State Consumer Disputes Redressal Commission
Paramjeet Kaur vs Lic Of India on 17 April, 2009
APPEAL NO: 1299/2008 Smt. Paramjeet Kaur Ward no. 13, Hanumangarh Town, Distt. Hanumangarh. Complainant - appellant Vs. 1. Life Insurance Corporation of India, Regional office, New Delhi .through Regional Manager 2. Life Insurance Corporation of India, Divisional Office, Bikaner , through Sr.Divisional Manager 3. Life Insurance Corporation of India, Br.Office, Hanumangarh Jn. through Br. Manager. Opposite parties-respondents 17.4.2009 Before: Mr.Justice Sunil Kumar Garg-President Mrs.Vimla Sethia-Member
Mr.Jitendra Mitruka counsel for the appellant Mr.J.P.Sharma counsel for the respondents This appeal has been filed by the complainant appellant against order dated 2.7.08 passed by the District Forum,Hanumangarh in complaint no. 65/08 by which the 2 complaint of the appellant was dismissed.
2. It arises in the following circumstances-
That the complainant appellant had filed a complaint before the District Forum, Hanumangarh on 12.8.08 inter alia stating that her husband Kripal Singh now deceased, had taken one insurance policy bearing no. 501572940 for a sum of Rs.1 lac on 26.3.06 from the respondents and that policy was obtained by the deceased through Bholaram Sindhi, the agent of the respondents. It was further stated in the complaint that on 2/3 July 2006 the deceased had felt some trouble in his stomach and the deceased was shown to Dr. Paras Jain of whose clinic was near by but the deceased had died on 3.7.06 due to heart attack. It was further stated in the complaint that after the death of the deceased claim in respect os his policies were preferred by the appellant before the office of the respondents but the claim of the complainant appellant in respect of policy bearing no. 501572940 was repudiated by the respondents through letter dated 31.3.07 on the ground that in column 9 of the proposal form, there was a specific question whether he had taken other policies previous to that or not and since the answer of that question was in negative and further had he would have declare or mentioned that he had also taken other policies prior to that, he would have been medically examined and since the fact of taking earlier policies was not mentioned by the deceased while taking the policy in question, therefore, it was a case of suppression of material facts on the part of the decesed. It was further stated in the complaint that the respondents had made payment in 3 respect of other two policies and if the fact of taking earlier policies was not mentioned by the deceased in the proposal form, for that the agent Bholaram was responsible as the form in question was filled in up by him and thus there was no deliberate suppression on the part of the deceased. Thus, after repudiation of the claim in respect of policy bearing no. 501572940 , the present complaint was filed.
A reply was filed by the respondents before the District Forum on 4.4.08 and in the reply they have taken the same pleas which were taken by them in the repudiation letter dated 31.3.07 . Apart from that it was stated in the reply that since the eceased was of the age of 35 years and if such person takes policy for a sum of Rs. 1 lac within two years, and thus while issuing the later policy, proper steps would have been taken by the respondents and since there was non-mentioning of earlier policies, therefore, for that respondents have been deprieved of that right and thus the policy was obtained by suppressing material facts and after violating the terms and conditions of the policy and claim was rightly repudiated by the respondents. Hence complaint be dismissed.
After hering the parties, the District Forum,Hanumangarh through impugned order dated 2.7.08 had dismissed the complaint of the complainant appellant inter alia holding that non-mentioning of the earlier policies by the deceased was found a material fact and since it was not mentioned by the deceased in the proposal form, therefore, on that ground claim was rightly repudiated by the respondents.
4Aggrieved from the said order dated 2.7.08 passed by the District Forum, Hanumangarh this appeal has been filed by the complainant appellant.
3. In this appeal the main contention of the learned counsel for the appellant is that the claim of the complainant appellant had been rejected by the respondents through letter dated 31.3.07 without giving opportunity of hearing and further in respect of the policy in question bearing no. 501572940 under dispute, the proposal form was filled in up by the agent of the respondents and no information about the rules and regulations of the policy were made known to the deceased or to the complainant appellant at the time when the declaration form for second policy was filled in up by the deceased, therefore, the deceased as well as the complainant appellant being the wife was not aware of the rules and regulations and thus there was no mis-representation on their part. Hence repudiation of the claim by the respondents could not be justified and the District Forum had committed serious error and illegality in dismissing the claim of the complainant appellant. Hence, the impugned order cannot be sustained and this appeal deserves to be allowed.
4. On the other hand the learned counsel for the respondents has vehemently supported the impugned order of the District Forum.
5. We have heard the learned counsel appearing for the appellant as well as for the respondents and gone through the entire materials available on record.
6. There is no dispute on the point that earlier to the present 5 policy which was taken by the deceased on 26.3.06, two other policies bearing no. 500404671 and 501224986 were taken by the deceased on 28.4.98 and 28.1.05 respectively.
7. There is no dispute on the point that payment in respect of other two policies had been made by the respondents to the complainant appellant but claim in respect of the policy in question bearing no. 501572940 was repudiated by the respondents through letter dated 31.3.07 on the grounds mentioned therein.
8. There is no dispute on the point that a bare perusal of the proposal form in question reveals that in col.9 the answer could have not been shown to be given either in negative or by using the word " No"
but on the contrary col. 9 is blank and there is a line in horizantal form.
9. There is no dispute on the point that the deceased had died on 3.7.06 due to heart attack and within one year of issuance of the policy in question.
10. Thus, in the facts and circumstances just narrated above, the question for consideration is whether repudiation of claim of the complainant by the respondents was justified or not or whether findings of the District Forum regarding dismissal of the complaint could be sustained or not and further the question whether non-mentioning in col.9 of taking earlier policy could be treated in the present case as suppression of material facts on the part of the deceased or not.
On suppression of material facts 6
11. It may be stated here that 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 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.
12. The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. In this respect, the decision of the Hon'ble Supreme Court in LIC Vs. Smt. G.M.Channabasemma (1996 (III) CPJ 8 (SC) may be referred to where it was held that the burden of proving that the insured had made false representation and suppressed material facts is undoubtedly on the LIC of India. Furthermore, mere concealment of some facts will not amount to concealment of material facts and if there is fraudulent suppression of material facts in the proposal, the policy could be vitiated otherwise not.
13. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.
14. The Hon'ble National Commission in National Insurance Co. Ltd. Vs. Bipul Kunda (2005 CTJ 377 (CP) (NCDRC) ) has held that for repudiating a claim of an insured, it is for the insurer to show that a sttement on a fact, which was material for the policy, had been suppressed by the insured and that statement 7 was fraudulently made by him/her with the knowledge of the falsity of that statement.
15. It may further be stated here that even if the death takes place within two years, mis-representation, if any, that should be material in the sense of having some effect upon life expectation whether direct or indirect and if it is found material, that defence could be taken by the Insurance Company, not otherwise.
16. The word "misrepresentation" means suggestio falsi, in matter of substance essentially material to the subject, whether by acts or by words, by manoeuvres, or by positive assertions or material concealment (suppressio veri) whereby a person is misled and damnified.
17. The word "fraud" means a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter. In this respect, the decision of the Hon'ble Supreme Court in Ram Preeti Yadav Vs. UP Board of High School & Intermediate Education and ors. (JT 2003 (Supp.I) SC 25 ) may be referred to.
18.. It is well settled that misrepresentation itself amounts to fraud in some cases.
19. The word "misconduct" means an act or conduct in the nature of a breach of trust or an act resulting in loss to other party.
20. The word "suppression of fact" envisages a deliberate or conscious omission to state of fact with the intention of deriving 8 wrongful gain. In this respect, the decision of the Hon'ble Supreme Court in Collector of Customs Calcutta Vs. Tin Plate Co. of India Ltd. ( (1997) 10 SCC 538 ) may be referred to.
Insurance Company is State with in article 12 of Constitution of India
21. The Hon'ble Supreme Court in Biman Krishna Bose Vs. United India Insurance Co. Ltd. & ors. reported in III (2001) CPJ 10 (SC) had observed in the following manner-
(i) That the Insurance Companies are "State" within the meaning of Article 12 of the Constitution of India and they are expected to act fairly and reasonably.
(ii) That the Insurance Companies are required to satisfy the requirement of reasonableness and fairness while dealing with the customers. They must not take any irrelevant and extrneous considertion while arriving to a decision. Arbitratiness should not appear in their actions or decisions.
22. In this respect we may further add that agents of LIC are bound to disclose full information relevant and advantageous to the insured. The purpose of creating the Corporation is to serve the interest of consumers.
23. Further in insurance practice generally insurer's agent approaches proposers for insurance and gets the proposal form filled up and signed by them with a declaration that the answers are true and shall be the basis of the contract.
924. Apart from that where the declartion form is filled in up by the insured in presence of the agent and generally it is filled in up by the agent himself in presence of the insured and if some untrue answers are made in the proposal and insured signs it without the knowledge of the implications, in such a case insured could not be put at fault and the policy would be enforceable against the insurer.
25. Keeping in mind the above legal position, if the facts of the present case are examined in broad prospectived it clearly appears that the respondents LIC had failed to prove the fact of non-mentioning of taking earlier policy in col.no.9 of the present policy was with any ulterior motive or with any fraudulent intention or any misrepresentation on the part of the deceased or on the part of the complainant appellant. The present case is a case where the deceased had died because of heart attack and it was not a case of suppression of material fact on the part of the deceased regarding his health. Thus in such a case, it could not be said that the deceased was aware that he would die of heart attack in near future and,therefore,from that point of view also it could not be said that the deceased had knowingly and fraudulently had not mentioned in col.no.9 the fact of taking earlier policy. The death by heart which had taken place suddenly could not be visualized by any one in expectation or in advance.
26. Whether a fact is material or not has to be decided in the light of and in the content of cause of death. If the fact has bearing on the cause of death it would become material otherwise it could not be said to be material, otherwise it could not said to be immaterial. Mere incorrect or wrong answer to questions which ultimately do not have any bearing or connection with the death 10 of the insured would not absolve the Corporation from its liability under the policy. Therefore,even if the fact of taking earlier policy was not mentioned by the deceased in subsequent policy, judging it from the point of view of cause of death,it was not material and the Corporation cannot escape from its liability on the ground of suppression of material facts.
27. When onus in cases of fraudulent suppression of material facts rests heavily on the party alleging fraud,viz the insurer,therefore,that burden has to be discharged by the LIC and in the present case the respondents LIC had failed to discharge that burden and,therefore,the stand taken by the respondents LIC in repudiating the claim of the complainant appellant under the policy could not be accepted.
28. Thus,non-mentioning of the fact of taking earlier policy in the proposal form by the deceased would not amount to suppression or concealment of material fact or misstatement in real sense as in the present case because the answer of question in col. 9 was not given in negative or with the word 'No' but column 9 was erassed only with a line and thus in the above circumstances ,the respondents LIC were not justified in repudiating the claim of the complainant appellant on the ground of suppression of material facts and thus the District Forum was not right in dismissing the complaint of the complainant appellant.
Life Insurance Corporation is a social welfare institution
29. The Hon'ble Supreme Court in the case of Life Insurance Corportion of India Vs. Anuradha (II (2004) SLT 1065= III (2004) 11 CLT 5 (SC)= (2004) 10 SCC 131, has observed that the Life Insurance Corporation is a social welfare institution, more so when life insurance has been nationalised and the service is not available in the private sector. Thus it could be said that the institution of LIC has been established as a welfare measure and similarly the C.P.Act,1986 is also a benevolent welfare statute for the protection of consumers. Taking into that consideration also the repudiation of the claim of the complinant appellant by the respondents could not be justified.
30. Thus it is held that the present case was not a case of suppression of material facts on the part of the deceased or complainant appellant and,therefore, the respondents were not justified in repuditing the claim of the complainant appellant on ground of suppression of material facts regarding taking earlier policy and the District Forum was wrong in dismissing the complaint of the complainant appellant.
31. For the reasons stated above, it is held that the present case was not a case of deliberate suppression of material facts on the part of the deceased and the claim of the complainant appellant was wrongly repudiated by the respondents LIC on wrong assumption and in an arbitrary manner. Hence repudiation of the claim of the complainant appellant was not justified and it had amounted to deficiency in service on the part of the respondents LIC. Thus the findings of the District Forum dismissing the complaint of the complainant appellant are suffering from basic infirmity and illegality and are not based on correct appreciation of entire materials and evidence available on record and thus interference is called for with the findings recorded by the District Forum and appeal deserves to be allowed.
12Accordingly, the appeal filed by the complainant appellant is allowed and the impugned order passed by the District Forum,Hanumangarh dated 2.7.08 is quashed and set aside and the complaint filed by the complainant is allowed in the manner that the respondents LIC would pay a sum of Rs.1 lac an amount of insurance in respect of policy no. 501572940 to the complainant appellant alongwith interest at the rate of 9% p.a. from the date of filing of the complaint till the payment is made.
Member President