Punjab

Ludhiana

CC/20/133

Amandeep Kaur - Complainant(s)

Versus

Aviva Life Insurance Co.Ld - Opp.Party(s)

Pankaj Katia

03 Oct 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:133 dated 11.08.2020.                                                         Date of decision: 03.10.2023.

 

Amandeep Kaur W/o. Sh. Okar Singh, r/o. H. No.209, Jogi Basti, Dharamkot, Near Basi Jewellers, Moga-142042.                                                                                                                                                         ..…Complainant

                                                Versus

1. M/s. Aviva Life Insurance Co. Ltd., through its Managing director having its office at Aviva Tower Sector Road Opposite Gold Course, DLF Phase V, Sector 43, Gurgaon-122003.
2. M/s. Aviva Life Insurance Co. Ltd. through its Manager having its office at Feroze Gandhi Market, Ferozepur Road, Near Park Plaza, Ludhiana-141001.                                                                                                                                                                     …..Opposite parties 

Complaint Under section 35 of the Consumer Protection Act.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. Manjeet Singh, Advocate.

For OPs                          :         Sh. Nitin Kapila, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                In brief, the facts of the case are that the husband of the complainant Sh. Okar Singh (hereinafter called as DLA) purchased a Life Insurance Policy under Non Linked Non Participating Plan for a sum of Rs.50,00,000/-  vide policy No.10386099 for a period of 30 years commencing from 08.10.2018 to 08.10.2048 from opposite party No.2 in which the complainant was a nominee. The DLA paid the premium as per premium schedule and also submitted proposal form filled by the representative of the opposite parties. The complainant further stated that the life assured died on 14.11.2019 and she submitted claim with opposite parties by submitting all the required documents. She also visited office of opposite party No.2 but she was told that her case is under process and insurance amount shall be released to her. The complainant shocked to receive repudiation letter dated 28.12.2019 informing that the policy had already been terminated on 17.12.2018 on the ground of non-disclosure of other polices with other insurers as also that the income of the LA was not commensurate for him to hold policies worth Rs.5.2 Crores. According to the complainant the termination was never intimated to her or LA. The complainant further stated that the LA was having handsome income specially agriculture income to meet out his living expenses and to pay the premiums of the insurance policies. The investigation stated to has been wrongly carried out that the LA was insured for Rs.5.2 Crores.  The LA handed over list of current/existing/active/live policies at the time of filling the proposal form. The policies held by the LA were more than 4-5 years old. The complainant further stated that the opposite parties have wrongly terminated the policy. Moreover, the opposite parties had charged even 2^nd premium from the LA by deducting his account of premium amount. The opposite parties had cooked up an afterthought story. The complainant also sent a legal notice dated 04.05.2020 upon the opposite parties. The opposite parties vide their reply dated 29.06.2020 upheld the repudiation. The complainant further stated that she has suffered mental tension, agony, harassment etc. due to deficiency in service and unfair trade practice on the part of the opposite parties for which she is entitled to compensation. In the end, the complainant has prayed for issuing direction to the opposite parties to release the insured amount on account of death of life assured along with interest as well as compensation of Rs.5,00,000/- and litigation expenses of Rs.1,00,000/-.

2.                Initially, the opposite parties were proceeded against exparte vide orders dated 27.11.2020 and 04.03.2021 respectively. However, they preferred a M.A.No.141 of 2021 in/and Revision Petition No.41 of 2021 before the Hon’ble State Consumer Disputes Redressal Commission, Punjab, Chandigarh for setting aside the exparte orders dated 27.11.2020 and 04.03.2021, which was allowed vide order dated 17.02.2022 subject to costs of Rs.10,000/- i.e. Rs.5,000/- in Consumer Legal Aid Account and Rs.5,0000/- to the complainant and with directions to file their written statement/reply and evidence.

3.                Accordingly, on 02.03.2022, opposite party No.1 and 2 through their counsel Sh. Nitin Kapila,  Advocate filed written statement along with affidavit and documents and also deposited costs of Rs.10,000/-.

                   The opposite parties in their written statement by taking preliminary objections, assailed the complaint on the ground of maintainability of the complaint, suppression of material facts by the complainant; lack of jurisdiction and cause of action. The opposite parties stated that LA concealed in the proposal form regarding having prior life insurance policies with other insurance companies with total sum assured (death claim) of Rs.1,45,50,000/-and during investigation it was revealed that after obtaining policy from Aviva, LA also obtained insurance policies from other insurance companies with a total sum assured of Rs.5,22,00,000/- was not in consistent with the income of the LA as per his income tax return for the year 2017-18 and 2018-19 showing his gross annual income just over Rs.4 Lakhs.  On contacting other insurers, the opposite parties came to know about the insurance policies purchased by the LA and as such, they suo-moto terminated the insurance policy on 17.12.2019 as per Section 45 of the Insurance Act and refunded the premium amount to policy holder. However, the LA in his proposal form made declaration that the information given by him is true and compete in all aspect, on the basis of which the opposite parties were induced to issue the policy in question. The relevant part of proposal form is reproduced as under:-

          Personal Details

          Income – Rs.4,00,000/-

          Nature of Organization/Business- Mobile phone selling

          Existing policies – Exide Life Rs.26 Lakhs

 

According to the opposite parties the policy was terminated even before receiving and registration of death claim of LA which was received on 18.12.2019. Further under Section 45 of the Insurance Act, 1938, the insurance company can challenge the policy on the ground of concealment of material fact by the insured within three years from the date of commencement of the policy. The policy in question was issued on 08.10.2018 and LA was allegedly died on 14.11.2019 i.e. within three years from the date of commencement of the policy and as such, they have rightly, legally and in accordance with terms and conditions of the policy, terminated the policy and refunded the amount. The opposite parties further averred that the complainant had admitted the purchase of other insurance policies from the other insurers, which is reproduced as under:-

Company Name	Policy Number	Sum Assured	Risk. Com. Date	Prior to AVIVA
Exide Life	3434963	5000000	17.11.2018	No
HDFC	18900131	2600000	05.11.2016	Yes
Canara HSBC	1500763011	3500000	24.08.2018	Yes
Aegon Religare	1.80815E+11	1000000	04.12.2018	No
Edelweiss Tokio	000035824E	2500000	06.02.2019	No
Canara HSBC	9100416374	1950000	23.03.2019	No
Canara HSBC	9100416375	3000000	19.11.2018	No
Canara HSBC	9100416376	3000000	19.11.2018	No
Star Union Dai-ichi	1263055	3000000	19.11.2018	No
Canara HSBC	9100416378	3500000	27.11.2018	No
Bajaj Allianz	352623201	500000	06.02.2019	No
Stat Union Dai-ichi	1268922	3000000	13.12.2018	No
Edelweiss Tokio	000077490E	6500000	05.01.2017	Yes
Edelweiss Tokio	000077505E	2500000	26.11.2018	No
Future Generalli	1512978	1950000	12.04.2018	Yes
Future Generalli	1475318	2000000	09.11.2018	No
Future Generalli	1476687	200000	16.11.2018	No
Aviva India	10380695	5000000	08.10.2018	Aviva
Aviva India	10380696	1500000	18.07.2018	Aviva
Total Insurance		5,22,00,000
Total Insurance Prior to AVIVA		14550000

 

                   Under the column Facts of the case, the opposite parties have stated that the LA approached them for issuance of insurance policy and submitted duly filled and signed proposal form on 10.09.2018, on the basis of which they issued the insurance policy, contents of which are reproduced as under:-

Name of the policyholder	Okar Singh
Name of the Life Assured	Okar  Singh
Product Name	AVIVA LifeShield Platinum
Proposal Date	10.09.2018
Policy No.	10386099
Date of Commencement of Policy	08.10.2018
Sum Assured	Rs.50 Lakhs
Premium Amount	Rs.16,284/- (with taxes)
Premium Frequency	Annual

 

The opposite parties further stated that on the basis of information received from the other insurers, they came to know that huge insurance shopping was done by the LA and as there was a concealment of insurance police sin the proposal form, as such, the policy was terminated on 17.12.2019 and the complainant was informed about their decision of termination of policy was letter dated 20.12.2019. The opposite parties received a death claim intimation from the complainant on 18.12.2019 vide death claim form dated 13.12.2019 informing that the life assured had died on 14.11.2019. According to the opposite parties, as per section 45 of the Insurance Act, the proposal details of policy were duly investigated and verified by them to determine the bonafide of the facts stated in the proposal form and during investigation, it was brought to their attention that

• The Life Assured has given incorrect details in proposal form regarding prior policies from other Insurance Companies and also that LA obtained huge insurance policies totaling to Rs.5,22,00,000/-  even after obtaining policy from opposite party which was not commensurate with the profit and income of deceased thereby committed a fraud by including the answering opposite party to issue the policy on his life which otherwise would not have been issued if the correct details regarding prior policies would have been furnished in the proposal form.

The opposite parties further averred that they terminated the policy and refunded the premium to the complainant.

                   On merits, the opposite parties have denied that there is any deficiency of service and have also prayed for dismissal of the complaint.

3.                In support of her claim, the complainant tendered her affidavit Ex. CA in which she reiterated the allegations and the claim of compensation as stated in the complaint. The complainant also tendered documents Ex. C1 is the copy of declaration/proposal form, Ex. C2 is the copy of insurance policy, Ex. C3 is the copy of death certificate of Okar Singh, Ex. C4 is the copy of repudiation letter dated 20.12.2019, Ex. C5 is the copy of income tax returns for 2018-2020, Ex. C6 is the renewal receipt dated 08.10.2019, Ex. C7 is the copy of legal notice dated 04.05.2020, Ex. C8 is the copy of reply dated 29.06.2020

and closed the evidence.

4.                On the other hand, counsel for the opposite parties tendered affidavit Ex. RA of Sh. Rishi Chadha, Manager, Legal of the opposite parties along with documents Ex. R1 is the copy of proposal form,  Ex. R2 is the copy of policy documents, Ex. R3 is the copy of death claim form, Ex. R4 is the copy of death certificate of Okar Singh, Ex. R5 is the copy of repudiation letter dated 20.12.2019, Ex. R6 is the copies of income tax returns and closed the evidence.

5.                We have heard the arguments of the counsel for the parties and also gone through the complaint, affidavit and annexed documents and written reply along with affidavit and documents produced on record by both the parties.

6.                The complainant, being wife and nominee of DLA Okar Singh, has raised a grievance with regard to repudiation of death claim and cancellation of the life insurance policy. Admittedly, DLA was a holder of Aviva Life Shielf Platinum policy Ex. C2 = Ex. R2 (a Non Linked Non Participating Plan) for a sum assured of Rs.50,00,000/- having a validity of 30 years commencing from 08.10.2018 to 08.10.2047. A yearly premium of Rs.16,284/- was payable. LA has obtained this policy by submitting an application form Ex. C1 along with proposal form Ex. R1 wherein he has answered the relevant questions with regarding to holding of earlier insurance policies in the column of insurance details, as under:-

          7. Insurance Details

7.1 Are you holding any life, health or critical insurance policies (in-force/paid up) in your name or have submitted any simultaneous proposal with us or any other life insurance company which is under consideration?

Yes

If yes, give details of existing Insurances cover of in-force/paid-up policies in the name of life to be insured. Please include policies from Aviva Life Insurance as well. (If more than five policies exist, than give details of all the policies by attaching a addendum)

a. Name of the Insurer	Type of Policy	Term of Policy	Sum Assured/ Paid-up sum assured	Year of Issue	Whether accepted at ordinary rates, if not, state the extra charge imposed	Riders Covered
Exide Life	Term	30 yr.	2600000	2016	Yes	No
e. Are you paying Premium for Life Insurance Policies on any other life.						No

 

 

He also submitted the following declaration with regard to information furnished by him in the said form:-

“8. DECLARATION & AUTHORISATION

1. I declare and confirm that all the replies to the questions in the proposal, the details furnished in the enclosed questionnaires, in the documentary evidence and the reports of any medical examination are true and accurate to the best of my knowledge. I have fully understood the nature of the questions and importance of disclosing all material information accurately arid truthfully, while answering such questions. I am aware that the policy is sourced on the basis of limited health questions and I declare that no material information required by Aviva Life Insurance Company India Limited (the Company) to assess the risks on my life has been withheld and/or misrepresented by me.

2. I undertake to notify the Company of any change in the state of my health, or my occupation or my financial condition, subsequent to the signing of this proposal and before the issuance of policy by the Company. I also undertake to notify the Company promptly within 30 days regarding any changes in (a) information provided in the form, its supporting Annexures as well as in the documentary evidence including or (b) if any certification becomes incorrect and to provide fresh self-certification along with documentary evidence with respect to the status of my tax residence, contact details including without limitation residential address, correspondence address, registered email id, phone/mobile numbers, in my (or my beneficiary's/nominee's, as the case may be).

3. I hereby understand and agree that the Company is under no obligation to issue the policy on receipt of the proposal form and premium Risk commences after acceptance of risk by the Company.

4. Thereby authorize the Company to conduct medical examinations which may include laboratory tests, cardiac & radiological investigations and other medical tests as deemed by the Company to assess my health status hereby accord my express consent to undergo HIV1/2 test by ELISA method. I am aware that this test is only for sing purpose and does not amount to a confirmation for HIV/AIDS. The company reserves the right to accept, decline or offer alternate terms on my proposal for life or health insurance based on the results of medical tests performed.

5. Thereby expressly accord consent, for the purpose of causing the proposal and underwriting the risk and anytime thereafter to the Company (a) to collect and retain with itself my personal sensitive information, including without limitation my medical record, financial information relating to the Account and all transactions therein including my bank account details, income tax returns.; (b) to collect from and authorize my past and present employer's), business associates, medical practitioner, hospital, medical source, any life and non-life insurance Company/organization, government, statutory body, any third parties to release to the Company the records of employment/business or personal sensitive information, including without limitation my medical record, financial information relating to the Account and all transactions therein including my bank account details, income tax returns or other details of mine as may be considered relevant. We hereby accept and acknowledge that the Company shall have the right and authority to carry out investigations from the information available in public domain for confirming the information provided by me/us to the Company. I further accord my express consent to the Company to disclose any information contained in the proposal, the annexure, in the reports of any medical examination/laboratory tests or in the documents submitted by me (or as the case may be, by my beneficiary) or procured by the Company to any other insurer or to any reinsurer, law enforcement agencies, statutory auditors, tax authorities, regulatory bodies or any third parties, Central KYC registry, including but not limited to claims investigator, professional service providers, legal counsels engaged by the Company or any other industry body/association.

6. I declare that all sums of money paid by me to the Company are from a legitimate source and I am legally entitled to use the monies for the purposes envisaged herein. I further undertake to promptly declare the source of any funds paid or sought to be paid by me to the Company, as and when asked for by the Company, I declare that in case I am found guilty of any offence relating to any applicable laws, including without limitation Anti Money Laundering law, Foreign Exchange Management Act, 1999 then the Company shall have the right to handle my policy in the manner as per the applicable law.

7. I hereby understand and agree that fraud, suppression of material fact and misrepresentation would be dealt with in accordance with the provisions of Section 45 of Insurance Act, 1938 as amended from time to time.

 8. We also agree to furnish such information and/or documents as the Company may require from time to time on account of any change in law either in India or abroad in the subject matter herein.

9. We fully agree and confirm to the use of electronic medium, including email, as a mode of communication, in relation to this proposal/resulting policy, from and to the Company. Also, I hereby consent t receiving information from Central KYC registry through sms/email on the registered number/email address.

10. I hereby understand and agree that this proposal form, including any declarations and statements annexed to it or submitted to the Company in connection with the proposal and any additional statement(s) or document(s) provided by me to the Company shall form part of the policy documents issued by the Company.”

7.                Acting upon the declaration and information so received by the opposite parties, the insurance policy was issued and the policy documents Ex. C2 = Ex. R2 were sent to the registered address of the DLA. However, the DLA died on 14.11.2019 i.e. within about 13 months from the date of issuance of the policy. On receipt of death claim form (Ex. R3) aong with death certificate, the opposite parties initiated a pre-claim investigation in order to check the veracity of facts and information. After careful scrutiny of the information and documents, it transpired that DLA had deliberately and with malafide intention withheld the material information with regard to availing of multiple insurance policies of various companies to the tune of Rs.5.2 Crore previous to availing the policy in question. On 17.12.2019, the insurance company terminated the policy vide letter dated 20.12.2019 Ex. C3 = Ex.  R5 and premium amount was refunded to the complainant. The operative part of the cancellation letter is as under:-

“After careful consideration of all the documents submitted by you, we would like to inform you that the captioned policy number was terminated on 17-Dec-19 basis non disclosure of other insurance policy with other insurers

In the proposal form, you under Section 8 Insurance details, life assured has marked no to specific question:

 7.1. Are you holding any life, health or critical insurance policies (in-force/paid up) in your name or have submitted any simultaneous proposal with us or any other life insurance company which is under consideration – ‘Yes’

And disclosed insurance cover of INR 26L with Exide Life prior to AVIVA.

However, as per the information procured by us during the course of investigation, the deceased life assured had insurance cover of approx 1.3 Cr prior to AVIVA from other insurers.

Had the complete and correct details of existing insurance cover been disclosed, we would not have issued the above mentioned policy.

Further, the huge insurance shopping of total 5.2 Cr made by the life insured was not commensurate with the profile and income of him and such shopping was done with a mala-fide intention in order to gain unlawful gain from insurance.

Hence, the risk on the life of Mr. Okar Singh is not accepted and no claim is admitted against the company on account of the death of the proposed life insured.”

8.                Perusal of record shows that DLA stated to have been died on account of “natural death” on 14.11.2019 i.e. after about 13 months from the issuance of the policy. Death certificate of DLA is Ex. C3. It is pertinent to mention that DLA was born on 01.01.1978 and at the time of obtaining the policy he was aged about 40 years and at the time of death, he was about 41 years of age. The complainant did not elaborate any facts and circumstances leading to natural death of DLA in a comparatively younger age nor any affidavit of herself or of any attendant was produced in whose presence DLA breathed his last. Even no medical document was brought on record to show that DLA was taken to some hospital before he was declared dead or brought dead. The complainant was required to dispel suspicious with regard to “natural death” of DLA. The opposite parties in their written statement specifically provided the details of the previous multiple insurance policies held by the DLA and have specifically pleaded the execution of well planned external fraud by the complainant or DLA but the complainant did not opt to file any rejoinder to the contents of the written statement. Even in her affidavit, the facts which were specifically in the knowledge of the complainant were not divulged raising a serious doubt with regard to bonafide of the claim.

9.                It is evident that the repudiation in the present case was within the two years from the commencement of the insurance cover which leads to invoking of Section 45 of the Insurance Act, which reads as under:-

“Section 45

(1) No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.

(2) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:
Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based.

Explanation I. -For the purposes of this sub-section, the expression "fraud" means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy: -

(a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;

(b) the active concealment of a fact by the insured having knowledge or belief of the fact;

(c) any other act fitted to deceive; and

(d) any such act or omission as the law specially declares to be fraudulent.

Explanation II. -Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.

(3) Notwithstanding anything contained in sub-section (2), no insurer shall repudiate a life insurance policy on the ground of fraud if the insured can prove that the misstatement of or suppression of a material fact was true to the best of his knowledge and belief or that there was no deliberate intention to suppress the fact or that such misstatement of or suppression of a material fact are within the knowledge of the insurer:

Provided that in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policyholder is not alive.

Explanation. -A person who solicits and negotiates a contract of insurance shall be deemed for the purpose of the formation of the contract, to be the agent of the insurer.

(4) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:

Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision to repudiate the policy of life insurance is based:

Provided further that in case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy till the date of repudiation shall be paid to the insured or the legal representatives or nominees or assignees of the insured within a period of ninety days from the date of such repudiation.

Explanation. -For the purposes of this sub-section, the misstatement of or suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.

(5) Nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.”

 

10.              It is settled proposition of law that the contract of insurance is based upon the principle of  ‘Uberrima Fides’ and both insurer and insured are under legal obligation to provide the correct and authenticated information at the time of the policy. The information regarding holding of earlier prior insurance policies, age, proof of income and medical history are some of the criteria which are to be disclosed truthfully by the proposer. In the present case, the opposite parties had sought intimation from the DLA with respect of previous multiple policies which was not disclosed and uppressed the material facts.

11.              In its judgment Satwant Kaur Sandhu Vs New India Assurance Co. Ltd. Civil Appeal No.2776 of 2002 decided n 10.07.2009, the Hon’ble Supreme Court of India has held that if there was clear suppression of material facts in regard to the health of the insured, the insurer was fully justified in repudiating the insurance contract. The Hon’ble Supreme Court of India has further held in Reliance life Insurance Co. Ltd. and others Vs Rekhaben Nareshbhai Rathod in 2019 (2) R.C.R. (Civil) 909 that two months prior to policy obtained from appellant insured obtained policy from another company and this fact was not disclosed by the insured. Repudiation was made within two years period from commencement of insurance cover. The proposer was aware of contents of form that he was required to fill and disclosure of material for assessment of risk which was being taken by insurer which entitled the insurer to repudiate the claim.  

13.              As a result of above discussion, the complaint fails and the same is hereby dismissed. However, there shall be no order as to costs. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.

 

14.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

                             (Monika Bhagat)                        (Sanjeev Batra)                                                Member                                      President         

 

Announced in Open Commission.

Dated:03.10.2023.

Gobind Ram.