State Consumer Disputes Redressal Commission
Life Insurance Corporation Of India And ... vs Maddela Lavanya (Died) Per Lrs And ... on 31 December, 2013
BEFORE A.P STATE CONSUMER DISPUTES
REDRESSAL COMMISSION AT HYDERABAD
F.A.No.2
OF 2013 AGAINST C.C.NO. 51 OF 2011 DISTRICT FORUM ADILABAD
Between:
1. The Branch Manager,
Life
Insurance Corporation of India
Nirmala
Branch, Nirmal District through the
authorized
signatory G.V.Subramanyam
Regional
Manager (L&HPF) South Central Zonal
Officer,
Saifabad, Hyderabad
2. The
Zonal Manager,
Life
Insurance Corporation of India
SC
Zonal Office, Saifabad, through its authorized
signatory
of Sri G.V.Subramanyam
Regional
Manager (L & HPF) South Central Zonal
Officer,
Saifabad, Hyderabad
Appellant/opposite
parties
A N D
1. Maddela Lavanya
(died) per LRs
Respondents no.2 and 3 herein
2. Maddela Raghuvardhan S/o M.Rajeshwar
age 12 years (Minor) R/o 4-72,
Godalapampu Village, Dilawarpur Post,
Khanapur
Mandal, Adilabad Dist. Rep. by the guardian-nearest
relative Vangala Sudhakar
3. Maddela Visnhuvardhan S/o M.Rajeshwar,
Age 10 years (Minor)
(R2 & R3 impleaded as LRs of the R1 as
as per the orders
Respondents/opposite
parties
Counsel for the Appellant M/s K.Venkatesh Gupta
Counsel for the Respondents M/s V.Narayana Swamy
QUORUM:
SRI R.LAKSHMINARASIMHA RAO, HONBLE I/C PRESIDENT
SRI THOTA ASHOK KUMAR, HONBLE MEMBER
AND SRI S.BHUJANGA RAO, HONBLE MEMBER TUESDAY THE THIRTY FIRST DAY OF DECEMBER TWO THOUSAND THIRTEEN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble I/c President) ***
1. The respondents husband, Rajeshwer during his life time obtained life insurance policy bearing number 685202523 from the appellant-insurance corporation for sum assured of `3,00,000/-, for a period of 16 years with the commencement of the policy on 28.03.2009 and the maturity date 28.03.2025. The terms of the insurance policy provide for payment of sum assured and bonus etc. The respondents husband died on 12.08.2009 - leaving behind him the respondent as legal heir and she is also the nominee of the insured for the purpose of the sum assured under the insurance policy. After the death of their husband , the respondent submitted claim and the appellant-corporation has repudiated the claim on 18.11.2009. The respondent claimed repudiation of her claim arbitrary and unjustifiable.
2. The appellant insurance corporation resisted the claim contending that as per the death certificate, the date of death of the life assured was 12.08.2009 and the life assured died within 4 months 14 days from the date of commencement of the policy. On enquiry it was found that the deceased life assured was afflicted with post-polio residual paralysis of right lower limbs and was physically handicapped and disability is to the extent of 65%. The life assured suppressed the existence of post-polio residual paralysis of right lower limbs in the proposal form. Therefore, the appellant repudiated the claim of the respondents vide letter dated 23.12.2010.
3. In support of her claim the respondent filed the documents, ExA1 to A15, and on behalf of the appellant, its Manager (L&HPF) filed his affidavit and the documents, Exs.B1 to B4.
4. The District Forum allowed the complaint on the premise of the death of the insured due to cardiac arrest and failure of the appellant to prove the repudiation of the claim is made on dependable evidence.
5. Aggrieved by the order of the District Forum, the opposite party has filed appeal contending that the insured suppressed in proposal form that he was suffering from post-polio residual paralysis of right lower limb. It is contended that the District forum has passed the order not on legally acceptable reasons.
6. The learned counsel for the appellant has filed written arguments.
7. The point for consideration is whether repudiation of the claim is justifiable?
8. Issuance of insurance policy is not disputed. The respondents husband submitted proposal on 28.3.2009 and he categorically mentioned therein that he did not suffer from ailment pertaining to lungs, liver, kidney, brain and nervous system. Column no.11(a) and (b) of the proposal form reads as under:
Sl.No. Question Answer 11 (a).
During the past 5 years did you consult any Medical Practitioner for any ailment requiring treatment for more than a week.
No 11(b).
Have you ever been admitted to any hospital or nursing home for General Check-up observation, treatment or operation?
No
9. Therefore, there is no denying the fact that the insured had not represented the facts in correct perspective. The non-revealing of his post-polio residual paralysis of right lower limb by the insured by itself cannot be treated as material fact the suppression of which is fatal to the claim. The life insurance policy is issued for the sum assured of `3,00,000/-. A fact can be said to be suppressed in the matter of contract of insurance if it is not within the knowledge of the insurance company. The respondents husband had not only suffered from paralysis and he also sustained disability which is averred in paragraph 3 of the written version of the appellant-insurance company as under:
That as per the Death Certificate date of death of the Life Assured is 12.08.2009. The above life assured died within 4 months 14 days from the date of commencement of the policy. This being an early claim as per the rules of Corporation an enquiry was made to ascertain bonafides of death. IN our enquiry it was found that the deceased life assured was afflicted with post-polio residual paralysis of right lower limbs and was a physically handicapped and disability is to the extent of 65%. This material fact was suppressed and not disclosed in the proposal form 28.03.2009 submitted by the life assured. Hence the claim on the policy was repudiated and the same was informed to claimant vide letter dated 23.12.2010.
10. Interestingly, the appellant had chosen to contend that it has come to know during the claim enquiry that the insured was suffering from post-polio residual paralysis of right lower limb. It is beyond imagination of any prudent person that the fact that a person suffering from post-polio residual paralysis of right lower limb with disability to the extent of 65% could be said to have been suppressed more so it is to the extent of 65%. The insured died due to cardiac arrest and not on account of any problem relating to post-polio residual paralysis of right lower limb.
11. It is not the case of the appellant that the insured could walk as normal as any other person without any disability does nor is it the case of the appellant-insurance company that the disability the insured sustained on account of his suffering from post-polio residual paralysis of right lower limb is so negligible that one cannot notice unless the insured is examined. The insured came to the office of the appellant and obtained the insurance policy and presumably he had undergone medical check up as the sum assured exceeded Rs.1,00,000/-. The appellant has consciously issued the insurance policy knowing well that the insured was suffering from post-polio residual paralysis of his right lower limb and as such the appellant is estopped from contending that the insured suppressed the fact that he sustained disability to the extent of 65% due to post-polio residual paralysis.
12. The appellant-insurance company has repudiated the claim in regard to accident benefit not on the basis of any acceptable evidence and it made the repudiation arbitrarily and made a frivolous attempt to defend its action. This Commission holds repudiation of the claim unjustified for the aforementioned reasons other than the reasons assigned therefor, by the District Forum.
13. The Honble Supreme Court in Hope PlantationsLtd vs Taluk Land Board, Peermade and another (1999)5 SCC 590 considered the scope of estoppel and its effect on the party to the contract.
14. 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 267.16acres 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 .
15. 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.
17. 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.
18. Having consciously issued the life insurance policy to the insured suffering from disability sustained due to polio, the appellant is estopped from stating that the insured suppressed his disability and his being affected with polio. The repudiation of the claim is arbitrary and the appeal filed by the insurance company is frivolous.
19. The National Commission in Venu Madhav vs Ch.Mohan Rao IV (2011)CPJ 343(NC) deprecated abuse of process of law and awarded a sum of Rs. one lakh rupees towards punitive damages. The National Commission held It is well settled that no leniency should be shown to such type of litigants who in order to cover up their own fault and negligence, goes on filing meritless petitions in different Foras.
20. Of the amount awarded, `1,00,000/-
the National Commission apportioned a sum of `50,000/-
to the respondent and the balance amount of `50,000/- in favour of the Consumer Legal Aid Account of the National Commission. And in default of deposit the amount in compliance of the order, interest @9% was directed to be paid by the revision petitioner.
21. The Honble Supreme Court held in Ramarameshwari Devi and others vs Niramala Devi and others V(2011)SLT196 that the frivolous litigation should be curbed and put an end to. It was held:
We are clearly of the view that unless we ensure that wrong-doers are denied profit or undue benefit from the frivolous litigation, it would be difficult to control frivolous and uncalled for litigations. In order to curb uncalled for and frivolous litigation, the Courts have to ensure that there is no incentive or motive for uncalled for litigation. It is a matter of common experience that Courts otherwise scarce and valuable time is consumed or more appropriately wasted in a large number of uncalled for cases.
22. At the cost of repletion we may state that the repudiation of the claim of the respondents is not made on any contemporaneous evidence and it was made on unacceptable piece of evidence and made frivolous attempt before the District Forum to support the repudiation of the claim as also the insurance company has filed the appeal which is frivolous and also vexatious. For foregoing reasons and in the light of ratio laid in the aforementioned decisions, the appeal is liable to be dismissed with punitive costs.
23. In the result, the appeal is dismissed confirming the order of the District Forum. The punitive costs of the proceedings are quantified at `50,000/-
of which an amount of `25,000/-
shall be paid to the respondents and the balance amount of `25,000/-
to the Andhra Pradesh State Consumer Welfare Fund. Time for compliance four weeks.
I/C PRESIDENT MEMBER MEMBER Dt.31.12.2013 కె.ఎం.కె.*