This revision petition has been filed by the petitioners Shriram Life Insurance Co. Ltd. & anr, against the order dated 02.05.2017 of the State Consumer Disputes Redressal Commission, Andhra Pradesh, (in short ‘the State Commission’) passed in First Appeal No.268 of 2015.

2.      Brief facts of the case are that the respondent/complainant is the wife of the Deceased Life Assured (DLA), who had taken life insurance policy.  The first policy No.LN080900089707 was issued on 20.07.2009 for sum of Rs.2,00,000/-.  The second policy bearing No.NP08090097589 was issued on 07.11.2011 for sum of Rs.4,00,000/-.  The insured died on 25.05.2013. The insurance claim was lodged by the complainant. However, the same was repudiated on 30.10.2013 on the ground that DLA was suffering from cancer before taking the insurance policy.  The complainant filed a consumer complaint bearing No.120/2013 before the District Consumer Forum, Kurnool, (in short ‘the District Forum’).  The complaint was resisted by the Insurance Company on the same grounds on which the repudiation was made.  However, the District Forum allowed the complaint and directed the Insurance Company to pay insurance amount of both the policies along with 9% p.a. interest. The opposite party/Insurance Company preferred appeal before the State Commission and the State Commission modified the order of the District Forum as follows:-

“22.  In the result, the appeal is partly allowed and the order of the Forum awarding payment of a sum of Rs.2,00,000/- under the policy bearing No.LN080900089707 with interest at 9% per annum from 12.12.2013 till the date of payment is set aside and the rest of the order of the Forum is confirmed.  No costs.”

3.      Hence the present revision petition by the opposite party/Insurance Company.

4.      Heard the learned counsel for the parties and perused the record.  Learned counsel for the petitioners stated that when the fact of pre-existing disease of cancer has been accepted by the State Commission, there should be no question of allowing insurance claim of the second policy which was taken in the year 2011.  The State Commission has allowed the claim on the basis that the DLA was examined by a panel of doctors of the opposite party and an additional premium was taken for DLA as he was anaemic.  Learned counsel stated that the medical examination done by the panel doctor of the Insurance Company cannot detect serious illness like cancer.  When the fact of DLA suffering from cancer is accepted by the complainant as well as by the State Commission and the information in respect of the cancer was not submitted in the proposal form, it is certain that the DLA had deliberately concealed this information from the Insurance Company and therefore, Insurance Company is not liable to pay the claim of the policy.

5.      On the other hand, learned counsel for the respondent/complainant stated that the DLA was examined by the panel doctor of the Insurance Company and the DLA was found anaemic. The Insurance Company charged extra premium for insuring the DLA, therefore, the Insurance Company cannot take the ground of any pre-existing disease as the Insurance Company was fully satisfied with the health examination carried out by the panel doctor of the Insurance Company.  The medical papers submitted by the opposite parties have not been proved by the concerned doctor or by any authorised representative of the concerned hospital.  Thus, these papers cannot be read in evidence.  The State Commission has rightly taken the view that this policy is payable because the Insurance Company was satisfied with the health of insured after charging the extra premium for anemia which was found after the medical examination by the penal doctor of the Insurance Company.    

6.      I have carefully considered the arguments advanced by both the learned counsel for the parties and have examined the material on record.  The contract of insurance is based on utmost faith on the part of the parties.  Accordingly, both the parties are supposed to disclose all the information that they have.  Clearly, the proposal form is to be filled with correct information without concealing any particular aspect.  The State Commission has clearly given a finding that the DLA was suffering from cancer and was treated in the year 2009 for this disease.  Based on this fact and based on the fact that the DLA had concealed this aspect of health in the proposal form, the claim under the first policy which was issued in the year 2009 has not been allowed.  When the DLA was examined by the panel doctor it was the duty of the insured to have informed about this disease to the panel doctor, however, if it was not informed, atleast the same should have been mentioned in the proposal form.  The examination by the penal doctor cannot take away the contractual responsibility of the proposer to give the correct information in respect of his health in the proposal form. The fact that the DLA concealed the information was mentioned in the repudiation letter and the complainant has not denied this information in the complaint nor there is any denial in the rejoinder filed by the complainant.  Thus, the fact that the DLA was treated for cancer in the year 2009 has not been specifically denied by the complainant at any stage.  Even the State Commission has given a finding that the DLA was suffering from cancer.  Once it is established that the DLA/proposer concealed information in respect of his health the Insurance Company has every right to repudiate the claim.  It was not an ordinary information, which may not be called material information for the insurance company.  Had the proposer given this information in the proposal form or may have informed the panel doctor, in all probability, the Insurance Company may not have given  Insurance to the DLA. Hon’ble Supreme Court in the matter of Satwant Kaur Sandhu Vs. New India Assurance Co. Ltd., 2009 INDLAW SC 856, has observed the following:-

“[A]  Insurance- Material fact- Meaning of –Term “material fact” is not defined in Act- In general terms it means as any fact which would influence judgment of a prudent insurer in fixing premium or determining whether he would like to accept risk- Held, in a Contract of Insurance, any fact which would influence mind of a prudent insurer in deciding whether to accept or not to accept risk is a “material fact”- Appeal dismissed.   

[C]   Consumer Protection- Insurance- Mediclaim policy- Repudiation of –Mis-representation and suppression of material facts regarding health made by policy holder-Non-disclosure of fact in proposal form at time of taking out mediclaim policy, that policy holder was suffering from chronic Diabetes and Renal failure fact- Whether factum of said illness was a “material” fact for purpose of a mediclaim policy and its non-disclosure was tantamount to suppression of material facts enabling Insurance Company to repudiate its liability under policy?- Mediclaim is a contract of insurance falling in category of contract uberrimae fidei, meaning a contract of utmost good faith on part of assured- When an information on a specific aspect is asked for in proposal form, an assured is under a solemn obligation to make a true and full disclosure of information on subject which is within his knowledge-Any inaccurate answer will entitle insurer to repudiate his liability because there is clear presumption that any information sought for in proposal form is material for purpose of entering into a Contract of Insurance- Held, statement made by insured in proposal form as to state of his health was palpably untrue to his knowledge-  There was clear suppression of material facts in regard to health of insured and, therefore, respondent-insurer was fully justified in repudiating insurance contract- Appeal dismissed.” 

7.      On the basis of the above judgment, it is clear that the suppression of any material information may lead to the repudiation of the claim.  This judgment is fully applicable in the present case as the suppression of information in respect of disease of cancer will definitely be a concealment of a material information and the reason given by the State Commission for allowing the insurance claim under the second policy cannot be sustained. 

8.      Thus, it is clearly established that even for the second policy bearing No.NP08090097589, the material information was concealed by the DLA in the proposal form and therefore, the Insurance Company was right in repudiating the claim. 

9.      Based on the above discussion, the revision petition No.2519 of 2017 is allowed and the order of the State Commission dated 02.05.2017 and order dated 05.05.2015 of the District Forum are set aside.  Consequently, the complaint is also dismissed.