PER MR SUBHASH CHANDRA

        This first appeal under section 19 of the Consumer Protection Act, 1986 (in short, ‘the Act’) challenges the order of the Telangana State Consumer Disputes Redressal Commission, Hyderabad (in short, ‘the State Commission’) in CC no. 58 of 2013 dated 11.04.2017 allowing the claim of the complainant and directing the OPs to pay a sum of Rs. 50 lakh along with interest @ 9% per annum from the date of death of the insured till realization with cost of Rs.5000/- within four weeks. The appellant is before this Commission with the following prayer:

1. Set aside the impugned order dated 11.04.2017 passed by the State Commission, Telangana at Hyderabad in CC no.58 of 2013 and dismiss the complaint of the respondent herein;
2. Grant costs of proceedings in favour the appellant and against the respondent; and/ or
3. Grant such other or further relief(s) which this Hon’ble Commission may deem fit in the facts and circumstances of the case and in the interest of justice.

2.     The facts in brief are that one Garipally Vinod Kumar, submitted the life insurance proposal on 25.11.2011 for a sum of Rs.50 lakh to the appellant which was declined on 18.07.2011 after medical examination on the grounds that he was excessively over weight weighing 126 kg on 16.09.2011. Subsequently, another insurance proposal was submitted by ‘G Vinod Kumar’ in which the answer to question no. 8 A – whether a proposal or application for revival of the policy pertaining to him had been withdrawn, deferred, dropped or declined was answered in the negative. Following conduct of a medical examination, Policy no. 604732976 dated 05.10.20211 for a sum of Rs.50 lakh was issued wherein the respondent was named as nominee. On 04.11.2011 the insured died due to drowning and on 25.09.2012 a claim for the insured amount was preferred by the nominee (the present respondent) to the complainant/ insurance company. The claim was rejected on the grounds of non-disclosure of material facts at the time of obtaining the policy and the fact that a previous proposal had been declined which fact had not been disclosed by the deceased life assured (DLA). The appellant cited the principle of utmost good faith in a contract of insurance and relied upon the judgment of Vasantiben Haresh Kumar Thakur and Ors. vs Life Insurance Corporation of India – III (2006) CPJ 440 (NC), Dineshbhai G Chandarana vs LIC of India FA no. 242 of 2006 decided on 27.02.2010 and Seema Agrawal vs Branch Manager, LIC of India RP no. 1059 of 2009 decided on 17.07.2015 and argued that withholding of material facts was a breach of principle of ubberima fides and therefore, the appellant was within his right to repudiate the claim. It was contended that the same did not constitute any deficiency in service under section 2 (1) (g) of the Act. It is also contended that the State Commission had erred in relying upon the judgment of this Commission in Vidya Devi vs LIC of India RP no. 382 of 2011 decided on 16.07.2012 which had dealt with question of non-disclosure of previous policies and had, based upon the Hon’ble Supreme Court’s judgment in Satwant Kaur Sandhu vs New India Assurance Company Ltd., IV (2009) CPJ 8 (SC), held that the assured was under a solemn obligation to make a true and full disclosure of the information which is within his knowledge and that material fact refers to “any fact which goes to the root of the contract of insurance and has a bearing on the risk involved”.

3.     It is also argued that the contention of the respondent that the proposal form had been filled by the Insurance Agent and not by the DLA cannot be accepted since it had been held in the case of LIC vs M Gowri and Ors., FA no.163 of 1993 by this Commission that the insurance agent does not act as an agent of the insurance company but acts as an agent of the insured for whom the insurance is being obtained.

4.     We have heard the learned counsel for the parties and have perused the records carefully.

5.     It was argued by the appellant that the deceased son of the respondent (Garipally Vinod Kumar) had obtained a policy bearing no.604732976 from the appellant for a sum assured of Rs.50 lakh. The policy was commenced on 28.04.2011 and the deceased died due to drowning in water on 03.11.2011. An FIR no.175 of 2011 was also lodged at PS Balkonda on 04.11.2011. The post mortem report also states that the death occurred due to drowning in water. The respondent approached the appellant for the settlement of the claim being nominee in the said policy. The respondent alleges that the claim was not entertained properly. Hence, the respondent issued a legal notice dated 22.01.2013. The appellant replied to the legal notice by stating some technicalities in the documents. Even after removing the technicalities, the claim was not settled by the appellant.  Thereafter the respondent filed a complaint before the State Commission on 03.04.2013 wherein the State Commission directed the appellant to pay a sum of Rs.50 lakh covered under by policy together with interest @ 9% per annum from the date of death of the deceased i.e., 03.11.2011 till realization and to pay a cost of Rs.5000/- to the respondent as cost of litigation.  Learned counsel for the respondent submits that there was no suppression of material fact and the cause of the death was accidental. Therefore, the State Commission has rightly decided the complaint in favour of the respondent.

6.     The contention of the respondent is that the insurance policy in question had been approved following the medical examination of the DLA by the approved doctor of the appellant insurance company. It was also argued that the repudiation of the claim on 11.05.2013, i.e., after two years of the policy was barred under Section 45 of the Insurance Act, 1983.

7.     From the foregoing, it is apparent that the appellant herein had rejected a proposal in the name of the DLA on grounds of extreme obesity. It is also evident that the said Garipally Vinod Kumar and G Vinod Kumar are the same person as is manifest from the personal details as per the proposal forms. It is not in dispute that the forms do not pertain to the DLA. The respondent’s contention is that the proposal forms were filled in by an Insurance Agency for which the DLA cannot be held responsible. It is also his contention, that there was no willful suppression of material facts and therefore, the policy was in order.

8.     In considering the rival contentions of the parties, it is salient to remain cognizant of the fact that a contract of insurance is based on the principle of uberrima fides or utmost good faith. Both the parties to the contract are required to abide by the same. It has also been laid by the Hon’ble Supreme Court in Reliance Life Insurance Co. Ltd., and Ors. Vs Rekhaben Nareshbhai Rathod Civil Appeal no. 4261 of 2019 (arising out of SLP (C) no. 14312 of 2015) decided on 24.04.2019 that an insurance agent when filling in a proposal form on behalf of the life assured, ceases to be an agent of the insurance company and acts as the agent of the life assured. The reliance of the respondent, therefore, on the averment that the DLA cannot be faulted for the errors of the agent cannot, therefore, be considered. The response of the DLA at the time of the proposal to a question of prior refusal/ rejection of a policy proposal was a categorical negative. The DLA further affairmed this reply as he certified that the contents of the form had been read over and explained to him. This position cannot be now be resiled from.

9.     The refusal of a proposal for a life insurance policy is definitely a material information since it is an essential input for the insurer in arriving at a decision as to whether or not to extend the cover of risk for the DLA, and if so, under what terms and conditions and for what amount. By responding to the question no. 8A in the proposal form in the negative, the DLA conveyed an impression that was contrary to facts and prevented the appellant/ insurance company from assessing the risk cover for the DLA in the context of his health status.  As laid down by the Hon’ble Supreme Court in Satwant Kaur (supra) it was not for the DLA to decide whether or not this information was relevant. Therefore, on both counts, the DLA fails to find succor. The insurance policy issued to ‘G Vinod Kumar’ was clearly vitiated and therefore, the nominee thereunder (the present respondent) was not eligible to any claim on the death of the DLA.

10.   In view of the foregoing discussion, the appeal is allowed and the order of the State Commission is set aside. Parties to bear their own cost.

11.   All pending IAs, if any, shall stand disposed of by this order.