STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

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

……Appellant/complainant

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.

 ....Respondent/OP

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:  MRS. NEENA SANDHU, PRESIDING MEMBER.

S.  JAGROOP  SINGH   MAHAL, MEMBER.

Argued by:          Sh. Gaurav Bhardwaj, Adv. for the appellant.

                   Sh. Rajesh K. Sharma, Adv. for the respondent.

PER  JAGROOP  SINGH   MAHAL, MEMBER

                    This is complainant’s appeal against the order dated 3.8.2010, passed by the learned District Consumer Disputes Redressal Forum-II, UT, Chandigarh (hereinafter referred to as the District Forum), vide which it dismissed the complaint.

2.                      The facts, in brief, are that the father (now deceased) of the complainant had taken two Endowment Assurance Policies with profits and accident benefit from the OP, which 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 and the same was being duly paid to the OP.  Unfortunately, the father of the complainant expired on 26.1.2004, and the complainant being the nominee of the deceased, lodged his claim with the OP. Despite correspondences and providing all the relevant documents, the OPs repudiated his claim vide letter dated 31.3.2008 on the ground of concealment of material fact regarding the heath of the assured (deceased). The complainant alleged that the information in the proposal form was filled-up by the agent of the OP and the document was blank when signed 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). Hence the complainant had filed complaint before the ld. Forum demanding the assured amount as well as compensation from the OP for deficiency in service and unfair trade practice.

3.                      In its written reply the OP submitted 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.  On the basis of 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  and thus  decides to accept or decline the proposal.   In the present case the assured had concealed material facts regarding his health. The OP admitted factum regarding purchase of insurance policy and regular payment of premium thereof by the father of the complainant. It was pleaded that the life assured died on 26.1.2004 within a period of two years from the date of taking the policies. Thereafter, 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 24th Jan., 2004 and died on 26th Jan., 2004 as per record of the PGI, Chandigarh placed at Annexure R-5.  Thus the complainant had intentionally concealed important facts about his health with the malafide intention of defrauding the Insurance Corporation (OP).  Therefore, the OP-company rightly repudiated his claim in view of Condition No.5  of the proposal form. Hence pleading no deficiency on its part the OP prayed for dismissal of the complaint.

4.                      Parties led evidence in support of their case. 

5.                      After hearing the ld. Counsel for the parties and on going through the evidence on record, the ld. District Forum dismissed the complaint, as stated in the opening para of this order.

6.                      Feeling aggrieved, the instant appeal has been filed by the appellant/complainant.

7.                      We have heard the ld. Counsel for the parties and have perused record of the case.

8.                      The complaint was dismissed by the ld. District Forum on the ground that Pritam Singh Lega, deceased insured gave incorrect answers to the questions No.11(d), (h) and (i) of the proposal form vide which he replied as follows :-

                    The ld. Counsel argued that the insured fell ill and died within two years of the insurance and the doctor attending on him found, vide Annexure R-6, that he was suffering from diabetes mellitus and hyper tension for 25 years.  He was alcohol consumer for the last 30 years and had end stage renal disease with Encephalopathy (uremic, sepsis related) and complete heart block (hyperkalemia, ischemic heart disease).  It is argued that the contract of insurance depends on utmost faith and the insured was required to give correct answers to questions in the proposal form and, therefore, the contract of insurance would be void abinitio and the appellant/complainant was not entitled to the assured amount.  On the other hand, the ld. Counsel for the appellant/complainant has argued that the facts mentioned in Annexure R-6 are totally wrong; that there is no bases of the alleged information mentioned by the doctor and the answers given by the insured in the proposal form were correct and there was no concealment.  In order to decide the controversy, it is necessary to ascertain whether the insured was suffering from any such disease or was alcoholic for the last 30 years, as mentioned in Annexure R-6.

9.                      The doctor who prepared Annexure R-6 had no first hand knowledge as to whether the insured used to take alcohol for the last 30 years or he had hypertension for the last 25 years.  Obviously, these facts were mentioned by the doctor from some outside information which it was necessary for him to mention in Annexure R-6.  It has not been mentioned in this document as to from where the doctor got this information about the deceased.  Annexure R-5 is the certificate of hospital treatment, in para 5 (b) of which it is asked as to whether the history was reported by the patient himself/herself or someone else and against this ‘No’ has been mentioned.  Against clause (c) the name and relationship of the person, who reported it, is mentioned as Harminder Singh (son). The record of the PGI was called and the copies are at Pages 281 to 335 of the file of learned District Forum but the same nowhere shows if the history, as given in Annexure R-5 or R-6, was ever mentioned by Harminder Singh.  The ld. Counsel for the appellant/complainant has argued that there is no denial from the OP that if the consumption of alcohol was started by the deceased/insured after his insurance, the same level of disease could have been acquired by him within the aforesaid period of two years.  These documents (Annexure R-5 and R-6) are based on hearsay, rather no evidence and in view of the direct evidence, coming from the record of the respondent/OP itself, it would not be enough to hold that the deceased insured was suffering from any such disease on the date on which the proposal for insurance was given.

10.                   The contention of the complainant is that before selling the insurance policy, the OP conducted the medical examination of the deceased insured not once but twice.  The record relating to the medical examination was not produced by the respondent/OP before the ld. District Forum but the same was ordered to be produced before this Commission in pursuance of an order dated 24.12.2010 and the same was marked R-1 to R-9 but in order to avoid duplicacy, the same are exhibited as Annexure R-14 to R-22.

11.                   The first examination was conducted on 12.6.2002.  Annexure R-18 is the blood sugar tolerance report,  Annexure R-19 is the Biochemistry report, Annexure R-20 is the report on Tolerantgenogram P.A. View) and Annexure R-21 is the Medical Examiner’s Confidential Report of the tests conducted in June 2002.  No abnormality was found as a result of these medical tests.

12.                   Again another test was conducted on 28.8.2002.  Annexure R-14 is the Biochemistry report about blood tests etc., Annexure R-15 is the report of full routine examination of urine, Annexure R-16 is the blood report and Annexure R-22 is the Blood Sugar Tolerance Report.  There was no abnormality found as a result of the second test also and only thereafter the insurance policies were sold to the insured deceased.  In view of these reports, it cannot be said if the deceased insured was suffering from any such diseases and if that is accepted as true, then the answers given by him in the proposal form, which are now said to be incorrect, were perfectly correct in accordance with the physical health of the deceased.

13.                   When the OP/respondent was ordered to produce the medical reports, which showed that the insured was not suffering from any disease, the OP came up with another story alleging that there was impersonation during the medical examination of the deceased; that they have now got compared the signatures of the insured, appearing on the medical reports, with his standard signatures from Jassy Anand, Forensic Consultant and his affidavit (Annexure R-11) and the report (Annexure R-12) be considered in evidence.  This contention was vehemently opposed by the ld. Counsel for the appellant/complainant firstly on the ground that there was no such ground taken by the respondent/OP in their written statement and that this evidence, being beyond pleadings, cannot be considered.  The second ground is that entirely a new case is being set up by the respondent/OP for repudiating the claim of the appellant/complainant and this fact was never mentioned by them in their repudiation letters (Annexure R-7 and R-8) and they cannot be permitted to take this stand at the appellate stage.  We find sufficient merit in the contention of the ld. Counsel for appellant/complainant. Since no such ground was taken in Annexure R-7 and R-8 nor any such pleading exists in the reply filed by the OP,  such a new ground cannot be allowed to be taken at this stage just for the purpose of defeating the claim of the complainant which otherwise may be maintainable.  The medical record, on which the signatures of the insured are stated to have been fabricated, had been continuously in possession of the OP.  The proposal forms were also with them during this entire period because these documents had been procured by their agent. However, it was never disputed by them that the insured was medically examined each time when the two insurance policies were purchased by him nor they ever alleged if some body else was fraudulently got medically examined in place of the deceased insured. Rather the OP/Appellant did not even mention in the written reply if the insured was medically examined by their doctors before the insurance policies were issued to him.  This new story, therefore, cannot be allowed to be introduced at this stage and the request made by the respondent/OP for producing the affidavits of Smt. P. Kwatra, Manager (Legal & HPF), Jassy Anand, Forensic Consultant and the report dated 21.3.2008, as Annexures R-10 to R-13 respectively, so far as these relate to the allegation that the medical reports of some other person were introduced in place of the insured and it was a case of impersonation, cannot be allowed and the same is accordingly declined.  The result is that both the reports of the medical examinations (Annexure R-14 to R-22) conducted by the respondent/OP prove that at the time when the insured filled up the proposal form, he was not suffering from any such disease and he gave correct answers to the questions put to him and there was no supply of incorrect information by the insured.

14.                   From their own record of the OP it is proved that the insured was having good health at the time when he was insured by the OP.  He was not suffering from any such disease, as developed subsequently, which led to his death.  The medical reports (Annexure R-5 & R-6), which are based on hearsay evidence, will not have precedence over the primary evidence in the shape of medical tests, results of which are Annexure R-14 to R-22, filed alongwith the application for placing on record in the appeal. 

15.                   The learned counsel for the respondent has referred to the decision of the Hon’ble National Commission in the case of LIC of India Vs. Krishan Chander Sharma, Revision Petition No.1935 of 1999) and that of the Hon’ble State Commission in the case reported as Life Insurance Corporation of India & Ors. Vs. Murti Devi-III (2007) CPJ 110  in support of his case, but these authorities are not helpful to the respondent/OP.  In both the authorities, the insured had remained admitted in the hospital for treatment of the disease before they took the insurance policies but did not mention the said fact in the proposal form.  It is not so in the present case. 

16.                   The ld. Counsel for the appellant/complainant has also argued that mental depression, anxiety, hyper tension cannot, by itself, be termed as diseases material to be disclosed while purchasing the insurance policy and the non-mentioning of any such disease cannot be considered as suppression of material facts which may be sufficient to reject the insurance claim.  In support of his contention, the ld. Counsel cited the case of Vidya Vs. Life Insurance Corporation of India & Anr.-2004(3) RCR (Civil) 793.

17.                   The above facts make it clear that the insured was not suffering from any disease at the time of purchase of the insurance policies on his life and he gave correct answers to the questions in the proposal form as per his health.  If subsequently he contracted any disease, the insurance claim cannot be denied on its basis.  It is generally the tendency on the part of the Insurance Companies to issue insurance policies and get premium therefor but they find one excuse or the other to deny the claim subsequently when the time unfortunately comes for payment of the claim on its basis.  The present one is a unique case where a false ground is being tried to be introduced, even at the appellate stage, regarding impersonation at the time when the medical tests of the insured were conducted, though it was never the case of the respondent/OP before the District Forum or even at the time of repudiating the claim. This attitude on the part of the Insurance Companies to coin false grounds to reject the claim is highly deplorable.

18.                   In view of the above discussion, we are of the considered opinion that the appellant/complainant was entitled to the claimed amount of the insurance polices and his complaint was liable to be allowed.  It has been wrongly dismissed by the ld. District Forum.  We accordingly accept the appeal, set aside the impugned order dated 3.8.2010 and direct the respondent/OP to pay the claim amount of Rs.10,00,000/- to the complainant alongwith interest @ 9% per annum w.e.f .1.4.2008 (the claims were repudiated vide Annexure R-7 and R-8 on 31.3.2008) till the payment is made to the complainant.  The respondent/OP shall also pay Rs.10,000/- as costs of litigation.  If the entire amount is not paid within thirty days from the date of receipt of copy of the order, the OP/respondent would be liable to pay the same with penal interest @ 12% per annum w.e.f. today, till actual payment to the complainant.

                   Copies of this order be sent to the parties free of charge.

Pronounced.

16^th August, 2011

[NEENA SANDHU]

PRESIDING MEMBER

[JAGROOP SINGH MAHAL]

MEMBER

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