A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION

AT HYDERABAD.

F.A.  1659/2007  against C.C. 56/2006, Dist. Forum, Nalgonda.      

Between:

1)  Jella Laxmaiah,

S/o. Late Krishnaiah,

Age: 50 years.

2)  Jella Urmila,

W/o. Laxmaiah, Age: 46 years

3)  Jella  Jaya Krishna,

S/o. Late Vital, Age:  6 years

4)  Jella Jaya Sree,

D/o. Late Vital, Age:  2 years

Complainants 3 & 4 being minors

Rep. by  their father  Complainant No.1

All are R/o. Plot No. 108,

New  Venkateswara Colony

C/o. Kotaiah Chary, Retd. D.E.

Electricity Department.

Nalgonda  (Town & Dist. )                           ***                         Appellants/

                                                                                                Complainants.

                                                                   And

1)  L.I.C. of India,

City Branch No. 21

Barkatpura, Hyderabad

Rep. by its Branch Manager

2)   L.I.C. of  India

Divisional Office, Jeevan Prakash

5-9-21, Secretariat Road,

Saifabad, Hyderabad.

Rep. by its Divisional Manager

3) L.I.C. of  India

Zonal Office,  Jeevan Bhagya

Secretariat Road

Hyderabad.

Rep. by its Zonal Manager

4)  L.I.C. of India

Nalgonda

Rep. by its Branch Manager.                       ***                         Respondents/

                                                                                                Ops.

Counsel for the Appellant:                          M/s.  STP Venkateswarlu

Counsel for the Resp:                                  M/s. P. Rajasekhar.

CORAM:

HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT

&

                 SMT. M. SHREESHA, MEMBER

WEDNESDAY, THIS THE SEVENTH DAY  OF APRIL TWO THOUSAND TEN

Oral Order: (Per Hon’ble Justice D. Appa Rao, President)

                                                          *****

1)                 Appellants are unsuccessful complainants.         

2)                 The case of the complainants  in brief is that  first complainant is the father, second complainant is the mother  and third and fourth complainants are children of late  Jella  Vittal.    During his life time,  Jella Vittal took  Jeevan Mithra  (Triple Cover Endowment plan)  with profits  (accident benefit) policy  for Rs. 1 lakh commencing from  27.5.2003  to 27.5.2020  vide Ex. A1.    He paid premia  till his death  which occurred on  12.6.2004.   The nominee  Smt. Chandrakala  @ Poojitha  predeceased him on  2.5.2004.    When they made the claim  by submitting  all the documents  the insurance company repudiated the claim on the ground that  the assured had  falsely mentioned that  policy bearing  No. 600335589 was in force.    However, when they enquired they came to know that the said policy was in a lapsed condition for non-payment of premia.   On the ground that the fact was mis-informed, and suppressed it had repudiated the claim.    The insurance company had taken two years to repudiate the claim,  which itself amounts to deficiency in service.  It was not a suppression of fact.  Therefore they prayed that an amount of Rs. 3,00,000/- together with interest @ 18% p.a., from 27.4.2005 till the date of realization  with costs be awarded.  

3)                 The insurance company resisted the case.    While denying each and every allegation made in the complaint  it alleged that the policy was issued to  late  Jella Vittal  was true.    He has given false information with regard to earlier policy bearing No. 60335589 stating that it was in force, even though the said policy was lapsed due to non-payment of premia.  The policy was repudiated as the assured had withheld correct information regarding his previous policy particulars at the time of effecting the assurance.    Therefore it prayed for dismissal of the complaint with costs. 

4)       The complainants in proof of their case filed the  affidavit evidence  of first complainant and got Exs. A1 to A11 marked while the respondents insurance company filed the affidavit evidence of its   Administrative Officer and got Ex. B1 marked. 

5)                The Dist. Forum after considering the evidence placed on record opined that the policy which he had taken was in a lapsed condition for non-payment of premia,  and the said fact was suppressed and on the other hand he mentioned that the policy was in force.    Relying a decision of  Rajasthan State Commission in  L.I.C. of India Vs.  Smt. Sumitra Devi  it opined that  since he had suppressed the fact regarding the lapse of earlier policy  the insurance company was justified in repudiating the claim, and consequently dismissed the complaint. 

6)                Aggrieved by the said decision, the complainant preferred the appeal contending that the Dist. Forum did not appreciate  the facts  in correct perspective.   It ought to have seen that the assured did not suppress  the previous policy  and had he been intended to suppress the fact he would  not have disclosed in the first place.      At any rate the insurance company could have verified the fact.    The mere non-disclosure of lapsed policy  would not entail repudiation of claim being not material as was held  by the National Commission in  L.I.C. of India Vs.  Consumer Education & Research Society reported in 1994 STPL (CL) 120 NC.    Therefore they prayed that the amount claimed be awarded. 

7)                The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?

8)                It is an undisputed fact that  late   Jella Vittal  is  the son of complainant Nos. 1 & 2  and father of  complainant  Nos. 3 & 4 evidenced under Ex. A2 legal heir certificate.    He took Ex. A1 policy   on 27.5.2003 commencing from 27.5.2003 to 27.5.2028.  The said policy was admittedly in force.    Jella Vittal died on 12.6.2004.   When the  complainants made  claim the insurance company  by its letter Dt.  28.1.2006  (Ex. A6) repudiated the claim on the ground that the deceased with-held correct information regarding the previous policy  particulars at the time of  effecting assurance.   It relied the answers given by the assured  for question No. 9  as noted  herein :

Q9 :   Please give details of your previous  insurance :   (Including policies surrendered/lapsed during last three years):

When the claim was made they came to learn that  the above said policy was in a lapsed condition as on the date  of proposal.    Had he made correct statement about the previous policy, the policy  in dispute,   had not been considered at the proposal stage itself.      This incorrect information made them to repudiate the claim.    Despite the representation to the Zonal Office the very same repudiation was up-held vide Ex. A9. 

9)                 The moot question that arises for consideration is whether non-disclosure of said information would entail repudiation of the claim?

10)              Their Lordships of Supreme Court in   L.I.C. of India Vs. Asha Goel  reported in AIR 2001 SC 549  opined that:   

Mere inaccuracy of falsity in respect of some recitals or items in the proposal is not sufficient. The burden of proof is on the insurer to establish these circumstances and unless the insurer is able to do so there is no question of the policy being avoided on ground of misstatement of facts. The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called in question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person.

                                                                                                (emphasis supplied)

11)               Their  Lordships  had also taken cognizance of the fact that: 

In course of time the Corporation has grown in size and at present it is one of the largest public sector financial undertakings. The public in general and crores of policy-holders in particular look forward to prompt and efficient service from the Corporation. Therefore the authorities in-charge of management of the affairs of the Corporation should bear in mind that its credibility and reputation depend on its prompt and efficient service. Therefore, the approach of the Corporation in the matter of repudiation of a policy admittedly issued by it should be one of extreme care and caution. It should not be dealt with in a mechanical and routine manner.

12)              Coming to the facts the earlier policy that was made a mention by the assured,   was also  in favour of the very same insurance company.   Obviously the entire proposal form was filled up by the agent as can be seen from his signature  and writing.    Answers to these coloumns were in mono-syllable.  The very insurance company asked to answer either denoting  ‘yes’ or ‘no’.  since the particulars  were given by the assured under coloumn No. 9 with regard to previous policy,  the insurance company ought to have verified instead of relying on the statement of the assured.    It is not as though the insurance company  had believed the statement given by the assured  about his health  in the  proposal form.  He was examined by a medical examiner  before accepting the policy.    Having accepted the proposal  through its authorized agent, it would have directed the agent to verify with regard to previous policy  whether it was  in force or not.    Having accepted the policy and having received the premia  till his death  on 12.6.2004  it did not raise  the objection that earlier policy particulars were incorrect.    It is not known how  non-payment of premia in regard to earlier policy  would make any difference  in accepting the present policy.    Had it been the case,  a duty casts on the insurance company to verify  those particulars as the earlier policy itself relates to it.    Hardly the amount covered under the policy was  Rs. 1 lakh  and in case of death  the nominee  would get Rs. 3 lakhs  not  a high amount in order to repudiate on the ground that  he had furnished  incorrect particulars.  They are not material.    Since, we hold that the repudiation was unjust,  in the light of decision of the Supreme Court, the insurance company is liable to pay  the amount covered under the policy .

13)               In the result the appeal is allowed by setting-aside the order of the Dist. Forum.  Consequently  the complaint is allowed directing the insurance company to pay Rs. 3 lakhs together with interest @ 9% p.a., from the date of complaint viz.,  from 16.10.2006  till the date of realization  with costs of  Rs. 2,000/-.   Since, we are awarding interest, we do not intend to award any compensation.  Time for compliance four weeks.

1)      _______________________________

      PRESIDENT           

2)      ________________________________

          MEMBER            

                                                                   Dt.   07. 04. 2010. .

*pnr

“UP LOAD – O.K.”