Per Shri P.B. Joshi, Hon’ble Presiding Judicial Member

          Complainants are legal representatives of deceased Dilip Barave, who has availed loan facility from the predecessor in title opponent No.2, namely, UTI Bank Ltd. for the purpose of dairy farming amounting to Rs.29,63,000/-.  In order to provide collateral security for the said loan to opponent No.2 as per terms and conditions of the said loan scheme of opponent No.2, said deceased had taken out policy at the instance and insistence of opponent No.2 from opponent No.1.  Before the said policy was issued to deceased, opponent No.2 had arranged medical examination from the Panel Doctors of opponent No.1 and on the strength of the report submitted by said Panel Doctors, said policy was issued to said deceased.  Original policy was issued in favour of opponent No.2 under the said loan scheme.  Policy was issued on 22/09/2005.  Due to financial crisis and other domestic difficulties, said deceased could not pay the subsequent installments of the premium of the said policy.  However, said policy was revived on 16/09/2006 by paying penal premium.  On 09/09/2006 he was admitted in Rural Hospital at Ghodegaon.  He was in the hospital till 11/09/2006.  Doctors treating said deceased at the said hospital suspected malignancy and advised the said deceased to get admitted at Tata Memorial Hospital in Mumbai.  Accordingly, said deceased was admitted in the Tata Memorial Hospital, Parel, Mumbai on 18/09/2006 but before his ailment could be detected and/or any further treatment was meted out to him, said deceased died on 21/09/2006 due to cardio respiratory arrest.  After the death of deceased, the complainants submitted their claim under the said policy to opponent No.1.  The claim was repudiated by opponent No.1 by its letter dated 10/03/2007 on the ground of suppression of ailment and hospitalization of said deceased between 09/09/2006 and 11/09/2006.  It was further alleged in the said letter that said deceased had adverse habits of alcoholic, tobacco chewing since 3-4 years and had been suffering from epigastric pain since 1-2 years which was not disclosed in the proposal dated 12/08/2005 under Question No.13(a) and 14(e).  The complainants have contended that at the time of revival of said insurance policy, deceased was not called upon to file any fresh disclosure and was not called upon to carry out a fresh medical examination.  It was contended by the complainants that question of suppressing any fact by the deceased does not arise from any angle.  The letter dated 10/03/2007 repudiating the complainant’s legitimate claim was bad in law.  As the claim of the complainant was repudiated by opponent No.1, complainants filed complaint with prayer that opponent No.1 be directed to rectify the defects in the service and award the entire amount of Rs.29,63,000/- under the said policy with interest @ 18% p.a. from the date of repudiation of the complainants’ claim.  Complainants also prayed that opponents be jointly and severally directed to pay a sum of Rs.10 Lakhs on the ground of deficiency in service and unfair trade practice and also on the ground of failure on the part of the opponents to favourably consider the complainant’s claim.  Complainants prayed for Rs.25,000/- as costs of this complaint.

2.       Opponent No.1 resisted the claim by filing written version.  Opponent No.1 has not disputed about issuance of policy, revival of policy and repudiation.  However, it was contended that the claim was rightly repudiated on the ground mentioned in the said letter.  It was contended that as there was suppression of material fact by the deceased, claim was rightly repudiated and prayed for dismissal of complaint.

3.       Opponent No.2 failed to file written version and hence, matter proceeded without written version of opponent No.2.

4.       Considering the rival contentions of the parties, considering the record, scope of the complaint and submissions made before us, following points arise for our consideration and our findings thereon are noted as against the reasons recorded herein below :-

REASONS

5.       Point No.1 :- Here in the present matter, most of the things are admitted.  Only dispute is with regard to legality of the repudiation.  As per complainants, repudiation of claim by opponent No.1 is illegal.  Whereas it is the contention of opponent No.1 that as there was suppression of material fact on the part of deceased, the claim was repudiated on the ground legally.

6.       To decide said point, it is necessary to refer the documents on which the opponent No.1 is relying to support the repudiation.  Proposal Form is on record at page-64 of the complaint compilation.  Learned Advocate for opponent No.1 has argued that in column 13(a), question was asked to the proposed insured that - Have you ever used tobacco in any form? and tick marked on ‘No’ is done and in column 13(b), question was asked to the proposed insured that - Have you ever used alcohol? and tick marked on ‘No’ is done.  Learned Advocate for the opponent No.1 has argued that in the clinical history taken in Tata Memorial Centre when the deceased was admitted in the said hospital, in risk factor, tobacco chewing and alcohol are tick-marked as ‘Right’.  It was submitted that from the said clinical history in the Tata Memorial Hospital, it is clear that deceased was in habit of chewing tobacco and was taking alcohol.  However, said fact was suppressed by deceased when the proposal form was submitted.  It was argued on behalf of the opponent No.1 that because of suppression of said material fact, opponent No.1 has rightly repudiated the claim.

7.       Learned Advocate for the complainants has submitted that there was only tick-marks and there is no endorsement who has given said information for making those tick-marks and hence, that cannot be attributed as information given by deceased.  Considering the submissions made before us, tick-marks on tobacco chewing and consuming alcohol in the said history, it cannot be inferred without further evidence that those tick-marks were made on the information given by deceased.  It is not clear who has made those tick-marks and on whose information.  It was necessary to mention on whose instructions those tick-marks were made and as per the Hospital Administration Manual, it was necessary to obtain thumb impression/signature of that person who has given information.  There is no thumb impression or signature on those papers.  In absence of evidence by way of affidavit of the person who made those tick-marks, contention of opponent No.1 that deceased was in habit of tobacco and was used to consume alcohol cannot be accepted.

8.       Learned Advocate for opponent No.1 has submitted that deceased was admitted in Rural Hospital, Ghodegaon.  However, that information was not given by deceased when the policy was revived.  Learned Advocate for the complainants submitted that deceased was admitted in the Rural Hospital, Ghodegaon during the period 09/09/2006 to 11/09/2006.  However, declaration for revival was given on 07/08/2006 which is at page-69 of the complaint compilation.  It was submitted that as the declaration was given on 07/08/20006 there was no question of mentioning in the said declaration that declarant was admitted in the hospital on 09/09/2006 and that is very clear from the record.

9.       Learned Advocate for opponent No.1 has submitted an authority reported in 2001 (2) SCC- 160 (Life Insurance Corpn. Of India & Ors. V/s. Asha Goel (Smt.) and Ant.) and contended that it is the duty of the insured to disclose the material fact and the said duty continued up to execution of contract of insurance.

10.     There cannot be any dispute about it.  Here in the present case, it is the contention of the complainants that deceased has not suppressed any fact.  We have already discussed about it.  We would like to refer the observation of their Lordships in the said authority, wherein their Lordships of Apex Court have referred to earlier decision of the Apex Court in the matter of Mithoolal Nayak V/s. LIC of India, AIR 1962 SC 814, in which position of law was stated thus : The three conditions for application of second part of Section 45 of the Insurance Act 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 policyholder and (c) the policyholder must have known at the time of making statement that it was false or that it suppressed the facts which it was material to disclose.  It was observations of their Lordships that - “Mere inaccuracy or falsity in respect of some recitals or items in the proposal is not sufficient.  The burden of proof is on the Insurer to establish these circumstances and unless Insurer is able to do so there is no question of policy being avoided on the ground of misstatement of facts.”

11.     Keeping in view those observations of their Lordships of the Apex Court and the facts of the present case are considered, we find that it cannot be said that there is any suppression of material facts on the part of the deceased policy holder much less a fraudulent suppression of facts.  Hence, we find that repudiation of opponent No.1 is not legal.  Hence, we answer point No.1 in negative.

12.     Point No.2 :- The complainants have contended that loan protected policy was obtained by deceased from opponent No.1 for Rs.29,63,000/-.  Opponent No.1 has not disputed about the policy.  Opponent No.1 has not disputed the amount of policy.  The claim was repudiated only on the ground that deceased has not given necessary information and suppressed some material facts.  We have already discussed that point earlier while discussing Point No.1.  As far as amount of policy is concerned, in fact there is not dispute.  Thus, we find that in view of answer of Point No.1, it is clear that complainants are entitled for the amount of policy i.e. Rs.29,63,000/-.  Hence, we answer Point No.2 accordingly.

13.     Point No.3 :- The complainants have claimed an amount of Rs.10 Lakhs on the ground of deficiency in service, unfair trade practice and also on the ground of failure on the part of the opponents to favourably consider the complainants’ claim.  In view of answer of Point No.1, it is clear that there is deficiency in service on the part of opponent No.1 and hence, complainants are entitled for compensation on that count.  However, amount of Rs.10 Lakhs claimed by the complainants cannot be granted as there is no justification for such a huge amount.  We find that an amount of Rs.3 Lakhs is just and proper.  Hence, we answer Point No.3 accordingly.

14.     Point No.4 :-   In view of answers to Point Nos.1,2&3, complaint deserves to be allowed partly.  Hence, we pass the following order :-

                   -: ORDER :-

1.Complaint is partly allowed.

2.Opponent No.1/Insurance Company is directed to pay to the complainants amount of Rs.29,63,000/- along with interest @ 9% p.a. from the date of filing of the complaint till its realization within a period of sixty days, failing which interest will be enhanced to 12% p.a. till realization.

3.Opponent No.1/Insurance Company is further directed to pay amount of Rs.3 Lakhs as compensation to the complainants.

4.Opponent No.1/Insurance Company is further directed to bear its own costs and pay amount of Rs.10,000/- towards costs of this complaint to the complainants.

5.Copies of the order be furnished to the parties.

Pronounced

Dated 26^th August 2014.