This complaint coming up before us for hearing on 28-03-14 in the presence of Sri N. Koteswara Rao, advocate for complainant and of                                Sri P. Ramanjaneyulu, advocate for opposite parties, upon perusing the material on record, after hearing both sides and having stood over till this day for consideration this Forum made the following:-

O R D E R

Per Sri A. Hazarath Rao,  President:-    

          The complainant filed this complaint u/s 12 of the Consumer Protection Act seeking the insured amount of Rs.2,00,000/- with interest and besides costs.

2.   In brief the averments of the complaint are hereunder:

          One Edupati Subba Rao obtained insurance policy for Rs.2,00,000/- form the opposite party bearing No.4635905.   The policy period was from 21-01-11 to 21-01-65 and the premium payable was Rs.10,564/- p.a.   The opposite parties agreed to pay Rs.2,00,000/- in the event of death of the policy holder.  The policy holder died on 11-03-11 leaving the complainant as his nominee.   The policy was in force at the time of the death of the insured.  The complainant on 24-04-12 claimed the insured amount from the opposite parties.   But the opposite parties rejected the claim alleging non disclosure of material facts.   The repudiation of the claim is unjust and unreasonable and thus the opposite parties committed deficiency in service.  The complaint therefore be allowed.

3.  The contention of the opposite parties in brief is hereunder:

          The complaint is not maintainable either in law or on facts.   The complainant approached this Forum with unclean hands suppressing material facts.   The opposite parties repudiated the claim for mis-representation of the material facts by the deceased policy holder at the time of taking proposal.   In the proposal form the deceased policy holder nominated his son on 24-04-12 and the opposite parties received death claim intimation along with claimants statement and death certificate of the deceased policy holder.   The opposite parties there upon conducted investigation.   The investigations revealed that the deceased policy holder was suffering from inflammatory Lesion Koch prior to obtaining policy from the opposite parties.   The deceased policy holder took treatment from Indo American Hospital, Hyderabad.   The deceased policy holder suppressed the said fact while obtaining the policy.   The inflammatory Lesion Koch cannot be considered as a normal disease.  The contract of insurance is of utmost good faith.   The deceased policy holder was under an obligation to disclose the material facts in the proposal form.   The opposite parties thus rightly repudiated the complainant’s claim on the ground o suppression of material facts.  Doctor’s affidavit is not necessary wile repudiating death claim and its non production cannot be a reason to allow the complaint.   The opposite parties did not commit deficiency in service.   The complaint therefore be dismissed.

4.  Exs.A-1 to A-5 and Exs.B-1 to B-6 were marked on behalf of complainant and opposite parties respectively.

5.  Now the points that arose for consideration in this complaint are:

          1. Whether the opposite parties committed deficiency in service by                        repudiating the claim unjustly and unreasonably?

          3. Whether the complainant is entitled to insured amount

                   of Rs.2,00,000/-?

          4. Whether the complainant is entitled to compensation?

          5. To what relief?

6.   Admitted facts in this case are these:

          1. Insured Edupati Subba Rao obtained insurance policy

              bearing No.004635905 on 21-11-11 for Rs.2,00,000/-

              and the mode of premium is annual (Ex.A-1).

          2. The insured paid Rs.10,352.62 ps on 21-01-11.

          3. The complainant submitted claim form along with copy of death                   certificate of the insured (Exs.A-1 to A-4=B-3).

          4. The opposite parties on 31-05-12 repudiated the complainant’s                   claim (Ex.A-5=B-6).

7.   POINT  No.1:-   The opposite parties repudiated complainant’s claim alleging that the deceased insured suppressed material facts regarding his health and taking treatment in Basavatarakam Indo American Cancer Hospital and Research Institute prior to obtaining the policy in question.  It is well settled in law that burden is on the insurer to prove or establish that the insured suppressed material fact while obtaining insurance policy because a negative aspect cannot be proved by adducing positive evidence.  

8.   In Shnyni Valsan Pombally vs. State Bank of India & another 2014 (1) CPJ 387 (NC) held that it is a well settled proposition of law that a contract of insurance is based on the principle of utmost good faith – Uberrimae fidei, applicable to both parties. The rule of non disclosure of material facts vitiating a policy still holds the field.  The bargaining position of the parties in a contract of insurance is unequal.  The insured knows all the facts, the insurer is unaware anything which may be material to the risk. Very often it is the insured who is the sole person who has this knowledge.  The insurer may not even have the means to find out the facts which would materially affect the risk.  The law therefore, enjoins on the insured an absolute duty to disclose correctly all material facts which are within his personal knowledge or which he ought to have known had he made reasonable enquiries.   A contract of insurance therefore can be repudiated for non disclosure of material facts. 

9.      In the above case the National Consumer Disputes Redressal Commission relied upon the decision reported in Satwant Kaur Sandhu vs. New India Assurance Company 2009 (4) CPJ 8 (SC) regarding the expression material fact wherein it was held

“It has to be understood in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk.   Any fact, which goes to the root of the contract of insurance and has a bearing on the risk involved, would be “material” and if the proposer has knowledge of such fact, he is obliged to disclose it, particularly while answering questions in the proposal form.   Any inaccurate answer will entitle the insurer to repudiate their liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance”.         

9A. The decisions relied on by the opposite parties reported in LIC of India vs.B. Chandravatamma (AIR 1971 AP 41) and LIC of India vs. Smt Surekha Jadav (RP No.2130 of 2007 dated 31-07-12 (NC) were to the same effect.

10.  In Life Insurance Corporation of India and others vs. Nita Bharadwaj 2014 (1) CPJ 409 (NC)  it was held that it is immaterial whether cause of death had any nexus or not with the disease suffered and suppressed by the insured. 

11.   In Neetu Namdhari vs. Life Insurance Corporation of India and others 2014 (1) CPJ 442 (NC) and Manjinder Kaur vs. Life Insurance Corporation of India and another 2014 (1) CPJ 3 (NC) it was held that answers given by life assured which were within his knowledge in a fraudulent manner amounted to suppression of material facts and results in vitiating contract of insurance. 

12.    The learned counsel for the opposite parties contended that affidavit of concerned doctor need not be filed and it is not a ground to allow the claim and relied on the decision reported in the Divisional Manager, LIC of India and others vs. Smt Anupama and others decided by the National Consumer Disputes Redressal Commission on 17-04-12 in R.P.Nos.3794-3796 of 2007.   In the above decision, the National consumer Disputes Redressal Commission followed the decision reported in LIC of India Vs. Krishan Chander Sharma – II(2007) CPJ 53(NC).   

13.   The National Consumer Disputes Redressal Commission  in LIC of India Vs. Krishan Chander Sharma – II(2007) CPJ 53(NC) has ruled that if there is other credible evidence to prove the fact of a pre-existing disease, mere absence of an affidavit of the concerned treating doctor is not an adequate reason to reject the proof.

14.  In Divisional Manager, LIC of India and others vs. Smt Anupama and others decided by the National Consumer Disputes Redressal Commission on 17-04-12 in R.P.Nos.3794-3796 of 2007 it was held

 “The authenticity of the Hospital documents was proved by the Record Keeper of Apollo Hospitals before the Fora below.  The insuree had not disclosed these facts in Column No.4 of Declaration of Good Health and had also replied in the negative on the question whether he consumed alcoholic drinks.    At the time of revival of his policies that had lapsed on account of non-payment of premium he again did not disclose his pre-existing disease.  Respondent has also not been able to submit any credible evidence to rebut the facts in the documents/records produced from Apollo Hospital.  The various documents produced from Apollo Hospitals indicated his treatment for his pre-existing disease of Cirrhosis of Liver caused by heavy consumption of                   1 and 1½ litres alcohol per day.  Since there is close nexus between his disease and his death, it is clear that insuree had suppressed material facts regarding his health and therefore the revision petition deserves to be allowed.

                    We have heard the averments made by the learned Counsel for both parties at length and have carefully considered the evidence on record led by the parties.  The facts pertaining to the issuance of 4 policies by the Petitioner to the Respondent’s late husband are not in dispute.  It is also an admitted fact that the insuree expired on 24.07.2003 in Apollo Hospital because of Cirrhosis of Liver.  Counsel for Respondent had contended before us that the case summary and other medical records produced from Apollo Hospital where the insuree had been admitted and subsequently died is not adequate proof that he was a known case of Cirrhosis of Liver with previous UGI bleeds because the case history was based on the version given by an attendant.    We are, however, unable to accept this contention because this was not the only evidence available on file to prove that the insuree had been suffering from Cirrhosis of Liver.  This diagnosis was reached by a well-qualified medical expert in a reputed hospital who after examining the insuree recorded a diagnosis of chronic alcohol related liver disease.  It is medically well established that Cirrhosis of Liver does not develop overnight and one of the most common causes of this disease is alcoholism.   In view of these irrefutable facts, it is clear that the insuree had a pre-existing disease the information about which he had suppressed in his insurance proposal form.  We are also unable to accept the reasoning of the District Forum that merely because the affidavit of the doctor who had given the said certificate has not been filed, the same is adequate reason to reject the documents from the Hospital even though these were certified by an official of the said Hospital.

We note that the insuree who was a young man of 33 years took 4 insurance policies, the last one for an amount or Rs.15 lakhs on 28.01.2003 i.e. just a few months before he expired which would justify drawing of an adverse inference.  We have also carefully gone through the majority order of the State Commission and we do not find any specific reasons that have been recorded by them to controvert or challenge the records of Apollo Hospital as proof that the insuree was an alcoholic and a patient of Cirrhosis of Liver for quite long time.   It is well established that a contract of insurance is made in “utmost good faith” and suppression of any material fact by the insuree would entitle the Insurance Company to repudiate the claim.  Since it is clearly proved as discussed in the foregoing paras that insuree had suppressed material facts regarding his pre-existing disease which eventually led to his death, we are unable to uphold the majority order of the State Commission and the same is set aside.  The revision petitions are therefore allowed.  No costs.

15.   Now this Forum has to see whether the documents filed by the opposite parties are sufficient to prove that the deceased insured suppressed material facts.   In this case    the opposite parties on 31-05-12 repudiated the claim under Ex.A-5=B-6.   The relevant para in Ex.A-5=B-6 is extracted below for better appreciation:

     “However, our investigations have established that the Life Assured was diagnosed of suggestive inflammatory Lesion Koch’s prior to the application for insurance.   Hence the aforesaid replies in the application for insurance were false.

          Had the Life Assured replied to the aforesaid questions truthfully and correctly, the Company would not have issued the policy at all.   We are, therefore, hereby repudiating out liability under the policy forfeiting the premium paid there under.”

16.   Prior to issuing Ex.B-6 the opposite parties appointed M/s Zubair & Company to investigate into the claim who in turn submitted report on            09-05-12 (Ex.B-4).   Page 6 of Ex.B-4 revealed that the investigator visited and enquired in 1) NRI Hospital, Guntur 2) Balaji Cancer Hospital, Guntur and 3) Basavataraka Rama Rao hospital, Hyderabad and learnt that the deceased insured  took treatment for cancer and died due to cancer.

17.   To substantiate its contention, the opposite parties filed the laboratory reports marked as Ex.B-5 i.e., Cytology, Bio-chemistry, Hematology.   In Ex.B-5 name of the patient was mentioned as Y. Subba Rao, aged 47, Male and was treated as out-patient during 03-12-10 – 06-12-10.   The opposite parties did not mention in their reply about Ex.B-5 to deny or admit by the complainant about the insured taking treatment during 03-12-10 – 06-12-10 in the said hospital.  In Ex.B-5 neither patient’s father’s name nor his village name was mentioned.   The opposite parties themselves filed Ex.B-5.  The opposite parties did not summon the record from Basavatarakam Indo American Cancer Hospital and Research Institute as happened in the reported case of the Divisional Manager, LIC of India and others vs. Smt Anupama and others decided by the National Consumer Disputes Redressal Commission on 17-04-12 in R.P.Nos.3794-3796 of 2007.   The opposite parties not mentioning of Ex.B-5 in Ex.B-6 though available with it, absence of father’s name of patient and village name and not summoning the records from the said hospital mentioning name of the insured and his father and name of village leads us to doubt the authenticity of Ex.B-5 that it related to the insured.   In this case the opposite parties failed to adduce credible evidence in establishing suppression of pre-existing disease as held in LIC of India Vs. Krishan Chander Sharma – II(2007) CPJ 53(NC).   We therefore, opine that the decision Divisional Manager, LIC of India and others vs. Smt Anupama and others decided by the National Consumer Disputes Redressal Commission on 17-04-12 in R.P.Nos.3794-3796 of 2007 is distinguishable on facts.   In view of the afore mentioned discussions, we hold that the opposite parties repudiating the claim is unjust and unreasonable and amounted to deficiency in service and answer this point against the opposite parties.

18.  POINT No.2:-  The complainant claimed interest @24% p.a., from the date of the death of the insured.   The complaint averments revealed that she submitted claim on 24-04-12 and the opposite parties repudiated the claim on 31-05-12.   There was no much delay.   It can therefore be said that the opposite parties acted without much delay.    Under those circumstances, awarding interest from 01-06-12 will meet ends of justice.

19.   In view of above findings on point No.1, the complainant being nominee is entitled to receive the insured amount of Rs.2,00,000/- with interest @9% p.a., from 01-06-12 till payment.  We therefore answer this point accordingly in favour of the complainant.

20.  POINT No.3:-  The complainant claimed Rs.5,000/- as damages towards mental agony as the opposite parties rejected the claim on untenable grounds.  The amount of Rs.5000/- under any stretch of imagination cannot be said as excessive.   We therefore, award Rs.5,000/- as damages and answer this point in favour of the complainant.

21.  POINT No.4 :-   In view of above findings, in the result the complaint is partly allowed as indicated below:

          1. The opposite parties are directed to pay Rs.2,00,000/- (Rupees two lakhs only) being the insured amount together with interest @9% p.a., from 01-06-12 till payment to the complainant.

          2. The opposite parties are directed to pay Rs.5,000/- (Rupees five thousand only) as damages and Rs.2,000/- (Rupees two thousand only) as costs to the complainant.

          3.  The amounts ordered above shall be paid within a period of six weeks from the date of receipt of the copy of the order.

Typed to my dictation by Junior Steno, corrected by me and pronounced in the open Forum dated this the 2^nd day of April, 2014.

Sd/-xxx                             Sd/-xxx                                      Sd/-xxx

     MEMBER                                      MEMBER                                PRESIDENT

 APPENDIX OF EVIDENCE

DOCUMENTS MARKED

For Complainant:

For opposite party:  

                                                                                             Sd/-xxx

        PRESIDENT

NB:   The parties are required to collect the extra sets within a month after receipt of this order either personally or through their advocate as otherwise the extra sets shall be weeded out.