of policies and claim cannot be rejected after completion of two years of receiving of policy from the date of issue under Section 45 of the Insurance Act. According to OPs, after their due investigation, it was found that DLA had withheld the details about the previous insurance policies contract at the time of applying for the insurance policies contract with OP. The DLA had not concealed any facts because the proposal form was completed/filled in by the insurance advisor/agent and he had given wrong information from his own side to sell the insurance policy. The act and conduct of OPs in repudiating the genuine claim of the complainant is wrong and illegal and it amounts to deficiency in service and unfair trade practice of OPs in the eyes Consumer Complaint No.25 of 2016 3 of law. The complainant has, thus, prayed that OPs be directed to pay full amount of Rs.25 lakhs each of above policies alongwith interest @18% per annum till actual realization; to pay Rs.2,00,000/- as compensation for mental harassment; and to pay Rs.55,000/- as costs of litigation.
2. Upon notice, OPs appeared and filed written reply by raising preliminary objections that the complaint is a gross abuse of process of law and has been filed by the complainant with the sole purpose of harassing and pressurizing the OP company. The complaint is alleged to be false, frivolous and baseless. There is no cause of action in favour of complainant to file the complaint against OPs. The complainant is not entitled to any claim or to get any relief/claim claim in the complaint. The complaint is ex-facie misconceived and devoid of any merits. The OP company received duly filled and signed two application forms from DLA Mrs. Anita and the details of policies are as under:-
Policy number 000123262 000146146
Application No. & AF000650143 AF000650152
Date 14.02.2012 03.05.2012
Policy issuance date 09.03.2012 16.05.2012
Product U-Protect U-Protect
Life Insured Anita Anita
Premium Rs.5421/- Rs.5421/-
Paying Term 15 yearls 15 yearls
Consumer Complaint No.25 of 2016 4
Mode yearly yearly
Sum Assured Rs.25,00,000/- Rs.25,00,000/-
Nominee Budhwanti Budhwanti
The OP company issued policies on the basis of KYC documents received alongwith the application forms. The proposal forms contained declaration, in which, it was specifically mentioned that all material facts, which form the basis of the insurance contract, should be disclosed correctly, otherwise the policy issued might stand to be void or voidable. The extract of the declaration is reproduced as under:-
"I/(We) understand and agree that all statements and answer made in this application (Proposal for insurance) including contact details or provided in connection with this application and addendum if any are true and complete to the best of my (our) knowledge and believe."
Policy contracts bearing no.000123262 and 000146146 were issued on 09.03.2012 and 16.05.2015 respectively on the basis of above mentioned details. The OP company carried out investigation and found that DLA had suppressed material facts about her previous life insurance policies, which were taken by her from other insurance companies and the details are as under:
Particulars Birla Sun Life Birla Sun Life HDFC Life SBI Life Policy no. 000417733 0004770543 14324522 47001625810 Issue date 27.04.2005 23.03.2011 10.05.2011 20.05.2011 Sum Rs.8,00,000/- Rs.25,00,000/- Rs.30,79,322/- Rs.24,00,000 Assured Consumer Complaint No.25 of 2016 5 The specific question was asked from DLA at the time of filling the proposal forms and she replied it as not applicable, which is as under:
Section C: Previous Policy Details:
43. Details of Life Insurance/Heath Insurance held/applied with DLF Pramerica/other companies (of the life to be insured) N/A It is further averred that as per OP company's Board underwriting guidelines, life assured was eligible for a maximum cover of assured sum of Rs.52 lakhs only on the basis of his annual income of Rs.3,00,000/- declared in the proposal form. The annual income declared by DLA as Rs.3,00,000/- and after investigation, it was found that DLA had already taken policies approximately of Rs.88 lakhs from other insurance companies. The actual pay out under the policy in question is Rs.50 lakhs after considering the income of the DLA as Rs.3,00,000/- only. At the time of repudiation of the claim, the OPs treated the policy to be void vitiated by suppression of facts and misrepresentation the amount of premium paid under the policies i.e. Rs.14,475/- each in both the policy through NEFT dated 11.08.2015 was sent to complainant and the same was also intimated to her. By obtaining policies through fraudulent means, the Contract of Insurance (Policy) is liable to be rescinded, as per Section 45 of the Insurance Act 1938 and no benefit is payable. The OPs rightly repudiated the insurance claim of complainant. It is further averred that insurance agent is a licensed person under the IRDA and is governed under the rules framed by the Regulatory Consumer Complaint No.25 of 2016 6 body and is not an employee or agent of the company. The insurance agent operates independently and represents on behalf of the consumers to the company. On the facts disclosed in the proposal form, which are duly filled in and signed by the agent and the consumer, the insurance company thereafter decides as to whether the policy contract can be executed or not. It is further averred that life assured/proposer/nominee duly signed the documents in English and it cannot be presumed that they were not aware of the contents of the documents. The complainant also filed a complaint before the learned Ombudsman on the present subject matter and the same was dismissed, vide order dated 22.12.2015 by the Insurance Ombudsman. The complaint is contested even on merits by OPs on the above referred grounds. It is denied that DLA disclosed the details of previous policies to the above agent. The OPs have denied any deficiency in service and unfair trade practice on their part. The OPs have prayed for dismissal of the complaint.
3. The complainant tendered in evidence affidavit Ex.C-A alongwith documents Ex.C-1 to C-4 and closed the evidence. As against it, OPs tendered in evidence affidavit Ex.OP-A alongwith copies of documents Ex.OP-1 to Ex.OP-10.
4. We have heard learned counsel for the parties at considerable length and have also examined the record of the case. The only point falling for adjudication in this case between the parties is whether OPs are justified in repudiating the contract of insurance between the parties on the ground of suppression of previous Consumer Complaint No.25 of 2016 7 policies taken by DLA Anita. The OPs repudiated the insurance claims of the complainant primarily on the ground of suppression of details of previous policies by DLA. On the other hand, the version of the complainant is that DLA got the proposal form filled in through the agent and it was the mistake of the agent, that he had not mentioned the details of the policies in the proposal form in this case. Evidence on the record needs to be referred to for adjudication of the controversy in this case. Affidavit of Budhwanti complainant is Ex.CA on the record. She testified in her affidavit that her daughter- in-law Anita purchased two policies bearing no.123262 and 146146 for the sum assured of Rs.25 lakhs each from OPs and she was appointed as nominee in above policies by late life assured Anita. She further deposed that Anita DLA expired on 03.01.2015 due to jaundice/hepatitis and after her death, she lodged death claim against above policies by completing all the formalities alongwith death claim papers and submitted them with OP no.2 on 01.05.2015, as nominee. She further testified that deceased life assured (DLA) had paid the due premiums in time, but OPs wrongly and illegally declined the death claim on 12.08.2015, vide letter dated 12.08.2015 on the grounds that the DLA withheld her previous insurance policies details in the proposal form, whereas DLA had fully disclosed the details of previous policies to the agent of OPs, who filled the proposal form and non-disclosure of the previous policies is not a suppression of material facts warranting the repudiation of death claim. Ex.C-1 is letter dated 09.03.2012 from OPs to DLA Anita Consumer Complaint No.25 of 2016 8 regarding policy no.000123262. Ex.C-2 is letter dated 16.05.2012 from OPs to DLA Anita regarding policy no.000146146. Ex.C-3 is the death claim form against policy no.000123262 and 000146146. Ex.C-4 is the repudiation letter dated 12.08.2015 from OPs to complainant. As against it, OPs tendered in evidence affidavit of Parmal Singh, D.M. Legal of OPs Ex.OP's-A. This witness has stated in his affidavit that DLA Anita filled the proposal form at the time of taking the above policies. She had not disclosed the details of previous policies and suppressed this material fact in the proposal forms Ex.OP-1 and Ex.OP-2. He further deposed that OPs issued policies in good faith on the basis of particulars, as disclosed in the proposal forms by DLA. This witness further stated that the contract of insurance is, thus, vitiated by misrepresentation practiced by DLA Anita on OP. He further stated that the insurance agent is a licensed person under the IRDA and is governed under the rules framed by the Regulatory Body and is not an employee and agent of insurance company. This witness further stated that the claim of the complainant has been repudiated on account of concealment of material facts. The particulars of the existing policies amounting to assured amount of Rs.88 lakhs with the other insurance companies, which have been suppressed in this case is in direct violation of declaration which formed part of the proposal forms of DLA Anita. He further stated that even under Section 45 of Insurance Act, any material fact, if deliberately withheld authorized the insurance company to repudiate the contract, if it goes to the root of the matter. Consumer Complaint No.25 of 2016 9
5. The proposal form Ex.OP-1 filled in by DLA Anita and has been perused by us. There is no mention of details of previous policies in it. Declaration suffered by DLA Anita form part of this proposal form. Similarly, in another proposal form Ex.C-2, there is no mention of any details of previous insurance policies and declaration made by the offerer formed part of it. The counsel for the complainant could not point out anywhere in the proposal form that the particulars of details of previous policies were set out by the DLA Anita, when she took the contract of insurance from OPs. Ex.OP-5 is death claim form. Vide Ex.OP-6/A DLA Anita obtained Birla Sun Life Insurance Term Plan from Birla Sun Life Insurance for the sum assured amount of Rs.25,00,000/-. Vide OP-6/B, DLA Anita obtained insurance policy from SBI Life Insurance for sum assured amount of Rs.24,00,000/-. Ex.OP-6/C is the copy of proposal form for single life (HDFC Life) filled in by Anita DLA. Ex.OP's-7 is the copy of repudiation letter dated 12.08.2015. Ex.OP's-8 is the copy of debit confirmation of online transaction. Ex.OP's-9 is the copy of order passed by Insurance Ombudsman for dismissing the complaint as withdrawn of complainant. Ex.OP's-10 is the copy of document of power of attorney.
6. Now the point which survives for adjudication before us in this complaint is whether non-disclosure of details of previous policies by the complainant is a material fact in this case, which renders the contract of insurance as voidable at the option of the OP. Vide Ex.OP-6/A to Ex.OP-6/C, DLA Anita took insurance policies Consumer Complaint No.25 of 2016 10 from other insurance companies for the amount of Rs.88 lakhs. It is, thus, proved that DLA had not disclosed the details of previous policies, while taking the above policies from OPs. The matter is not res integra. The National Commission has held in "Dineshbhai Chandarana & another Vs. Life Insurance Corporation & another" 2010(3)CPC-323 as under:
"Consumer Protection Act, 1986- Section 19 & 24A- Suppression of material facts- Insurance claim- The insured deceased had taken sixteen life insurance policies- Insurance corporation repudiated the claim of last policy due to suppression of material facts- claim was dismissed by the State Commission on the ground of limitation and concealment of terms of last policy- Appeal filed- Appellant contended that deceased could seek life insurance policies for a sum upto eight times of his annual income- Held, as a contract of life insurance is based upon the principle of uberimma fide on the part of assured- Insurance corporation was within its legal rights to repudiate the claim for non-disclosure of details of last policy- No interference is required in the impugned order- Appeal dismissed."
The matter was again examined by the National Commission in case titled as "L.I.C. of India & another Vs. Vidya Devi & another"
2012(3)CPC-339 and held as under:-
"Consumer Protection Act, 1986- Section 14(1)(d) & 21(b)- Insurance claim- Suppression of material fact- Complainant Consumer Complaint No.25 of 2016 11 had other policies, but the material was not disclosed when policy in question was obtained- Fora below accepted the claim- Revision filed- Held, order under challenge cannot be sustained- complainant was bound to disclose true facts as it was under a solemn obligation, when present policy was obtained- Assured had violated obligation necessary for a valid contract- impugned order set aside- Repudiation of claim justified."
Our own State Consumer Commission also touched upon this point and held in First Appeal No.1430 of 2014, instituted on 21.10.2014 and decided on 14.03.2016 in case titled as "Life Insurance Corporation Office Vs. Gurpreet Kaur" relying upon "L.I.C. of India and another Vs. Vidya Devi & another" (Supra) that non disclosure of details of previous policies are of utmost importance and is suppression of material fact. There is, thus, consistent view of law taken by National Commission and our own State Commission as held above that non disclosure of details of previous policies by the insured is a suppression of material fact justifying the repudiation of contract of insurance. Even under Section 45 of Insurance Act, the contract of insurance is based on uberimma fides and who-so-ever betrays this principle renders the contract of insurance voidable at the option of the other. Reference may be made to law laid down in case titled as "Satwant Kaur Sandhu Vs. New India Assurance Company Ltd" IV (2009) CPJ 8(SC) by the Apex Court in this regard. To counter this, counsel for the complainant relied upon law Consumer Complaint No.25 of 2016 12 laid by the National Commission in "L.I.C. of India Vs. Krishan Chander Sharma" in revision petition no.1935 of 1999 decided on 23.01.2006. The cited authority is not applicable to the facts of the case. The facts of cited authority are not pari materia with the facts of the case in hand. The counsel for the complainant further relied upon law laid down by our own High Court in case "The Oriental Insurance Co. Ltd. Vs. Permanent Lok Adalat (Public Utility Services), Gurgaon & another" in CWP no.19425 of 2012 (O&M) decided on 20.07.2017. We find that this authority is again distinguishable from the facts of the case in hand. The matter of suppression of material fact of details of previous policies is the bone of contention in this case and there are direct authorities of the National Commission on this point that it renders the contract of insurance voidable at the option of the other. While relying upon law laid down by the National Commission on the authorities as relied upon by OPs and the view of our own State Consumer Commission as cited above, which are directly applicable to factual controversy of this case, we are of this view that OPs are justified in repudiating the contract of insurance on account of suppression of material fact of non disclosure of details of previous insurance policies to OPs by the insured.
7. As a result of our above discussion, we find no merit in the complaint and the same is hereby dismissed.
Consumer Complaint No.25 of 2016 13
8. Arguments in this complaint were heard on 31.10.2017 and the order was reserved. The certified copies of the order be communicated to the parties, as per rules.
9. The complaint could not be decided within the statutory period due to heavy pendency of court cases.
(J. S. KLAR) PRESIDING JUDICIAL MEMBER (SURINDER PAL KAUR) MEMBER November 02, 2017.
(MM)