State Consumer Disputes Redressal Commission
Lic Of India The Nilgiris vs Smt.V.P. Salu The Nilgiris District on 27 September, 2010
BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI Present Hon'ble Thiru Justice M. THANIKACHALAM PRESIDENT Tmt.Vasugi Ramanan, M.A., B.L., MEMBER I Thiru.S.Sambandam, B.Sc., MEMBER II F.A.NO.514/2006 [Against order in C.C.No.5/2003 on the file of the DCDRF, Udhagamandalam] DATED THIS THE 27th DAY OF SEPTEMBER 2010 The Branch Manager, | LIC of India, | Appellant/First O.P. State Bank Road, Ootacamund, | The Nilgiris. | Vs. 1.
Smt.V.P. Salu, | W/o. Late O.M. George, | |
2. Minor Jerin George, | R1 to 3/Complainants S/o. Late O.M.George, | |
3. Minor Evalen George, | D/o. late O.M.George, | | All residing at: D.No.225/B2, | George Home, Kandal Bennet Market, | Ooty, The Nilgiris District. |
4. Smt. Malliga Sivalingam, |R4 / Second O.P. W/o. Sivalingam, |(Complaint dismissed) LIC Agent, Type II, No.10, HPF Quarters, | Indunagar and Post, Udhagamandalam, | The Nilgiris. | The R1 to 3 as complainants filed a complaint before the District Forum against the opposite parties praying for the direction to the opposite parties to settle the claim of the insurance policy for a sum of Rs.1 lakh together with interest at the rate of 18% per annum from the date of death of the said O.M. George till realization, to pay Rs.1 lakh as damages for causing mental agony, anguish and sufferings to the complainant due to the deficiency of service and unfair trade practice of the opposite parties with cost. The District Forum allowed the complaint, against the said order, this appeal is preferred praying to set aside the order of the District Forum dt.25.01.2006 in C.C.5/2003.
This appeal coming before us for hearing finally on 13.09.2010, upon hearing the arguments of the counsels on eitherside, this commission made the following order:
Counsel for the Appellant /1st O.P. : M/s.Manoj Sreevatsan, Advocate.
Counsel for the Respondents/Complainants : Mr.K.Govi Ganesan, Advocate.
M. THANIKACHALAM J, PRESIDENT
1. The first opposite party is the appellant.
2. The facts leading to this appeal in brief:-
The husband of the first complainant and father of the complainant 2 and 3 by name O.M.George, had taken an insurance policy called Bima Kiran, with the first opposite party through the second opposite party-the agent of the first opposite party. At the time of taking the policy, the second opposite party obtained signature in blank proposal assurance form, after taking the required particulars from Mr.O.M.George, which he knew fully well that O.M.George had availed the employment under physically handicapped quota, due to polio attack on leg. The policy under which a sum assured was Rs.1 lakh accepted and confirmed by the first opposite party under which they are liable to pay the amount to the life assured.
3. The policy holder, who was paying the premium regularly, died on 4.11.99, for which, a claim was lodged, repudiated by the first opposite party, as if, the assured had suppressed the material facts. The complainants (as said in Para 5, not O.M.George), never withheld any material information regarding deformity of the policy holder, at the time of taking insurance with the first opposite party. Further, more than two years had lapsed and the insurance company is not entitled to challenge the information furnished by the policy holder, in the proposal form. However, unreasonably and unjustifiably, the first opposite party repudiated the claim, failed to rectify the same despite notice, thereby, caused deficiency in service, for which, they should be directed to pay not only the sum assured under policy with interest, but also a sum of Rs.1 lakh, as damages for causing mental agony and deficiency in service.
4. The first opposite party in its elaborate and detailed counter statement, denying each and every allegations adverse to them, opposed the claim of the complainants, contending that the Forum is not competent to adjudicate the dispute involved in this matter, that Bima Kiran policy being a high risk policy, which gives several benefits, based upon information given by the proposer without medical tests, policy was given, that though the assured had infirmity wantonly suppressed the same, thereby, availed the extented benefit, which is inbuilt, for which, no separate premium is collected, that as per the special Clauses if a handicapped person had taken this kind of high risk plan policy, who is coming under Group-A, even has to pay extra premium of Rs.2/- per thousand sum assured, which is not the case here, that because of the suppression of the material facts, namely the assured was physically handicapped and not disclosing the essential matter, had taken the policy fraudulently, which is void and on that basis alone, after investigation, the claim was repudiated, which cannot be described as deficiency in service, thereby, praying for the dismissal of the compliant.
5. The second opposite party denying the averments including the alleged signature obtained in the blank forms, challenging the other averments, stating that he has not committed any deficiency in service, prayed for the dismissal of the complaint.
6. The District Forum in its elaborate order, running to 23 pages, discussing unnecessary issues, has come to the conclusion, that the second opposite party should have obtained the signature of the assured in Ex.B1, whereas, the insured has not suppressed the fact that he was physically handicapped, that if at all the suppression must be by the second opposite party, for which, the first opposite party should be held responsible. Further, it is the conclusion of the District Forum, that Section 45 of the Insurance Act also comes to the aid of the claimants and in that case the first opposite party is not entitled to challenge the proposal at this distance of time. Thus concluding, the non-payment of the amount under the policy, should be construed as deficiency in service, has granted an order dated 25.1.2006, directing the first opposite party alone, to pay the insurance claim of Rs.1 lakh with interest thereon at 12% per annum, along with a compensation of Rs.5,000/-
which is challenged in this appeal.
7. Heard, the learned counsel appearing for either side, perused the documents, written submissions as well as the order of the District Forum.
8. The main submission of the learned counsel for the appellant was, that the insured namely O.M.George, had suppressed the material facts, which are relevant for the issuance of the Bima Kiran high risk policy, wantonly thereby making the policy itself as void by offending the good faith, which is the basis for this kind of policy, on which ground alone, repudiation was made, which cannot be branded as deficiency in service, as did by the District Forum.
It is the further submission of the learned counsel for the appellant, that Section 45 of the Insurance Act will not come to the aid of the complainants, since the later part of the Section was made out unquestionably by the first opposite party, which was also not considered properly by the District Forum, resulting erroneous view, followed by funity direction, which should be rectified, opposed by the other side.
9. As seen from Ex.B3, the husband of the first complainant by name O.M.George, had taken a Bima Kiran policy [without profits] on the basis of the proposal dated 27.9.95 [Ex.B1] for the sum assured Rs.1 lakh, with free insurance cover for Rs.40,000/-. The date of maturity of the policy is 28.10.2019.
Unfortunately, the person assured under Ex.B3, expired on 4.11.99, leaving the complainants, as his LRs as well as his wife namely the first complainant as nominee. Based upon the policy, when the LRs have lodged a claim, not only on the basis of Ex.B3, but also on the basis of other policies, which are not the subject matter of this case, as seen from Ex.B4, it seems, the first opposite party honoured the other policies, repudiating this policy alone, taking the view, that he had suppressed the material fact, which are so essential, thereby, he himself made the contract void. This is branded as deficiency, resulting this complaint, before the Consumer Forum, ending in favour of the complainant, giving follow up action of this appeal.
10. Admittedly, the proposal has been given on 27.9.2005 and the policy was issued with effect from the same date. The person assured died on 4.11.99, that is after two years. Even as pleaded in the complaint, O.M.George was physically handicapped person, due to polio attack on leg. As seen from Ex.B11, his deformity is described as "Physically handicapped". Thus, we would say that it is not only established fact but also an admitted fact, that person assured under Ex.B3 was a handicapped. But, as seen from Ex.B1 while submitting the proposal for the query "Due you have any bodily defect or deformity, the answer given was "NO". Therefore, it is evident that the person whose life was assured, under policy, had suppressed the material facts, namely regarding his admitted disability. Only based upon this proposal, without medical examination, a beneficial high risk policy was issued to him, conferring many benefits. As submitted before us, if assured has disclosed the deformity, they would not have accepted the policy, since for this kind of handicapped person, this policy is not extended, inviting our attention to Ex.B13 also. As seen from Ex.B13, if a person wanted to come under this policy, having handicapped with loss of one limp only under Group-A, they have to pay extra premium, thereby showing, if a handicapped person was having deformity on all the four limps, certainly he is not entitled to have the Bima Kiran Policy. Because of the suppression of the material fact alone, this kind of policy was issued, for which, the assured alone should be held ordinarily responsible.
11. An attempt was made on behalf of the complainants, to say that under Section 45 of the Insurance Act, the policy cannot be called in question on the ground of misstatement after two years, since in this case, more than two years had lapsed. As seen from Section 45, it is not the blanket protection given to the policy holder, whereas it is subjected to certain conditions, and that conditions should be satisfied by the insurer namely the first opposite party, that is they should prove that the material matter or suppressed fact was material to disclose, that it was fraudulently made by the policy holder, that the policy holder knew at the time of making the statement, that the statement was false or that it suppressed the fact, which it was material to disclose. For Bima Kiran Policy, generally handicapped person are not preferred. If the handicapped person in the proposal had disclosed, the first opposite party might have rejected the policy and in this view, it is material to disclose. In the proposal, since it is said under authority of the policy holder having signed that he is not suffering from any deformity, the fact being that he was suffering from deformity, it should be held that knowing fully well, that the statement, given by him is false, he had made the false statement unless it is otherwise proved. Thus, insurer have satisfied the conditions available under Section 45 of the Insurance Act, to challenge the misstatement in the proposal though it is after two years and in this view, Section 45 cannot be a bar.
12. The complainant anticipating this kind of defence, very cleverly we would say so, considering the fact and circumstances of the case, pleaded in Para 3 of the complaint that the second opposite party had obtained the signature of O.M.George, in blank proposal assurance form, after taking the required particulars. The complainants are not parties to the proposal, and they are also not the witnesses also. It is also not the case of the complainant, that O.M.George had disclosed this fact to them while he was alive. In Para 5, it is said, that the complainants never withheld any material information regarding the alleged deformity of the policy holder, at the time of effecting the assurance with the first opposite party.
When the complainants are not the parties to the proposal, this question will not arise for consideration. The second opposite party had also denied, taking blank signature in the proposal form.
Therefore, the averments, that the second opposite party had obtained the signature of the policy holder, in the blank form, remains dead letters, without any supportive evidence. But, the District Forum, based upon surmise and conjecture, as if, taking the signature in blank form alone is the unwritten rule, came to the conclusion, that this kind of practice should have happened in this case, in which finding, we are unable to concur. True, the agent of the first opposite party, namely the second opposite party while enquiring the policy holder, on seeing him also, should have known about the known physical deformity. But unfortunately, for the query regarding the deformity, answer is written as "NO", for which, we cannot find fault with the second opposite party alone, in view of the fact that the policy holder was a educated person, employed in Hindustan Photo Film, obtaining a job under the handicapped quota. He should have desisted from signing in the blank form or if the answers were incorrectly written. In this view, it should be held, that the suppression of the admitted deformity of the policy holder, he should be held responsible not as held by the District Forum. We are unable to fix the responsibility, upon the second opposite party alone. As submitted before us, for the mischief done by the second opposite party, action was taken against the second opposite party.
In this case, for the reasons recorded by us supra, we conclude that there has been suppression of material facts, which was within the exclusive knowledge of the policy holder, which is essential also for this kind of policy. When there is no evidence acceptable in nature, the information furnished in the proposal, cannot be taken, as if, furnished by the second opposite party, as recorded by the District Forum. Further, the finding of the District Forum that the suppression was made by the second opposite party is also not supported by any acceptable material. It is not in dispute before us that the deformity is a material fact, to be disclosed, which is admittedly not disclosed in the proposal, for which, the policy holder should be held responsible, being the signatory. The first opposite party considering all these facts, as well the nature of the policy, giving maximum benefit with less premium, has justifiably repudiated the claim, on the ground of suppression of material facts, which cannot be described, as deficiency in service, resulting a grant. Hence, the appeal is meritorious, to be accepted.
13. However considering the deformity of the policy holder, as well as the plight of the complainants when this Commission suggested for awarding exgratia of payment, accepting the same, Memo was filed, agreeing to pay a sum of Rs.10,000/- as exgratia, which should be ordered in this case, setting aside the order of the District Forum.
14. In the result, the appeal is allowed, the order of the District Forum is set aside and the complaint is dismissed. However, the first opposite party is directed to pay a sum of Rs.10,000/- as exgratia payment [as agreed] within two months from this date. There will be no order as to cost throughout.
S. SAMBANDAM VASUGI RAMANAN M.THANIKACHALAM MEMBER II MEMBER I PRESIDENT INDEX : YES / NO Ns/mtj/insurance/fm