BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

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Complt.  Case No :  191 of 2009

Date of Institution:    10.02.2009

Date of Decision  :    03.08.2010

Harminder Singh Lega s/o Late Sh.Pritam Singh Lega, R/o 1548, Sector 18-D, Chandigarh. 

 ……Complainants

V E R S U S

Life Insurance Corporation of India, Branch Office, Unit No.I, Jeevan Deep Building, Sector 17-B, Chandigarh through its Branch Manager.

.…..Opposite Party

CORAM:          SH.LAKSHMAN SHARMA                         PRESIDENT

                    SH.ASHOK RAJ BHANDARI            MEMBER

                    MRS.MADHU MUTNEJA                        MEMBER

PRESENT:     Sh.Gaurav Bhardwaj, Adv. for the complainant.

Sh.Rajesh Sharma, Advocate for the OP.

PER MADHU MUTNEJA, MEMBER

                The instant complaint has been filed by Sh.Harminder Singh Lega, complainant son of Late Sh.Pritam Singh Lega, praying that the OP be directed to pay the Insurance claim as well as compensation for repudiating the Insurance claim of the complainant.

1]             The facts of the case are as under:-

                The father of the complainant Sh.Pritam Singh (since deceased) had taken two Endowment Assurance Policies with profits and accident benefit from the OP.  The policies were effective from 15.5.2002 to 15.5.2019 and 28.8.2002 to 28.5.2019 respectively.  The total sum assured was Rs.5.00 lacs for each policy.  The premium was fixed at Rs.21,001/- and Rs.11,394/- respectively.  This premium was being duly paid to the OP. 

                Unfortunately, the father of the complainant fell ill and was admitted in PGI for treatment on 24.1.2004 where he  expired on 26.1.2004. Being the nominee of the deceased, the complainant then lodged his claim with the OP.

                Numerous correspondences were exchanged between the parties for settlement of claim.  Relevant papers and documents were also submitted for endorsing and approving the claim.  The complainant unfortunately received a repudiation letter from the OP on 31.3.2008.  The claim was repudiated on the ground that the deceased had withheld material information regarding his health at the time of effecting insurance from the OP. 

                The complainant feels that the act of the OP in corresponding with him for 3 years, making various demands for documents, and then finally repudiated his claim, is totally illegal and unjustified. 

                As per the complainant, the OP had taken premium from the father of the complainant and also conducted a medical examination before entering into the contract of insurance with him.  But now at the time of making payments of the claim, they are making excuses that the deceased had not disclosed material facts about his health to them.  The information in the proposal form was filled-up by the agent of the OP and the document was signed blank by the deceased father of the complainant.  Moreover, before acceptance of the proposal form, it was the duty of the doctors of the OP to point out any illness diagnosed at the time of taking the policies in question and not after the death of the Life Assured (LA).

                When the father of the complainant died, the OP asked the complainant to provide Form No.3816 (Certificate of Hospital Treatment) and 3784 (Medical Attendants Certificate) duly filled by the concerned doctors of PGI, who were present at the time of passing away of the deceased.  The forms dully fill-in were submitted in original to the OP.  As per the forms filled-up by the PGI the cause of death of the deceased was Sepsis.

                The OP thus sent a letter of repudiation to the complainant.  As per the repudiation letter of OP, dated 31.3.2008 placed at Ann.C-18, the claim was repudiated because the deceased had withheld material information regarding his health at the time of taking the insurance policies from the OP.  The deceased was believed to be suffering from Carcinoma Rectum, Hypertension, Diabetes Mellitus for about 25 years.  He was also a chronic alcoholic for the last 30 years.  The relevant portion of the repudiation letter is reproduced as under:-

“It is, therefore, evident that he had made deliberate mis-statements and withheld material information from us regarding his health at the time of effecting the assurance and hence in terms of the policy contract and the declaration contained in the forms of proposal for Assurance and Personal Statement, we hereby repudiate the claim and accordingly, we are not liable for any payment under the above policy and all moneys that have been paid in consequence thereof belong to us.”

The complainant has thus filed the instant complaint before this Forum demanding the assured amount as well as compensation from the OP for deficiency in service and unfair trade practice.

2]             In the written statement filed by the OP, it is stated that the contract of insurance is based on the principles of ‘Uberrima fide’ i.e. utmost good faith.  The contract is based on the information provided by one party to the contract i.e. Proposer/Risk Assured.  Based on the information provided in the proposal form as well as the information gathered from the medical examiners report, to whom he divulges information about the state of his heath, the insurance company undertakes to under write the risk based solely on the information furnished by the Proposer.   Based on this information, the OP decides to accept or decline the proposal. At times even an alternative plan is suggested considering the over all information provided by the person seeking insurance.  It is the proposer alone who is aware of the past and present history of the life to be assured and unless he answers all the questions in the proposal form correctly, the underwriter who accepts the risk on behalf of the insurer cannot properly assess and underwrite the risk.  Some proposers do not disclose full facts and thus violate the principle of utmost good faith. 

                The OP submits that Sh.Pritam Singh Lega, father of the complainant had purchased the Endowment Assurance Policies, already mentioned above, from them and was paying regular premium.  The complainant was appointed nominee under the policy.  The life assured died on 26.1.2004 within a period of two years from the date of taking the policies. During the detailed investigations as per claim settlement procedure, it was revealed that the deceased was suffering from Diabetes Mellitus and Hypertension for 25 years.  He was an alcohol consumer for the last 30 years.  The deceased was also suffering from Chronic Renal Failure and was on end stage of renal disease.  He was diagnosed as a case of complete heart block and Ischemic Heart Disease.  He was admitted with all these ailments in PGI, Chandigarh on 24^th Jan., 2004 and died on 26^th Jan., 2004. As per record of the PGI, Chandigarh placed at Annexure R-5.  It is evident that the deceased had intentionally concealed important facts about his health with the malafide intention of defrauding the Insurance Corporation (OP).  Had he disclosed relevant facts about his health on the proposal form, the insurance corporation would not have issued the policies in question to him. 

                As per Condition No.5  of the proposal form:-

“5. Forfeiture in certain events:

In case the premium shall not be duly paid or in case any condition herein condoned or endorsed herein shall be contravened or in case it is found that any untrue or incorrect statement is contained in the proposal, personal statement declaration and connected documents or any material information is withheld, then and in every such case but subject to the provision of Section 45 of the Insurance Act, 1938, wherever applicable, this policy shall be void and all claims to any benefit in virtue hereof shall cease and determine and all moneys that have been paid in consequence hereof shall belong to the Corporation, excepting always insofar as relief is provided in terms of the privileges herein contained or may be lawfully granted by the Corporation."

Every answer to the questions made in the proposal form as well as declaration by the proposer seems false, and an absolute concealment of material facts. On the basis of these facts and findings, the insurer has taken a decision to repudiate the claim. It cannot be now alleged that there has been any deficiency in service on the part of the insurer in relation to performance of its duties. 

                The OP has therefore prayed for dismissal of the complaint.

3]             We have heard the ld.Counsel for the parties and have gone through the evidence and documents placed on record by all the parties.

4]             At the time of arguments, both the parties relied upon the same documents. The ld.Counsel for the complainant stated that the deceased had died due to Sepsis and the cause of his death was not due to any other ailment as relied upon by the OP.

5]             The ld.Counsel for the OP relied on the same documents and stated that the deceased was suffering from Hypertension, Diabetes Mellitus, Chronic Renal Failure, Complete Heart Block, Ischemic Heart Disease at the time of taking the policies in question.  He also stated that Sepsis is a result of all the above ailments.   Diabetes Mellitus Type-2 with Triopathy with end stage renal disease with encephalopathy curemic sepsis related, complete heart block, Hyperkalemia, Ischemic Heart Disease are also all Sepsis related.  When the deceased was admitted to PGI, he was diagnosed with all the above diseases.  The deceased remained in PGI for 3 days only. The case summary of PGI as per Form 3816 is as under:-

“This 60 yr. Male known case of Type 2 Diabetes Mellitus with Tropathy # with Essential hypertension with Chronic Renal failure with End Stage Renal Disease on maintenance hemodialysis (last dialysis on 21/1/04) presented with altered seasorium of 3 days.  On evaluation found to have hyperkalemia, and was started on periodical dialysis.  ECG showed a complete heart block for which a temporary pacemaker insertion was done; etiology of complete heart block ? hyperkalemia, underlying Ischemic heart disease – CPR-MB was 75.  Patient developed hypertension for which he was given inotropic support.  On 26/1/04 patient had a cardiorespiratory   arrest from which he could not revived.”           

7]             Neither parties have placed on record any documents to show any previous ailment of the deceased.  Both the parties have also not placed on record any medical examination, if any, carried out on the patient at the time of issuance of the policy.  The only documents available and on which both parties rely are those of the History Sheet and patient record prepared by the PGI during his admission/treatment in the PGI. 

8]             The complainant wishes to stress that the deceased was not suffering from any disease before he was admitted to PGI.  However, the record shows the complete opposite position and records of PGI can well be treated as authentic and unbiased documents.

9]             The complainant has relied on the judgment of Hon’ble National Commission, New Delhi in case Life Insurance Corporation of India & Ors. Vs. Pariapally Sujatha & Ors., 2010(2) CLT 551 (NC) wherein the claim by the insurance company was repudiated on the ground of suppression of material facts.  It was held : “….no affidavit of the doctor filed by the petitioner- insurance company who stated that the he treated the deceased 9 years ago to show that the deceased was actually suffering from the said disease.” 

                The ld.Counsel for complainant also relied on the case of Life Insurance Corporation of India & Ors. Vs. Harbans Kaur,2009(3) CPC 677 (NC) wherein it has been held “OP failed to prove that insured had concealed a material fact at the time of policy”

 10]           Rebuting the claim of the ld.Counsel for complainant, the ld.Counsel for the OP has laid reliance on the following judgments of the Haryana State Commission, Panchkula:-

i)        Santosh Devi Gupta Vs. Life Insurance Corporation of India, Complaint No.77/2000, decided on 25.4.2007 held : It is well settled norm that the History of the Hospital Certificate can be relied upon.  It is also equally stated that non-production of Doctor who had submitted medical attendance certificate is not fatal to the case of the opposite Parties.  Repudiation upheld.

ii)     Life Insurance Corporation of India & Ors. Vs. Murti Devi, F.A.No.682 of 2003, decided on 9.1.2007 held : It is not the law that as and when Certificate of Doctor is not supported by the affidavit of treating Doctor, the same should be excluded from consideration. In this case medical Certificate has been admitted on record without objection and on this count cannot be excluded from consideration as has been done by the District Forum.  As there was deliberate concealment on the part of deceased about the true state of his health, the contract of insurance entered into him and opposite parties stood vitiated on account of fraud committed by him.  Repudiation action upheld.

The OP has also relied on the judgment of the Hon’ble National Commission, New Delhi.

i)      New India Assurance Co. Ltd. Vs. Sh. Vishwanath Manglunia, R.P.No.164 of 2006, decided on 12.4.2010 held“….The law by now is well settled by a catena of decisions that the insurer would be fully justified in repudiating the insurance contract for suppression of material fact.  In this regard, learned counsel for the petitioner/New India Assurance Company Limited has referred to a number of judgments of the Hon’ble Apex Court, in particular that of (i) Smt. Krishnawanti Puri Vs. LIC of India [AIR 1975 Delhi. 19]; (ii) V. Sriniwasa Pillai Vs. LIC of India [AIR 1977 Mad. 381]; (iii) Smt. Dipashri Vs. LIC of India [AIR 1985 Bom. 192]; and the latest judgment in the case of (iv) Satwant Kaur Sandhu Vs. New India Assurance Company Limited [2009 INDLAW SC 856].  The gist of all the citations point towards the legal proposition that insurance is a contract based on complete good faith and any suppression of material fact would be a breach of such contract and the insurer would be justified in repudiating the claim once such suppression is established.”

And the Hon’ble Supreme Court of India in Satwant Kaur Sandhu Vs. New India Assurance Company Ltd. (2009) 8 Supreme Court Cases 316 held: Nature and object of – Obligation of insured to disclose true and full information sought in proposal form – Extent of said disclosure necessary – When information on a specific aspect is asked for in the proposal form, held, the assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge – Obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known – Whether the  information sought for is material for the purpose of the policy is a matter not to be determined by the proposer.

                In present case, although insured was aware of the fact that he was suffering from chronic diabetes and renal failure, he did not disclose the said fact in proposal form for the policy – Hence, insured was fully justified in repudiating the insurance contract – Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002 – Regn. 2(1)(d) – Contract Act, 1872 – Ss.18 and 19 – Contract and Specific Relief – Formation defects –  Rescission of contract (of insurance for) – Consumer Protection – Services – Insurance – Consumer Protection Act, 1986, Ss.2(1) (o),(g) & (c)(iii)

                “….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….”

                “…..The certificate also stated that the insured was a known diabetic for the last 16 years. Thereupon, the respondent vide letter dated 30th August, 1993 informed the appellant that her claim had been repudiated….”

11]            Even The State Commission, U.T., Chandigarh in its most recent judgment dated 8^th July, 2010 in Vipin Gandhi Vs.Zonal Manager, Life Insurance Corporation & Anr., Appeal No.2252 of 2008, has held “At this stage, we may like to refer to the latest judgment of Hon’ble National Commission in the case of New India Assurance Company Limited Vs. Vishwanath Manglunia reported as 2010 CTJ 634 (CP) (NCDRC) wherein the Hon’ble National Commission has held that Insurance is a contract based on good faith and suppression of any material fact would be a breach of that contract.  The Hon’ble National Commission further referring to the case of Satwant Kaur Sandhu (supra) held that the insurer would, therefore, be justified to repudiate the insured’s claim once such a suppression is established.  Thus, our view is fully supported by the law settled by the Hon’ble Apex court and Hon’ble National Commission in the cases referred to above.”

12]            The complainant has alleged that the act of the OP’s in repudiating his claim amounts to deficiency in service and unfair trade practice.  The Hon’ble Supreme Court of India in Ravneet Singh Bagga Vs. KLM royal Dutch Airlines and Anr., (2000) 1 Supreme Court Cases 66 relying on the definition of “service” and “deficiency” as per Section 2(1)(o) and 2(1)(g0 of the Consumer Protection Act  held “In case of bona fide disputes, no wilful fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance in the service can be inferred. 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 bona fides, rashness, haste or omission and the like may be the factors to ascertain the deficiency in rendering the service.” 

13]            There seems to be a misconceived notion of the complainant that the OP must honour their commitment since no previous medical records are available to show any illness of the deceased. When no medical records are available/presented from either side we can only rely on the records of the PGI.  The records clearly show that the deceased had been suffering from numerous ailments which led to his death and also became the cause of his death.  We cannot therefore attribute any deficiency in service to the OP in deciding the claim case of the insured.  The claim was repudiated by the competent authority on the basis of the investigation report.  Otherwise also the decision of the Hon’ble National Commission is that once it is found that all relevant facts have not been presented by the insured to the underwriter at the time of taking the policy is a clear case for repudiation.    

14]            In view of the above, we feel that no deficiency in service or unfair trade practice can be made out against the OP. The complaint is thus dismissed. Both the parties are left to bear their own costs.

15]            Certified copies of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

03.08.2010                                                             Sd/-

(LAKSHMAN SHARMA)

PRESIDENT

                                                          Sd/-

                                       (ASHOK RAJ BHANDARI)

MEMBER

                                                                             Sd/-

                                                             (MADHU MUTNEJA)

MEMBER

‘Om’