Respondent was the complainant before the District Consumer Disputes Redressal Forum, South X, Delhi (for short ‘District forum’).  His grievance was that his insured Maruti Van during the validity period of the insurance met with an accident on 13.12.2003.  On the advice of the petitioner – insurance company, he got the vehicle repaired from M/s T.R.Sahni Motors Pvt. Ltd. on payment of Rs.1,226,241.66 as repair charges. When a claim for its reimbursement was lodged with the petitioner – insurance company, the same was repudiated on the ground that he had suppressed material fact with regard to having received claims from the previous insurance company. The District forum issued notice to the petitioner/opposite party who resisted the claim. 

On consideration of respective evidence adduced by the parties, the District Forum dismissed the complaint. 

When the matter was taken up in appeal before State Consumer Disputes Redressal Commission, Delhi (for short ‘State Commission’) by the respondent/ complainant, the order of dismissal passed by the District forum was set aside and taking note that the surveyor had assessed the loss at Rs.97,960/-, the State Commission passed the following order :-

“However, so far as the no claim bonus is concerned, the appellant was given discount of Rs.1120/- and, therefore, the respondent could not have denied that claim against the instant policy as the insurance company was bound to pay the claim for the insured period.  However, in view of the assessment of the loss as assessed by the surveyor, we allow the appeal by directing the respondent to pay an amount of Rs.97,960/- less the discount of Rs.1120/- to the appellant besides Rs.25,000/- as compensation which shall include cost of litigation.”   

          Aggrieved thereupon that the petitioner/insurance company have filed this revision petition to challenge the said order.

From the facts of the case, it is not in dispute that the respondent/complainant submitted a proposal form for the insurance of his private car for an insured declared value of Rs.1,79,104/- on 23.7.2003 on the basis of which the private car insurance policy was issued covering the period from 23.7.2003 to 22.7.2004.  Prior thereto, the vehicle had been insured with another insurance company i.e. National Insurance Co.Ltd. about which even though a mention was made in Column 8 (A) of the proposal form, the complainant had stated therein that he would be entitled to a ‘No Claim Bonus’ meaning thereby that he had lodged no claim with the previous insurer.  However, when the matter was cross checked from the National Insurance Co.Ltd., the previous insurer, it came to light that the complainant had filed claims and availed reimbursement under their policy.  It was in this background that the petitioner/ insurance company, holding it to be case of suppression of material fact repudiated the claim.  The District Forum too had upheld their contentions but the State Commission, as already stated, held otherwise.

Learned counsel for the petitioner has contended that the State  Commission, contrary to any rebuttal by the complainant, has held that there was no claim in the previous year of insurance with National Insurance Co.Ltd.  This runs counter to the facts of the case, as the complainant himself had admitted both in the complaint and in the appeal before the State Commission that there was a claim in the previous year of insurance.  The previous insurer has also confirmed the claim lodged by the complainant.  He has further referred to the reliance placed by the State Commission on clause 6 of the policy and contends that it relates only to contribution of rateable proportion of any compensation, cost or expense when there are more than one insurance policy covering the same liability which has no application to the facts of this case.  In the present case there being no other policy except the one under dispute, this clause is not applicable.

Next, learned counsel submits that State Commission omitted to observe that the respondent/complainant had obtained the insurance by falsely representing that he is entitled to a discount of 20% when in fact he had lodged a claim with the previous insurer and that is how he availed the discount of Rs.1,120/- from the petitioner/ insurance company by misrepresentation.  The contract of insurance, in such circumstances, is void ab-initio. 

Countering the allegation of the respondent/complainant that the proposal form was filled in by the agent, he submits that it is only an afterthought as he did not make any mention in the legal notice and in any case as held by Hon’ble Kolkata High Court in the case of Mrs. Maniluxmi Patel and Anr. Vs. Hindustan Cooperative Insurance Society Ltd. & Anr. (AIR 1962 Calcutta 625), it would make no difference as the complainant himself is a literate person and had signed the proposal form in English.  Finally, he contends that the complainant had fraudulently suppressed the fact with regard to having received insurance claim from the previous insurance company which he deliberately did not disclose at the time of obtaining a new policy and, therefore, he was not entitled to the benefit under the policy.

Learned counsel for the respondent/complainant, on the other hand had submitted that the complainant having clearly stated about the previous insurance in the proposal form and having informed the agent about the previous claim, it was for the agent to have advised him properly and in any case when the form was filled up by the agent, the complainant cannot be made to suffer for the negligence of the agent.  He contends that it was the agent who promised him better service by the petitioner/insurance company which prompted him to change the insurance company but the lapse of the same agent is now being attributed to the complainant for no fault of his.  In so far as the complainant was concerned, there was no concealment from his side.  In any case, since the State Commission has directed the petitioner/insurance company to reimburse the claim as assessed by their own surveyor and deduct the ‘No Claim Bonus’, learned counsel submits that on the principle of equity also the order passed by State Commission deserves to be upheld.  

          Having considered the arguments advanced by learned counsel for the parties, it may be stated that ‘insurance’ is a contract of  utmost good faith i.e. uberrima fides.  In the present case, the contentions of the complainant that “the agent who despite correct position revealed by the appellant (complainant) about the earlier claim taken by the appellant (complainant) from National Insurance Company opted not to mention the said fact in the proposal form”; amounts to admission of the complainant that he was indeed not entitled to ‘No Claim Bonus’.  In this regard, it would be relevant to look at para 8 (A) and (B) of the proposal form and the declaration which are re-produced below :-

8. A.  Previous Insurance Particulars :

B.              Are you entitled to a NO CLAIM BONUS from your previous insurer ?                                     Yes       No      if Yes  20%

(Please attach renewal notice.  In the absence of renewal notice, please give your declaration in the format overleaf.)

  DECLARATION

I/We desire to insure with Tata AIG General Insurance Co.Ltd. in respect of the vehicle described above and confirm that the statements contained in this application are my/our true and accurate representations. I/We agree that this application and declaration shall be promissory and shall be the basis of the contract between me/us and Tata AIG General Insurance Co.Ltd. and also agree to accept the Company’s policy of insurance alongwith the conditions prescribed by the company.

I/We also declare that any additions or alterations are carried out after the submission of this proposal form then the same would be conveyed to the insurer immediately.

I/We to the Company taking appropriate measures to capture the voice log for all such telephonic transactions carried out by me/us as required by the procedures/regulations internal or external to the company.

I/We agree that the insurance would be effective only on acceptance of this application by the company and the payment of the requisite premium by me/us in advance.

Declaration for NCB (strike out if not applicable)

“I/We declare that the rate of NCB claimed by me/us is correct and that no claim has arisen in the expiring policy period (copy of policy enclosed).  I/We further undertake that if this declaration is found to be incorrect, all benefits under the policy in respect of Section – I of the Policy will stand forfeited.”                                                            (emphasis supplied)

As would be clear from table 8 (A), while the complainant has stated the details with regard to previous insurance policy, he has opted not to mention anything against the column “Claims lodged during the preceding five years” and left the columns blank.  Further  against col. 8 (B) asking whether he was entitled to a ‘No Claim Bonus’ from the previous insurer, he has answered in the affirmative mentioning entitlement to 20% as NCB.  Thus the attempt not to disclose details of the claim obtained from the previous insurance company is clearly visible.  When this is to be considered against the declaration given that if at any stage the statement contained in the application form are found to be untrue and inaccurate all the benefits under the policy will stand forfeited, it cannot but be held that the respondent/complainant would not be entitled to the benefit under the policy. 

On the allegation that the proposal form was filled up by the agent, the issue, as rightly pointed out by learned counsel for petitioner in similar circumstances in the case of Mrs. Maniluxmi Patel and Anr. Vs. Hindustan Cooperative Insurance Society Ltd. & Anr. (AIR 1962 Calcutta 625), the Kolkata High Court has dismissed a suit on the ground that the assured gave untrue replies to questions in the proposal form signed by him.  In that case too, the plea was that the agent had filled up the form as the applicant was illiterate.  The doctrine of knowledge of the agent to be treated as the knowledge of the company even when the complainant was illiterate, has been dispelled.  In the case in hand, the complainant is not an illiterate person having put his signature in English and further as rightly pointed out by learned counsel for the petitioner, the role of the agent appears to have been brought in only as an afterthought.  We also find unacceptable that the State Commission while allowing the appeal could direct the petitioner to pay an amount of Rs.97,960/- less the discount of Rs.1,120/- given on account of ‘No Claim Bonus’ as the State Commission, thereby altered the terms of the policy which it had no authority to do.  Clearly it had no such jurisdiction.  In case of LIC of India Vs. Smt.G.M. Channabasamma (1991) 1 SCC 357, the Hon’ble Supreme Court has held that a contract of ‘insurance’ is a contract of ‘uberrima fides’ and there must be complete good faith on the part of the assured.  The assured thus is under a solemn obligation to make full disclosure of material fact which may be relevant for insurer to take into an account. Further in the case of General Assurance Society Ltd. Vs. Chandumull Jain & Anr.  (1966) 3 SCR 500, the Hon’ble Apex Court has observed that “the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however, reasonable, if the parties have not made it themselves.”  The direction to adjust the ‘No Claim Bonus’ against the amount of damage assessed passed by the State Commission, clearly violates this settled principle of law and, therefore, cannot be sustained.

In totality, therefore there is merit in the revision petition and the same is allowed, however, with no order as to cost.