State Consumer Disputes Redressal Commission
Life Insurance Corportion Of India vs Mrs. S. Vasantha And Other on 7 October, 2009
BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI Present Hon'ble Thiru Justice M. THANIKACHALAM PRESIDENT THIRU Pon. GUNASEKARAN B.A.,B.L., MEMBER - I A.P.NO.200/2005 (Against order in O.P.No.630/1998 on the file of the DCDRF, Chennai (South)) DATED THIS THE 7th DAY OF OCTOBER 2009 1.
The Zonal Manager Life Insurance Corportion of India Southern Zonal Office Marketing/CS Department LIC of India, Mount Road Chennai
- 2
2. Senior Divisional Manager Madras Divisional office-II Anna Nagar Plaza, C-47, 2nd Avenue Anna Nagar, P.B. No.209 Chennai 600 040 Appellants / Opposite parties Vs. Mrs. S. Vasantha W/o. Subramanian No.40/D2, Mandaveli Ranipet - 2 Respondent/ Complainant The Respondent as complainant filed a complaint before the District Forum against the Appellants /opposite parties praying for the direction to the opposite parties to pay a sum of Rs.3,00,000/- towards the policy amount with compensation of Rs.50000/- and cost of Rs.5000/-. The District Forum allowed the complaint directing the opposite party to pay Rs.300000/- with 12% interest alongwith compensation of Rs.10000/- and cost of Rs.1000/-.
Against the said impugned order, this appeal is preferred praying to set aside the order of the District Forum dt.28.1.2005 in OP No.630/1998.
This petition coming before us for hearing finally on 15.9.2009. Upon hearing the arguments of the counsels on eitherside, this commission made the following order:
Counsel for the Appellant/ Opposite party: M/s.M.B.Gopalan, Advocates Counsel for the Respondent/ Complainant: M/s.S. Muthu Venkatraman, Advocate Honble M. THANIKACHALAM J, PRESIDENT.
1. The opposite parties in O.P.No.630/1998 on the file of the District Forum, Chennai (South), who suffered an adverse order, are the appellants.
2. The complainants son Vijayaraghavan, had taken a Life Insurance Policy on 15.11.1994, and the assured amount therein is Rs.3 lakhs. Vijayaraghavan succumbed to illness, after admission in the Christian Medical College Hospital, Vellore, on 01.06.1995. In the policy, he had nominated his mother/ complainant, as nominee to receive the policy amount. Pursuant to the nomination, when a claim was lodged for the assured amount, the opposite parties repudiated the same without any basis. In fact before the insurance policy was taken, Vijayaraghavan was subjected to medical Test and his health condition was certified as hale and healthy. Despite request, since the opposite parties have repudiated the claim, the petition is filed not only for the policy amount, but also for compensation.
3. The opposite parties in their written version admitting that the complainants son had taken a Life Insurance Policy, for a sum assured of Rs.3 lakhs would contend that, within 6 months or so, from the date of commencement of policy, Vijayaraghavan died, that as per the usual rules and practice, when the matter was investigated, that revealed, the life assured was suffering from liver disease from his childhood, and that he had been taking injection for the same biweekly, but in the proposal form, the above illness was deliberately suppressed and false answers were given, though the death has no direct effect to the illness mentioned above, and that the fact remains there is a material suppression, and in this view, under the policy, the insurance company is entitled to repudiate the same, and repudiated the claim of the complainant, for which there cannot be any grievance.
4. Based upon the above averments, the case was taken for hearing, wherein, in support of the claimants claim, 13 documents were exhibited and to nullify the same 4 documents were exhibited on the side of the opposite parties.
5. The District Forum, Chennai (South), in its cryptic order, has come to the conclusion that a passing remarks found regarding the history of the complainants son, cannot be taken as material suppression, and that the repudiation made by the opposite party is unjustified, that too, when they have failed to prove by clinching evidence that the ailment suffered by the complainants son was existing even while taking the policy. Thus holding, finding fault with the opposite parties, as if they have failed to honour the policy, directed them to pay a sum of Rs.3 lakhs, with interest thereon at 12% p.a., being the assured amount, in addition to Rs.10000/- towards deficiency in service alongwith cost of Rs.1000/-, which is under challenge before us.
6. Heard the learned counsel appearing for either side as well as perused the written submission, lower court records, and precedents relied on by them.
7. There is no loggerhead between the parties, regarding the policy taken by the deceased Vijayaraghavan, the sum assured, the period of coverage, as well as his death when the policy was alive. Unfortunately, at the young age, within six months or so, from the date of the policy on 1.6.1995, he died in Christian Medical College Hospital, Vellore, as disclosed by documentary evidence, not seriously challenged.
It is also an admitted fact, as nominee / mother, the complainant, in the ordinary course is entitle to receive the assured amount. Under the hope and faith as nominee, when the complainant approached the insurance company, they repudiated the same, as if there was material suppression of facts, leading to repudiation, which the insurance company is entitled to take. The defense so taken negatived, and once again the same point is urged before us.
8. The only point urged on behalf of the appellants before us, is that, there was material suppression of facts or in the proposal form, the insured has not furnished true and correct answers, and in this view under the terms of the policy and according to law also, the appellants are entitled to repudiate the claim, and in this way alone it is repudiated, which should receive the seal of approval of this commission, though failed before the District Forum.
9. Per contra, it is the submission of the learned counsel for respondent / complainant, that there is no suppression of any facts, much less material facts and only in order to avoid the claim, a false defense has been taken, which requires rejection, as did by the District Forum.
10. The learned counsel for the appellants invited our attention to a decision of the Apex Court, an unreported judgement dt.10.7.2009 in Civil Appeal No.2776/2002 in Satwant Kaur Sandhu Vs. New India Assurance Company Ltd. in support of the defense. In the case involved in the above decision also, repudiation had taken place, on the ground of material suppression, since the insured, though was a known diabetic for 16 years, he had not disclosed the same, in the proposal form, whereas he had declared as if he was in sound health. The insured in that case, died during the currency of the policy. After a claim was lodged, the insurance company made enquiries, and obtained a certificate, as if the deceased therein was a known case of chronic renal failure /Diabetic nephropathy. It appears, when the claim was made, the same was repudiated, resulting a filing of the case before the District Forum concerned. The District Forum, concluding that the report of the Vijaya Hospital was not supported by any circumstantial evidence and was unreliable. On that basis, concluding that the insurance company was guilty of deficiency in service, because of repudiation, not based on full material information, directed the insurance company to pay the claim amount, which was challenged before the State Commission. The State Commission, allowed the appeal and set aside the order of the District Forum, concluding that the non-disclosure of the illness or the disease suffered by the insured in the proposal form, amounted to misrepresentation and suppression of material facts, regarding the health, and this being the position, no case of deficiency in service. In this view, the appeal was allowed, thereby giving grievance to the claimant, resulting a revision before the National Commission.
Unfortunately, the National Commission, by oversight or otherwise, concluding as if current finding has been rendered, dismissed the Revision Petition, which was challenged before the Apex Court.
11. The Apex Court, considering the facts and circumstances of the case, as well as the declaration made by the insured in the policy, then considering the effect of Sec.45 of the Insurance Act, as well, came to the conclusion that the insurance policy is a contract, falling in the category of utmost good faith on the part of the assured, and if the assured has not made full disclosure correctly or in other words, if the declaration so made found to be false to the knowledge of the declarant, then the insurance company is entitled to repudiate the claim. Their Lordships also considered the regulations issued by the Insurance Regulatory and Development Authority, where they have given explanation for material. At the paragraph end of 19 of the said judgement it is observed that Explanation:
Material for the purpose of these regulations shall mean and include all important, essential and relevant information I the context of underwriting the risk to be covered by the insurer.
It is the further observation that Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for the in the proposal form is material for the purpose of entering into a Contract of insurance
12. On the above basis, based on the materials, it is the conclusion of their Lordships which reads:
We have no hesitation in coming to the conclusion that the statement made by the insured in the proposal form as to the state of his health was palpably untrue to his knowledge. There was clear suppression of material facts in regard to the health of the insured and, therefore, the respondent insurer was fully justified in repudiating the insurance contract.
It was the case of the complainant, that the insured was checked by the doctors of the insurance company, and they have not noticed any ill health, and this being the position, as if there was material suppression of previous illness also, the claim cannot be rejected. The checking at the time of taking the policy was only on the information supplied by the assured, and it is not a detailed checkup, subjecting the assured, to various medical tests etc. Therefore, that alone cannot be the reason to stop the repudiation, or prevent the repudiation, when materials are available to show that the assured had suppressed the material facts. The Apex Court, thus analyzing the case of repudiation on the basis of the material suppression, dismissed the appeal, confirming the order of the State Commission, which principle is squarely applicable to the case on hand.
13. In Life Insurance Corporation Of India Vs. Krishnan Chander Sharma reported in II (2007) CPJ 51 (NC), the same kind of question had arisen for consideration. It seems in the case involved in the above decision the insured was suffering from certain kind of illness, but not disclosed in the proposal form, for the query What has been your usual state of health whereas it is said Good. But later on, it was brought to the surface that the assured was seriously suffering from asthma and allergic bronchitis. On the basis of the suppression of the disease, the claim was repudiated, confirmed by the National Commission.
14. It is also the dictum of the National Commission, the cause of death, need not be connected to the illness suffered, whereas the important question is whether there was suppression of material facts, or any false declaration has been given to the knowledge of the assured. While considering this point, it is observed that Ultimate cause of death of the deceased has no relevance whatsoever to the disclosing of the information regarding health as required by aforementioned clauses (a),
(b), (d) and (i) of clause 11 of the proposal form. Obviously, the answers given by the deceased who was suffering from asthma and allergic bronchitis etc., to these questions were false to her knowledge and petitioner-Insurance Company was, thus, justified in repudiating the claim by the said letter dt.30.3.1995. Orders passed by For a below being legally erroneous, deserves to e set aside.
15. In order to make out a case that the deceased in this case was suffering from liver disease or he was taking treatment for liver illness, taking that is Liver Extract injection biweekly, the reliance is placed upon Ex.B3, copy of case sheet, pertaining to Mr. Vijayaraghavan. It seems, before my learned predecessor, some doubt had been raised, regarding the correctness or genuineness of Ex.B3 and to verify the correctness, this Commission had summoned the case sheet of Vijayaraghavan and responding the summon, the Christian Medical College, Vellore, submitted the entire case sheet for our perusal. The entry therein is challenged by the learned counsel for the respondent/claimant, as if they are inadmissible or they are factually incorrect or they are not proved. We find answer for the above said submission in Satwant Kaur Sandhus case, referred above, it is observed in the said decision, the deceased or his family members alone should have supplied the materials and in this view the same cannot be ignored, which reads It is more than clear from the said certificate that information about the medical history of the deceased must have been supplied by his family members at the time of admission in the hospital, a normal practice in any hospital.
16. In Smt. Vidya Devi etc. Vs. LIC of India reported in 2003(2) CPJ 106 (NC), it is observed that Certainly the doctor who recorded the nature of disease of Chawla at the time of admission could not have thought of all these illness with which Chawla suffered unless he himself told the same to the doctor at the time of his admission.
This usual practice as observed must be available in our case also and the doctor should have recorded the previous medical history of the deceased, only on the basis of the information supplied by the deceased or by his family members, for which we cannot expect any direct evidence from the opposite party.
17. The Apex Court, in Oriental Insurance Co.
Ltd., Vs. Munimahesh Patel reported in 2007-2-Law Weekly, page 661 , has observed that The Commission having accepted that there was wrong declaration of the nature of occupation of the person insured, should not have granted the relief in the manner done.
thereby showing suppression of any material fact in the insurance policy or proposal form had taken place on material facts, the assured or his nominee cannot claim the assured amount, and the insurance company is entitled to repudiate the same.
The learned counsel for respondent/ complainant, though urged that the entries cannot be relied on or false defense had been taken, has not explained as to why and under what circumstances, that should not be relied on or how the above decisions are not made applicable to the present case, and also has not brought anyother decision contra of anyother State Commission, including the Supreme Court. Therefore on the basis of the above settled position of law as on date, the case on hand should be analysed.
18. As rightly submitted by the learned counsel for the complainant/ respondent, and as held by the National Commission in Oriental Insurance Company Ltd., Vs. Ramesh Marutrao Jadhav reported in 1993 (3) CPR 203, it is the duty of the insurance company, to establish the fact that there was material suppression, in which there cannot be any dispute. Therefore, we have to see, whether the insurance company, discharged its burden.
19. As adverted to above, the case sheet of deceased Vijayaraghavan was made available for our perusal. At page 7 of the case sheet, the doctor has noted that noticed to have jaundice at 10 months of age with Hepatamegali and has been taking Liver Extract injections twice a week since, but he never had jaundice since 10 months. Now noted jaundice one day.
Smoker-alchohol. From the careful reading of the above case sheet, it is seen that the deceased was having some kind of ailment in liver, more than ordinary liver problem, warranting to take liver extract injection, twice a week, since. To ignore or eclipse the above entry, we find no reason at all, as repeatedly held by the courts as indicated above. This is a material fact, and there cannot be any dispute. This material fact as seen from the policy form, produced and marked, was not disclosed by the assured, whereas in the proposal the assured has declared as if he is not suffering from any illness.
20. The learned counsel for the respondent, submitted that the deceased was donating blood periodically, by placing reliance upon certain documents also, and it is the further submission that a person, who is suffering from liver disease will not be permitted to donate blood or the blood will not be taken. It is the usual practice, when the blood is taken from a donar, that will be tested at that time, and if no deficiency or illness or any adverse effect is notice, then only the blood will be taken. In this manner, despite the fact that the deceased was taking liver extract for the enlargement of the liver or for someother reason, there would not have been any deficiency in blood, for donation. Therefore, as donar, his blood should been accepted. Before us, no medical literature has been produced or no expert opinion also made available to show, that a person who is taking liver extract is prohibited from donating blood. This being the position, and because of the proved fact that the deceased was suffering from some kind of illness in the liver, warranting biweekly liver extract injection, which fact has not been disclosed in the proposal form, we are constrained to hold that there is a false declaration and it should be construed as material suppression of the fact. If the deceased had disclosed this, the consideration for insurance must be different and that opportunity was not given to the insurance company. In view of the established fact, and ratio decidenti declared by the rulings quoted above, we are constrained to accept the case of the appellant, that the repudiation is justifiable. Unfortunately, the District Forum, casually passed a remark as if the entry found in the medical records maintained in the usual course of business, is a passing remarks, cannot be relied on, shows the non-appreciation of the facts, based upon law, as well non-application of mind which should be eschewed and in this view, appeal deserves acceptance.
21. In the result, the appeal is allowed. The order of the District Forum in OP No.630/1998 dt.28.1.2005 is set aside, and the complaint is dismissed. Considering the facts and circumstances of the case, there will be no order as to cost, throughout.
The Registry is directed to handover the Fixed Deposit Receipt, made towards the mandatory deposit, to the appellant/opposite party duly discharged, since appellant succeeded, and there is no need to retain the FDR.
PON GUNASEKARAN M. THANIKACHALAM MEMBER-I PRESIDENT INDEX : YES / NO Rsh/d/mtj/Insurance