KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACAUD, THIRUVANANTHAPURAM. APPEAL No. 135/2008 JUDGMENT DATED: 21-12-2009 PRESENT: SHRI. M.V. VISWANATHAN : JUDICIAL MEMBER APPELLANTS 1. The Branch Manager, LIC of India, K.M.H.R. Building, Sulthan Bathery. 2. Divisional Manager, LIC of India, Divisional Office, Jeevan Prakash, Kozhikode. (Rep. by Adv. Sri. S.S. Kalkura) Vs RESPONDENT K.A. Shibu, S/o Late Abraham, Kanjirakkattu House, Chettapalam, Pulpally, Wayanad District. (Rep. by Adv. Sri. K.S. Satheesh Kumar & M. Vysakh) JUDGMENT SHRI. M.V. VISWANATHAN : JUDICIAL MEMBER Appellants are the opposite parties in the complaint in CC No. 15/2006. The aforesaid complaint was filed by the respondent (complainant) alleging deficiency in service on the part of the opposite parties in repudiating the insurance claim made by the complainant with respect to the life insurance policy taken by the policy holder late K.V. Abraham. The respondent/complainant is the nominee of the aforesaid policyholder late K.V. Abraham. He is also the son of the policyholder. The complainant submitted the insurance claim, on the death of the policyholder on 09-03-2004. The opposite parties repudiated the insurance claim by the repudiation letter dated 31-12-2004 stating that the life assured K.V. Abraham made incorrect statements and withheld correct information from the insurer of the said policy. It was also stated that the life assured had undergone treatment for liver disease since May 2003 and he was having jaundice and epigastric pain. But the life assured did not disclose those facts in his proposal instead he gave false answers in the said proposal. Thus, the opposite parties repudiated the insurance claim. Thereafter the complaint in CC No. 15/2006 was filed before the CDRF, Wayanad, Kalpetta. 2. Before the Forum below, the opposite parties entered appearance and filed written version denying and disputing the alleged deficiency in service. They reiterated the very same grounds urged in the repudiation letter dated 31-12-2004. Before the Forum below, the complainant was examined as PW1 and Exts. A1 to A6 documents were marked on his side. From the side of the opposite parties OPW1 and OPW2 were examined and B1 to B14 documents were marked. Ext.C1 clinical notes produced from K.J. Medical Trust Hospital, Kalpetta, Wayanad was also marked. On an appreciation of the evidence on record, the Forum below accepted the case of the complainant and that the opposite parties were found deficient in rendering service. Thereby the opposite parties are directed to pay the insurance amount of Rs. 1,00,000/- with accrued bonus to the complainant with interest at 12% per annum from the date of complaint. The opposite parties are also directed to pay compensation of Rs. 1,000/- and costs Rs. 2,000/-. Aggrieved by the impugned order dated 30th January 2008 passed by CDRF, Wayanad, Kalpetta in CC No.15/06, the present appeal is filed. 3. We heard both sides. The leaned Counsel for the appellants/opposite parties submitted his arguments based on the grounds urged in the memorandum of the present appeal. He relied on B1 proposal submitted by the life assured for getting B12 policy and argued for the position that here was suppression of material facts entitling the opposite party LIC of India to repudiate the insurance claim. He further submitted that on account of the suppression of material facts the very policy was void and the complainant being the nominee of the policyholder is not entitled to get any benefit under the said policy. He relied on the decision rendered by the Hon’ble Supreme Court in P.J. Chacko and Anr. Vs Chairman, LIC of India and Ors. reported in 2008 SAR (Civil) 44 and also the decision rendered by the Hon’ble National Commission in Asha Devi Vs LIC of India [IV (2008) CPJ 109 (NC)]. Thus, the appellants prayed for setting aside the impugned order passed by the Forum below. On the other hand, the learned Counsel for the respondent/complainant supported the impugned order dated 30-01-2008 passed by the Forum below in CC No. 15/06. He argued for the position that the life insurance policy was issued after examining the life assured by the panel doctor of the insurer and there was no such suppression of material facts. It is further submitted that OPW1 Dr.K.J. Abraham has deposed that jaundice is a curable disease and that the non-disclosure of the ailment of jaundice cannot be treated as suppression of material facts. It is also submitted that the life assured died due to heart attack and that the disease of jaundice was having no nexus with the cause of death of the life Assured. Therefore, the respondent/complainant prayed for dismissal of the present appeal. 4. The points that arise for consideration are:- 1. Whether there was any deficiency in service on the part of the appellants/opposite parties in repudiating the insurance claim made by the respondent/complainant with respect to the life insurance policy issued by the appellant LIC of India infavour of the policy holder K.V. Abraham? 2. Whether the appellants/opposite parties can be justified in issuing B9 repudiation letter dated 31-12-2004? 3. Is there any legally sustainable ground to interfere with the impugned order dated 30-01-2008 passed by CDRF, Wayanad, Kalpetta in CC 15/2006? 5. Point Nos. 1 to 3: There is no dispute that the life assured K.V. Abraham had taken a life insurance policy dated 29-12-2003. The policy was taken through the LIC agent Unnikrishnan by remitting the annual premium of Rs. 6,838/-. It is also an admitted fact that the life assured K.V. Abraham was subjected to medical examination by the panel doctor of LIC of India and the medical officer certified that the life assured K.V. Abraham appears healthy. Ext.B11 is the medical examiner’s confidential report dated 29-12-2003. It is after obtaining B11 report, that B12 policy dated 29-12-2003 was issued to the policyholder K.V. Abraham. It is not in dispute that the life assured died on 09-03-2004 due to heart attack. Thus, the life assured died after two months and 12 days of taking the policy. Admittedly, the complainant is the son and nominee of the life assured. After the death of the life assured, the complainant being the nominee submitted B4 claim statement dated 06-05-2004 for getting the insurance amount of Rs. 1,00,000/- covered by the policy bearing No. 793310325 issued infavour of the policy holder K.V. Abraham. 6. The LIC of India being the insurer of the aforesaid policy repudiated the aforesaid claim by B9 repudiation letter dated 31-12-2004. In B9 repudiation letter, it was specifically contended that the life assured withheld correct information regarding his health at the time of effecting the assurance. It is further stated in B9 repudiation letter that the life assured had undergone treatment for liver disease from K.J. Hospital, Kalpetta, since May 2003; that Dr. K.J. Abraham had treated the life assured as outpatient on 10-05-2003, 14—12-2003, 16-12-2003, 19-12-2003, 07-01-2004, 09-01-2004 and 11-01-2004 for jaundice and epigastric pain; that the life assured did not ever disclose these facts in his proposal; but instead he gave false answers to questions 11(a), (b), (d), (e) and (i). In the written version filed by the opposite parties they adopted the very stand regarding suppression of material facts regarding the health of the life assured and that the policy was obtained by willfully suppressing material information about the health of the life assured and thereby the life assured misled the insurer to believe that the life proposed is in perfect health. Thereby the opposite parties justified their action in repudiating the insurance claim. 7. The pertinent question for consideration is whether the policy holder (life assured) made incorrect statement and suppressed correct information regarding his health while submitting the proposal for the life insurance policy. It is also to be considered whether the facts said to have been suppressed by the life assured can be considered as material facts. 8. It is fundamental that contract of insurance is based on utmost good faith “uberrimaefidei”. It stipulates that parties to the contract of insurance should disclose the facts, which are within their knowledge. It is not for the proposor to decide as to whether a particular fact is material or not. It is for the insurer to decide which facts are material and required for their appraisal. It is based on the materiability of those facts, the insurer asks the insured to give details of those facts, which are within his knowledge. Breach of this duty on the part of the insured to disclose the facts entitles the insurer to avoid the contract of insurance. It is to be noted that the insurer issued the policy based on the facts disclosed by the insured. Suppression of any such fact or giving incorrect information would make the contract void. 9. In a recent judgment reported in IV (2009) CPJ 8 (SC) [Satwant Kaur Sandhu Vs New India Assurance Company Ltd.), the Hon’ble Supreme Court had the occasion to consider the term “material fact’. The Hon’ble Apex Court has also referred to the Regulation 2(1)(d) of the Insurance Regulatory and Development Authority (Protection of Policy Holders’ Interest) Regulations 2002; and the authority Pollock and Mulla’s Indian Contract and Specific Relief Acts and also the authority Machillvery on Insurance Law (Xth edition). The Court also considered the leading case law on the subject and held that “in a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a “material fact”. If the proposor has knowledge of such fact, he obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasis that any inaccurate answer will entitle the insurer to repudiate his 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 insurane”. 10. In this background this Commission shall appraise the evidence in the present case. Ext.B1 is the proposal form submitted by the life assured. It was submitted on 29-12-2003. The life assured K.V. Abraham affixed his signature in B1 proposal, which was submitted for taking B12 life insurance policy. It is based on B1 proposal, the life insurance policy was issued by the insurer, the LIC of India. Exts. B1(a) are the questions and answers under the sub heading ‘personal history’. The appellants/opposite parties much relied on question Nos. a, b, d, e & i. Those questions and answers are as follows: Personal History Answer ‘Yes’ or ‘No’ a) During the last five years did you consult a Medical Practitioner for any ailment requiring No treatment for more than a week? b) Have you ever been admitted to any hospital or nursing home for general check-up, observation, No treatment or operation? d) Are you suffering from or have you ever suffered from ailments pertaining to Liver, Stomach, Heart, No Lungs, Kidney, Brain or Nervous system e) Are you suffering from or have your ever suffered from diabetes, Tuberculosis, High Blood Pressure, No Low Blood Pressure, Cancer, Epilepsy, Hernia, Hydrocelem, Leprosy or any other disease? i) Whether your usual state of health has been good? Yes If not, give details The aforesaid answers to the said questions would make it clear that the life assured made the insurer to believe that he is having no ailments referred to therein and that he is of good health. 11. The case of the appellants/opposite parties is that the aforesaid answers to questions a, b, d, e & i are false answers and those answers were given by suppressing the material facts regarding the health of the life assured K.V. Abraham. It is also the case of the appellants/opposite parties that the life assured was having the ailment of jaundice and that the said disease is one which affects the organ liver. It is also the case of the appellants/opposite parties that the life assured had undergone treatment for jaundice during the relevant time and that B1 proposal was submitted by the life assured while undergoing treatment for jaundice. 12. The case of the appellants/opposite parties that the life assured was having jaundice and he was undergoing treatment for the disease of jaundice is established by the oral evidence of OPW1 Dr.K.J. Abraham and B2 certificate of hospital treatment issued by Dr. K.J. Abraham and B3 series of clinical notes. Ext.C1 is the original of B3 series of clinical notes. OPW1 Dr. K.J. Abraham has categorically admitted that the life assured K.V. Abraham was under his treatment for jaundice. He has also deposed about the genuineness and correctness of B2 certificate issued by him and B3 series of clinical notes. Ext.C1 is the clinical notes produced from K.J. Medical Trust Hospital, Kalpetta, Wayanad. C1 would make it clear that the life assured K.V. Abraham was treated for jaundice from 14-12-2003. It would also show that the life assured was treated as an outpatient at that hospital on 10-05-2003 with the complaint of epigastic pain for a period of one week. C1 clinical notes would also show that the life assured was treated as an outpatient on 16-12-2003, 19-12-2003, 07-01-2004, 09-01-2004 and 11-01-2004 and he was affected by jaundice. It would also show that on 07-01-2004 he was advised to consult a gastro entrologist. He was again advised to go to Medical College Hospital, Calicut. The clinical laboratory report attached to C1 clinical notes would make it clear that Liver Function Test (LFT) was done on 14-12-2003 and he was having the serum bilirubin level in his blood at 7.4 mg%. It would also show that his serum bilirubin level was fluctuating and on 07-01-2004 it had gone up to 11 mg%. Thus, C1 clinical notes (B3 series) and the testimony of OPW1 would make it crystal clear that the life assured K.V. Abraham was affected by the disease jaundice from 14-12-2003 onwards. The C1 clinical notes would show that even on 11-01-2004 the life assured was having jaundice. It is true that OPW1 Dr. K.J. Abraham had no occasion to treat the life assured after 11-01-2004. Ext.B2 certificate of hospital treatment issued by Dr.K.J. Abraham (OPW1) would also show that the life assured K.V. Abraham was having the disease of jaundice from 14-12-2003 onwards. It is reported that on 14-12-2003 the life assured came to the hospital with jaundice. It is also reported that from 14-12-2003 to 11-01-2004 he was treated for jaundice. There can be no dispute about the fact that jaundice is a disease affecting the liver. It can also be seen that he was having the said disease on the date of submission of B1 proposal. Thus, it is evident that the life assured had given incorrect and false information in B1 proposal, which was submitted on 29-12-2003. This situation would strengthen the case of the appellants/opposite parties that the life assured had given false statements and he suppressed material facts regarding the condition of his health. The available evidence on record would show that the answers given to the question No. a, b, d, e & i are false and incorrect answers and the said false and incorrect answers/statements were given by the life assured wilfully suppressing the true facts. Thereby the life assured obtained the life insurance policy by suppressing material facts. If that be so, the appellants/opposite parties can very well repudiate the insurance claim. They are also justified in treating the aforesaid life insurance policy as void because of the suppression of material facts by the life assured while submitting the proposal. We have no hesitation in justifying the action of the appellants/opposite parties in repudiating the very contract of insurance and repudiating the insurance claim put forward by the respondent/complainant, the nominee of the life assured. 13. The Forum below has relied on the decision rendered by the Hon’ble National Commission in LIC of India Vs. Smt. Thejalben Kannanbai Pattel (2007 CTJ NCDRC page 232). The facts and circumstances of the aforesaid reported case cannot be made applicable to the present case on hand. In the aforesaid case the suppression of the fact was regarding hospitalization for fever and throat pain. Considering the nature of the illness, it was held by the National Commission that suppression of fact regarding the treatment for fever and throat pain cannot be treated as suppression of material facts. But in the present case on hand, the life assured was seriously affected by the disease of jaundice affecting his liver. But suppressing that fact the life assured gave the statement to the effect that he is not suffering or suffered from ailment pertaining to liver. The life assured herein has also stated the condition of his health as good. Such a statement was given while he was undergoing treatment for jaundice. So, in the present case there was suppression of material facts. The Forum below has not considered the suppression of material facts by the life assured in this case. The Forum below was also carried by the statement of OPW1 Dr. K.J. Abraham that jaundice is a curable disease. It is to be noted that by the advancement of medical science more serious ailments have become curable disease. But that cannot be taken as a ground to ignore the suppression of material facts regarding any such serious ailments. The Forum below cannot be justified in ignoring the evidence available on record. In fact, the Forum below has not appreciated the evidence on record in its correct perspective. The impugned order passed by the Forum below is legally unsustainable. 14. The foregoing discussions and the finding thereon would make it clear that there was no deficiency of service on the part of the appellants/opposite parties in repudiating the insurance claim made by the respondent/complainant and that the complaint in CC 15/2006 is liable to be dismissed. These points are answered accordingly. In the result, the appeal is allowed. The impugned order dated 30-01-2008 passed by CDRF, Wayanad, Kalpetta in CC 15/2006 is set aside. Thereby the complaint in CC No. 15/2006 is dismissed. The parties are directed to suffer their respective costs throughout. M.V. VISWANATHAN : JUDICIAL MEMBER Sr. | 
