Order by
Sh.Amrinder Singh Sidhu, President
1. The complainant has filed the instant complaint under section 12 of the Consumer Protection Act, 1986 (now section 35 of Consumer Protection Act, 2019) on the allegations that Puro Bibi wife of the complainant had purchased policy bearing No.005571692 on 08.05.2012 for Rs.8,75,000/- from the Opposite Parties against the paid up premium of Rs.14,999.17 paisa. It is alleged that unfortunately said Puri Bibi life assured died on 18.08.2012 due to heart failure and at the time of death, the policy holder was leading perfectly healthy and normal life. After the death of life assured, the complainant found the above said policy from the trunk of said Puro Bibi in the year 2015 i.e. after the death of 2/3 years and thereafter, the complainant lodged the claim with the Opposite Parties and fulfilled all the formalities and other documents demanded by the Opposite Parties. Thereafter, the complainant on so many occasions visits the office of Opposite Party No.1 and made requests for the settlement of his claim, but the Opposite Parties are lingering on the matter on one pretext to another. The aforesaid act of the Opposite Parties amounts to deficiency in service. Vide instant complaint, the complainant has sought the following reliefs.
- To make the insured amount of Rs.8,75,000/- as sum assured qua the policy in question and also to pay Rs. 1 lakh on account of compensation for causing him mental tension and harassment besides Rs.15,000/- as costs of litigation or any other relief which this Commission may deem fit and proper may be awarded to the complainant.
Hence, the complainant has filed the complaint for the redressal of his grievance .
2. Upon notice, Opposite Parties appeared and contested the complaint by filing written reply taking preliminary objections therein inter alia that the complaint is not maintainable. The name of the Opposite Parties is changed to Aditya Birla Sun Life Insurance Company Limited w.e.f. 11 August, 2017. Further, the complainant has suppressed and concealed the true and material facts and did not narrate the real facts in the complainant. Actual facts are that life assured had suppressed the material facts with regard to his age at the time of policy application. In the present case, the Opposite Parties issued policy in favour of Life Assured Puro Bibi on 08.05.2012 and the Life Assured Puro Bibi expired on 18.08.2012 and as such, the policy has continued for a period of 3 months and 10 days since its issuance. The claim was thoroughly investigated wherein it was revealed that Life Assured Puro Bibi had understated her age to the tune of 15 years. The correct disclosure of age was vital as the Life Assured Puro Bibi was under duty bound to disclose the true and correct facts as the same was important to underwrite the correct risk in issuance of the policy. Had the true and correct facts been known to the Opposite Parties, the policy would not have been issued to the Life Assured Puro Bibi. As per section 45 of the Insurance Act, 1938 no policy of life insurance shall after the expiry of two years from the date on which it was affected, be called in question by an insurer of the policy was inaccurate of false, unless the insurer shows that statement was on material to disclose and that it was fraudulently made by the policy holder and that the policy holder knew at the time of making it that the statement was false or that it was material to disclose. Actually, in the application form, the Life Assured Puro Bibi had mentioned her date of birth as 12.11.1973 i.e. 38 years at the time of application car received as KYC documents. However, during investigation, voter card received as KYC document was onlye verified wherein LA’s age was 56 years which revealed that deceased Life Assured Puro Bibi had understated her age by 15 years at the time of application and had not provided the complete and true information to the Opposite Parties in order to underwrite the risk involved in issuance of insurance cover to the Life Assured Puro Bibi. The Life Assured Puro Bibi kept the Opposite Parties in dark from her correct age which was contrary to the date of birth mentioned in the application form and hence based on the evidence procured during the investigation, the Opposite Parties had rightly repudiated the claim on the ground of misstatement of age and said fact was communicated to the complainant vide repudiation letter dated 19.03.2016. Moreover, in the year 2016, the Opposite Parties had filed a Police complaint before SSP, Ferozepur regarding misrepresentation/ forgery of necessary documents for the purpose of issuance of insurant policy wherein the Opposite Party had identified 8 policies which were purchased in he year 2011, 2012 and 2015 after submitting forged documents seeking intervention of the authority and investigation of the case and that the subject policy No. 005571692 was also one of the identified policy amongst other policies. As such, there was breach of one of the basic principles of life insurance contract which is utomost good faith and hence there was no other alternative for the Opposite Parties but except to repudiate the claim of the complainant and as such, there is no deficiency in service on the part of the Opposite Parties. On merits, the Opposite Parties took up the same and similar pleas as taken up by them in the preliminary objections. Remaining facts mentioned in the complaint are also denied and a prayer for dismissal of the complaint with cost was made.
3. In order to prove his case, complainant tendered into evidence his affidavit Ex.C1 alongwith copies of documents Ex.C1 to Ex.C5 and closed his evidence.
4. On the other hand, to rebut the evidence of the complainant, the Opposite Parties tendered into evidence the affidavit of Ms.Kshama Priyadarshini, Senior Chief Manager Legal Ex.Ops1 alongwith copies of documents Ex.Ops2 to Ex.Ops6 and closed the evidence on behalf of the Opposite Parties.
5. We have heard the ld.counsel for the Parties and also gone through the evidence produced on record.
6. Ld.counsel for the complainant has mainly reiterated the facts as narrated in the complaint and contended that Puro Bibi wife of the complainant had purchased policy bearing No.005571692 on 08.05.2012 for Rs.8,75,000/- from the Opposite Parties against the paid up premium of Rs.14,999.17 paisa. Further contended that unfortunately said Puri Bibi life assured died on 18.08.2012 due to heart failure and at the time of death, the policy holder was leading perfectly healthy and normal life. After the death of life assured, the complainant found the above said policy from the trunk of said Puro Bibi in the year 2015 i.e. after the death of 2/3 years and thereafter, the complainant lodged the claim with the Opposite Parties and fulfilled all the formalities and other documents demanded by the Opposite Parties. Thereafter, the complainant on so many occasions visits the office of Opposite Party No.1 and made requests for the settlement of his claim, but the Opposite Parties are lingering on the matter on one pretext to another and the aforesaid act of the Opposite Parties amounts to deficiency in service.
7. On the other hand, ld.counsel for the Opposite Parties has repelled the aforesaid contention of the complainant on the ground that actual facts are that life assured had suppressed the material facts with regard to his age at the time of policy application. In the present case, the Opposite Parties issued policy in favour of Life Assured Puro Bibi on 08.05.2012 and the Life Assured Puro Bibi expired on 18.08.2012 and as such, the policy has continued for a period of 3 months and 10 days since its issuance. The claim was thoroughly investigated wherein it was revealed that Life Assured Puro Bibi had understated her age to the tune of 15 years. The correct disclosure of age was vital as the Life Assured Puro Bibi was under duty bound to disclose the true and correct facts as the same was important to underwrite the correct risk in issuance of the policy. Had the true and correct facts been known to the Opposite Parties, the policy would not have been issued to the Life Assured Puro Bibi. As per section 45 of the Insurance Act, 1938 no policy of life insurance shall after the expiry of two years from the date on which it was affected, be called in question by an insurer of the policy was inaccurate of false, unless the insurer shows that statement was on material to disclose and that it was fraudulently made by the policy holder and that the policy holder knew at the time of making it that the statement was false or that it was material to disclose. Actually, in the application form, the Life Assured Puro Bibi had mentioned her date of birth as 12.11.1973 i.e. 38 years at the time of application car received as KYC documents. However, during investigation, voter card received as KYC document was onlye verified wherein LA’s age was 56 years which revealed that deceased Life Assured Puro Bibi had understated her age by 15 years at the time of application and had not provided the complete and true information to the Opposite Parties in order to underwrite the risk involved in issuance of insurance cover to the Life Assured Puro Bibi. The Life Assured Puro Bibi kept the Opposite Parties in dark from her correct age which was contrary to the date of birth mentioned in the application form and hence based on the evidence procured during the investigation, the Opposite Parties had rightly repudiated the claim on the ground of misstatement of age and said fact was communicated to the complainant vide repudiation letter dated 19.03.2016.
8. In the proposal form Ex.Ops2, Life Assured Puro Bibi had filed her date of birth as 12.11.1973 and the investigation, voter card received as KYC document was onlye verified wherein LA’s age was 56 years which revealed that deceased Life Assured Puro Bibi had understated her age by 15 years at the time of application and had not provided the complete and true information to the Opposite Parties in order to underwrite the risk involved in issuance of insurance cover to the Life Assured Puro Bibi. Regulation 2 (2)(d) of the IRDA (Protection of Policyholders’ Interests) Regulations, 2002 provides that ‘Proposal Form’ means a form to be filled by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of risk, to determine the rates, terms and conditions of a cover to be granted.” Hon’ble Supreme Court of India in Ramrameshwari Devi and Ors. Vs. Nirmala Devi and Ors. (Civil Appeal Nos.4912-4913 of 2011 decided on 4.7.2011) has held that no one can take undue advantage by filing vexatious and uncalled for litigation. The relevant Para no 45 of the judgement is reproduced as under:-
We are clearly of the view that unless we ensure that wrong-doers are denied profit or undue benefit from the frivolous
litigation, it would be difficult to control frivolous and uncalled for litigations. In order to curb uncalled for and frivolous litigation, the courts have to ensure that there is no incentive or motive for uncalled for litigation. It is a matter of common experience that court's otherwise scarce and valuable time is consumed or more appropriately wasted in a large number of uncalled for cases.
Furthermore, Hon’ble Supreme Court of India in case Reliance Life Insurance Company Ltd. & Ors. Vs. Rekhaben Nareshbhari Rathod has also so. The relevant para No.26 of the judgement is also reproduced as under:-
26 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 justifies 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 Boehm19, 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 under- writer trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge, to mislead the under-writer into a belief that the circumstance does not exist, and to induce him to estimate the risque, 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 care 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 a breach of the duty of good faith and will render the policy voidable by the insurer. The system of 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. The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) (1766) 3 Burr 1905 ―there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance‖. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.
9. Keeping in view the misstatement made by the Life Assured Puro Bibi in the proposal form regarding his less age i.e. by 15 years, this District Consumer Commission finds no deficiency in service on the part of the Opposite Party-Insurance Company because in the instant case, the Life Assured Puro Bibi had suppressed the material facts pertaining to her age at the time of for issuance of the policy in question and hence, violated the terms and conditions of the policy in question. It is well settled principle of law that the parties are bound by the terms and conditions of the Insurance Policy, and none of the parties can seek any relief beyond those terms and conditions. In this regard reference may be made to the observation made by the Hon’ble Apex Court in case cited as Suraj Mal Ram Niwas Oil Mills (P) Ltd. Versus United India Insurance Co. Ltd and another, 2011 CTJ 11 (Supreme Court) (CP) wherein the Division Bench of the Hon’ble Apex Court consisting of Hon’ble Mr. Justice D.K. Jain and Hon’ble Mr. Justice T.S. Thakur, held that:-
“22. Before embarking on an examination of the correctness of the grounds of repudiation of the policy, it would be apposite to examine the nature of a contract of insurance. It is trite that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. Therefore, the terms of a contract of insurance have to be strictly construed, and no exception can be made on the ground of equity………..”
“24. Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount important, and it is not open for the Court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risk covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the court should always be to interpret the words in which the contract is expressed by the parties.”
The facts and circumstances of the instant case are fully attracted to Suraj Mal Ram Niwas Oil Mills (P) Ltd case (Supra). Since the life assured had accepted the terms and conditions of the insurance policy and misstated regarding his age at the time of proposal with the Opposite Party for issuance of the policy in question and hence, violated the terms and conditions of the policy in question.
10. In view of the aforesaid facts and circumstances, the insured had violated the basic terms and conditions of the policy in question and hence the present complaint is not maintainable and the same stands dismissed. Keeping in view the peculiar circumstances of the case, the parties are left to bear their own costs.Copies of the orders be furnished to the parties free of cost. File is ordered to be consigned to the record room.
11. Reason for delay in deciding the complaint.
This complaint could not be decided within the prescribed period because the State Government has not appointed any of the Whole Time Members in this Commission for about 3 years i.e. w.e.f. 15.09.2018 till 27.08.2021 as well as the situation arising due to outbreak of the Novel Coronavirus (COVID-19).
Announced in Open Commission.
Dated:01.02.2022.
