IN THE DISTRICT CONSUMERS’ DISPUTES REDRESSAL FORUM AT MYSORE<br /> <br /> PRESENT: 1. Shri.D.Krishnappa<br /> B.A., L.L.B - President<br /> <br /> <br /> 2. G.V.Balasubramanya<br /> B.E., LL.M - Member<br /> <br /> CC 227/06 DATED 28-11-2006<br /> <br /> Complainant Sri.Jayashekhara, D.No.30, Block No.13, J.S.S. Layout, Mysore-4.<br /> (By Sri.K.N.Mahadevaswamy, Advocate)<br /> Vs. <br /> Opposite Party Life Insurance Corporation of India, Jeevan Jyothi, Bangalore Road, Bannimantap, Mysore. Rep. by the Senior Branch Manager, Branch-II.<br /> (By Sri.B.N.S., Advocate)<br /> <br /> Nature of complaint : Deficiency in service<br /> Date of filing of complaint : 16-08-2006<br /> Date of appearance of O.P. : 18-09-2006<br /> Date of order : 28-11-2006<br /> Duration of Proceeding : 2 MONTHS and 10 DAYS<br /> <br /> <br /> <br /> <br /> <br /> PRESIDENT <br /> MEMBER<br /> <br /> <br /> <br /> <br /> Sri.G.V.Balasubramanya,<br /> Member<br /> <br /> 1. The Complainant took an Insurance Policy from Opposite Party on 15.11.2004. The sum assured was Rs.1,00,000/-. The Policy carried additional benefits like accident benefit, critical illness cover and premium waiver benefit. The Complainant had arranged payment of monthly premium of Rs.914/- through salary deduction. The policy envisaged an option to the Complainant to continue or discontinue the critical illness cover after 5 years.<br /> 2. The Opposite Party, after a few months after commencement of the policy, asked the Complainant to undergo certain medical tests and submit the reports. The Complainant underwent the tests and submitted the reports on 18.08.2005. Then, the Opposite Party called upon the Complainant to send a Physician’s report. The same was, also, submitted on 10.09.2005. Subsequently, the Opposite Party asked for a report from the dermatologist. This too was submitted. After a lapse of two months, the Opposite Party wrote a letter to the Complainant stating that the critical illness cover had been withdrawn and the premium for Term Rider Benefit has to be paid at 6.15%. The Letter, also, stated that the risk will be accepted with Health Extra (HE) at 3.9%. The Opposite Party wanted the Complainant to convey his consent for the above modifications in the terms of the policy and also surrender the policy for incorporating the modified terms. <br /> 3. The Complainant conveyed his opposition to such modification. But, the Opposite Party gave only an untenable reply. Thus, the Complainant was constrained to issue a legal notice calling upon the Opposite Party to stick to the original terms of the policy. As no reply was given, this Complaint has been filed. The Complainant wants this Forum to direct the Opposite Party not to revise the terms of policy. He, also, wants damages of Rs.50,000/-<br /> 4. The Opposite Party, in his version, has admitted issuing the policy with additional benefits to the Complainant. He says that since the age of the Complainant exceeded 35 years certain medical tests which were not done earlier were required to be done as per the direction of the Inspection Department. The Opposite Party admits that the Complainant furnished all the test reports. He, also, says that underwriting section after verifying the tests reports decided to modify the terms of the policy as narrated by the Complainant and the same was communicated to him. As the Complainant did not reply, the risk under the policy was suspended and the monthly premium that was sent subsequent to suspension of risk was held in suspense account. <br /> 5. The Opposite Party has averred that it is entitled to alter the terms of the policy at any stage on the ground of suppression of material fact. Since, the Complainant has suppressed the fact that he had vitiligo, it vitiates the contract. Thus, the Opposite Party prayed for dismissing the Complaint.<br /> 6. From the above contentions, the following points arise for our consideration.<br /> I. Whether the complainant proves that the Opposite Party has rendered deficient service by unilaterally altering the terms of the policy after it was issued?<br /> II. Whether Opposite Party proves that the Complainant has suppressed material fact which vitiates the policy?<br /> III. What order or relief? <br /> <br /> 7. Our findings are as under:<br /> <br /> Point I : In the affirmative. <br /> Point II : In the negative.<br /> Point III : As per final Order.<br /> <br /> <br /> REASONS<br /> <br /> 8. Point No.7(I):- The risk under the policy commenced on 15.112004. While sending the policy certificate to the complainant, the Opposite party has asked him to go through the policy terms and conditions and if he does not agree with any of them, he can return the policy within 15 days. From the documents filed by the complainant it is seen that even before the policy was issued, the Opposite party asked the complainant to submit ECG, Hoemogram and Blood Sugar Tolerance reports. Apparently, some of these tests were got done by the Opposite party at his cost as the Opposite party has written that if the complainant rejects the policy within 15 days, the premium paid by him would be refunded after deducting the risk premium and charges for medical examination. The ECG and Blood Sugar Tolerance Reports are normal. The medical examiner of the Opposite party has given a confidential report wherein except vitilego he has found the complainant to be normal. Again, on 02.09.2005, the Opposite party asked the complainant to submit a physician’s report. This was complied with on 10.09.2005. The report is apparently normal. Once again on 04.10.2005, the Opposite party asked the complainant to submit a report of dermatologist on the ground that their ZUS has called for the same. The complainant obtained it the same day.<br /> 9. After ordering all the tests and issuing the policy, the Opposite party on 15.12.2005 wrote a letter stating that the medical reports submitted by the complainant were referred to the Zonal office who directed that the risk can be accepted with HE 3.9% for Basic S A and 6.15% for Term Rider Benefit without critical illness cover. The Opposite party, also, wrote to the complainant’s employer not to recover the premium from the salary as the risk had been suspended. The Opposite party wanted complainant to give his consent for the modified terms. <br /> 10. The complainant wrote a letter dated 27.12.2005 requesting the Opposite party to reconsider its decision. In reply the Opposite party wrote<br /> “ We would like to again inform you that the above policy was completed on 15.11.2004 for 1,00,000/- B.S.A. with Cri “By mistake”. The decision of charging HE was taken after obtaining expert doctors opinion (who is an outsider) on the Special Medical Report submitted and the reason of charging Extra is “STRICTLY CONFIDENTIAL” By any Insurance Company. The insurer takes a prognostic view on the special reports rather than diagnostic view while charging extra premium. The corporation evaluates the risk over a period of Insurance Contract on the basis of “whether the symptoms or findings of the special medical reports given an indication of an impending impairment and expected EMR resulting therefrom over the duration of the contract”.” <br /> 11. A life insurance contract despite being an unilateral contract and a contract of adhesion has all the elements of an ordinary contract. Thus, all such provisions of the contract Act which define the circumstances under which a contract can be avoided are applicable in a contract of insurance, also. Therefore, the Opposite party has to show that a circumstance as defined in the contract Act existed. Which entitled him to avoid / modify the contract. The contract between him and the complainant is a concluded contract. As per the provisions of Contract Act “Mistake” is, also, a ground under certain circumstances for avoiding the contract. Hence, we have to examine whether the plea of “Mistake” taken by him for modifying the policy can be accepted. Section 20 of the contract Act is applicable only where both the parties are under a mistake as to a matter of fact essential to the agreement. That makes the contract void. However, under section 22 where one of the parties to a contract is under a mistake as to a matter of fact, then such contract is not even voidable.<br /> 12. It is essential to take a look at section 13 of the Contract Act, also. It says that two or more persons were said to consent when they agree upon the same thing in the same sense. When a person proposes to insure his life and the insurer after satisfying himself issues the policy, the insured and insurer are deemed to have agreed upon the same thing in the same sense. When the Opposite party ordered number of medical examinations, satisfied himself about the health of the complainant and then issued the policy, he cannot hide behind the plea of “mistake”. If the Opposite party has erred by issuing the policy before his higher authorities approved it, then he has to stand by that. He could have issued the policy after receiving all the approvals. Thus, the Opposite party can not modify the terms of contract unilaterally after it is concluded.<br /> 13. The reasons given for such modifications are, also, not acceptable. The Opposite party has said that he has to take a prognostic view after looking at the medical reports. The risk has to be evaluated based on the information given/ collection at the time of taking the policy. There is really nothing objectionable in the medical reports submitted by the complainant which justifies charging higher premium. The Opposite party has stated that the reasons for charging HE is confidential. Having accepted the risk at normal rate of premium can he contend that for undisclosable reason he wants to enhance the premium? Hence, as for as we are concerned firstly, no material has been brought before us which justifies charging higher premium. Secondly, this is a contract concluded after calling for necessary information and evaluating it. The Opposite party as underwriter could have justified demanding higher premium and refusing to cover critical illness had he done it before issuing the policy. Once the policy is issued, it means he has assessed the risk on the basis of the information given to him. After that he cannot unilaterally rescind the contract except for suppression of material fact under Section 45 of the LIC Act. Except under this circumstance, a policy once issued can not be avoided for any other reason. <br /> 14. This contract cannot be held either void or voidable for any of the reasons given in the contract Act. Therefore, the Opposite party cannot modify the terms of the policy unless the complainant is willing to accept such modifications. Since, the Opposite party has not only suspended the risk unilaterally, but has also advised the complainant’s employer not to remit the premiums, such act amounts to deficiency in service. Therefore, we answer the point in the affirmative.<br /> 15. Point No.II:- The Opposite party has contended that the complainant had not disclosed that he had vitiligo and this amounts to suppression of material fact. Column 11 (a) of the proposal form asks the prospective insured as to whether he had consulted a medical practitioner in the previous 5 years for any ailment requiring treatment for more than a week. The complainant, no doubt, has answered in the negative. Since, this is a medical policy, presence of white patches was observed by the medical examiner and the complainant was asked to submit an opinion from a dermatologist. Complainant submitted the same immediately. All this happened prior to issuing the policy. Secondly, loss of pigmentation is not at all considered as a disease. Under these circumstances, we are not convinced that the complainant has suppressed a material fact, and that is a ground for the Opposite party to vary the policy. The Opposite party which has varied the policy has not come up with before this Forum specifying ground or grounds on which it has varied the policy. Therefore, such variation for unknown reasons in our view is not permissible and is to be rejected. Therefore, we answer the point in the negative.<br /> 16. The entire chain of events lead to an indisputable conclusion that the Opposite party is trying to take advantage of his own wrong. The complainant has complied with every demand made by the Opposite party. The complainant underwent medical tests in August 2005 and the policy was issued in November 2005. There can be no excuse for not obtaining the approval from his under writing department before issuing he policy. Having once issued the policy, it cannot be allowed to alter the terms of the policy unilaterally for his own fault which he has himself admitted as a “mistake”. Obtaining approval of the underwriting Department is an internal issue for which the complainant should not suffer. With these observations, we proceed to pass the following order:-<br /> <br /> ORDER<br /> <br /> A. Complaint is allowed.<br /> B. The Opposite party is directed to continue the risk under the policy without modifying the terms of the policy and accept the premium as per schedule.<br /> C. The Opposite party shall pay the complainant cost of Rs.1,000/-.<br /> D. Give a copy of this order to each party according to rules. <br /> <br /> (Dictated to the Stenographer, transcribed by him, transcript revised by us and then pronounced in the open Forum on this the day 28th November 2006)<br /> <br /> <br /> <br /> <br /> <br /> (D.Krishnappa) <br /> President <br /> (G.V.Balasubramanya)<br /> Member<br /> <br /> <br /> <br />