Haryana

StateCommission

A/175/2015

SBI LIFE INSURANCE CO.LTD. AND ANOTHER - Complainant(s)

Versus

AZAD SINGH - Opp.Party(s)

RAJNEESH MALHOTRA

21 Jul 2015

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

                                                 

First Appeal No  :       175 of 2015

Date of Institution:       23.02.2015

Date of Decision :       21.07.2015

 

1.     SBI Life Insurance Company Limited, Central Processsing Centre, Kapas Bhawan, Plot No.3-A, Sector 10, CBD Belapur, Navi Mumbai-400614.

 

2.     SBI Life Insurance Company Limited, Ist Floor, Nirmal Complex, Purkas Adda, New Courts Road, Sonepat.

                                      Appellants-Opposite Parties

Versus

 

Azad Singh s/o Sh. Deep Chand, Resident of Village Kumaspur, Tehsil and District Sonepat, nominee of deceased Mahender Singh.  

 

                                      Respondent-Complainant

 

CORAM:             Hon’ble Mr. Justice Nawab Singh, President.

                             Shri B.M. Bedi, Judicial Member.

                             Shri Diwan Singh Chauhan, Member                                                                                                                                         

Argued by :         Shri Rajneesh Malhotra, Advocate for appellants.

                             Ms. Nancy Gupta, Advocate for respondent. 

 

                                                   O R D E R

 

B.M. BEDI, JUDICIAL MEMBER

 

SBI Life Insurance Company Limited (for short ‘SBI Life Insurance’)-Opposite Parties, are in appeal against dated October 20^th, 2014, passed by District Consumer Disputes Redressal Forum (for short ‘District Forum’), Sonepat, whereby complaint filed by Azad Singh-complainant (respondent herein) seeking direction to the SBI Life Insurance to pay the insurable benefits with respect to the Life Insurance Policy, was accepted.

2.      Mahender Singh-since deceased (hereinafter referred to as ‘the assured’) purchased a Life Insurance Policy No.49002785703 for Rs.10.00 lacs (Annexure B-1) from SBI Life Insurance-appellants.  The policy commenced from January 12^th, 2011. The installment premium payable was annual. The Complainant-respondent was nominee of the life assured. The assured died on February 19^th, 2012. The complainant, being the nominee of the deceased claimed the insured amount. The SBI Life Insurance repudiated claim vide Repudiation Letter dated August 20^th, 2012, (Annexure-G) on the ground that the assured was an alcoholic prior to the purchase of the policy but he had concealed the said fact in the proposal form (Annexure A-1) at the time of obtaining the policy. Aggrieved thereof, the complainant filed complaint under Section 12 of the Consumer Protection Act, 1986.

3.      The appellants-opposite parties contested the complaint by filing reply raising preliminary objections that Mahender Singh committed breach of utmost good faith by suppressing material fact concerning his health, habits and other matters while filling up proposal form, as Mahender Singh was a chronic alcoholic and was diagnosed for Cirrhosis of Liver prior to the date of commencement of risk. It was submitted that Mahender Singh purchased insurance policy vide proposal form dated January 7^th, 2011 at annual premium of Rs.50,000/- for a term of 10 years to be paid for a sum assured of Rs.10.00 lacs. It was stated that date of commencement of risk was stated to be 12.01.2011. The life assured committed breach of terms and conditions of the policy. He was alcoholic for the last 20-25 years and was diagnosed for Cirrhosis of Liver. Thus, justifying repudiation of claim, the opposite parties prayed for dismissal of the complaint.

4.      After evaluating the evidence of the parties, the District Forum allowed complaint and issued direction to the SBI Life Insurance as under:-

“………we hereby directed the respondents to make the payment of the claim amount to Smt. Bhateri widow and Ajay i.e. widow and son of the deceased Mahender Singh in respect of the policy mentioned above. However, the respondents can deduct the amount, if any, paid to them in respect of the above mentioned policy. The respondents are directed to make the payment of the claim amount in equal shares to Smt. Bhateri widow of deceased Mahender Singh, Ajay son of late Mahender Singh and to the mother of the deceased Mahender Singh, if she is alive. The respondents are directed to make the payment of the claim amount within one month from the date of this order, failing which, the amount of the claim shall fetch interest at the rate of 09% per annum from the date of this order till its realization”.

5.      The question for consideration before this Commission is as to whether the SBI Life Insurance was justified in repudiating complainant’s claim or not?

6.      To decide the issue involved, the proposal form (Annexure A/1), which was submitted by the life assured duly signed by him, for obtaining the policy is an important document. In the said form against column No.8 sub clause (x)(a)(c) the and (xvi), the answers given by the life assured are as under:-

“x.     Are you suffering from or did you suffer or undergo investigation in the past from or have you been advised to undergo investigation or treatment for:

1.  Cancer/Leukemia/Lymphoma          
2. xxxx
3. Liver disease (Jaundice/Hepatitis etc)        ”

“xvii.   Do you consume or have ever consumed Alcohol in any form or have you suffered from complications due to alcohol consumption?

The answers given to the above questions were in negative.

7.      Learned counsel for the appellants-opposite parties has further referred to the report of Medical Officer General Hospital, Sonepat, wherein in the history of diseases it has been mentioned as ‘alcoholic Cirrhosis’ and against column ‘By whom history reported to you?, the answer is ‘self & attendant’. In the hospital record regarding indoor admission of Mahender Singh, Life Assured, it is mentioned that ‘Known alcoholic since 20-25 years’. This document has been signed by the Medical Officer, General Hospital, Sonepat.

8.      In view of the above, it is proved that the life assured concealed the true fact regarding his state of health which was material at the time of obtaining the policy.

9.      It is well settled principle of law that if the policy was obtained by the life assured on mis-statement and by concealment of true fact regarding his/her health, the insurer is not liable to pay any insurable benefits.  

10.    In Mithoo Lal V. Life Insurance Corporation of India , AIR 1962 Supreme Court 814, Hon’ble Apex Court held as under:-

“Contract of life insurance entered into as a result of fraudulent suppression of material facts by policy holder- Policy is vitiated and person holding assignment of policy cannot claim benefit of contract………….”

11.    Hon’ble Apex Court in Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. – (2000) 2 SCC 734 held as under:-

“It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and the good faith forbids either party from non-disclosure of the facts which the parties know.  ………..”

12.    In P.C. Chacko v. Chairman LIC of India, (2008) 1 Supreme Court Cases 321 Hon’ble Apex Court held as under:-

“22.   We are not unmindful of the fact that Life Insurance Corporation being a State within the meaning of Article 12 of the Constitution of India, its action must be fair, just and equitable but the same would not mean that it shall be asked to make a charity of public money, although the contract of insurance is found to be vitiated by reason of an act of the insured. This is not a case where the contract of insurance or a clause thereof is unreasonable, unfair or irrational which could make the court carry the bargaining powers of the contracting parties. It is also not the case of the appellants that in framing the aforesaid questionnaire in the application/proposal form, the respondents had acted unjustifiably or the conditions imposed are unconstitutional.”

13.    In CROWN CONSULTANTS PVT. LTD. Versus ORIENTAL INSURANCE COMPANY LTD., III(2011) CPJ 439 (NC), Hon’ble National Commission held as under:-

“19.     A contract of insurance is based on the doctrine of uberrima fides, i.e., “utmost good faith”, in the conduct of the insured. This doctrine was enunciated as far back as in 1766 by Lord Mansfield in the celebrated case of Carter V. Boehm, (1766) 97ER 1162, 1164, in the following words:

“Insurance is a contract of speculation….The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only; underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstances in his knowledge, to mislead the underwriter into a belief that the circumstance does not exist….Good faith forbids either party for concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and his believing the contrary.”

14.    In view of the above, it is established that the SBI Life Insurance-opposite parties have rightly repudiated the claim. District Forum failed to appreciate the evidence available on the record. So, the impugned order cannot be allowed to sustain.

15.    Hence, the appeal is accepted, the impugned order is set aside and the complaint is dismissed.

16.    The statutory amount of Rs.25,000/- deposited at the time of filing the appeal be refunded to the appellants against proper receipt and identification in accordance with rules, after the expiry of period of appeal/revision, if any.

 

Announced 21.07.2015

(Diwan Singh Chauhan) Member

(B.M. Bedi) Judicial Member

(Nawab Singh) President

CL