This case is coming on for final hearing before us in the presence of Sri K.B.Parameswara rao, Advocate for the Complainant and P.Sakuntala Advocate for O.P.No.1 and Sri T.Ravi Advocate for O.P.No.2 and having stood over for consideration the Forum made the following:-
O R D E R
AS PER SRI G.APPALA NAIDU,MEMBER
This complaint is filed U/s-12 of C.P.Act,1986 seeking relief to pass an award in favour of the complainant and against the O.P’s directing them to pay assured amount of Rs.2,36,250/- with interest at 12% per annum from the date of death of the insured i.e. 02.12.2012 till the date of realization, to pay a sum of Rs.25,000/- towards compensation and damages, to pay a sum of Rs.5,000/- towards costs of the complaint and to grant such other relief or reliefs as the Honourable Forum deems fit and proper in the circumstances of the case in the interest of justice on the following averments:-
The complainant is the resident of Padmavathinagar, Vizianagaram town and the O.P.1 is running insurance policies in the name and style of India First Life Insurance and the 2nd O.P. is running banking business and tide up with India First Life Insurance. The complainant also submits that during the life time of her husband i.e. Appala Raju took one policy with the 1st O.P. through the 2nd O.P. on 08.11.2011 under smart save plan policy bearing No.10222177 by paying yearly premium of Rs.15,000/- for sum assurance of Rs.2,36,250/- and that the 1st O.P. accepted the policy after verification and examination of all the formalities required. While it is so suddenly the policy holder i.e. the husband of the complainant died on 02.12.2012 at his home. After the same the complainant sent claim forms along with necessary documents as required by the O.P.1 but inspite of the complainant’s thorough follow-up, the claim of the complainant was repudiated on the ground of non disclosure of ailments of the deceased in the questionnaire form.
Hence the complainant submits that the repudiation of the claim is illegal, arbitrary and unjustified since the 1st O.P. obtained only signatures of the deceased and filled up the blanks by himself and later the concerned authority checked and verified the policy prior to issuance of the same and by that time, the panel doctor also thoroughly examined the deceased – husband of the complainant. The repudiation letter issued by the 1st O.P. states that insured may be died due to typical type of chest pain and diabetes and was under-going treatment and further the insured died within two years from the date of the commencement of risk and hence the 1st O.P. did not pay the assured amount as the insured gave false statement.
The complainant further submits that by the date of taking policy, the concerned panel doctor examined and gave certificate stating that the insured was hale and healthy and that the column in the proposed form was filled by them and the death of any person may happen suddenly but not with the prior intimation and unfortunately the insured died within two years from the commencement of risk of the policy which is beyond his control and which was also due to the act of God.
It is also submitted by the complainant that the reason for repudiating the claim of the complainant is only invented to avoid payment due under the policy and even if the said decease is preexisting it is neither visible nor can be preconceived by the patient until and unless the defect appears apparently or seriously and further the alleged illness is curable and not a dangerous one to the life of the person. Hence there is no willful suppression of the fact of the deceased while taking the policy but repudiation of the same was done without any basis and also arbitrarily which amounts to non-rendering of proper service that too with a malafide intention which comes under the definition of deficiency of service. As a result of the action on the part of O.P’s the complainant was subjected to harassment, mental agony, inconvenience and financial loss since the claim is repudiated wantonly and willfully without any just and reasonable cause. Hence this complaint.
Counters filed by the O.P.1 and 2 denying the allegations leveled by the complainant except those which are specifically admitted therein and puts the complainant to strict proof of the same. It is submitted by the O.P.1 that the deceased Mr.Appalaraju was suffering from a typical chest pain with elevated random blood sugar and diabetes and was under treatment for the same prior to inception of the policy under question, which was concealed by the deceased even though it is a material fact. Further the contract of insurance is based on the foundation of utmost good faith. But in this case he life assured had concealed the material fact and did not disclose the true and correct material facts to the insurer. “Material fact” has been defined to mean and include all important, essential and relevant information in the context of guiding the insurer to decide whether to undertake the risk or not. Further the deceased life assured expired within two years from the date of risk commencement and hence the O.P.No.1 had conducted an investigation under the provision of clause-8 (3) of the Insurance Regulatory and Development Authority (protection of policy holders interest) Regulations, 2002 in order to verify the authenticity of the claim. During the course of investigation, it was found that the deceased life assured did not disclose about the past medical history which was a material fact for the O.P.No.1 to underwrite the risk before issuance of the insurance policy. It was further revealed that the deceased life assured was suffering from a typical chest pain with elevated random blood sugar and was under treatment for the same in Surya Hospitals, Vizianagaram before making the proposal and therefore the chest pain and his blood sugar was high than normal on all the three dates i.e. 22.08.2011, 03.10.2011 and 23.11.2012 and he was also taking medication for the same.
In view of all the above, the deceased life assured was duty bound to disclose all the material facts having a bearing on the insurability of deceased life assured and risk to be covered by the company and in this regard he also signed the declaration at clause of the proposal Form, declaring the information mentioned therein are true and correct. The aforesaid clause is reproduced here under:-
“I/We hereby declare that the benefit illustrations containing important information in relation to the product being purchased by me/us have been provided to me/us and that content of this proposal form have been fully explained to me/us. Further to this, I/We hereby declare that I/We have also gone through the sales material/audiovisuals/IVR (English/Hindi) and I/We have fully understood the product features and significance of the proposed contract basis all the information provided. I/We have understood the questions in the proposal form and I/We have answered them truthfully, completely and correctly. I/We further declare that I/We have not withheld any material fact or information which may affect the decision of India First Life Insurance Company Limited (Hereafter called the “Company”) in underwriting the risk.”
The O.P. has the right to cancel the policy, if the statement provided in the proposal form is found to be untrue and inaccurate. By using the same, the O.P.1 repudiated the claim of the complainant on the ground of non-disclosures of material fact pertaining to the past medical history of the deceased life assured which is the moot principle under the contract of insurance. Therefore the O.P.1 pleads that the complaint may be dismissed with compensatory costs in favour of the O.P.1.
The 2nd O.P. also filed counter stating that they have no role in the issuance of the policy to the deceased- husband of the complainant as they are only a facilitator to collect the premium amount and to remit the same to the 1st O.P. Further the 2nd O.P. has no privity of contract with the complainant or her deceased husband or with any insurance policy holders. The insurable interest if any is between the policy holder and the 1st O.P.
It is further submitted that the deceased policy holder was maintaining a savings bank account with the 2nd O.P. bearing No.106510100036002. As per the statement of account maintained by the 2nd O.P. in its ordinary and regular course of business, the husband of the complainant i.e. Sri B.Appalaraju paid Rs.15,000/- towards the annual premium to the 1st O.P. on 08.11.2011 and thereafter no premium was paid to the 1st O.P. through this branch. The premium so paid on 08.11.2011 covered the period from 08.11.2011 to 07.11.2012 in as much as the insurance policy is only for one year it being yearly premium policy. The next date of payment of premium was 08.11.2012. Since the deceased Appalaraju died on 02.12.2012, the policy is not covered and hence the complainant is not entitled for the relief being claimed.
It is further submitted that the deceased suppressed the true, correct and material facts with regard to his health condition and surreptitiously obtained the policy though the contract of insurance is based on utmost good faith.
It is also submitted that the complaint filed against the 2nd O.P. is not maintainable as the same is bad for misjoinder of parties and there is nothing to be done or performed by the 2nd O.P. The 2nd O.P. has no role to play in the above transaction and hence the 2nd O.P. is not at all liable in any manner, since there is no cause of action to file the complaint against the 2nd O.P. Hence they pray the Honourable Forum to dismiss the complaint against them and to award costs to the 2nd O.P. in the interest of justice.
Exhibits A1 to A5 are marked on behalf of the complainant and exhibits B1 to B5 are marked on behalf of the O.P’s.
Heard arguments. Posted for orders. The orders are as follows:-
The counsel for both the parties advanced arguments by reiterating what was stated in the complaint, counters, evidence affidavits and brief written arguments respectively.
The main contention of the complainant is that though her deceased husband insured his life and paid the 1st year premium of Rs.15,000/- on 08.11.2011 and she sent the claim forms to the 1st O.P. along with necessary documents, her claim was repudiated on the ground of non-disclosure of the ailments of the insured which amounts to deficiency in service, as there is no willful suppression of the fact of the deceased while taking the policy and as the alleged illness is curable and not a danger to the life of the person. Further there is also grace period of one month for payment of the next premium but suddenly the policy holder/the insured died on 02.12.2012.
The main contention of the 1st O.P. is that since the 1st premium was paid by the insured on 08.11.2011, the risk commencement date is the same which coverage will continue for one year from the said date and the second annual premium was not paid by the insurer but suddenly died on 02.12.2012. Further contention of the 1st O.P. is that the insurance contract is based on utmost good faith and any material fact particularly with regard to health condition of the insured should not be suppressed, as it forms the critical factor to decide whether to undertake the risk coverage of the life insured. If they are not satisfied with the health condition they would not have given policy if the material fact is known to them prior to the issuance of the said policy. Hence the O.P.1 pleads that there is no deficiency of service of whatsoever on their part in support of which they have submitted certain citations as under:-
1.In the case of Ravneet Singh Bagga Vs K.L.M.Royal Dutch airlines (2000) 1 SCC 66) it is held by the Honourable Supreme Court that the test of deficiency in service by stating that “the deficiency in service cannot be alleged when attributing fault, imperfection, short coming or inadequacy in the quality, nature and manner of performance which is required to be performed by a person in pursuance of the contract or otherwise in relation to any service. The burden of proving the deficiency in service is upon the person who alleges it. The complainant has, on facts, been found to have not established any willful fault, imperfection, short coming or inadequacy in the service of the respondent. The deficiency in service has to be distinguished from the tortuous acts of the respondent. In the absence of deficiency in service the aggrieved person may have a remedy under the common law to file the suit for damages but cannot insist for grant of relief under the act for the alleged acts of forum and omission attributable to the respondent which otherwise do not amount to deficiency in service. In case of bonafide disputes not willful default, imperfection, short coming or inadequacy in the quality, nature and manner of performance in the service can be informed (SIC). If on facts it is found that the person or authority rendering service had taken all precautions and considered all relevant facts and circumstances in the course of the transaction and that their action or the final decision was in good fath, it cannot be said that there had been any deficiency in service. If the action of the respondent is found to be in good faith, there is no deficiency of service entitling the aggrieved person to claim relief under the Act. The rendering of deficient service has to be considered and decided in each case according to the facts of that case for which no hard and fast rule can be laid down. Inefficiency, lack of due care, absence of bonafides, rashness, haste or omission and the like may be the factors to ascertain the deficiency in rendering the service.”
2. That the term “material fact” has not been defined under the insurance act, 1938. However, insurance regulatory and development authority (Protection of policy holders interest) regulations, 2002 defined the word “material” to mean and include all “important”, “essential” and “relevant” information in the contest of guiding the insurer to decide whether to undertake the risk or not. The Honourable Supreme Court in the case reported in (2009) 8 SCC 316) titled satwant kaur saudhu Vs New India Assurance of Company Limited held that “The term material fact is not defined in the act and therefore, it has been understood and explained by the courts in general terms to mean as any fact which would influence the judgement 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 the insurance and has bearing on the risk involved would be “material”.
3. It is well established through a catena of judgements including that of the Apex court in United India Insurance Company Limited Vs Harchand Rai Chandanlal I (2003) CPJ 393 and Vikram Greentech (I) limited and another Vs New India Assurance Company Limited II (2009 CPJ 34 that an insurance policy is to be construed strictly as per the terms and conditions of policy document which is a binding contract between the parties and nothing can be added or substracted by giving a different meaning to the words mentioned therein.
Therefore in the light of this, complainant is bound by the terms and conditions of the policy and O.P.No.1 is liable to cancel and/or return the policy amount paid by him. In the present case the deceased life assured suppressed the material fact pertaining to past medical history while signing the proposal with a malafide intention to induce the O.P.No.1 to issue the subject policy and take undue advantage and obtain unlawful benefits from the same. Thus the present complaint is liable to be dismissed.
Another contention raised by the O.P.1 is that as per medical reports it is confirmed that the deceased life assured was suffering from a typical chest pain with elevated random blood sugar and was under treatment for the same in Surya Hospitals, Vizianagaram. As per the medical paper of Surya Hospitals dated 22.08.2011, 03.10.2011 and 23.11.2012, the life assured was suffering from a typical chest pain and his random blood sugar was high than normal on all the three dates and he was also taking medication for the same.
The 2nd O.P. pleads and states that they have no role in the issuance of the policy of the deceased husband of the complainant as they act only as a facilitator to collect the premium amount and to remit the same to the 1st O.P. and also the 2nd O.P. has no privity of contract with the complainant or her deceased husband or with any insurance policy holders. The 2nd O.P. collects the premium and remits the same to the 1st O.P. of its account holder who are interested to take the insurance policy from the 1st O.P. Hence the insurable interest if any is between the policy holder and the 1st O.P. It is further averred that as per the statement of account maintained by the 2nd O.P. in its ordinary and regular course of business, the husband of the complainant Sri B.Appalaraju paid Rs.15,000/- towards the annual premium to the 1st O.P. on 08.11.2011 and thereafter no premium was paid to the 1st O.P. through this branch. It is further averred that the said premium paid on 08.11.2011 covering the period from 08.11.2011 to 07.11.2012 in as much as the insurance policy period is only for one year it being yearly premium policy. The next date of payment of premium was 08.11.2012, since the deceased Appalaraju died on 02.12.2012, the policy is not covered and as such the complainant is not entitled for the relief being claimed. It is also submitted by the 2nd O.P. that the deceased suppressed the true, correct and material facts with regard to his health condition and surreptitiously obtained the policy though the contract of insurance is based on utmost good faith. In view of all the above, the 2nd O.P. has no role to play in the above transaction and as such the 2nd O.P. is not at all liable in any manner since the complaint filed against the 2nd O.P. is not maintainable and is also bad for misjoinder of parties, as they are neither necessary party or proper party. Hence the 2nd O.P. pleads that the complaint/petition against them may be dismissed with costs payable to them, in the interest of justice.
Now the point for consideration is whether there is deficiency in service on the part of O.P’s?
Perusal of the entire material placed on record reveals that the deceased husband of the complainant paid the 1st annual premium to the 1st O.P. on 08.11.2011 and obtained the policy which covers one year period from 08.11.2011 to 07.11.2012 but which is not renewed for further period by paying the next annual installment of premium. Unfortunately the policy holder/life insured suddenly died on 02.12.2012 due to heart attack thus the said policy was also not in force by the time the deceased died. Further at the time of availing the aforesaid insurance policy i.e. India First smart save plan, the deceased life assured even though was required to disclose the material facts regarding his health condition/medical history etc., in the proposal Form he replied in the negative for the questions relating to his health condition. Also the deceased life assured took treatment and medication from Surya Hospitals, Ring road, near Shiridi Sai Temple, Vizianagaram on 22.08.2011, 03.10.2011 and also on 23.11.2012 before taking the policy and also before he died for a typical type of chest pain and diabetes, which material fact was concealed by the life assured. The same fact was also revealed while at the time of investigation of the case carried out by the company. Since the facts of his illness are not disclosed by the deceased life assured and as the death occurred within 2 years from the date of commencement of risk, the company in accordance with section-45 of the insurance act 1938, called in question the statement made by the deceased life assured wherein he had suppressed the facts which were material to the issuance the policy. Hence the company had repudiated the claim. However the 1st O.P. vide its letter dated 07.01.2013 addressed to Ms.Ramanamma that is the complainant, paid the fund value under the aforesaid policy for an amount of Rs.14,273.01 which was credited to the bank account No.106510100036002 of Andhra Bank on 05.01.2013 which is reflected in the bank statement.
In view of all the above factors, we are of the considered opinion that there is no deficiency on the part of O.P.1 and accordingly the complaint is liable to be dismissed but without costs. Since the 2nd O.P. i.e. Andhra Bank has no role in the issuance of the policy to the deceased husband of the complainant and they are only a facilitator to collect the premium amount and to remit the same to the 1st O.P. and since the 2nd O.P. has no privity of contract with the complainant or her deceased husband or with any insurance policy holders and the 2nd O.P. is neither a proper party nor a necessary party in this case the complaint against 2nd O.P. is also liable to be dismissed but without costs.
In the result, the complaint is dismissed against O.P.1 and also O.P.2 but under the circumstances without costs.
Dictated to the Steno, transcribed by him, corrected by me and pronounced by us in the open Forum, this the 8th day of July, 2015.
MEMBER PRESIDENT
C.C.No.67 / 2014
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For complainant:- For opposite parties:-
PW 1 RW1 & RW2
DOCUMENTS MARKED
For Compainant:-
Ex.A-1 Smart Save Plan policy issued by the 1st O.P.
Ex.A-2 Confirmation letter issued by the complainant.
Ex.A-3 Death certificate of the insured B.Appalaraju.
Ex.A-4 Letter correspondence by the complaint to the 1st
O.P.
Ex.A-5 Repudiation letter issued by the 1st O.P. on dated
27.03.2014.
For OP’s:-
Ex.B-1 IndiaFirst Life Insurance Copy.
Ex.B-2 Surya Hospitals Copy.
Ex.B-3 Spurthi Outsource Business Service Copy.
Ex.B-4 IndiaFirst Life Insurance Copy.
Ex.B-5 Andhra Bank copy.
President
