F.A.No.652  OF 2012 AGAINST C.C.NO.30 OF 2011 DISTRICT FORUM-I MACHILIPATNAM AT KRISHNA DISTRICT 

Between:

Bajaj Allianz Life Insurance Overseas Bank, Near

                                                Appellant/opposite party

1.   Ganesana

2.   Ganesana  

Both are R/o R/o D.No.1/140

                                                    Respondents/complainants

Counsel for the Appellant              M/s

Counsel for the Respondent           Served

QUORUM:   SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER

                                        &

                        SRI THOTA ASHOK KUMAR, HON’BLE MEMBER

MONDAY THE   DAY OF MARCH

                                   TWO THOUSAND THIRTEEN

Oral Order (As per Sri

                                        ***

1.             The opposite party-insurance company is the appellant. The respondents filed complaint seeking for payment of insurance sum assured along with interest and compensation from the appellant-insurance company.

2.             The husband of the first respondent during his life time obtained four life insurance policies bearing nos.1323063, 138859327, 132311785 and 1033487912   respectively and he appointed the first respondent as his nominee for the first three life insurance policies and the second respondent for the fourth insurance policy. The father of the second respondent died on 06.09.2010 and after his death, the respondents submitted claim forms along with the insurance policies and death certificate of the insured. The appellant-insurance company repudiated the claim on 31.09.2010 and the respondents submitted representation to the Claims Review Committee on 28.02.2011. As there was no action taken by the Claims Review Committee, the respondents filed complaint before the District Forum.

3.             The respondents contended that the insured was illiterate and he had no record of his age and as such the Revenue Authorities issued House Hold Card on 11.02.2006 by mentioning his age as 65 years and prior to obtaining the life insurance policies the appellant-insurance company’s S.D.M,   It is contended that the insured paid the premium regularly and the appellant-insurance company had not raised objection at the time of issuing insurance policies or at the time of collecting premium with regard to the discrepancy in the age of the insured mentioned in the policies.

4.             The appellant-insurance company resisted the claim on the premise that the insured understated his age by 14 years by submitting fabricated  documents and he was under obligation to mention his correct date of birth in the proposal forms. It is contended that had the insured stated his correct age, the appellant-insurance company would not have issued insurance policies or it would have sought for documents and subjected him to medical tests. The insured after going through the proposal form and understanding the contents of the proposal form, made declaration that he read the application and answered the questions therein. It is contended that the first respondent is aware of suppression of correct age by her husband and the appellant-insurance company came to know the discrepancy in the age of the insured during the claim investigation which revealed that the insured obtained the insurance policies in fraudulent manner.

5.             The second respondent was examined as PW1 and the documents, ExA1 to A9 were marked. On behalf of the appellant-insurance company,   of the appellant –insurance company as DW2  and ExB1 to B13 had been marked.

6.             The District Forum allowed the complaint awarding refund of the premium with interest and a sum of Rs.20

7.             The opposite party insurance company has filed appeal contending that the maximum age for entering into insurance contract is 60 years and the insured understating his age by 14 years obtained the insurance policies though he was not eligible to obtain the insurance coverage. It is contended that if the insured stated his correct age, the appellant-insurance company would not have issued insurance policies by offering to cover risk on his life.

8.             The counsel for the appellant has filed written arguments.

9.             The point for consideration is whether the order of the District Forum suffers from misappreciation of facts or law?

10.            The appellant-insurance company issuing four life insurance policies  in favour of the first respondent’s husband and payment of premium by him thereunder as also the death of the insured on 6.09.2010 and repudiation of the claims of the respondents by the appellant-insurance company on 31.09.2010 are beyond any dispute. The appellant repudiated the claim on the ground that the insured understated his age by 14 years by submitting forged documents  whereas the respondents challenged the repudiation on the premise that the insured was illiterate and the SDM of the appellant-insurance company managed to get PAN card for him to show his age within the limits of eligibility clause in insurance policy as also they contended that the revenue authorities issued house hold card showing his age as 65 years on 11.02.2006 without there being any record therefor.

11.            The age of the first respondent’s husband is seen as 65years from the house hold card which was issued on 11.02.2006 and PAN card issued by the Income Tax Department shows his date of birth as 02.-02.2006. The respondents contend that the SDM of the appellant-insurance company obtained the signature of the insured in the application form and applied for issuance of PAN card for him. The appellant-insurance company contends that the insured submitted forged documents in order to show his age below 60 years. The appellant has not examined the SDM nor filed his affidavit  

12.            The appellant-insurance company cannot contend that the PAN card is a forged document without examining its SDM and take inconsistent plea that the insured fabricated the documents to obtain the insurance policies and that the respondents fabricated the document for the purpose of claiming the sum assured under the insurance policies. In the cross examination of the respondent no.2 it was suggested to him on behalf of the appellant-insurance company that the respondents fabricated the PAN card.

13.            The District Forum returned the issue on the discrepancy in the age of the insured that it was within the knowledge of the deceased that he was not in the eligibility limits of age to obtain insurance policies and the SDM of the appellant-insurance company made him believe that he can obtain the insurance policies, is not challenged by the appellant-insurance company nor did the respondents file appeal challenging the order. At page 7 of the order it is

“Any person with common knowledge would not believe that the person with such features as seen in photograph was aged only 56 years. He looks more than 70 years. It is highly improbable and uncommon for the medical practitioner and the agent of the Opposite Party not entertaining suspicion as to age of the deceased when a proposal was made stating his age as 56 years. The agent seems to have purposefully remained silent only with ulterior motive of repudiating a claim when made any. The said agent may have other photographs when policy holder was physically before him to know his age. Therefore, we have no hesitation to hold that the agent   representative of the Opposite Party was also not fair in making the policy holder believed that he could take policies.”

14.            The learned counsel for the appellant-insurance company has contended that the contract of insurance procured by breach of principle of ‘utmost good faith ‘is nullity and void

“ Where there has been a suppression of fact, acceptance of the (insurance) policy by an officer of the insurance company would not be binding upon it” and “Since terms of the contract of insurance are being governed by the provisions of a statute, non-disclosure of such material facts would render the policy  

15.            The other decision of the apex court on which reliance is placed is in “General Assurance Society Ltd

“In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties because it is not for the court to make a new contract, however, reasonable, if the parties have not made it themselves”.

16.            In all the aforementioned decisions, the ratio laid is that the contract of insurance is based on principle of “ubberma fides and parties to the contract of insurance are bound by the principle.  The appellant cannot invoke the principle laid in the aforementioned decisions since the appellant was a party which through its SDM facilitated obtaining the PAN card and induced the first respondent’s husband to obtain the insurance policies basing on the PAN card. The principle of good faith equally applies to the appellant-insurance company. The District Forum found the appellant unfair on the other aspect that it refrained itself from bringing the proposal basing on which the repudiation of the claim was made.

17.            The District Forum observed that the appellant-insurance company had not filed the proposal forms signed and submitted by the first respondent’s husband and the proposal form contains the particulars of the income of the person who submits it as also it contains the particulars of the physical verification of the person who intends to obtain the insurance policy by the doctor of the appellant-insurance company and it also contains the signature and particulars of the agent who is instrumental in procuring the person to propose for the insurance coverage. The appellant has not produced the proposal nor did it file affidavits of the agent through whom the proposal was submitted and the doctor who examined the first respondent’s husband prior to submission of the proposal.

18.            Thus, the insured and insurer are not fair in agreeing to form contract of insurance. No party, in such circumstances can take advantage of the terms of the insurance policy to the detriment of the other party to the contract. The insured or his nominee cannot claim for the amount on maturity of the policy or the sum assured thereunder and the insurance company cannot retain the amount received towards premium from the insured. Interestingly, after recording finding on unfair nature of the parties to the contract of insurance, the District Forum proceeded to award compensation to the respondents holding that

“Therefore, we have no hesitation to hold that the agent or representative of the Opposite Party was also not fair in making the policy holder believed that he could take policies. Then only nominees of the deceased cannot be allowed to forego entire amount of premium paid by them. Since the representatives of the Opposite Party have deliberately allowed the policy holder to take policies with sufficient knowledge that he must be more than 60 years, the Opposite Party must be made liable to pay compensation also to the nominees. Therefore, we, the Forum hold that there is deficiency in service on the part of the Opposite Party in the process of taking policies from the deceased

Point No.2:

12. In view of the answer on Point No.1, the Complainants are not entitled to the assured amounts under the policies. However, they are entitled to the premium amounts paid by the policy holder/deceased and they are also entitled to   ”

19.                  And the District Forum awarded compensation despite making observation at page 6 of the   that

“When the policy itself is cancelled, not from the date of cancellation but it relates back to the date of policy. So, the very four policies have become cancelled. It cannot be said that the policies were valid for the purpose of investment in units and in valid for the purpose of life assured. When the contract was become cancelled, the person paying the premium is entitled to refund of the payment. No forfeiture clause is brought to our notice. If the representative of the Opposite Party was fair and only the policy holder was trying to take undue advantage of some wrong date of birth in some documents, there must be justification for the insurance company to withhold the part of premium.”.

20.            The awarding of the compensation is not justifiable when the insured along with the insurance company was found to be unfair and each party was held to take advantage of the situation the other party is placed in. As such the relief for compensation of `20,000/- granted by the District Forum is liable to be set aside. The appellant is liable to pay interest on the amount received towards premium as it retained the amount with it with the knowledge that the contract was void.

21.            In the result the appeal is allowed setting aside the relief of `20,000/- awarded towards compensation.  The rest of the order is confirmed. The parties shall bear their own costs.

                                                                                                                                                                   MEMBER

                                                                                                                                                                                MEMBER

                                                                                  Dt.18.03.2013

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