BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT  HYDERABAD.

FA  1000 of 2013 against  CC 103 of 2011 , Dist. Forum, Khammam

Between:

1)  The Branch Manager

LIC of India, City Branch No. 7

G.C. Avenue, Kolkota-700 013

2)  The Divisional Manager

LIC of India, Metropolitan

Divisional Office-1,

16, C.R. Avenue Kokatta

Local Branch, Khammam.                          ***                         Appellants/

Opposite Parties

                                                                   Vs.

1)  Smt. Pasupuleti  Bhagya Laxmi

W/o. Late P. Jaganmohan Rao

2)  Chy. P. Rihit Kumar

S/o.  Late P. Jaganmohan Rao

2)  Chy. P. Manjor Kumar

S/o.  Late P. Jaganmohan Rao

both are minors rep. by R1

All are R/o.  5-6-118/A

Pakabanda Bazar, Khammam                     ***                       Respondents/

Complainants

Counsel for the Appellants:                         M/s. Karra Srinivas

Counsel for the Respondents:                     M/s. TLK Sharma

CORAM:     

            HON’BLE SRI  JUSTICE GOPALA KRISHNA TAMADA, PRESIDENT

                                      &

                             SRI  R. L. NARASIMHA RAO,  HON’BLE MEMBER

Oral Order :   14/08/2014 

(Per Hon’ble Justice Gopala Krishna Tamada, President)

                                                                   ***

1)                This appeal is directed against the order dt. 18.6.2013 made in CC No.  103/2011 on the file of Dist. Forum, Khammam whereby the appellants/Opposite Parties  were directed to pay an amount of Rs. 80,000/-  covered under the policy  with interest @ 9% p.a.,   from the date of complaint  till the date of realization.

2)                The factual matrix of the case is that  Pasupulati  Jagan Mohan Rao, husband of  the first complainant and  father of second and third complainants had obtained  a policy bearing No.  578124978 for a sum of 
Rs. 80,000/- by submitting the proposal dt. 25.3.2010.   While undergoing treatment at Gandhi Hospital, Secunderabad, her husband died on 4.4.2010 due to sudden ill-health.   When the claim was made, it was repudiated on the ground of suppression of material information.   The complainant submits that despite issuance of legal notice, the Opposite Parties did not settle the claim.   Hence, she was constrained to approach the Dist. Forum for a direction to Opposite Parties to pay the amount covered under the policy together compensation and costs. 

3)                While admitting the issuance of policy in question, the insurance company resisted the claim of the complainant.   As the death of the insured occurred within 5 days from the date of issuance of policy, an investigation was carried out which revealed that the insured was suffering from critical illness before obtaining the policy.     On the very date of receipt of proposal for insurance along with proposal deposit amount for the said policy i.e., 31.3.2010 the deceased was suffering from ‘Chronic Rheumatic Heart Disease’ and was undergoing treatment at Mamata Super speciality Hospital at Khammam as an inpatient.   The opposite parties allege that the life assured had suppressed the material facts of his critical illness and the treatment for the same.    As per the certificate issued by the said hospital he was   in a state of unconsciousness  since 1.00 a.m. on 31.3.2010, and he was a known case of ‘Chronic Rheumatic Heart Disease with post PBMV’.  As there was suppression of material information relating to his health, the Opposite Parties rightly repudiated the claim. 

4)                The Dist. Forum having regard to the fact  that there is no material on record to establish that  the life assured had taken treatment prior to issuance of policy and that onus lies on the insurance company to prove  that  he was suffering  from major ailments  before issuance of policy and as they failed to establish their case, directed the  appellant insurance company to  pay  an amount of Rs. 80,000/- covered under the policy with  interest @ 9% p.a., from the date of complaint till the date of payment.

5)                As stated supra, the said order is challenged before this Commission by way of appeal.

6)                Mr.  Srinivas Karra, learned counsel for the appellants/Opposite Parties vehemently argued that it is an early claim and  a fraud was played on the insurance corporation.    It is apparent on the face of the record that the proposal dt. 25.3.2010 along with premium was submitted to the Corporation on 31.3.2010 and the policy was issued on 31.3.2010 covering the risk from 28.3.2010 and that the life assured died on 4.4.2010 within 5 days.    As it is an early claim, they probed into the matter.    As per Ex. B2  discharge card  and Ex. B3  certificate of  hospital treatment issued by Mamata Super Speciality Hospital, Khammam  reveal that  the life assured was suffering from  ‘Chronic  Rheumatic Heart Disease with post PBMV’, and he was in a state of unconsciousness  since 1.00 a.m.  as on the date of submission of proposal.   The policy was issued on the principle of  ‘uberrima fides’ and as  there was suppression of material facts relating to his health, the insurance company rightly  repudiated the claim and therefore prayed that the appeal be allowed. 

7)                 On the other hand, Mr. TLK Shamra, learned counsel for the respondent/complainant contended that as the policy was issued on 31.3.2010 covering the risk from 28.3.2010, the insurance company is liable to pay the amount covered under the policy.  After issuance of policy, they cannot shriek from their  responsibilityof paying the amount covered under the policy. 

8)                 The moot question involved in this case is whether repudiation of claim on the part of Opposite Party insurance company is justified?

9)                 There is no dispute with regard to issuance of policy and the death of the life assured on 4.4.2010.  The main contention of the Opposite Parties is that the life assured had suppressed the material information with regard to his health and obtained policy to make unlawful gain.    As it is an early claim, they made a thorough investigation which revealed that the deceased was suffering from ‘Chronic Rheumatic Heart Disease’.    The LIC issued the policy based on the statements made by the proposer following the principles of good faith and when there was suppression of material information they need not pay any amount as the contract becomes void ab initio. 

10)              We have been observing  that in a number of cases,  the insurance companies are issuing policies basing on the statements made by the proposer in utmost good faith but when it comes to settlement of claims, they start examining the matter under the microscope.  In   a majority of policies issued by the insurance companies they were routed through their agents.   The agents in their anxiety to get their commission and the insurance companies in order to do more and more business see that the policies are issued the moment they receive the premium amount.   Even the insurance companies are not aware as to who is the proposer, what is his/her status or health condition etc.    Here, the intention is very clear that first they induce the people to purchase policies and later they start litigation.    Even in the instant case also, the proposal was made through an agent.    On Ex. B1 we find the rubber stamps of the agent and specified person code and license Nos.  on the first and last pages of the proposal.    A close scrutiny of the proposal form would reveal even the coloumns were filled up by the agent and simply obtained the signatures of the proposer on ‘x’ marks.      It is manifest that the proposal was routed through the agent of the LIC.     If we may say so, the agents are playing fraud on LIC as well as gullible consumers with false assurances.    When the policy was issued by the insurance company with utmost good faith, the same yardstick has to be applied while settling the claims also.   The LIC ought to have made thorough enquiry, investigation or necessary medical health check-ups before issuance of policy irrespective of the amount involved.   Without doing so, when they have issued the policy, now they cannot turn round and contend that they need not pay any amount as there was suppression of material information with regard to his health.    

11)               Even in the case on hand, the insurance company did not file any medical   record prior to taking of the policy except Ex. B2 discharge card issued byMamata Supers Speciality Hospital, Khammam.  Even assuming for a moment that he was suffering from some ailment or the other, the medical record should be prior to 31.3.2010.    The insurance company did not  even file  the death certificate issued by the concerned hospital in order to know  as to the  cause of death,   nor examined any of the doctors nor filed the affidavits of the doctors who treated the deceased  in support of their contention.  Except filing Ex. B2 discharge card and some investigation bills or requisition forms no cogent evidence is produced to nullify the claim of the complainant.    We are of the considered opinion   that all these discreet enquiries, investigations and health check-ups etc., ought to  have been made before issuance of policy itself.   Having issued the policy they cannot repudiate the claim on one ground or the other.    

12)               In  similar set of circumstances,   in a recent judgement   in Abdul Latheef Vs.  LIC Of India in R.P. No.  2370/2012 decided on 4.7.2014 the National Commission held that:

• It is unfortunate that on one hand the LIC raises the voice of “Utmost good faith” but, in contrast, the faith will be lost while not settling the genuine claims for some or other reasons. It is the exploitation of the policy holders. The consumers are literally under fear or dilemma that, whether, after death, the beneficiaries ever certainly get any fruits from the LIC.”

13)              As the  insurance company  failed to establish that the  life assured had taken treatment  prior to obtaining the policy as stated supra,  nor  could prove the nexus between the alleged treatment and the cause of death,  we do not find any mis-appreciation of fact or law by  the Dist. Forum in directing the  Appellants/Opposite Parties  to pay the amount covered under the policy.   We do not find any merits in the appeal.

14)              In the result this appeal is dismissed confirming the order of the Dist. Forum.   There shall be no order as to costs.  Time for compliance four weeks. 

1)      _______________________________

PRESIDENT        

2)           ________________________________

MEMBER  

*pnr