National Consumer Disputes Redressal
Deep Chand Sood & Ors. vs Life Insurance Corporation Of India & ... on 17 March, 2020
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 318 OF 2008 (Against the Order dated 17/06/2008 in Complaint No. 03/2005 of the State Commission Himachal Pradesh) 1. L.I.C. OF INDIA & ANR. Senior Divisional Manager, The Mall Shimla HIMACHAL PRADESH 2. L.I.C. OF INDIA Branch Manager, Branch Office, Palampur, Tehsil Palampur Kangra HIMACHAL PRADESH 3. THROUGH ASSISTANT SECRETARY Northern Zonal Office, Jeevan Bharti, Connaught Circus New Delhi DELHI ...........Appellant(s) Versus 1. DEEP CHAND SOOD & ORS. C/o. Sh. Onkar Chand Sood, U/8, Gurdwara Road, Ward No. 7, Palampur Kangra - 176 061 HIMACHAL PRADESH 2. MS. ISHANI SOOD C/o. Sh. Onkar Chand Sood, U/8, Gurdwara Road, Ward No. 7, Palampur Kangra - 176 061 HIMACHAL PRADESH 3. SHEETAL SOOD C/o. Sh. Onkar Chand Sood, U/8, Gurdwara Road, Ward No. 7, Palampur Kangra - 176 061 HIMACHAL PRADESH ...........Respondent(s) FIRST APPEAL NO. 53 OF 2009 (Against the Order dated 03/06/2008 in Complaint No. 3/2005 of the State Commission Himachal Pradesh) 1. DEEP CHAND SOOD & ORS. S/o Sh. Devi Prasad Sood,
R/o Friends Colony, Holta, Palampur, Tehsil Palampur Kangra Himachal Pradesh 2. MS. ISHANI SOOD (MINOR) D/o Sh. Devi Prasad Sood, Through Father-Cum-First-Cum-Natural Guardian, Sh. Deep Chand Sood, R/o Friends Colony, Holta, Palampur, Tehsil Palampur Kangra Himachal Pradesh 3. MS. SHEETAL SOOD (NOW MINOR) D/o Sh. Deep Chand Sood, R/o Friends Colony, Holta, Palampur, Tehsil Palampur Kangra Himachal Pradesh ...........Appellant(s) Versus 1. LIFE INSURANCE CORPORATION OF INDIA & ANR. Through its Senior Divisional Manager, The Mall Shimla Himachal Pradesh 2. THE BRANCH OFFICE Life Insurance Corporation Of India, Through its Branch Manager, Palampur, Tehsil Palampur Kangra Himachal Pradesh ...........Respondent(s) BEFORE: HON'BLE MR. JUSTICE V.K. JAIN,PRESIDING MEMBER For the Appellant : For the Complainants : Ms. Shomona Khanna, Advocate & Ms. Khushboo Prateek, Advocate For the Respondent : For L.I.C. : Mr. Ashok Kashyap, Advocate Dated : 17 Mar 2020 ORDER JUSTICE V.K. JAIN, PRESIDING MEMBER Late Smt. Rama Sood, who was employed as a Staff Nurse in a School obtained as many as 19 insurance policies from the petitioner LIC of India. The details of the said policies, as noted in the written version to the complaint and in the order of the State Commission were as follows:
Sl. No. Policy No. Table & Term Sum Assured Proposal Date Remarks Status at Death Last Premia paid on
1.
130403584 75-20 25,000 22.12.86 Revived on 30.9.03 In force 19.10.04
2. 130405172 75-20 10,000 28.12.87 Revived on 30.3.02 In force 19.10.04
3. 150100344 74-15 50,000 28.7.90 Revived on 30.9.03 In force 30.9.2003
4. 152336677 14-20 1,00,000 15.2.96 Not revived In force 28.04.05
5. 152372724 89-15 1,00,000 28.3.99 Not revived In force 28.04.05
6. 150798290 14-15 1,00,000 28.03.2K Revived on 19.10.04 & Repudiated In force 19.10.04
7. 152400755 14-14 2,00,000 28.03.02 Not revived In force 28.04.05
8. 151280124 14-16 1,00,000 28.10.02 Not revived Lapsed 31.10.02
9. 151321656 151-15 5,00,000 15.02.03 Not revived Lapsed 28.02.03
10. 151329959 159-11 2,00,000 22.10.03 Not revived Lapsed 17.11.03
11. 151329994 14-06 1,00,000 22.10.03 Not revived Lapsed 17.11.03
12. 151460678 102-33 5,00,000 07.12.03 Not revived Lapsed 08.12.03
13. 152429832 14-27 5,00,000 15.02.04 Repudiated In force 28.04.05
14. 152411383 149-27 3,00,000 28.02.04 10 Gaps Lapsed 28.04.05
15. 151612717 149-27 18,00,000 18.08.04 Repudiated In force 16.02.05
16. 152365382 14-06 50,000 28.03.97 Matured
17. 130405909 90-15 30,000 12.05.88 Matured
18. 150876629 90-15 1,00,000 28.11.00 Not revived
2. Late Smt. Rama Sood having died on 20.4.2005, claims for payment in terms of the aforesaid policies were preferred by the complainants, they being her legal representatives. The claim against the following eight policies stand duly paid:
Sl. No. Policy No. Date on which admitted Amount paid
1.
130405172 14.01.2001 12095.00
2. 130403584 14.1.2006 25404.00
3. 150100344 14.1.2006 87951.00
4. 130405909 28.6.2003 34818.00
5. 152365382 28.3.2003 66449.00
6. 152372724 13.7.2005 130306.00
7. 152336677 28.6.2005 123393.00
8. 152400755 28.6.2005 224203.00
3. It would also be seen from Chart-A that policies No. 151280124, 51321656, 51329959, 151329994, 151460678 and 152411383 had lapsed on account of the premium having not been paid. The policies having lapsed within less than two years, no claim for the aforesaid lapsed policies was payable. As far as policy No. 150876629 at Sl. No. 18 is concerned, there is no evidence of any premium having been paid after taking the policy and therefore, the aforesaid policy had also lapsed. It was informed by the learned counsel for the Corporation during the course of hearing that the aforesaid policy was taken under Marriage / Education Endowment Plan and the amount which was payable under the said policy, despite its having lapsed stand duly paid. Therefore, the dispute between the parties is confined to payment in terms of three insurance policies bearing No. 150798290, 152429832, 151612717.
4. The insurer repudiated the claim against policy No. 150798290, 152429832, 152411383, vide letters dated 06.1.2006, which to the extent they are relevant read as under:
"Reg: Death claim Policy No. 150798290 in the name of late Shri Bal Smt. Rama Sood Sum Assured Rs. 1,00,000-Plan & Term 14-15 (DAB) With reference to you claim under the above policy on the life of your deceased wife, we have to inform you that we have decided to repudiate all liability under the policy on account of the deceased having withheld material information regarding her health at the time of effecting the assurance with us.
In this connection we have to inform you in the DGH form dated 28.5.2002 signed by the deceased she had answered the following questions as under-noted:
2(b) Did you ever have any operation or injury? NO We may, however, state that this answer was false as we hold indisputable proof to show that she was got operated for ovarian cyst at Dr. Mangla Dogra's Nagpal Nursing Home 5/19 a Chandigarh and remained admitted there from 19.12.2002 to 22.12.2001. She did not however disclose this fact in her DGH form instead she gave false answers therein as stated above and revived policy fraudulently.
It is therefore evident that he had made deliberate misstatement and withheld material information from us regarding his health at the time of effecting the revival of the policy. We hereby repudiate the claim and accordingly we are not liable for any payment under the above policy and all moneys that have been paid in consequences thereof belong to us."
Reg: Death Claim Policy No. 152429832 in the name of late Smt. Rama Sood, sum Assured R.5,00,000/- Plan & Term 14-27 (DAB) With reference to your claim under the above policy on the life of your deceased wife we have to inform you that we have decided to repudiate all liability under the policy on account of the deceased having withheld material information regarding his health at the time of effecting the assurance with us.
In this connection we have to inform you that in the proposal for Assurance dated 28.1.2004 signed by the deceased, she had answered the following questions as under noted:
9. Please give detail of your previous insurance policy No. 151321656, 1304035847, 152365382, 152329994 11(b) Have you ever been admitted to any hospital or Nursing home for general check-up, observation, treatment or operation? NO
(c) Have you remained absent from place of work on grounds of health during the last five years? NO We may, however, state that all these answers were false as we hold indisputable proof to show that before she proposed for the above policy she remained absent from her duties from 18.12.2001 to 11.01.2002 (24 days) for operation ovarian cyst and remained admitted at Doctor Mangla Dogra's Nagpal Nursing Home, 5/19A Chandigarh from 19.12.2001 to 22.12.2001. At the time of proposal she was having insurance policies No. 130405172, 150100344, 152336677, 152372724, 150798290, 152400755, 151280124, 15139959 and 151460678 also in addition to the above mentioned four policies, she did not however disclose this fact in her proposal / personal statement instead she gave false answers therein as stated above and obtained insurance fraudulently.
It is therefore evident that he had made deliberate misstatement and withheld material information form us regarding his health at the time of effecting the assurance and in terms of the policy contract and the declaration contained in the forms of proposal for assurance we hereby repudiate the claim and accordingly we are not liable for any payment under the above policy and all moneys that have been paid in consequence thereof belong to us."
Reg. Death Claim Policy No. 151612717 in the name of late Smt. Rama Sood, sum Assured Rs.18,00,000/- Plan & Term 149-27 With reference to you claim under the above policy on the life of your deceased wife, we have to inform you that we have decided to repudiate all liability under the policy on account of the deceased having withheld material information regarding her health at the time of effecting the assurance with us.
In this connection we have to inform you that in the proposal for Assurance dated 16.8.2004 signed by the deceased, she had answered the following questions as under noted
9. Please give detail of your previous insurance policy no. 151329994, 151321656, 152365382, 130403584.
11(b) Have you ever been admitted to any hospital or Nursing home for general check-up, observations, treatment or operation? NO
(c) Have you remained absent from place of work on grounds of health during the last five years? NO We may, however, state that all these answers were false as we hold indisputable proof to show that before she proposed for the above policy she remained absent from her duties from 18.12.2001 to 11.01.2002 (24 days) for operation ovarian cyst and remained admitted at Doctor Mangla Dogra's Nagpal Nursing Home, 5/19A Chandigarh from 19.12.2001 to 22.12.2001. At the time of proposal she was having insurance policies no. 130405172, 150100344, 152336677, 152372724, 150798290, 152400755, 151280124, 151399959, 152429832 and 151460678 also in addition to the above mentioned four policies, she did not however disclose this fact in her proposal / personal statement. Instead she gave false answers therein as stated above and obtained insurance fraudulently.
It is therefore evident that he had made deliberate misstatement and withheld material information from us regarding his health at the time of effecting the assurance and in terms of the policy contract and the declaration contained in the forms of proposal for assurance. We hereby repudiate the claim and accordingly we are not liable for any payment under the above policy and all moneys that have been paid in consequence thereof belong to us."
5. The claim in terms of polices taken by late Smt. Rama Sood having not been paid, the complainants approached the concerned State Commission by way of a consumer complaint. The complaint was resisted by the Corporation primarily on the grounds on which the claim had been repudiated. Vide impugned order dated 03.6.2008, the State Commission directed the insurer to pay the sum insured in respect of the above referred three polices bearing No. 150798290, 152429832, 152411383. Regarding Policy No. 150876629, it was directed that on its maturity, the value along with other benefits like bonus etc., will be paid by the insurer and the complainants were not liable to pay premium thereof. Interest @ 6% per annum with effect from 01.11.2005 was also awarded to the complainants. Being aggrieved from the order passed by the State Commission, the Corporation is before this Commission by way of this appeal.
6. Policy No. 150798290 The proposal for taking this policy was signed by Smt. Rama Sood on 31.3.2000. Admittedly, this policy had lapsed and was later got revived by the deceased insured. A Declaration Of Good Health form dated 28.5.2002 was submitted by Smt. Rama Sood. Vide Question No. 2(b) contained in the said form she was asked as to whether she had undergone any operation or injury. The answer given by her was in negative, she having written 'No" while responding to the question. The Corporation has filed a certificate issued by Dr. Mangla Dogra, Formerly of PGI Chandigarh, whereby she has certified that Smt. Rama Sood was hospitalized from 19.12.2001 and was discharged on 22.12.2001, after LAVH c (with) BSO was done on 20.12.2001. It is also stated in the said certificate that the patient was having excess bleeding during past six months and was diagnosed to be having an Ovarian Cyst. The certificate also shows that as per her histopathology report the cyst was benign. The aforesaid certificate was duly proved by Dr. Mangla Dogra by way of her affidavit dated 16.2.2006 filed before the State Commission.
7. It would thus be seen that a false Declaration Of Good Health was made by Smt. Rama Sood while obtaining renewal of this policy, she having concealed material information that she had undergone a surgery at a hospital on 20.12.2001. It was submitted by the learned counsel for the complainant that the cyst removed during the surgery was found to be benign and not malignant and therefore, had no impact on the health of the insured. This to my mind would be irrelevant since a contract of insurance being based on utmost good faith she was required to disclose while submitting the declaration, that she had undergone a surgery for removal of a cyst on 20.12.2001 though, she could have also stated that the said cyst was found to be benign. It would then have been for the Corporation to decide whether considering her past surgery, the policy could be revived or not.
8. Coming to Policy No. 152429832, in the proposal form submitted by the insured on 28.1.2004 much after she had undergone a surgery for removal of a cyst, she was required to disclose against question No. 11(b) whether she had been admitted to any hospital or nursing home for general checkup, observation, treatment or operation The answer given by her was in negative. Thus, she concealed the surgery which had been performed much earlier on 20.12.2001.
In response to question 9(c) she was required to disclose whether she had remained absent from her place of work on grounds of health during the last five years. The answer given by her was in negative. However, the evidence produced before the State Commission shows that she was absent from her duty for as many as twenty days from 18.12.2001 to 11.1.2002 and had admitted in Dr. Mangla Dogra's Nagpal Nursing Home from 19.12.2001 to 22.12.2001. Thus she also concealed the fact of having taken leave on medical grounds. Obviously this was done in order to conceal the surgery which she had undergone on 20.12.2001.
9. Coming to policy No. 151612717, in the proposal form dated 16.8.2004 submitted by her the deceased insured while replying to question No. 11(b) and 11(c) concealed that she had been admitted in Dr. Mangla Dogra's Nagpal Nursing Home for removal of cyst and that she had remain absent on ground of health from 18.12.2001 to 11.1.2002.
In reply to question 9 she was also required to disclose the previous insurance policies. She disclosed four insurance policies but did not disclose policies number 130405172, 150100344, 152336677, 152372724, 150798290, 152400755, 151280124, 151399959, 152429832 and 151460678.
10. I may also note here that as per the health record of deceased Smt. Rama Sood produced by the Medical Officer, CSK H.P., Krishi Vishwa Vidalaya, Palampur, where the deceased was employed as a Nurse, she was suffering from Myalgia for four days from 16.8.1999 to 19.8.1999, from Gastro-enteritis for five days from 26.3.2001 to 30.3.2001 from Osteo-arthritis for ten days from 16.4.2001 to 25.4.2001, from Myalgia from 16.1.2002 to 19.1.2002. From 13.9.2004 to 15.9.2004, she was suffering from acute acid peptic disease. She had also taken leave due to her operation from 18.12.2001 to 11.01.2002.
11. It is thus evident that the deceased had conceded material fact with respect to she having undergone surgery on 20.12.2001, she having taken frequent leave on medical grounds in last five years before submission of the proposals and in one proposal she had also concealed several other insurance policies, which she had already taken. It was her boundant duty to disclose truthfully, honestly and clearly the entire information sought by the insurer in the proposal form since it is based upon the information provided in the proposal form that the insurer decides whether to accept the proposal or not. The same would be the position when a good health declaration is submitted for obtaining the renewal of a lapsed policy.
12. In LIC of India Vs. Manish Gupta - Civil Apeal No.3944 of 2019, decided on 15.04.2019, the proposal form required a disclosure as to whether the proposer had suffered from Cardiovascular disease, he responded in negative to the said question. The complainant underwent a surgery, submitted a claim which was repudiated on the ground that she was suffering from a pre-existing illness. Upholding the repudiation of the claim, the Hon'ble Supreme Court interalia held as under:-
"Moreover, non-disclosure of any health event is specifically set out as a ground for excluding the liability of the insurer."
"A contract of insurance involves utmost good faith. In Satwant Kaur Sandhu Vs. New India Assurance Company Ltd., this Court has held thus:
"...Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment."
..........The documentary material indicates that there was a clear failure on the part of the respondent to disclose that he had suffered from rheumatic heart disease since childhood. The ground for repudiation was in terms of the exclusions contained in the policy. The failure of the insured to disclose the past history of cardiovascular disease was a valid ground for repudiation."
13. In Reliance Life Insurance Co. Ltd. & Anr. Vs. Rekhaben Nareshbhai Rathod - Civil Appeal No.4261 of 2019, decided on 24.4.2019, the Hon'ble Supreme Court interalia observed as under:-
"26. ..............It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.
The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) "there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurane". Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.
29. We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form. .............."
14. The deceased insured being an educated person and a Nurse by profession cannot even claim that the proposal form was submitted by her without going through its contents, though even such a defence is otherwise not legally sustainable.
15. For the reasons stated hereinabove, the impugned order cannot be sustained and the same is accordingly set aside. The consumer complaint is consequently dismissed, with no order as to costs.
Both FA/318/2008 stands allowed, whereas FA/53/2009 stands dismissed in terms of this order.
......................J V.K. JAIN PRESIDING MEMBER