JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)

            Late Shri Naga Raju Prasad, husband of the complainant who was working as Superintendent in Customs & Central Excise Department of the Government obtained two policies on his life from the petitioner company.  The insurance policies were obtained on the basis on two separate proposal forms one dated 13.09.2013 and the other dated 22.10.2013.  He having died on 16.05.2014 due to cardiac arrest, the claims in terms of the insurance policies were submitted by the complainant, she being his wife.  The claims were repudiated vide letter dated 13.05.2014 which to the extent reads as under:

“Deceased life assured filled Proposal Forms for Insurance Policies and had answered following Questions in Proposal Forms:

Question No.9.Personal Medical history of the Life to be assured:

                 Answer the following as Yes/NO.

                C. Are you at present in good health?

                Answer: “Yes"

               3. Have you ever suffered from any of the following diseases?

                             (iii) High Blood Pressure.

                             Answer: “No”

The deceased life assured had suppressed the material fact by not disclosing the pre-health ailment of Hypertension and the treatment taken for the disease, while filling the Proposal forms which ought to have been disclosed.

Life insurance policies are contracts governed by the principle of “UBERRIMA FIDE” and the proposer applying for insurance is expected to correctly furnish all material information regarding the health, habits, family history, personal medical history, income etc. of the life proposed for insurance by giving correct answers to the questions in the proposal form.

In this case, had we been informed correctly about the health problems of the deceased life proposed for insurance, it would have influenced our decision in issuing the policy.  As such, the contract is void, unenforceable and not legally binding on our company and we are repudiating your claim for payment of death benefit under the policy.”

2. Being aggrieved from the repudiation of the claim, the complainant approached the concerned District Forum by way of a consumer complaint.  The complaint was resisted by the petitioners primarily on the ground on which the claims had been repudiated. 

3. The District Forum having allowed the consumer complaint, the petitioners approached the concerned State Commission by way of an appeal.  The appeal was dismissed by the State Commission, the petitioner is before this Commission by way of this Revision Petition.

4. A perusal of the proposal forms would show while filling up the said proposal forms, the insured was required to answer as to whether he was ever suffering from high blood-pressure.  The answer given by him was in the negative.  A perusal of the prescription issued by ‘Help Hospitals’ to the deceased husband of the complainant would show that he was suffering from hypertension for last six years, at the said prescription was issued and he was taking Telma H one per day.  Telma H is a drug of Telmisartan and a diuretic Hydrochlorothiazide.  This is not the case of the complainant anywhere in the consumer complaint that the deceased had not suffered from hypertension at any time in the past before the proposal form was submitted by him.  Though the learned counsel for the complainant submits that at the time of submitting the proposal form, the deceased was not suffering from hypertension, no such averment is found in the complaint.  More importantly, the question in the proposal, required to disclose if he had suffered from hypertension at any point of time in his life.  The prescription of Help Hospitals dated 10.02.2014 leaves no doubt that he had been suffering from hypertension for six years.  Therefore, it cannot be disputed that no point of time he had suffered from hypertension before the proposals were submitted by him on 13.09.2013 and 22.10.2013.  The policy was, therefore, obtained by concealment of material fact with respect to the state of health of the deceased.  It is quite possible that had the state of the health of the deceased been disclosed to the insurer, either the policy would not have been granted or the insurer would have asked the proposal to undergo further medical evaluation or to pay a higher premium considering the state of his health.

5.  In LIC of India Vs. Manish Gupta – Civil Apeal No.3944 of 2019, decided on 15.04.2019, the proposal form required a disclosure as to whether the proposer had suffered from Cardiovascular disease, he responded in negative to the said question. The complainant underwent a surgery, submitted a claim  which was repudiated on the ground that he was suffering from a pre-existing illness. Upholding the repudiation of the claim, the Hon’ble Supreme Court interalia held as under:-

“Moreover, non-disclosure of any health event is specifically set out as a ground for excluding the liability of the insurer.”

“A contract of insurance involves utmost good faith. In Satwant Kaur Sandhu Vs. New India Assurance Company Ltd., this Court has held thus:

 “...Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. 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. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment.”

In Reliance Life Insurance Co. Ltd. & Anr. Vs. Rekhaben Nareshbhai Rathod – Civil Appeal No.4261 of 2019, decided on 24.4.2019, the Hon’ble Supreme Court interalia observed as under:-

“26.    …………..It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.

The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) “there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurane”. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.

 29.     We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form.  …………..”

6.    For the reasons stated hereinabove, the impugned order cannot be sustained and is accordingly set aside.  The consumer complaint is consequently dismissed with no order as to costs.