State Consumer Disputes Redressal Commission
Smt Vodnala Raju W/O Late Yellaiah vs The Life Insurance Corporation Of India on 3 December, 2013
BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD F.A.No.571 OF 2009 AGAINST C.C.NO. 70 OF 2008 DISTRICT FORUM ADILABAD Between: Smt Vodnala Raju W/o late Yellaiah age 60 years, Occ: Household R/o H.No.3-80, Seetharampally Village Mancherial Mandal, Adilabad District Appellant/complainant A N D The Life Insurance Corporation of India Near RTC Bus Stand, Branch Macherial Adilabad District Respondent/opposite party Counsel for the Appellant M/s N.Vijay Counsel for the Respondent M/s Karra Srinivas QUORUM: SRI R.LAKSHMINARASIMHA RAO, HONBLE I/C PRESIDENT SRI THOTA ASHOK KUMAR, HONBLE MEMBER
& SRI S.BHUJANGA RAO, HONBLE MEMBER TUESDAY THE THIRD DAY OF DECEMBER TWO THOUSAND THIRTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble I/c President) ***
1. The unsuccessful complainant is the appellant. She has filed the appeal challenging the reasonableness of the order passed by the District Forum in C.C.No.70 of 2008.
VERSION OF THE APPELLANT
2. The appellants son, Vodnala Srinivas during her life time obtained life insurance policy bearing No. 684571942 from the respondent-insurance corporation for sum assured of `5,00,000/- for a period of 14 years with the commencement of the policy on 28.03.2007 and the maturity date 28.03.2022.The terms of the insurance policy provide for payment of sum assured and bonus etc., The appellants son died on 15.07.2007 leaving behind him the appellant who is also the nominee for the purpose of the sum assured under the insurance policy. After the death of her son, the appellant submitted claim and as the respondent-corporation has not settled the claim, the appellant got issued notice on 7.04.2004 which also failed to draw response from the respondent-insurance corporation.
VERSION OF THE RESPONDENT
3. The issuance of the policy in favour of the appellants son, the terms and conditions incorporated in the policy and the sum assured etc, are admitted. The death of the insured occurred within one year from the date of commencement of the policy. As it is a early claim, investigation was caused into the bonafides of the claim. It was revealed by the investigation that the insured while taking the insurance policy suppressed that he was suffering from cancer. He was treated as in-patient in Sai Orthopedic Clinic, Manchirial from 14.06.2004 till 21.06.2004. The appellants son answered in negative to the questionnaire in the proposal by suppressing the fact relating to his earlier treatment for cancer prior to the date of proposal. The decision on the claim has been pending for want of further investigation.
EVIDENCE ON RECORD
4. In support of her claim, the appellant had filed her affidavit and the documents, ExA1 to A7. On behalf of the Insurance Corporation, its Administrative Officer had filed his affidavit and got marked ExB1 to B5.
FINDINGS OF THE DISTRICT FORUM
5. The deceased was suffering of cancer prior to taking the insurance policy. The insured suppressed in the proposal form of his health condition and treatment he had undergone in the hospital.
GROUNDS OF APPEAL
6. Feeling aggrieved by the order of the District Forum, the complainant filed the appeal contending that respondent corporation committed material irregularity and illegality in repudiating the claim; At the time of submitting the proposal, the insured was hale and healthy; He did not undergo any treatment in Sai Orthopedic Hospital from 14.06.2004 till 21.06.2004 for any disease or for treatment of soft tissues and swelling at glutal region.
7. It is contended that the District Forum failed to see that the affidavit of the doctor of Sai Hospital filed by the respondent is not supported by case sheet or any other material in proof of admission of the deceased in the nursing home and the alleged treatment. It is contended that the appellant filed Memo before the District Forum disputing the statement of the doctor and required the doctor to face cross examination and the doctor had not turned up to give evidence.
8. It is contended that the District Forum had taken different view in C.C.No. 64 of 2008 which was filed in respect of the claim pertaining to the life insurance policy issued by the same respondent and the same insured and the District Forum allowed the consumer complaint and directed the respondent to pay the claim amount to the appellant.
9. The learned counsel for the appellant has filed written arguments.
10. THE POINTS FOR CONSIDERATION
i) Whether the insured was suffering from carcinoma at the time of submitting the proposal?
ii) Whether the insured had knowledge of suffering from carcinoma at the time of or prior to obtaining the insurance policy?
iii) Whether the respondent had committed deficiency in service in repudiating the claim of the appellant?
iv) To what relief?
APPERICIATION OF THE EVIDENCE
11. POINTS NO.1 TO 3: The appeal was dismissed for non-prosecution on 13.07.2011 and against the order of the dismissal of the appeal the appellant has filed revision, R.P.No. 661 of 2013 which was allowed by the Honble National Commission and the appeal is remitted back to this Commission.
12. The discussion under one point is intrinsically interrelated to the discussion under the other points. As such they have been taken up simultaneously for discussion as it would answer all the points without being suffered from the rigmarole repetition of appreciation of the same facts. The appellants son submitted proposal to the respondent life insurance corporation on 28.03.2008 for the purpose of obtaining life insurance policy. The answers given to the questions particularly the answer to the clause no.11 of the proposal is made the basis for repudiation of the claim by the respondent corporation.
13. The learned counsel for the appellant has submitted that the appellants son obtained another life insurance policy bearing number 684571942 from the respondent-corporation for a sum of `2,00,000/- and as the claim was not settled, the appellant had filed CC.No. 64 of 2008 and the respondent-insurance corporation has subscribed to identical defence in both the cases that the insured was suffering from cancer and he had undergone treatment at Sai Orthopedic Clinic on 14.06.2004 and on the complaint being allowed, the respondent paid the amount to the appellant and in the present case the District Forum had partly allowed the claim.
14. The learned counsel for the respondent-corporation has contended that the claim in CC No. 64 of 2008 arose two years after the insurance policy was issued and as such the respondent had complied with the order of the District Forum. The learned counsel for the appellant has contended that the defence of the respondent in both the cases has to be considered as the respondent had resisted the claim on the same line of defence as it resorted to in the instant case. This Commission finds substance in the contention of the counsel for the appellant as the respondent-corporation had not settled both the claims on the same premise that the insured was suffering from cancer prior to submission of the proposal.
15. The learned counsel for the appellant has contended that since the order in CC.No. 64 of 2008 has become final, the respondent is barred under the principle of resjudicata and estoppel as that complaint was decided taking into consideration of same and identical pleadings and evidence. The learned counsel has placed reliance on the decision of the Honble Supreme Court in Hope Plantations Ltd vs Taluk Land Board, Peermade and another (1999) 5 SCC 590 and Bhanukumar Jain vs Archana Kumar and another (2005)1 SCC 787.
16. In Hope Plantations Ltd (supra) , the Honble Supreme Court considered the distinction between the doctrines of resjudicata and estoppel. The facts of the case are that south India Tea Estate Company Ltd filed return/statement surrendering 267.16 acres as falling in the category of excess of ceiling area under the provisions of The Kerala Land Reforms (Ceiling) Ruels,1970 before the Land Board and claimed exemption under four heads,1. Tea plantation, 2. Roads and Buildings, 3. Area for the Fuel Trees and 4,Other Agricultural lands interspersed. The Tauluk Land Board disallowed the claim for exemption as fuel area and rested tea area and the Kerala High Court allowed the revision preferred by the claimant restoring the claims made for fuel area and rested tea area and remanded the matter to Taluk Board for redetermination of ceiling area under the heads, Roads and Buildings and Other Agricultural Lands Interspersed .
17. On appeal against the order of the High Court preferred by the State of Kerala, the Supreme Court restored the order of the Taluk Land Board. On remand, the Taluk Land Board decided the matter in favour of the claimant. On revision, the High Court had set aside the order as regards fuel area and rested tea area and directed the Taluk Land Board to re-determine the question afresh The Taluk Land Board preferred appeal against the judgment of the High Court. As such the matter reached the Supreme Court which had considered the matter as hit by the principles of estoppel. The Supreme Court distinguished resjudicata from estoppel as under:
It is settled law that principles of estoppel and res judicata are based on public policy and justice. Doctrine of res judicata is often treated as a branch of the law of estoppel though these two doctrines differ in some essential particulars. rule of res judicata prevents the parties to a judicial determination from litigating the same question over again even though the determination may even he demonstratedly wrong. When the proceedings have attained finality, parties are bound by the judgment and are estopped from questioning it. They cannot litigate again on the same cause of action nor can they litigate any issue which was necessary for decision in the earlier litigation. These two aspects are 'cause of action estoppel' and 'issue estoppel'. These two terms are of common law origin.
18. The cause of action estoppel and issue estoppel again are distinguished holding:
Again once an issue has been finally determined, parties cannot subsequently in the same suit advance arguments or adduce further evidence directed to showing that issue was wrongly determined. their only remedy is to approach the higher forum if available. the determination of the issue between the parties gives rise to as noted above, an issue estoppel. It operates in any subsequent proceedings in the same suit in which the issue had been determined. It also operated in subsequent suits between the same parties in which the same issue arises. Section 11 of the Code of Civil Procedure contains provisions of res judicata but these are not exhaustive of the general doctrine of res judicata. Legal principles of estoppel and res judicata are equally applicable in proceedings before administrative authorities as they are based on public policy and justice.
In Arnalds & Ors. vs. National Westminster Bank Plc. [(1991) 2 AC 93] House of Lords noticed the distinction between cause of action estoppel and issue estoppel. Cause of action estoppel arises where the cause of action in the later proceedings, the latter havig been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. The discovery of new factual matter which could not have been found out by reasonable diligence for use in the earlier proceedings does not according to tthe law of England, prevent the latter to be re-opened. Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of actin to which the same issue is relevant one of the parties seeks to re-open that issue.
19. In Bhanukumar Jain (supra) the difference between issue estoppel and resjudicata was considered holding that the court is prohibited by the principle of resjudicata while the issue estoppel restrains the party is applied against the party as under:
There is a distinction between 'issue estoppel' and 'res judicata' [See Thoday vs. Thoday 1964 (1) All. ER 341] Res judicata debars a court from exercising its jurisdiction to determine the lis if it has attained finality between the parties whereas the doctrine issue estoppel is invoked against the party. If such an issue is decided against him, he would be estopped from raising the same in the latter proceeding. The doctrine of res-judicata creates a different kind of estoppel viz Estopper By Accord.
In a case of this nature, however, the doctrine of 'issue estoppel' as also 'cause of action estoppel' may arise. In Thoday (supra) Lord Diplock held :
""cause of action estoppel" is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, i.e., judgment was given on it, it is said to be merged in the judgment.If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam."
The said dicta was followed in Barber vs. Staffordshire Country Council, (1996) 2 All ER 748. A cause of action estoppel arises where in two different proceedings identical issues are raised, in which event, the latter proceedings between the same parties shall be dealt with similarly as was done in the previous proceedings. In such an event the bar is absolute in relation to all points decided save and except allegation of fraud and collusion.
20. The learned counsel for the appellant has contended that the order in C.C.No. 64 of 2008 and C.C.No. 70 of 2008 was delivered on the basis of same evidence and pleadings on the same day, i.e., 30.05.2009. He has submitted that the respondent-corporation did not challenge the order passed in C.C.No. 64 of 2008 and complied with the order and the respondent on the issue is bound by the same findings on the principles of resjudicata and estoppel. Further, he has relied upon the decision of the High Court in Konduru Meera Saheb And Anr. vs Polinati Bheemayya And Ors. 2004 (4) ALD 855 where the parties and the subject matter was one and the same and the judgment challenged was a common judgment. The High Court referred to its earlier decisions as under:
14. Admittedly, no second appeals were preferred challenging the common judgment and decrees insofar as the first appeals in AS Nos. 263 of 1989 and 269 of 1989 are concerned, in such circumstances, a Division Bench of this Court (to which DSRV, J is a party) in Tengella Sesham Raju v. APSRTC, (DB), following the judgment of this Court in K. Krishnan v. Tirumala Tirupati Devasthanams, , and also the judgment of the Supreme Court in Sheodan Singh v. Daryao Kunwar, observed as under :
"The test of res judicata has to be applied, as observed by the Division Bench, in order to see that no two inconsistent decrees should come from an incidental issue. In the case on hand, the findings in OS No. 156 of 1988 granting permanent injunction has become final, since no appeal is filed. But, the Corporation for the reasons best known to it filed appeals against other suits and it succeeded in the first appeals. This shows for the same cause of action, the plaintiff in OS No. 156 of 1988 is enjoying permanent injunction and the allottees - plaintiffs in other suits are forced to pay damages. We are of the further view that by virtue of the judgment of the learned Single Judge, in the batch of the appeals filed by the Corporation, the common judgment and decree of the Trial Court was reversed and in some other cases in which no appeals are preferred by the Corporation, the common judgment of the Trial Court had become final, leading thereby to divergent decrees and judgment. This is an incomprehensible situation and to avoid the same, principle of res judicata has to be applied and on this score the impugned judgment of the learned Single Judge is liable to be set aside."
21. The matter in controversy was considered elaborately in its earlier decision by the High Court which was referred to as follows:
15. Now, it is relevant to note the observations of a Division Bench of this Court in K. Krishnaiah's case (supra), following the judgment of the Supreme Court in Venkateswara Prabhu v. Krishna Prabhu, , which are as under:
"What was the "matter in controversy" in both the suits in question ? Undoubtedly, the controversy pertained to the nature of the suit land. The finding given is that it is an inam land granted by devadayam purpose to Kurathalwar Temple and that Appellants 2 to 5 herein are encroachers. Appellant No. 1 had no title and no evidence, whatever was brought on record by him to establish the title of his ancestors. Issue No. 3 in OS No. 4 of 1987 whether the plaintiff-Tirumala Tirupati Devasthanams is entitled to injunction as prayed for an issue Nos. 1 and 2 in OS No. 4 of 1987 - (i) whether the plaintiffs are entitled to perpetual injunction and (ii) whether the plaintiffs are entitled to a mandatory injunction as prayed for -practically cover the same ground. If this appeal is to be heard and decided on merits, there is likelihood of inconsistent decrees coming into existence since the very source of the title in both the suits as put forward by the appellants herein is identical and such a situation is precluded by the principle of res judicata. As observed by the Supreme Court, "one of the tests for deciding whether the doctrine of res judicata applies to a particular case or not is to determine whether two inconsistent decrees will come into existence if it is not applied". (Emphasis is ours)
22. We have no hesitation to hold application of ratio laid in the aforementioned decisions as the respondent corporation pleaded the same fact of the insured suffering from cancer and undergoing treatment therefor in Omsai Hospital as also suppressing the fact of suffering disease and treatment in the proposal form. The position would have been different had the respondent-insurance corporation had expressed its readiness to note the expressed its readiness to settle the claim on application of Section 45 of the Insurance Act in C.C.No. 64 of 2008.
23. Even otherwise, the evidence on record would indicate that the insured was suffering from soft tissue swelling at right gluteal region and not of cancer. The respondent though stated before the District Forum that it would adduce the evidence of the doctor who treated the insured, it had only filed the affidavit of the doctor and it had not produced the doctor for cross examination. The respondent got marked the affidavit of the doctor as ExB5 even when the doctor was alive and as such it cannot be understood as to how the affidavit is marked in evidence.
24. The affidavit of the doctor without it being supported by any case sheet would carry little evidentiary value particularly in the light of contention of the respondent that the insured was suffering from cancer and the hospital where the doctor was working is an orthopedic hospital. The respondent had not stated whether it got the insured examined to know his health condition.
25. The doctor had not referred to the laboratory which is illegible. The prescription dated 15.06.2004 shows the doctor had performed surgery on the insured. However, it does not speak of the insured undergoing surgery for removal of any malignant tissue. The proposal which is in possession of the respondent-corporation contains a correction of the answer to question number 11(f) and the correction is not authorized by any initial of the insured. The respondent has no explanation as to how the correction of the statement of the insured was not got authenticated. The respondent had failed to adduce contemporaneous evidence to prove that the deceased suffered from cancer and suppressed the fact at the time of submitting the proposal .
26. Admittedly, the policy opted for requires the person submitting the proposal to undergo medical examination by the panel doctor of the respondent- corporation. The respondent had not got the insured examined when it decided to issue insurance policy for the sum exceeding `1,00,000/-.
There is no explanation whatsoever from the respondent in this regard and the respondent had consciously proceeded to issue the insurance policy and not being ignorant of the health condition of the insured.
27. The Respondent- Corporation accepted the proposal and issued insurance policy. The insured was treated at Hospital from 14.06.2004 till 15.06.2004, i.e. For one night. As seen from the prescription, the insured was suffering from soft tissue swelling at gluteal region. The doctor has stated in his affidavit that the insured was treated in the hospital from 14.06.2004 till 21.06.2004 contrary to the entry in ExB3 which as said above does speak of the period of treatment as one night from 14.06.2004 till 15.06.2004. The respondent or the doctor had not shown any explanation as to the discrepancy in the period of treatment or the period of stay of the insured in the hospital.
28. In Venkata Naidu Vs LIC of India IV (2011) CPJ 6 (SC) the Honble Supreme Court held that the insurance company has to prove by cogent evidence that the insured did not disclose correct facts relating to his illness and in the absence of tangible evidence to prove that the deceased had withheld information about his hospitalization and treatment, the repudiation of claim was held not justified. It was also held that there should be nexus between the cause of the death and the disease concealed by the insured.
29. No evidence has been brought on record by the respondent insurance corporation to the effect that the deceased had knowledge of the dreaded disease and that he had consulted a doctor or a hospital for the treatment thereof. In the case of repudiation of the claim, the burden of proof heavily lies upon the respondent- insurance corporation which had not adduced any contemporaneous evidence in order to support the repudiation of the claim.
30. The District Forum committed error in recording a finding that the deceased had suppressed the fact of ill health at the time of submitting the proposal. The respondent insurance corporation has failed to establish the deceased was suffering from cancer and he had the knowledge of the disease. In the circumstances, the order of the District Forum is modified. The respondent had already paid an amount of `1,08,250/-
to the appellant. Thus, the appellant is entitled to `5,00,000- `1,08,250/-= `3,91,750/- and interest thereon plus bonus.
31. In the result the appeal is allowed. The order of the District Forum is set aside. Consequently the complaint is allowed directing the respondent/opposite party- corporation to pay a sum of `3,91,750/-
assured under the policy along with interest @ 9% per annum from the date of filing of complaint till payment and bonus together with costs of `5,000/-. Time for compliance four weeks.
Sd/-
I/C PRESIDENT Sd/-
MEMBER Sd/-
MEMBER Dt.03.12.2013 కె.ఎం.కె.*