1.      This revision petition under section 21(b) of the Consumer Protection Act, 1986 (in short, the ‘Act’) assails the order dated 09.11.2016 in First Appeal No. 238 of 2016 of the State Consumer Disputes Redressal Commission, Bihar, Patna (in short, the ‘State Commission’) dismissing the appeal of the petitioner against order dated 08.03.2016 of the District Consumer Disputes Redressal Forum, Muzaffarpur (in short, the ‘District Forum’) in Consumer Complaint no. 202 of 2015.

2.      The brief facts of the case, according to the petitioner, are that the respondent filed a claim before the District Forum for a claim of the sum assured for Rs 3,60,000/- in respect of late Ram Prasad Paswan, the Deceased Life Assured (“DLA”) in respect of a policy under the “bright Star Edge” policy dated 27.11.2013 No. 501-1497889, a Unit Linked Policy with a premium amount of Rs 18,000/-.  The Life Assured expired on 04.02.2014 and an insurance claim was filed on his behalf by the respondent as the nominee. On investigation, the petitioner found that there had been concealment of material facts as the DLA had multiple life insurance policies which had not been disclosed and amounted to concealment of material facts. The petitioner repudiated the policy on 31.03.2015. The respondent’s complaint before the District Forum was allowed ex parte with directions to pay Rs 3,60,000/- with interest @ 8% p.a. since the death along with Rs 30,000/- as compensation for harassment and litigation costs. The petitioner’s appeal before the State Commission on grounds of being ex parte and violative of the principle of uberrimae fides was rejected by the State Commission on 9.11.2016. A supplementary application that the DLA was a resident of Hajipur, Vaishali and the policy was issued by Patna branch of petitioner and since no cause of action had arisen at Muzaffarpur, the District Forum acted without jurisdiction was also turned down. The petitioner also contends that the respondent also filed a Consumer Complaint (No. 201/2015) before the District Forum against ICICI Prudential Life Insurance Co. Ltd. which indicates that the respondent and the DLA were habituated to taking policies without disclosing the facts. The present revision petition is filed on ground of it being perverse and without jurisdiction, with the State Commission having acted with material irregularity, the policy being obtained on fraudulent grounds and being violative of the principle of uberrimae fides insofar as other policies were not disclosed. The lack of full disclosure was not appreciated by the State Commission and the age of the DLA of 51 years would have been considered while approving the policy. The existence of two policies with Birla Sun Life Insurance (No. 5864262) dated 14.12.2012 for Rs 21 lakhs and policy no. 5751565 dated 14.09.2012 for Rs 2,03,978/- could not be considered while approving the policy. The declaration of the DLA in the Proposal Form regarding “Insurance History” was deliberately left blank to suppress facts according to the petitioner. The acts of the Agent in filling up the form cannot be assumed to have been authorized by the Insurer and the petitioner company cannot be held liable for it. The order of the State Commission is stated to be without jurisdiction and erroneous in holding that the petitioner failed to prove that the DLA failed to prove that there was no suppression of facts. The State Commission also failed to consider the supplementary application pertaining to territorial jurisdiction. Since the petitioner was ex parte before the District Forum there was no opportunity to controvert the facts. The respondent had not contested that the proposal form was incorrectly filled by the agent or that it was not signed by him. The order being based on surmises and conjectures, the impugned order is untenable in law and deserves to be set aside according to the revisionist.

3.      The respondent contested the revision petition. I have heard both the learned counsel for both the parties and perused the material on record, including their short synopsis of arguments.

4.      The petitioner argued that the District Forum lacked territorial jurisdiction in that no cause of action arose at Muzaffarpur. Reliance was placed on Sonic Surgical Vs. National Insurance Co. Ltd.  in CA No. 1560/2004 decided on 20.10.2009. It was averred that the respondent did not file any evidence under section 13(2)(b)(ii) of the Act. Reliance was placed on Reliance Life Insurance Co. Ltd. & Ors. Vs. Rekha Ben Naresh Bhai Rathod, Civil Appeal No. 4261 of 2019 decided on 24.04.2019 that “disclosure of earlier cover was material to an assessment of the risk which was being taken by the insurer” especially if multiple life insurance policies were obtained in a short period. It was also contended that an insurance policy being a contract of uberrimae fides or utmost good faith, deliberate concealment of material facts was made the policy liable to repudiation which was, therefore, in order.

5.      Per contra, the respondent took the plea that the DLA was explained the contents of the proposal form in Hindi as he did not know how to read or write English and the insurance agent marked the relevant entries as “N.A.” or “Not Applicable” and that such disclosure had been accepted by the insurance company while issuing the policy, without insisting on a categorical response of either ‘Yes’ or ‘No’. Therefore, the lapse, if any, had been waived by the petitioner. Respondent relies upon Sahara India Insurance Co. Ltd. Vs. Rayani Ramajaneyulu, RP No. 1117 of 2014 dated 01.08.2018 wherein it was held that for acts of omissions and commissions of an agent, the insured or legal heir should not suffer and on Manmohan Nanda Vs. United India Assurance Co. Ltd., (2022) 4 SCC 582 wherein the Hon’ble Supreme Court held that insurance being a contract based on  uberrimae fides is also based on the principle of mutuality which casts a duty on the insurer to also inform all the terms and conditions of the policy to the insured. It is therefore contended that the orders of the lower fora do not suffer from any infirmity warranting interference.  

6.      In Rekhaben Nareshbhai Rathod (supra) it has been held that “failure of the insured to disclose the policy of the insurer obtained earlier in the proposal form entitled the insurer to repudiate the claim under the policy”. It has also been held, following the of the Division Bench of the Mysore High Court in V K Srinivasa Setty vs Messers Premier Life and General Insurance Co. Ltd., AIR 1958 Mys 53 that:

“a person who affixes his signature to a proposal which contains a statement which is not true, cannot ordinarily escape from the consequence arising therefrom by pleading that he chose to sign the proposal containing such statement without either reading or understanding it. That is because, in filling up the proposal form, the agent normally, ceases to act as agent of the insurer but becomes the agent of the insured and no agent can be assumed to have authority from the insurer to write the answers in the proposal form.

If an agent nevertheless does that, he becomes merely the amanuensis of the insured, and his knowledge of the untruth or inaccuracy of any statement contained in the form of proposal does not become the knowledge of the insurer. Further, apart from any question of imputed knowledge, the insured by signing that proposal adopts those answers and makes them his own and that would clearly be so, whether the insured signed the proposal without reading or understanding it, it being irrelevant to consider how the inaccuracy arose if he has contracted, as the plaintiff has done in this case that his written answers shall be accurate.

7.      In Satwant Kaur Sandhu vs New India Assurance Co. Ltd.,  (2009) 8 SCC 316 the Hon’ble Supreme Court has laid down that it is for the insurer and not the proposer to determine whether the information specially sought in the proposal form is material or otherwise. Whether the information is material sought or not has been considered in United India Insurance Co. Ltd., vs MKJ Corporation and Modern Insulators Ltd., vs Oriental Co. Ltd., (2000) 2 SCC 734 by the Hon’ble Supreme Court and it was held that:

“22. … 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”.

In the light of these findings, the respondent’s reliance on Rayani Ramajaneyulu (Supra) and Manmohan Nanda (supra) cannot be accepted.

8.      In view of the foregoing, the District Forum and the State Commission have considered the matter and pronounced orders which clearly constitute a material irregularity in the light of the law laid down by the Hon’ble Supreme Court with regard to concealment of material facts in the proposal form leading to a policy of insurance.

9.      The revisional jurisdiction of this Commission under section 21 of the Consumer Protection Act, 1986 is limited to matters involving either jurisdictional error or material irregularity as held by the Hon’ble Supreme Court in Rubi (Chandra) Dutta (2011) 11 SCC 269 decided on 18.03.2011, Lourdes Society Snehanjali Girls Hostel and Ors vs H & R Johnson (India) Ltd., and Ors. (2016) 8 SCC 286 decided on 02.08.2016 and T Ramalingeswara Rao (Dead) Through LRs & Ors Vs. N Madhava Rao and Ors, Civil Appeal No. 3408 of 2019 decided on 05.04.2019. In Lourdes Society Snehanjali Girls Hostel (supra) it has been held that:

“17.   The National Commission has to exercise the jurisdiction vested in it only if the State Commission or the District Forum has either failed to exercise their jurisdiction or exercised when the same was not vested in them or exceeded their jurisdiction by acting illegally or with material irregularity”.

10.   In the instant case, as set out above it is manifest that there is material irregularity in the impugned order of the State Commission. The revision petition is therefore liable to succeed.

11.   In the facts and circumstances of the case and for the aforesaid reasons, the revision petition is allowed and the impugned order of the State Commission is hereby set aside. There shall be no order as to costs. Pending IAs, if any, shall also stand disposed of with this order.