National Consumer Disputes Redressal
Lic Of India & Another vs Smt. Vidya Devi & Anr. on 16 July, 2012
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 382 OF 2011 (Against the order dated 09.11.2010 in Appeal No. 1136 of 2009 the Rajasthan State Consumer Disputes Redressal Commission, Jaipur) 1. LIC of India Divisional Manager Jeevan Prakash Post Box 66 Sagar Road, Bikaner 2. Branch Manager LICI, Nohar ........ Petitioner (s) Through Assistant Secretary Central Office (legal) H-39, New Asiatic Building, Connaught Place, New Delhi-1 Vs. 1. Smt. Vidya Devi W/o Late Shyopat Ram Village Bhumpura, Tehsil Rawatsar Distt. Hanumangarh 2. Mr. Ajay Kumar (Agent LIC) Code No. 0758-19D Through Branch Manager LIC, Nohar (Proforma party) .Respondent (s) REVISION PETITION NO. 383 OF 2011 (Against the order dated 09.11.2010 in Appeal No. 1137 of 2009 the Rajasthan State Consumer Disputes Redressal Commission, Jaipur) 1. LIC of India Divisional Manager Jeevan Prakash Post Box 66 Sagar Road, Bikaner 2. Branch Manager LICI, Nohar ........ Petitioner (s) Through Assistant Secretary Central Office (legal) H-39, New Asiatic Building, Connaught Place, New Delhi-1 Vs. 1. Smt. Vidya Devi W/o Late Shyopat Ram Village Bhumpura, Tehsil Rawatsar Distt. Hanumangarh 2. Mr. Ajay Kumar (Agent LIC) Code No. 0758-19D Through Branch Manager LIC, Nohar (Proforma party) .Respondent (s) BEFORE: HON'BLE MR. JUSTICE J.M. MALIK, PRESIDING MEMBER HONBLE MR. VINAY KUMAR, MEMBER For the Petitioners in both RPs : Mr. Ashok Kashyap, Advocate For the Respondents in both RPs : Mr. Najeeb A. Khan, Advocate Pronounced on : 16th July, 2012 ORDER
JUSTICE J. M. MALIK, PRESIDING MEMBER
1. This order shall decide two cases which pertain to two different insurance policies of the deceased insured. The main question swirls around the question whether the suppression of the fact that the insured had previous policies with the LIC tentamounts to material fact which entitles the LIC to repudiate the claim of the insured.
2. The facts of the cases are these. Late Shri Sheopat Ram obtained the following five insurance policies:-
____________________________________________ Sr. No. Policy No. Amount DOC
1.
500124519 One lakh 15.10.1996
2. 500174210 Two lakhs 2.5.2002
3. 501569559 Two lakhs 16.5.2005
4. 501601063 Two lakhs 28.2.2006
5. 501805926 Two lakhs 28.6.2006
3. He died on 31.5.2007 in an accident. LIC repudiated his claim on 22.11.2007. Smt. Vidya Devi filed two complaints against the LIC of India and its agent Mr. Ajay Kumar. The District Forum allowed both the complaints and held in the first complaint as under:-
Consequently the complaint of the complainant is allowed and the defendants are ordered to pay an amount of Rs.6,00,000/- (triple time of insured amount of Rs.2,00,000/-) on the policy no. 501805926 on the life of her husband with one years bonus for Rs.10,000/- in this way a total amount of Rs.6,10,000/- with interest @9% p.a. from the date of repudiation of the claim i.e. from 22-11.2007 with Rs.1,500/- as cost of complaint within one month from the date of the order. If the payment is not paid within the stipulated period of one month, the complainant will be entitled to receive interest on this amount @12% p.a. from the date of this order.
It was held in the second complaint.
Consequently the complaint of the complainant is allowed and the defendants are ordered to pay an amount of Rs.2,00,000/- on the policy No. 501601063 on the life of her husband with three years bonus for Rs.30,000/- in this way a total amount of Rs.2,30,000/- with interest @ 9% p.a. from the date of repudiation of the claim e.g. from 22-11.2007 with Rs.1,500/- as cost of complaint within one month from the date of the order. If the payment is not paid within the stipulated period of one month the complainant will be entitled to receive interest on this amount @12% p.a. from the date of this order.
4. LIC preferred appeals before the State Commission. The State Commission dismissed the appeals in one page order. Aggrieved by this order, the LIC of India filed the present revision petitions.
5. The key question is whether the insured was bound to disclose how much previous policies he had with the insurer-LIC. The main plea raised by the learned counsel for the petitioner is that the deceased paid the claim amount on the policies bearing Nos. 501569559, 500124519 and 500974210. Thereafter, the deceased made a proposal in respect of policies No. 501805926 on 21.7.2006 and policy No. 501601063 dated 26.2.2006. However, the deceased had concealed having obtained three previous policies No. 501569559, 500124519 and 500974210 and obtained the said policies by playing fraud upon the insurer and for the reasons no amount was due for payment towards the complainant. Learned counsel further argued that had the insured declared the previous policies obtained by him, He was to undergo certain medical tests such as the special report of ECG, hemogram, SBT and RAU etc.
6. On the other hand, learned counsel for the respondents contended that the above said suppression is not material. Deceased was an illiterate person. He fixed signatures on the blank papers. The agent in all the five policies was same. He was well aware of the fact that the deceased had applied for these policies.
7. Heard the arguments of learned counsel for the parties. Our attention has been invited towards para 9 of the proposal form, which reads as under:-
9. Please give details of your previous insurance: (including Policies Surrendered/Lapsed during last 3 years)
8. The deceased replied nil. Undoubtedly, this is a suppression of material fact. No explanation for non-disclosure of this fact of utmost importance is forthcoming. In the celebrated authority reported in Satwant Kaur Sandhu Vs. New India Assurance Company Ltd. IV (2009) CPJ 8 (SC) it has been held as under:-
Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. 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 propose 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.
It was further held as under:-
17.The term material fact is not defined in the Act and, therefore, it has been understood and explained by the Courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be material.
18. As stated in Pollock and Mullas Indian Contract and Specific Relief Acts any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is not a material fact.
9. The same question arose before the National Commission. The facts of that case are reported in para 5(1) of the judgment in reference to Dineshbhai Chandarana & another vs. Life Insurance Corporation of India, in first appeal No. 242 of 2006, decided on 27.7.2010. The facts are reproduced as below:-
5(1) It is clear from the relevant proposal form for the policy of March 1997 that for reasons best known to the deceased and/or his father, the details of the four policies taken in March 1994 and March 1995, which were very much within the period of past 3 years with reference to the policy sought in March 1997, were specifically omitted in reply to item no. 9 of the proposal form. Non-disclosure of this material fact in the policy proposal of 1997 was certainly not a bona fide inadvertence.
10. While placing reliance on Satwant Kaur Sandhus case (supra), the repudiation of claim made by the LIC was upheld. Consequently, we accept the revision petitions and set aside the orders passed by the District Forum and State Commission and dismiss the complaint.
..Sd/-..
(J.M. MALIK, J.) PRESIDING MEMBER Sd/-.
(VINAY KUMAR) MEMBER Naresh/3&4