State Consumer Disputes Redressal Commission
Life Insurance Corporation Of India vs Smt. Rukma Devi on 12 April, 2006
STATE CONSUMER DISPUTES REDRESSAL COMMISSION UTTARANCHAL - 11 - STATE CONSUMER DISPUTES REDRESSAL COMMISSION UTTARANCHAL DEHRA DUN FIRST APPEAL NO. 272 / 2005 Life Insurance Corporation of India ......Appellant Versus Smt. Rukma Devi .....Respondent Miss Anupama Gautam, Learned Counsel for the Appellant Sh. Manoj Kohli, Learned Counsel for the Respondent Coram: Hon'ble Justice Irshad Hussain, President Ms. Luxmi Singh, Member Dated: 12.04.2006 ORDER
(Per:
Mr. Justice Irshad Hussain, President):
This is insurer's appeal against the order dated 19.11.2005 passed by the District Forum, Uttarkashi allowing the claim of nominee (wife) of the insured and awarding compensation amounting to Rs.
10,00,000/- together with interest @6% p.a. w.e.f. 03.12.2004, the date of death of the insured till the date of the payment; Rs. 2,000/- as damages for mental agony and harassment and Rs. 2,000/- as expenses of the litigation.
2. Briefly stated the facts are as under:
3. Insured Mahavir Singh Chauhan purchased a Jeevan Shree Policy for Rs. 5,00,000/- for the period 12.08.2004 to 12.08.2009. He had also purchased two other policies namely Medical Policy for Rs. 2,00,000/- for the period 27.06.2002 to 27.06.2012 and Jeevan Mitra Policy for Rs. 70,000/- for the period 15.10.1990 to 15.10.2005. Insured met with an accident and died on 03.12.2004. Insured's wife Smt. Rukma Devi was the nominee and she was paid the amount due under the Medical and Jeevan Mitra Policy. However the amount due under Jeevan Shree Policy was withheld and finally repudiated on 04.03.2005 on the ground that the deceased had not disclosed his true state of health in answers given to specific questions at the time of the insurance thereby precisely giving answers in negative to questions under Clause 11 (i) asking him to answer as to whether during the last five years, he had consulted a medical practitioner for any ailment requiring treatment for more than a week; (iii) whether the deceased had remained absent from place of work on grounds of health, during the last five years and giving an answer in positive mentioning that his usual state of health had been "good" under Clause 11
(ix). The investigation disclosed that the deceased had been sick of entric fever / pyrexia; had consulted a medical practitioner and had remained on leave for 56 days w.e.f. 01.05.2004 on medical ground. It was also urged that had the deceased disclosed these facts, some special reports would have been called for before accepting the proposal of insurance and therefore in the event of deliberate mis-statements regarding health, the contract of insurance got vitiated and the claim was thus repudiated in terms of the policy contract and the declaration contained in the form of proposal for insurance.
4. Nominee Smt. Rukma Devi thereafter sent a representation to the Zonal Office of the appellant on 04.05.2005 (Paper No. 65) and when no heed was paid, the Consumer Case No. 49 / 2005 was filed by her in the District Forum. As is evident from the letter dated 07.11.2005 filed on record in the appeal by the respondent, the insurer gave an offer of payment of Rs. 5,00,000/- only on ex-gratia basis provided the nominee agrees to receive the said amount in full and final satisfaction of all her claims under the above policy.
5. The District Forum, on an appreciation of the material on record and after adverting to the reported decisions pressed into service before it, came to a definite conclusion that the insured had not suppressed material facts in regard to his health or ailment at the time of the proposal of the insurance policy; that the death of the deceased was caused due to injuries sustained in an accident and that there was at all no nexus between the cause of death and any ailment. Based on these inferences, the insurer was found to have repudiated the claim of the nominee illegally on incorrect facts thereby making deficiency in service and she was thus held entitled to the benefit which accrued under the insurance policy and damages etc. by the impugned order.
6. We have heard the Learned Counsel for the parties and have carefully considered their submissions in the light of the material on record and the reported decisions cited at the bar.
7. Learned Counsel for the insurer - appellant persuasively argued that the insured was bound to act strictly in accordance with the terms of policy and since the insured had fraudulently suppressed material facts as regard his health, the contract of insurance got vitiated and there was no deficiency in service in repudiating the claim under the policy of insurance. Learned Counsel then submitted that the insured had in the past been sick of entric fever / pyrexia and in all remained on leave on medical grounds for 56 days and if these facts were to be disclosed, the decision of the insurer was bound to be influenced while considering the proposal of insurance and that in the totality of the circumstances of the case, the repudiation of the claim was bonafide and the District Forum made an error in taking a contrary view and allowing the complaint. The following decisions were pressed into service:
Oriental Insurance Co. Ltd. Vs. Sony Cheriyan; 2000 (1) CPC Page 5.
Smt. Krishna Wanti Puri Vs. The Life Insurance Corporation of India, Divisional Officer, New Delhi and another; AIR 1975 Delhi 19.
Brahm Dutt Sharma Vs. Life Insurance Corporation of India; AIR 1966 Allahabad 474.
Life Insurance Corporation of India Vs. Smt. Nirmala Devi; 1997 (2) CPC
447.
Life Insurance Corporation of India Vs. Amruth S. Nimbalkar; 1997 (2) CPC
276. Mithoolal Nayak Vs. Life Insurance Corporation of India; AIR 1962 Supreme Court 814.
8. Per contra, the Learned Counsel for the respondent - complainant urged that the insurer has failed to discharge its burden to establish that the policyholder has made a statement fraudulently knowing that the statement was false and that there was deliberate suppression of material facts and therefore the repudiation of the claim was malafide and the District Forum was justified in coming to the conclusion that it was a case of deficiency in service. Learned Counsel also urged that circumstances do not show that the death of the policyholder was as a result of any disease directly or indirectly attributable to the death and since it was admittedly a case of death in a motor vehicle accident, there was at all no nexus between the cause of death and illness. According to the Learned Counsel, taking of medical leave is no ground to presume that the insured was suffering from any disease. The reported decisions relied upon by the Learned Counsel are as under:
Life Insurance Corporation of India Vs. Dayawati; III (2005) CPJ 544.
Life Insurance Corporation of India Vs. Jagat Kumar; IV (2003) CPJ 424.
Life Insurance Corporation of India and others Vs. Smt. Asha Goel and another; AIR 2001 Supreme Court 549.
Deepak Jaiswal Vs. Oriental Insurance Co.; I (2006) CPJ 29 (NC).
9. Having given our thoughtful considerations to the respective submissions and also having probed the import of the reported decisions, it need to be stated at the outset that the submissions of the Learned Counsel for the appellant are not sustainable and conclusions and inferences drawn by the District Forum in allowing the complaint and awarding the relief except grant of damages to the tune of Rs. 2,000/- do not suffer from vice of infirmity and illegality and therefore do not warrant any interference in the appellate jurisdiction by the Commission. The reasons are that though it is well settled that in a contract of insurance, utmost good faith must be observed by the contracting parties and that obligation of good faith require that all material facts must be disclosed by both the parties to the contract. What is a material fact, cannot be comprehensively described and it need to be considered keeping in view the particular circumstances of a case under hand. The broad feature and fact of the instant case was that the insured admittedly died in a motor vehicle accident and no disease whatsoever directly or indirectly was attributable to his demise. Keeping in view this material aspect of the case, it need to be seen whether the insured / policyholder had deliberately suppressed material facts as regard his health by giving incorrect information on the personal health in the personal statement in the policy form. As is evident from the answers given to the specific questions in regard to the state of health in Clause 11 of the Proposal Form (Paper No. 34), the insured had claimed to have not consulted a medical practitioner for any ailment requiring treatment for more than a week during the last five years and further claimed to have not remained absent from place of work on grounds of health during the last five years and lastly claimed that his usual state of health had been good, as also referred to in the earlier part of the judgment.
10. Attention was drawn by the Learned Counsel for the appellant to copy of the application dated 27.04.2004 (Paper No. 35) to show that the insured has sought casual leave from 28.04.2004 to 30.04.2004 on the ground of illness. Another application for medical leave dated 01.05.2004 (Paper No. 36) and medical certificate (Paper No. 37) were shown in support of the submission that the insured remained on medical leave for a period of 28 days; another application (Paper No. 38) and medical certificate (Paper No. 39) showing that the insured again remained on leave for 28 days as he has suffered with entric fever / pyrexia in support of the contention that though the insured had consulted a medical practitioner for his said ailment and remained on leave for 56 days, the answer to the question to these effects were given in the negative in the personal statement in the policy form and it was further incorrectly answered that the insured had maintained good usual state of health and therefore in the face of the facts, it was a clear case of suppression of material facts about the state of health. Entric fever / pyrexia commonly known as Typhoid is not a very serious disease and if the insured had in the past was laid down with this disease for sometime and then took leave to take rest on two occasions for a period of 28 days each, it would not mean that the insured had infact been requiring treatment of the said disease for long period from a medical practitioner. In a situation like this, the insured while giving answer in the negative to the question to that effect, it would not mean that he had made suppression of material fact as regard his health.
11. Further, medical leave on two occasions was taken for the purposes of rest and merely by taking the medical leave, it would not be presumed that the insured was suffering from any disease and even if the answer to a question to that effect was given in a negative, the same cannot be taken to mean that material fact regarding any ailment or disease was suppressed by the insured. In this connection, we may refer to a decision of this Commission in the matter of Life Insurance Corporation of India Vs. Dayawati; III (2005) CPJ 544 pressed into service on behalf of the respondent. In that case, the claim under the life insurance policy was repudiated on the ground that there was suppression of the material facts as regard the state of health by the insured, who was a Govt. employee and had even taken medical leave, which fact was not as such disclosed in the proposal form. It was observed by the Commission that taking of medical leave is no ground to presume that the insured was suffering from any disease. Govt. employees often take medical leave when no other leave is available to them. In the instant case also, the insured was a Govt. employee and it has not been shown by the insurer - appellant that leave of the nature other than medical leave was also due to the insured and therefore in the totality of the circumstances of the case, it appear that the insured had exhausted ordinary leave admissible to him and therefore he resorted to taking medical leave which is normally granted to Govt. servant for one year in whole of his service. Therefore, the ratio of the reported decision of this Commission support the cause of the respondent to hold that there was no suppression of material facts as regard to the state of health of the insured and in the totality of the circumstances of the case, the insured acted bonafidely in giving an answer in positive as regard to his usual state of health. In view of the fact that the death of the insured was the result of motor vehicle accident, there can be no doubt that there was no nexus between the cause of death and illness. On this score, the reported decision of Madhya Pradesh State Consumer Disputes Redressal Commission, Bhopal in the matter of Life Insurance Corporation of India Vs. Jagat Kumar; IV (2003) CPJ 424 pressed into service on behalf of the respondent support her cause in as much as in that case there was repudiation of claim on the ground of suppression of material fact and leave was obtained by the insured due to fever. The leave obtained for fever was held to have no nexus to the cause of death of the insured and the LIC was held liable to pay sum assured with interest on the finding that the repudiation of claim on the said ground was malafide. In this connection, another decision of the Apex Court in the matter of Life Insurance Corporation of India and others Vs. Smt. Asha Goel and another; AIR 2001 Supreme Court 549 also assume applicable significance. In the reported case also, the claim under the insurance policy was repudiated on the ground of withholding correct information regarding health. The Apex Court stressed that repudiation of claim merely on such ground is not proper and that the matter of repudiation of policy should not be dealt with in a mechanical and routine manner but should be one of extreme care and caution. It was also stressed that mere inaccuracy or falsity in respect of some recitals or item in the proposal is not sufficient. In the instant case as stated above, there was no suppression of material fact and there being absolutely no nexus between the cause of death and illness, the claim was repudiated mechanically and in a routine manner on the ground that the insured had suppressed facts in regard to his health. No doubt the approach was not correct and infact the repudiation was not bonafide.
12. In the case of Deepak Jaiswal Vs. Oriental Insurance Co.; I (2006) CPJ 29 (NC), the claim under the Janta Personal Accident Policy was repudiated on the ground that the insured died due to massive hemorrhage on account of hypertension. Head injury proved by C.T. Scan report and thus accidental fall resulting in the head injury was the cause of death of the insured. Repudiation in these circumstances was held to be unjustified by the National Commission and the insurance company was held liable to pay the benefit under the policy to the nominee. In that case, it was not proved that the deceased had knowledge of having hypertension and at any rate there was no nexus between the cause of death and illness. In view of the facts of the instant case referred above, the ratio of this reported decision also help the cause of the respondent that her claim under the policy was repudiated malafidely.
13. In regard to the reported decisions pressed into service on behalf of the insurer - appellant, it need to be mentioned that none of these can safely be applied to the facts of the instant case. The first case mentioned above (Oriental Insurance Co. Ltd. Vs. Sony Cheriyan; 2000 (1) CPC Page 5) pertain to the settled fundamental principle of insurance law that parties to the contract of insurance are bound to act strictly in accordance with the terms of policy and statutory limitation. The second case (Smt. Krishna Wanti Puri Vs. The Life Insurance Corporation of India, Divisional Officer, New Delhi and another; AIR 1975 Delhi 19) is also on the point that in insurance contract, good faith must be observed by contracting parties and suppression of material facts entitle the insurer to avoid the policy. In the case at serial No. 3 (Brahm Dutt Sharma Vs. Life Insurance Corporation of India; AIR 1966 Allahabad 474), stress was laid on the principle that averments of false statement in the proposal of the insurance vitiate the contract itself and whereas in the decision at serial No. 4 (Life Insurance Corporation of India Vs. Smt. Nirmala Devi; 1997 (2) CPC 447), the repudiation of the claim on the basis of concealment of disease was held to be justified. It need to be stated that the cause of death of the insured in the instant case was not any disease and in the peculiar circumstances of the case, the reported decisions pressed into service on behalf of the respondent and referred above supported the cause of the respondent and the insurer was not justified in repudiating the claim. The reported decision at serial No. 5 (Life Insurance Corporation of India Vs. Amruth S. Nimbalkar; 1997 (2) CPC 276) is also of not much help to the cause of the insured - appellant because in the reported case, there was concealment of disease of the insured. So far as the last mentioned reported decision at serial No. 6 (Mithoolal Nayak Vs. Life Insurance Corporation of India; AIR 1962 Supreme Court 814) is concerned, the ratio of the decision is also based on the fundamental principle of insurance law that suppression of material facts vitiate the policy and since on the facts of the instant case, it has been found that there has not been concealment of material fact as regard to any disease etc. and there being no nexus between the cause of death and the illness, the repudiation of the claim under the policy was not bonafide and as such this decision also does not support the cause of the insurer - appellant.
14. For the reasons aforesaid, we are convinced that the District Forum was justified in holding that the insured had not suppressed material facts in regard to his health or ailment; that there was no nexus between the cause of death and any ailment and that the claim was repudiated malafidely thereby making deficiency in service. The District Forum was thus justified in awarding benefit under the policy and also expenses of the litigation. However, the damages for mental agony and harassment amounting to Rs. 2,000/- need not to have been awarded in view of the amount under the policy directed to be paid together with interest. Therefore, to that extent the order of the District Forum need to be modified.
15. The Appeal is partly allowed. The respondent - complainant shall be entitled to receive Rs. 10,00,000/- together with interest @6% p.a. w.e.f. 03.12.2004, the date of death of the insured till the date of the payment and Rs. 2,000/- as expenses of the litigation.
(MS.
LUXMI SINGH) (JUSTICE IRSHAD HUSSAIN)