State Consumer Disputes Redressal Commission
Nandu Devi vs Lic Of India on 1 June, 2010
BEFORE THE CONSUMER DISPUTES REDRESSAL COMMISSION, RAJASTHAN, JAIPUR APPEAL NO: 70/2009 Smt.Nandu Devi w/o late Sh.Devilal Kahar, r/o Bakhat Vilas Road, Nai Aabadi, Shahpura, Distt. Bhilwara. (Raj.) Complainant-appellant Vs. Life Insurance Corporation of India, through Sr.Divisional Manager Divisional office "Jeevan Prakash' Ranadey Marg, Post Box no.2 Ajmer. ( Raj.) Opposite party-respondent 1.6.2010 Before: Mr.Justice Sunil Kumar Garg-President Mr.Shashi Kumar Pareek-Member Mr.Anil Bhatia counsel for the appellant Mr.Ram Kalyan Sharma counsel for the respondent 2 JUDGMENT
BY THE STATE COMMISSION ( PER HON'BLE MR.JUSTICE SUNIL KUMAR GARG, PRESIDENT This appeal has been filed by the complainant appellant against order dated 3.12.08 passed by the District Forum, Bhilwara in complaint no. 81/2008 by which the complaint of the complainant appellant was dismissed.
2. It arises in the following circumstances-
That the complainant appellant had filed a complaint against the respondent LIC before the District Forum, Bhilwara on 6.5.08 inter alia stating that her husband Devilal , now deceased had taken LIC policy from the respondents for a sum of Rs.50,000/- bearing policy no.185245826 on 17.11.05 and that policy was for 20 years and in the policy in question the age of the deceased was mentioned as 31 years. It was further stated in the complaint that the said policy was taken by the deceased as well as by the complainant appellant jointly. It was further stated in the complaint that the deceased had died on 23.12.05 and after the death of the deceased claim was preferred by the complainant appellant being the wife and nominee of the deceased before the office of the respondent and the claim was kept pending by the respondent but later on through letter dated 30.3.07 claim of the complainant appellant 3 was repudiated by the respondent LIC in the following manner-
" In this connection we have to inform you that in the proposal for assurance signed by him on 17.11.05 in answer to question no.1 requiring him to give his age nearer birthday, he gave it as 31 years. We may, however, state that above answer was false as we have secured evidence to show that the deceased had grossly understated his age by about 13 years at the time of proposing for the assurance. The evidence in our possession goes to show that the deceased was not less than 44 years of age. He, however, did not disclose his correct age in the proposal to us. On the other hand, he induced us to issue the above mentioned policy on a false statement made by him in the proposal form as regard his age. Had he disclosed his correct age, we would not have accepted his proposal.
We have therefore, in terms of the policy contract and the declarations contained in the said form of proposal repudiate the claim and accordingly we are not liable for any payment under the policy and all moneys that have been paid in consequence threof belong to us."4
It was further stated in the complaint that the deceased was an agriculturist by profession and was not literate person and he only knew how to sign and since he had not studied in any school, therefore, if different date of birth was found in other documents and for that deceased could not be held responsible as he was not literate person and further in the Municipality Voters List 2005, the age of the deceased was mentioned as 30 years and thus at the time of taking the policy if the age of the deceased was mentioned as 31 years, that could not be said to be a wrong age or mentioned with any fradulent intension.
It was further stated in the complaint that the proposal form for the policy in question was not filled in up by the deceased but the same was filled in up by the agent of the LIC and since the deceased was an illiterate person and he was not aware of the fact that what was mentioned in the proposal form by the agent and therefore,if the age was not correctly mentioned, for that the deceased could not be held responsible and it was prayed that claim of the complainant appellant was wrongly repudiated by the respondents through letter dated 30.3.07 and the present complaint was filed by the complainant appellant.
A reply was filed by the respondents on 19.8.08 and in the reply they have taken the same pleas which were taken by them in the repudiation letter dated 5 30.3.07. Apart from that it was stated in the reply that the policy in question was issued by the respondents on 22.11.05 and the deceased had died on 23.12.05 and further the matter was investigated by the investigator Mr. Ram Prasad who had submitted his report on 15.12.06 and he had come to the conclusion that at the time of taking the policy in question the age of the deceased was near about 50 -51 years.
It was further stated in the reply that in earlier policy taken by the deceased, the date of birth of the deceased was mentioned as 1.7.61 while in the second policy the age of the deceased as 31 years was wrongly mentioned. It was further stated in the reply that as per the report of the officials of the respondents LIC the age of the deceased was found 13 years less though he was not of the age of 31 years but he was of the age of 41 years and it was recommended that claim of the complainant appellant be repudiated and that is why the claim of the complainant appellant was repudiated by the respondents LIC and thus the complainant appellant is not entitled to any claim and it was prayed that complaint of the complainant be dismissed .
After hearing the parties, the District Forum, Bhilwara through impugned order dated 3.12.08 had dismissed the complaint inter alia holding that since from every point of view the age of the deceased was not 31 years when the policy in question was issued i.e 6 on 22.11.05 and the same was wrongly mentioned aid if the respondents LIC had repudiated the claim on ground of mentioning wrong age respondents LIC was justified in repudiating the claim of the complainant appellant on ground of wrong information in respect of the age.
Aggrieved from the said order dated 3.12.08 passed by the District Forum, Bhilwara this appeal has been filed by the complainant appellant.
3. In this appeal, the main contention of the learned counsel for the appellant complainant is that on file there is no authentic proof regarding age of the deceased and in various documents it had been differently mentioned and further since the deceased was not literate person and he could only signs the papers, if some difference was found in respect of the age of the deceased which was mentioned in the proposal form i.e. 31 years or in some other documents it was found more age, for that the deceased could not be held responsible and on that count claim should not have been repudiated by the respondents LIC and therefore, it could not be said that the deceased had intentionally and fraudulently mentioned his age wrongly in the proposal form as 31 years and in view of this the findings of the District Forum dismissing the complaint of the complainant appellant could not be sustained as they suffer from basic infirmity, illegality and perversity and similarly the respondents were not justified in repudiating the claim of the complainant appellant 7 and it was prayed that appeal be allowed.
4. On the other hand, the learned counsel appearing for the respondents has supported the impugned order of the District Forum.
5. We have heard the learned counsel for the appellant as well as for the respondents and have gone through the entire materials available on record.
6. There is no dispute on the point that the deceased had taken LIC policy from the respondents for a sum of Rs.50,000/- bearing policy no.185245826 on 17.11.05 and that policy was for 20 years.
7. There is no dispute on the point that in the proposal form the age of the deceased was mentioned as 31 years.
It may be stated here that in the manner the deceased had signed the proposal form, it clearly reveals that he was not at all literate person but he could only sign and had signed the papers.
8. There is no dispute on the point that the proposal form for taking the policy in question was filled in up by the agent of the respondents LIC.
9. There is no dispute on the point that policy in question 8 was taken by the deceased as well as by the complainant appellant jointly.
10. There is also no dispute on the point that deceased had died on 23.12.05 due to heart attack as is evident from the relevant papers of the respondents LIC.
11. There is no dispute on the point that the matter was investigated by the investigator Mr. Ram Prasad who had submitted his report on 15.12.06 and he had come to the conclusion that at the time of taking the policy in question the age of the deceased was near about 50 -51 years.
12. On file there is a Ration Card also in which the age of the deceased was mentioned as 46 years.
13. On file there is an identity card issued by the Election Commission of India in which the age of the deceased was mentioned as 43 years as on 1.1.98.
14. On file there is a Municipality voters list 2005 in which the age of the deceased was mentioned as 30 years and the age of the complainant appellant was mentioned as 28 years.
15. On file there is a death claim sheet prepared by the officials of the respondents LIC in which the age of the deceased was assessed as 44 years though as per the death claim sheet it was found the deceased had understated his age by about 13 years .
916. There is no dispute on the point that there is no authentic proof regarding age of the deceased as the deceased had not studied in any school and there is nothing on record to prove that in the school register what was the age of the deceased, meaning thereby the present case is a case where the age has to be determined on the basis of the documents produced and not on the basis of the retisters of the school.
17. Thus, in the facts and circumstances just narrated above, the question for consideration is whether repudiation of claim of the complainant appellant by the respondents was justified or not or whether the findings recorded by the District Forum by which complaint of the complainant appellant was dismissed could be sustained or not.
18. Before proceeding further, it may be stated here that since the proposal form of deceased was filled in up by the agent of the LIC, in his own writing and since the deceased had put his signatures which shows tht he was not literate person, therefore, something should be said on agents and principal and insurance law.
Agents and Principal
19. Chapter 10 of the Contract Act comprising sections 182 to 238 relates to the appointment and authority of agents and the rights and duties of the principal and agent. Section 182 defines an "agent" as a person employed to do an act for or to represent another, who is called the 'principal'.
1020. An agent represents his principal and acts not only for him but also in his place and thus, agent could not be treated as servant.
Authority of agents
21. Sections 186 to 189 of the Contract Act relate to authority of agents. The power of the agent to bind the principal may consist of three general kinds, namely, express, implied and apparent authority.
Express authority
22. Express authority is the authority actually given to the agent, whether verbally or in writing and which the principal intends to give. The life insurance agent's authority to solicit proposal and to collect initial premiums is an example of express authority to perform these acts. When the agent's act is within his express authority, the principal is bound by it with regard to the agent's motives.
Implied authority
23. Implied authority is defined in section 187 of the Contract Act as authority which is " to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case." Thus, the agent is said to have implied authority 11 to transact in accorcance with the general customs of the business. According to section 188, ' an agent having an authority to do an act, has authority to do every lawful thing which is necessary in order to do such act '. This is referred to as the incidental authority of the agent who has an authority.
Apparent or Ostensible Authority
24. Section 237 of Contract Act provides that when an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal the principal is bound by such acts or obligations if he has by his words or conduct induced such third persons to believe that such acts and obligations are within the scope of the agent's authority. The principal is then estopped from denying that the agent had the authority which the third person who dealt with him in good faith believed he had. This is also known as 'agency by estoppel'. But the agent's own assertions cannot give him apparent authority or estop the principal. If a person employs another as an agent in a character which involves a particular authority, he cannot by a secret reservation divest him of that authority.
When an agent carries out his instructions properly, no complications arise and the principal will be bound by his acts as if it was his own act. If the agent fails to conform to the instructions, the principal may seek to avoid to be bound by the acts of the agent. If any agent's act are within the scope of his authority, the principal is bound by those acts irrespective 12 of the agent's mistake and the prejudice caused to him by the acts. See Zurich General Accident and Liability Insurance Co. Vs. Roberts (1954 ) 2 Lloyd's Rep 55 ).
Proposal forms filled in up by agents
25. In insurance practice generally the insurer's agent approaches proposers for insurance and gets the proposal form filled in up and signed by them with a declaration that the answers are true and shall be the basis of the contract.
Where the agent himself signs the proposal form or where the agent fills in up the proposal form with untrue answers after the insured signs it and without his knowledge, the insured is not at fault and the policy is enforceable against the insurer.
Where the proposer is illiterate and free from blame in allowing the incorrect answer to reach the insurer, the insurer cannot take advantage of any breach of warranty that the facts are otherwise.
Law on suppression of material facts
26. 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 13 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.
27. The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer,.
Furthermore, mere concealment of some facts will not amount to concealment of material facts.
28. Thus, information given by insured in proposal form regarding state of health and age is the basis of contract of insurance. Contracts of insurance are of utmost good faith.
29. Keeping the above principles in mind, the facts of the present case are being examined in the following manner.
30. Before proceeding further something should be said about the proof of age of the proposer.
31. In life insurance, the age is a material factor because after certain age, the policies may not be issued. Further there are certain plans under which the insurance is available at a certain age and also for certain period. Moreover, the age has an impact on the amount of premium payable by the proposer. Lesser is the age, lesser would be the premium. In case it is found at a later stage that the proposer gave wrong age, either 14 the insurance could be avoided altogether, or the insured may have to pay additional premium. The corporation requires proof of the age alongwith the proposal form. Some recognised proof of age should be filed. Horoscopes are generally not accepted as standard proof of age. It is regarded a non-standard proof of age. However, it is in the discretion of the corporation to accept the horoscope in very rare cases. Generally, the school certificates are regarded as standard proof of age. There are also other documents which may be taken as standard proof of age, namely, certificate from employer, other official documents showing the age, and the like.
32. As already stated above, the proposal form of the deceased was filled in up by the agent of the respondents LIC in his own writing and in that proposal form, the age of the deceased was mentioned as 31 years but as per the report of the officials of the respondents LIC the deceased was not of the age of 31 years but he was of the age of 44 years .
33. It may be stated here that the following evidence is available on file for the purpose of determining the age of the deceased-
(i) Municipality Voters , 2005 in which the age of the deceased was mentioned as 30 years.
(ii) Ration card in which the age of the deceased was mentioned as 46 years.15
(iii) Identity card issued by the Election Commission of India in which the age of the deceased was mentioned as 43 years as on 1.1.98.
(iv) As per the report of investigator Mr. Ram Prasad had dated 15.12.06 the age of the deceased was near about 50 -51 years.
(v) As per death claim sheet the age of the deceased was found as 44 years on the date of filling in up the proposal form .
(vi) Though in the proposal form the age of the deceased was mentioned as 31 years.
Note- Thus, the case of the respondents LIC is that on the date when the proposal was filled in up by the deceased on 17.11.05, the age of the deceased was not 31 years as mentioned in the proposal form but the age of the deceased was 44 years and the deceased had wrongly stated his age as 31 years in the proposal form.
34. It may be stated here that the estimations regarding age given by villagers can hardly be treated as cogent evidence of proof of actual date of birth. On the same ground, it is mentioned that either the applications for obtaining ration cards or in that sense the ration card or the voters list cannot be treated as a conclusive proof of actual age mentioned therein of the person. The purpose of referring the age in these 16 documents is only to find out if the persons are majors or not and the object is not to determine the actual date of birth. The LIC on such evidence could not come to the conclusion that the actual age of deceased at the time of taking the policy was incorrectly stated to be 31 years.
35. It may further be stated here that this Commission in a case LIC Vs. Mooli Devi ( (1995 ) 3 CPR 256 has held that the age in the electoral roll does not reflect the true age of a person. Therefore, if the LIC had relied upon the age as given in the electoral roll and some other documents, that would not be sufficient proof to arrive at a conclusion about the actual age of the deceased. Further the voter list could never the proof of age and that could only be for the purpose to show that a person was/ is entitled to vote only.
36. There is another aspect of the matter which deserves to be noticed. It was open to the LIC to accept the stand of the life insured and to issue the policy tentatively and to keep the matter of determination of actual date of birth of proposer to be made on the evidence to be led to. That was not done in the present case rather the age mentioned in the proposal form of the deceased was accepted by the LIC respondents. When the factum of age as given in the proposal form was accepted by issuing the policy in question in favour of the deceased, the LIC cannot subsequently confront the same and that too after the death of the deceased to repudiate the claim.
37. Apart from the above, the proposal form in which the 17 age of the deceased was shown as 31 years, was filled in up by the agent of the respondents LIC, in his own writing and deceased who is not much literate person, hailing from village and did not know the language of the proposal form, has simply put his signatures on it any how in Hindi. Therefore, if the age of the deceased in that proposal form to some extent was not found correct one and in the present case as in various documents different age is mentioned, therefore, in such situation when the proposer ( the deceased ) was an illiterate person and if any untrue answer is found, that could be said to be without his knowledge and the insured ( the deceased ) could not be said to be at fault and the respondents LIC could not repudiate the claim on that ground and the policy would be enforceable against the LIC.
38. Furthermore, there is much difference in the age as mentioned in the proposal form (31 years) and in the documents- voters list ( 30 years ) identity card ( 43 years), investigator report ( near about 50-51 ) and death claim sheet ( 44 years ) but since agent of the LIC was aware of that by looking at the face of the deceased and if wrong answer in respect of age was mentioned by the agent of the respondents LIC in the proposal form of deceased, for that, the respondents LIC would be held liable.
39. It may further be stated here that since in the documents referred above, there is variation in respect of age of the deceased, therefore, in such circumstances if the age of the deceased was mentioned as 31 years in the proposal form that 18 could not be said to be fraudulently or deliberately mentioned by the deceased with some ulterior motives.
40. Had there would have been a date of birth recorded in the school certificate or in the register of school record, that would have been the best evidence for determining the correct age of the deceased but in absence of that, in the present case the age is based on the estimation and when the age is based on estimation, for that it could not be inferred that the deceased had wrongly mentioned his age in the declaration form dated 17.11.05 deliberately, fraudulently or for getting ulterior motives .
41. In this case reliance has been placed by the learned counsel for the respondents LIC on the decision of the Hon'ble National Commission in the case of LIC Vs. Yogendra Prasad Singh, ( III (2009 ) CPJ 38 (NC ) , for that it may be stated here that the facts of the present case stand distinguished for the reason that in that case the age of the deceased was found mentioned in the school record and this is not the position in the present case.
Death due to heart attack
42. In this case there is no dispute on the point that the deceased had died on 23.12.05 due to heart attack as in all the papers produced it was mentioned that the deceased had died due to heart attack.
1943. It may further be stated here that nobody knows when he would get heart attack whether he is young person or he is a person of middle age or an old one.
Symptoms of Heart Attack
44. Atherosclerosis of the coronary arteries may develop slowly to a point where complications occur without warning. Sudden death may occur and advanced diseases of the coronary arteries are the commonest cause of sudden death with or without warning symptoms .
45. Thus, chest pain or discomfort similar to angina but lasting more than 15 minutes may mean a heart attack. This means that a portion of the heart muscle actually dies due to sudden but prolonged oxygen shortage. A heart attack may occur due to insufficient blood flow through a narrowed coronary artery or due to the formation of a blood clot on the diseased lining of the coronary artery.
46. Furthermore, for diagnosing the heart disease, some necessary tests are ECG, echo, doppler, angioraphy etc. and until and unless they are done, heart disease could not be diagnosed and in this case there is nothing on record to prove the fact that the deceased had undergone for any of the tests as stated above.
2047. It may be stated here that since in the present case the deceased had died due to heart attack and as per medical science heart attack can take place at any time without any warning and therefore, if the deceased had died within a very few days after taking the policy in question, it could not be said that the deceased was aware that he would die due to heart attack and thus, this aspect that the deceased had died within a very few days after taking the policy in question, for that inference could not be drawn that he had taken the policy after mentioning wrong age with fraudulent intension or it could not be inferred that he had given false statement regarding his age in the declaration form dated 17.11.05.
48. It may be stated here that no doubt the policy was taken by the deceased on 22.11.05 and he had died on 23.12.05 i.e within near about two months but since nobody could visualize that he would die because of heart attack, therefore, in such circumstances, it could not be said that the deceased had taken the policy in question with fraudulent intention.
49. Had the deceased would have been a patient of some major diseases such as kidney, heart and brain prior to taking the policy in question on 17.11.05 as they are connected with the life span of a person, the position would have been different one.
50. In view of the discussions made above, it is held that it was not a case of deliberate suppression of material facts 21 regarding age on the part of the deceased. It could hardly be said that the deceased had concealed his actual age or that he knew that the age given by him was inaccurate or that he ever intended to defraud the LIC. Further since the age mentioned in the proposal form was accepted by the LIC by issuing the policy in question in favour of the deceased, the LIC could not subsequently confront the same after the death of the deceased. The documents voters list, ration card, election identity card etc. relied upon by the respondents LIC could not be treated or regarded as a conclusive proof of actual age mentioned therein. Thus, repudiation of claim of the complainant appellant was wholly arbitrary and it amounted to deficiency in service on the part of the respondents LIC. In this respect the decision of the Punjab State Consumer Disputes Redressal Commission , Chandigarh in the case of Tej Kaur & anr. Vs. Sr.Divisional Manager, Life Insurance Corporation of India (II (2001) CPJ 8 ) may be referred to where similar view was taken.
51. For the reasons stated above, the respondents were not justified in repudiating the claim of the complainant appellant and the respondents have repudiated the claim of the complainant appellant without any basis and on wrong assumption and in an arbitrary manner and in view of this the findings of the District Forum rejecting the claim of the complainant appellant could not be sustained as they suffer from basic infirmity, illegality or perversity and this appeal deserves to be allowed and the impugned order is liable to be quashed and set aside and the complainant appellant is entitled 22 to get claim amount of Rs.50,000/- under the policy in question of deceased alongwith interest @ 9% p.a. from the date of filing of complaint and further a sum of Rs.5000/- as costs of litigation .
Accordingly, this appeal filed by the complainant appellant is allowed and the impugned order dated 3.12.08 passed by the District Forum,Bhilwara is quashed and set aside and the complaint of the complainant appellant stands allowed in the manner that the respondents are directed to pay to the complainant appellant a sum of Rs.50,000/- as claim amount under the policy in question of deceased alongwith interest @ 9% p.a. from the date of filing of the complaint till the payment is made and further to pay Rs.5000/- as costs of litigation to the complainant appellant.
(S.K.Pareek ) (Justice Sunil Kumar Garg ) Member President nm