Heard the learned counsel for both the parties.

2.              This appeal is  filed  U/S-15 of erstwhile  Consumer Protection Act,1986(herein-after called the Act). Hereinafter, the parties to this appeal shall be referred to  with reference to their respective status before the learned District Forum.

3.               The factual  matrix  leading to the case of the complainant is that the complainant’s brother  Bishnulal Agrawal  has purchased   three insurance policy vide policy No.594932423,594938279 and 594944509 from OP  on 23.2013,28.10.2014 and  21.11.2015 respectively.  It is alleged inter-alia that brother  Bishnulal Agrawal expired on 14.12.2015. Thereafter the claim was made but it was repudiated by the OP stating that the policy holder has suppressed his pre-existing disease  challenging the repudiation by erring  same as deficiency of service on the part of the OP, complaint was filed.

4.          Per Contra,the OP filed written version stating that they have sold three policies to the complainant. They have also admitted that the policy holder died on 14.12.2015 leaving complainant as nominee but they averred that the policy holder has suppressed his pre-existing disease namely old Cardiac RHD and doctor has served same. As the policy holder suppressed the material facts there is violation of Section-45 of the Insurance Act(herein-after called the  Insurance Act. So, they have discharge the duty by not allowing the claim.

5.              After hearing both the parties, learned District Forum has passed the following order:-

    “  The O.Ps are directed to pay Rs.5,00,000/-,Rs.5,50,550/- and Rs.5,00,000/- vide Policy No. 594932423,594938279 and 594944509 respectively, totaling a sum of Rs.15,50,550/-(Rupees Fifteen lakhs fifty thousand five hundred fifty) to the complainant within one month from the date of receipt of this order alongwith interest @ 10% P.A. from the date of repudiation i.e. 25.03.2017 till payment. The O.Ps are further directed to pay Rs.5,000/-(Rupees Five thousand)only towards litigation expenses to the complainant within the aforesaid period.”

6.             Learned counsel for the appellant submitted that learned District Forum has committed error in law by allowing the complaint without going through the written version filed by the OP with all perspective. According to him U/S-45 of the Insurance Act, OP has proved the  report of doctor showing the policy holder as old  Cardiac RHD  patient but learned District  has not accepted the same. On the otherhand learned District Forum has not applied judicial mind to the fact and circumstances of the case. He further submitted that since the policy holder has filled up the proposal form denying all the diseases but the  OP has adduced the  medical opinion of doctor. Learned District Forum ought to have dismissed the case of the complainant. Hence  he submitted to set-aside the impugned order by allowing the appeal.

7.           Learned counsel for the respondent  submitted that the OP has utterly failed to prove their plea.  Learned District Forum has rightly decided the case in favour of the complainant. On the otherhand he supports the impugned order.

8.         Considered the submissions of learned counsel for the parties, perused the DFR and impugned order.

9.           No doubt the complainant is required to prove the deficiency of service on the part of the OP but in the instant case since Section45 of the Insurance Act is pressed into service, the case has to be decided as per the mandate of law.

10.    The respondent has appeared but did not participate in the hearing. However, the argument of the respondent is available in the DFR and his submission before the learned District Forum is considered while disposing the appeal.

POINTS FOR DISCUSSION

11.    The main point for consideration in this case is whether the complainant has proved the deficiency of service of the OPs in repudiating the claim of the complainant.

SUBMISSIONS

12.    It is admitted fact that the deceased assured has purchased the policy in question from the OPs on 28.11.2001. It was 20 years Money Back Policy with profits and accident claim benefits. It is not in dispute that the deceased assured expired on 11.12.2001 at MKCG Medical College and Hospital, Berhampur.

13.    The complainant has produced the Medical Attendance Certificate and the Certificate of Hospital Treatment and both the documents show that the primary cause of death was Hepatic Encephalopathy but the secondary cause was Upper GI Bleeding. It appears that he was admitted on 10.12.2001 and expired on 11.12.2001. The Medical Certificate has been given by Dr.Ganeswar Sethi, Medical Officer of Department of Medicine. He has not been examined. It is further available from the document that the life assured has history of headache and fever for five days before being admitted. The Medical Attendance Certificate shows that Dr Sethi is not usual Medical Attendant of the diseased, but the Medical Attendant who attended the deceased continued treatment of the deceased in consultation with Dr Sethi. However, such documents do not show that the deceased insured has history of alcoholism.

14.    The written version shows that the life assured has submitted the proposal form clearly stating therein that he has no any use of alcohol drinks, narcotics or any other drugs, tobacco in any form. Such proposal form was signed by him in presence of the agent of the LIC and the Doctor of LIC. The Bed Head Ticket of deceased shows that the life assured was admitted complaining hepatic fever for last five days. At the same time, it also shows that death was due to Hepatic Encephalopathy. It is also revealed from the front page of the Bed Head Ticket that he was having chronic alcoholism and history of fallen several times and on oral examination alcoholic smell was coming.  The treating Doctor has mentioned such facts. Dr Sethi has also admitted in the Medical Attendant Certificate that he was not directly treating the patient but the concerned Doctor was treating the deceased. So the Bed Head Ticket showing the history recorded by the Doctor on the first appearance of the patient before doctor assumes interference. The signature of the Doctor is available in the Bed Head Ticket. Hepatic Encephalopathy is also a fever related to the liver. When the question was asked that are you ever used alcohol or drug but he refused so and it was only recorded on 28.11.2001 which is just nine days before the death. So there is reason to believe that the deceased assured had conscious such fact while giving statement in the proposal form. Let us discuss the law in this regard.

15.    Now issue is whether the insured has suppressed the pre-existing disease and making false statement. In the decision of Mithoolal Nayak vrs. Life Insurance Corporation of India AIR 1962 Supreme Court 814, it has been held by the Hon’ble Apex Court which is as follows:-

                             “ xxx   xxx  xxx                                                                            

The three conditions for the application of the second part of Section 45 are

a)        the statement must be on a material matter or must suppress facts which it was material to disclose,

b)        the suppression must be fraudulently made by the policy holder and

c)         the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.”

16.               With due regard to the decision, it can be safely observed that within two years of commencement of policy the insurer have right to revoke the policy as per unamended Section 45 of Insurance Act, 1938. But onus lies on the insurer to prove all the  pre-conditons before calling the policy in question within two years.

17.              The said decision has also been followed in the case of Reliance Life Insurance Co.Ltd & another (Supra). The onus lies on the insurer to prove the aforesaid three conditions precedent to apply section 45 of said Act. Again question raised with regard to the meaning of “material fact.” In this regard also in the decision Reliance Life Insurance Co.Ltd and another (Supra) Their Lordships observed as follows:-

                             “xxx   xxx   xxx

Contracts of insurance are governed by the principle of utmost good faith. The duty of mutual fair dealing requires all parties to a contract to be fair and open with each other to create and maintain trust between them. In a contract of insurance, the insured can be expected to have information of which she/he has knowledge. This justified a duty of good faith, leading to a positive duty of disclosure. The duty of disclosure in insurance contracts was established in a King’s Bench decision in Carter v. Boehm, where Lord Mansfield held thus:

“Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only; the underwriter trusts to his representation, and proceeds upon confidence that he does “not keep back any circumstance in his knowledge, to mislead the underwriter into a belief that the circumstance does not exist, and to induce him to estimate the risqué, as if it did not exist.”

It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant’s health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost fare must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as breach of the duty of good faith and will render the policy voidable by the insurer. The system for adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.”

18.              So with due regard to the aforesaid decision, we find, in the instant case, the suppression as to use of alcohol or drug by the concerned life assured is definitely the material suppression barely eight days before the commencement of the policy. Had there been disclosure of such fact the OPs must not have allowed the policy to be purchased. Now the alcohol and drug are the main cause for creating menace in the society and carrying the country towards anarchy and despotism. The drugs or alcoholism are all reasons for committing suicide in the society and it has increased to considerable length of domestic violence. Many celebrities are repeatedly ending the lives being saddled with the drugs or too much alcohol. At the stage of pandemic COVID also uses of such contrabond articles have been totally prohibited to take as there is high risk to live who takes liquor and drugs. The Regulatory Authority is breaking their head to detect such offences.

19.                  Be that as it may, withholding the material suppression certainly the breach of policy contract. The contract of insurance is based on the principle of “Uberrima fides” i.e based on most abdudant good faith and trust, and the insured must observe most perfect good faith towards the insurer. The learned District Forum has not disclosed the case in this regard. They have simply taken a piece of Bed Head Ticket and observed that the death was caused due to Hepatic Encephalopathy. It must be remembered that Bed Head Ticket should have been read as whole to find out the purpose for which it is maintained.

20.             Be that as it may, we are unable to agree with the finding of the learned District Forum in this regard and hereby observe that the insurer has discharged the onus by proving that the life assured while purchasing the policy has withheld or suppressed the material fact and made misstatement so as to allow the insurer to call the policy in question within two years. Hence, we are of opinion that complainant has failed to prove deficiency of service on the part of the OPs which repudiating the claim.

21.                  When the onus lies on the complainant to prove but   again shift to the OP in view of the aforesaid discussion, it is for the OP to prove the pre-existing disease. The OP, in support of  his submission adduced the medical  certificate issued by one Dr. Balaram Panigrahi which is  placed below:-

        “ Bishunlal Agrawal,S/o: Fatechand Agrawal of Bhater was a patient of old cardiac patient(RHD) was undergoing treatment  time to time.”

22.            The aforesaid certificate of the doctor  does not disclose from which period to which period he was suffering from cardiac disease. Moreover, there is no endorsement as to treating the Bishnulal Agrawal  by Dr. Balaram Panigrahi. No prescription or certificate is attached to support his  medical certificate. Besides the above document, no other document is filed by the OP. In this regard learned District Forum has not relied on the certificate made by Dr.Balaram Panigrahi for the reasons stated therein. This Commission is also agree   of the view taken by learned District Forum. On the otherhand the order of the learned District Forum is affirmed and appeal stands no merit  is dismissed. Learned counsel for the appellant submitted that Policy No.594932423 , the OP have already paid  the sum assured for one policy No.594932423. In view of tthat the sum assured of the rest policy will …………………….. If it has been same, will be adjusted.             

              Free  copy of the order be supplied to the respective parties or they may download same from the confonet  or webtsite of this  Commission to treat same as if  copy of order received from this Commission.

                   DFR be sent back forthwith.