State Consumer Disputes Redressal Commission
Aviva Life Insurance Co.Ltd., And ... vs Banka Ramu S/O Nageshwar Rao on 22 July, 2013
BEFORE THE CIRCUIT BENCH A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT VIJAYAWADA KRISHNA DIST F.A.No.868 OF 2012 AGAINST C.C.No.130 OF 2011 DISTRICT FORUM-II VIJAYAWADA KRISHNA DISTRICT Between 1. Aviva Life Insurance Co.Ltd., rep. by its authorized person, Aviva Towers Sector Road, Opp to Golf course DLF Phase V Sector-43, Gurgaon-003 2. The Branch manager Aviva Life Insurance Co.Ltd., Shanti Plaza, Gayatri Nagar Vijayawada Appellants/ opposite parties A N D Banka Ramu S/o Nageshwar Rao Dr.No.7-4-4, Gollapalemgattu Vijayawada-1 Respondent/complainant Counsel for the Appellants M/s A.Naveen Kumar Counsel for the Respondent M/s G.A Padmanabha Rao QUORUM: SRI R.LAKSHMINARSIMHA RAO, HONBLE MEMBER
& SRI THOTA ASHOK KUMAR, HONBLE MEMBER MONDAY THE TWENTY SECOND DAY OF JULY TWO THOUSAND THIRTEEN Oral Order ( As per R.Lakshminarsimha Rao, Member) ***
1. The opposite parties are the appellants. The averments of the complaint are that the respondent took a policy bearing No.SCG2230417 from the appellant for a sum of `3,00,000/-. She paid first quarterly premium of `7,500/- on 12.11.2008 and next premium on 13.2.2009. Lakshmi Kantham the mother of the respondent died on 19.3.2009 due to heart attack. The respondent, who is the nominee under that policy had intimated to the appellant. The respondent had sent a letter dated 25.11.2009 to the appellant asking them to issue claim forms for settlement of policy. The respondent got notice issued on 24.2.2011 to the appellants.
2. The appellants resisted the case contending that they received the claim intimation on 12.8.2009 and life assured died on 19.3.2009. On the same day the appellants sent letter to the respondent asking him to provide requisite documents. The investigator submitted report along with medical record and doctors certificate to the appellant-insurance company. The investigation revealed that the life insured suffered from diabetes and hypertension for 2 years prior to his death and he was under treatment of Dr. Rajendra Babu. The life insured had suppressed the material facts while making proposal for policy. The appellants informed the respondent about repudiation of claim through letter dated 8.9.2009. The respondent had sent letter dated 1.2.2010 for verification of the policy. The appellants addressed letter to the respondent on 15.3.2010 informing that his representation was in process of submitting the claim before the claims review committee. The committee upheld its earlier decision confirming the repudiated the claim. .
3. The respondent filed his affidavit and the documents, Exs.A1 to A8. On behalf of the appellant insurance company, its Senior Manager Legal filed his affidavit and Exs.B1 to B9 .
4. The District Forum allowed the complaint on the premise that the investigator did not submit any medical record pertaining to the treatment undergone by the insured and the appellant has not filed the statement of the respondent that her husband suffered from diabetes and hypertension for two years prior to his death. The District Forum held that the appellant failed to prove that the insured had knowledge of the fact that she was suffering from diabetes and hypertension and that she had undergone treatment therefor.
5. Aggrieved by the order of the District Forum, the opposite party has filed appeal contending that the District Forum has decided the matter without following the law laid down by the Honble Supreme Court and National Commission. It is contended that the District Forum has not considered the statement of the respondent and the medical certificate issued by Dr.Rajendra Babu and that there has been no deficiency in service on the part of the appellant-insurance company. It is contended that insured suppressed material fact and misled the appellant about the risk covered and that the insured was a known case of diabetes and hypertension.
6. The point for consideration is whether repudiation of claim is not arbitrary?
7. The appellant issued insurance policy in favour of the respondents husband for a period of 10 years commencing from 14.11.2008. The insurance policy provides for risk coverage on the life of the insured for a sum of `3,00,000/-. The respondents husband submitted proposal for the purpose of taking insurance policy from the appellant-insurance company. The contention of the appellant is that the respondents husband concealed the fact that he was a diabetic and suffering from hypertension by the time he submitted the proposal. The relevant column in the proposal form and answer to the questions therein given by the respondents husband are as under:
Declaration of Good Health of the life to be insured (if applicable) a. Are you in good health? Yes b. Have you ever had a heart condition, a stroke, hypertension, paralysis, cancer, diabetes, kidney failure, liver failure, mental illness HIV infection or AIDS? No c. Do you currently have, or are you receiving treatment for any symptoms, medical conditions or disabilities? No d. Have you been absent from work due to illness or injury for a continuous period of more than 10 years during the last one year? No e. Are you currently pregnant? (If applicable for female life only) No
8. The appellant-insurance company repudiated the claim on the ground that the insured suppressed the fact that he was suffering from diabetes and hypertension two years prior to the date of proposal and as such the basis of repudiation is placed on the anvil of concealment of disease by the insured while submitting the proposal. The reason for repudiation as seen from the letter dated 8.09.2009 reads as follows:
As per the medical certificate from Dr.Rajendra Babu, procured by us during the course of claim valuation, the deceased life assured was suffering from Diabetes and hypertension since 2 years and was under his treatment. This fact in respect to pre-existing medical ailment was not disclosed in the proposal form In the proposal form dated November 12, 2008 the deceased life assured under the Declaration of Good Health of the life to be insured had answered No to specific question related in respect o medical condition.
a) Are you in Good Health?
b) Have you ever had a heart condition, a stroke, hypertension, paralysis, cancer, diabetes, kidney failure, liver failure, mental illness HIV infection or AIDS?
c) Do you currently have, or are you receiving treatment for any symptoms, medical conditions or disabilities?
This amounts to serious non-disclosure of material facts, which is a violation of the terms and conditions of the insurance policy.
Insurance being contract of uberimae fidae (utmost good faith), the Policy Holder is duty bound to reveal all relevant facts to the insurer in order for the insurer to determine the Policy Holders eligibility for availing the insurance.
Our liability as an insurer is subject to the terms and conditions of the policy of insurance, and under the terms and conditions of the Policy such non-disclosure gives us the right of avoiding the insurance. In the light fo the above, we regret to inform you that no claim is a admitted against the company and the policy shall be void and any benefits hereunder shall be forfeited.
9. The appellant, after receiving claim from the respondent appointed investigator to conduct enquiry of bonafides of the claim. The appellant instructed the investigator to conduct investigation as the authenticity of the event, exact cause of death, treatment record of the insured prior to the date of commencement of insurance policy, income and occupation details of the insured and other insurance policy details as also family background of the insured. The investigator submitted report to the effect the insured was suffering from diabetes and hypertension and he was medically treated by doctor Rajendra Babu.
10. The appellant addressed letter to the Medical Superintendent to issue copy of case history and investigation records of the insured which are purportedly required for evaluation of the claim. The investigator submitted report to the appellant stating that basing on statement of the respondent and medical certificate issued by Doctor Rajendra Babu, it could come to conclusion that the insured was diabetic and hypertensive two years prior to her death and thus, the appellant was requested to proceed with in accordance with the terms of the insurance policy.
11. Doctor Rajendra Babu issued medical certificate which has been made basis for repudiation of the claim to the effect the insured was under his treatment for diabetes and hypertension for a period of two years and she died due to cardiac failure at her residence on 19.03.2009. It is not disputed that Dr.Rajendra Babu is the family doctor of the respondent. The medical certificate issued by the doctor and diabetes and hypertension purportedly the insured suffered from and was treated therefor, are fortified by Bio-chemistry reports dated 20.02.2008, 21.02.2008, 26.06.2008 and 11.08.2008 issued by Gopi Laboratory and Excel laboratory respectively as also the prescription dated 02.02.2013 containing the values of blood glucose level of the insured and the finding of the doctor that it is under control, would establish that the insured was diabetic and hypertensive which she had not stated in reply to the questions in the proposal as to pre-existing disease and treatment therefor. The biochemistry reports of the insured and the value mentioned therein read as follows:
Fasting Blood Sugar - 140 Post Prandial Sugar - 198
12. Thus, it is clear that the insured concealed fact of diabetes and hypertension that she had knowledge of and undergone treatment which amounts to concealment of material fact and as such the benefits under the insurance policy cannot be directed to be paid to the respondent.
13. In Satwant Kaur Sandhu Vs. New India Assurance Company Limited [(2009) 8 SCC 316] the Honble Supreme Court considered material fact and its impact on the decision taken by the insurance company in issuing the insurance policy. Material fact is held to be all the material information furnished by the person submitting proposal guiding the insurance company to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of risk, to determine the rates, terms and conditions of a cover to be granted.
14. The Honble Supreme Court in P. C. Chacko Vs. Chairman, LIC of India reported in III (2008) CPJ 78 (SC) held :
The purpose for taking a policy of insurance is not, in our opinion, very material. It may serve the purpose of social security but then the same should not be obtained with a fraudulent act by the insured. Proposal can be repudiated if a fraudulent act is discovered. The proposer must show that his intention was bona fide. It must appear from the face of the record. In a case of this nature it was not necessary for the insurer to establish that the suppression was fraudulently made by the policy holder or that he must have been aware at the time of making the statement that the same was false or that the fact was suppressed which was material to disclose. A deliberate wrong answer which has a great bearing on the contract of insurance, if discovered may lead to the policy being vitiated in law.
15. The principle of Ubbermae fidae applicable to the insurance contracts was considered in United India Insurance Co.Ltd. v. Harchand Rai Chandan Lal (2004) 8 SCC 644), the Honble Supreme Court held that life insurance contracts are contracts uberrimae fides where observance of utmost good faith is enjoined on the parties to the contract, i.e. they must disclose all material facts in respect of the risk to be covered by the insurance.
16. This Commission find acceptable force in the contention of the appellant that had the insured disclosed at the time of submission of proposal that she was diabetic and hypertensive, the appellant would not have issued the insurance policy as the material fact had bearing on the risk and in case it decided to accept to cover risk it would be subject to other conditions such as higher rate of premium.
17. In view of the foregoing discussion, this Commission is of the view that there is no deficiency in service on the part of the appellant-insurance company in repudiation the claim and as such the order of the District Forum is held not sustainable and it liable to be set aside.
18. In the result, the appeal is allowed setting aside the order of the District Forum. Consequently, the complaint is dismissed. There shall be no separate order as to costs.
Sd/-
MEMBER Sd/-
MEMBER Dt. 22.07.2013 కె.ఎం.కె*