Haryana

StateCommission

A/714/2015

LIFE INSURACE CORP.OF INDIA - Complainant(s)

Versus

GUDDI DEVI - Opp.Party(s)

SATYAWAN AHLAWAT

11 Apr 2016

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

                                                 

First Appeal No  :      714 of 2015

Date of Institution:      31.08.2015

Date of Decision :       11.04.2016

 

Life Insurance Corporation through its Branch Manager near Geeta Bhawan Kaithal and another through its Manager (Legal), Division Office, Chandigarh.

                                      Appellant/Opposite Party

Versus

 

Guddi Devi w/o late Ram Mehar s/o Shri Mange Ram, Resident of Village Ramrai, Tehsil and District Jind.

                                      Respondent/Complainant

 

CORAM:             Hon’ble Mr. Justice Nawab Singh, President.

                             Shri B.M. Bedi, Judicial Member.

                             Shri Diwan Singh Chauhan, Member   

 

Present:               Shri Satyawan Ahlawat, Advocate for appellant.

                             Shri Raj Kapoor Malik, Advocate for respondent.

 

                                                   O R D E R

NAWAB SINGH J.(ORAL)

 

Life Insurance Corporation of India (LIC)-Opposite Party, is in appeal against the order dated July 13^th, 2015 passed by District Consumer Disputes Redressal Forum, Kaithal (for short ‘the District Forum’), whereby it directed the LIC to pay Rs.5.00 lacs, that is, the sum assured; Rs.2,000/- compensation within one month from the date of receipt of the order and in default thereto, pay interest @ 8% per annum from the date of the order till its realization.

2.      Ram Mehar-since deceased (hereinafter referred to as ‘the Insured’)-husband of Guddi Devi-complainant/respondent, purchased a Life Insurance Policy bearing No.178261125 (Exhibit C-2) from the LIC, on March 28^th, 2013 to be matured on February 28^th, 2028. The sum assured was Rs.5.00 lacs. The Insured died on May 20^th, 2013 while hospitalized in General Hospital, Jind.  The complainant filed claim with the LIC but the same was repudiated vide letter dated November 28^th, 2013 (Exhibit C-7). The relevant portion of which reads as under:-

“In this connection we have to inform you that in the Proposal for assurance dated 27.03.2013/Personal Statement signed by the deceased Life Assured on 28.03.2013 at the time of his medical examination he had answered the following questions as under:-

11(d)          Are you suffering from or have you ever suffered from ailments pertaining to liver, Stomach, Heart, Lungs, Kidney, Brain or Nervous System?

11(i)            What has been your usual state of health?

We may however, state that all these answers were false as we have evidence and reason to believe that before he proposed for the above policy he had suffered from Pallor & Chronic Renal Failure. He did not, however, disclose these facts in his proposal form. Instead he gave false answers therein as stated above.”

 

3.      Aggrieved of the repudiation of her claim, the complainant filed complaint under Section 12 of the Consumer Protection Act, 1986. 

4.      The LIC contested complaint by filing reply while reiterating the fact stated in the repudiation letter and prayed for dismissal of the complaint.

5.      Learned counsel for the LIC has argued that prior to the purchase of the policy, the insured was suffering from pallor for the last many months, Chronic Renal Failure (CRF) and remained on dialysis for eight months. So, the complainant is not entitled to the amount of Rs.5.00 lacs, that is, the sum assured. In support, reliance has been placed upon the medical record (Exhibit C-5) drawn at General Hospital, Jind, that is, the documents which were relied upon by the complainant.

6.      On the other hand, learned counsel for the complainant while referring to the judgment Life Insurance Corporation of India versus Smt. Asha Goel, 2001 AIR (SC) 549 prayed for dismissal of the appeal.

7.      A reading of the medical record (Exhibit C-5) shows that Ram Mehar was admitted in General Hospital, Jind on May 20^th, 2013 in Emergency Department. He was a patient of Pallor for the last many months, breathlessness, Chronic Renal Failure and remained on dialysis for eight months. Prior to that, he was admitted in Agroha Hospital, Hisar. The cause of death was Chronic Renal Failure and Anemia with Cardio Respiratory Arrest.

8.      From the medical record it is established that Ram Mehar-insured, was a patient of CRF prior to the date of obtaining the insurance policy and he remained on dialysis for eight months. Thus, the insured was aware of the disease suffered by him prior to the purchase of the insurance policy but in the proposal form (Exhibit R-1) at the time of obtaining the policy, the insured gave wrong answers to questions No.11(d) and 11(i) mentioned above.

9.      In Mithoo Lal V. Life Insurance Corporation of India , AIR 1962 Supreme Court 814, Hon’ble Apex Court held as under:-

“Contract of life insurance entered into as a result of fraudulent suppression of material facts by policy holder- Policy is vitiated and person holding assignment of policy cannot claim benefit of contract………….”

10.    Hon’ble Apex Court in Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. – (2000) 2 SCC 734 held as under:-

“It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and the good faith forbids either party from non-disclosure of the facts which the parties know.  ………..”

11.    In Revision Petition No.967 of 2008, Life Insurance Corporation of India versus Smt. Neelam Sharma, decided on September 30^th, 2014, Hon’ble National Commission observed as under:-

“8.       In Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, it has been observed by the Supreme Court that the expression “material fact” is to be understood in general terms to mean as any fact which would influence the judgment of a prudent Insurer, in deciding whether to accept the risk or not.  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, which is based on the principle of utmost faith –uberrima fides.  Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. (See: United India Insurance Co. Ltd. Vs. M.K.J. Corporation [(1996) 6 SCC 428].  It has also been emphasized that it is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known.”

“11.     Having given our anxious consideration to the material on record, we are of the opinion that the answers given by the Insured in the proposal form were untrue to his knowledge. There was clear suppression of “material facts” in regard to the health of the Insured.  It was not for the Insured to determine whether the information sought for in the aforesaid questionnaire was material for the purpose of the two policies…..”  

12.    In the case in hand, the LIC has proved by leading cogent evidence consisting of Admission Card (Exhibit C-5) of General Hospital, Jind and Certificate (Exhibit C-6) issued by Dr. Seema Devi, General Hospital, Jind, that the insured was suffering from Chronic Renal Failure prior to the date of purchase of the insurance policy, he remained on dialysis for about eight months. So, the judgment in Asha Goel’s case (Supra) referred to above is of no help to the complainant.  The LIC was justified in repudiating the claim of the complainant. 

13.    For the reasons recorded supra, the appeal is accepted, the impugned order is set aside and the complaint is dismissed.

14.    The statutory amount of Rs.25,000/- deposited at the time of filing the appeal be refunded to the appellant against proper receipt and identification in accordance with rules, after the expiry of period of appeal/revision, if any.

Announced 11.04.2016

(Diwan Singh Chauhan) Member

(B.M. Bedi) Judicial Member

(Nawab Singh) President

CL