BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD
C.C.No.93 OF 2010
Between:
Smt Alluri Karun Kumari
W/o late Alluri Anjaneya Raju
R/o D.No.9-4-1, Bandlavari Street
Kavali, SPSR, Nellore District
Complainant
A N D
1. Life Insurance Corporation of India
rep. by its Regional Manager,
South Central Zonal Office,
“Jeevan Bhagya”Saifabad,
Hyderabad-063
2. Life Insurance Corporation of India
rep. by its Senior Divisional Manager
Divisional Office, Dargamitta,
Nellore-003
Opposite parties
Counsel for the Complainant M/s ASC Bose
Counsel for the opposite parties M/s AVS Ramakrishna
QUORUM: SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER
AND
SRI THOTA ASHOK KUMAR, HON’BLE MEMBER
WEDNESDAY THE TWENTY FIFTH DAY OF JULY
TWO THOUSAND TWELVE
Oral Order (As per Sri R.Lakshminarasimha Rao, Hon’ble Member)
***
1. The complaint is filed seeking direction to the opposite party life insurance corporation to pay an amount of `6,00,000/- and ` 20,00,000/- together with bonus and other benefits under the insurance policies bearing numbers 841480167 and 841483913 and `1,00,000/- towards compensation and `10,000/- towards costs.
2. The averments of the complaint are that the complainant’s husband during his life time obtained insurance policy bearing number 841480167 under Jeevan Mitra plan and another insurance policy bearing number 841483913 under Anmol Jeevan(without benefits) plan. The first mentioned insurance policy commenced from 15.10.2004 while the latter insurance policy commenced from 13.01.2005. The complainant’s husband was hale and healthy and the opposite party subjected him to medical examination before issuing the policies.
3. The complainant’s husband died in a motor vehicle accident on 8.06.2005 and the Police, Kavali registered FIR in Cr.No.68 of 2005 against the offending driver of the lorry. The complainant lodged claim along with relevant documents. The second opposite party informed the complainant on 16.05.2006 that the claim was referred to their zonal office and having waited for a long time , the complainant submitted representation on 15.08.2006, 2.11.2006, 28.11.2007 requesting the opposite parties to settle her claim. For her survival the complainant left for her parent’s’ place and after returning to Kavali, she got issued notice dated 20.04.2010 requesting the opposite parties to settle her claim for which the opposite parties replied on 24.04.2010 informing her that the claim was repudiated and the decision was communicated to her.
4. The complainant informed the opposite parties that she had not received the intimation of repudiation and requested them to furnish copy of the repudiation letter. The second opposite party furnished copy of repudiation letter to the complainant on 6.09.2008. The claim was repudiated on the ground that the complainant’s husband was suffering from TB prior to obtaining the insurance policies and he did not disclose it in the proposal. The complainant’s husband was an electrician and he did not suffer from any ailments prior to the time of submission of proposal. The opposite parties consumed long time in taking decision to repudiate the claim.
5. The opposite parties resisted the claim on the premise that the complaint is not maintainable before this Commission and the value of the relief claimed is below `20 lakh. The first insurance policy was issued under Jeevan Mitra Plan (Triple Cover Endowment Plan with accident benefit) for `2 lakh and another insurance policy under Anmol Jeevan Plan for sum assured of `10 lakh. The complainant’s husband obtained one policy for a sum of `10 lakh and another insurance policy for `2 lakh. The insurance policies do not cover accident benefit. The complainant’s husband died within 2 years from the date of commencement of the insurance policies. Treating the claim as early claim, the opposite parties conducted investigation and it was revealed that the deceased suppressed material facts relating to his health which directly affects issuance of insurance policies in his favour.
6. The opposite parties repudiated the claim basing on the certificates, prescriptions and x-ray reports issued by Dr.K.Subba Rao and Dr.Rama Chandra Reddy that the deceased was suffering from TB and he suppressed to state the disease in the proposal. He replied to questions no.11(a) to 11(j) in the proposals that he was in good health and he did not receive any treatment for any disease or symptoms of disease. The ultimate cause of death of the insured has no relevance to the disclosure of information regarding his health as required by Clause 11 of the proposal form. There was no negligence or deficiency in service on their part ; hence the opposite parties prayed for dismissal of the complaint.
7. The complainant has filed his affidavit and the documents, ExA1 to A12. On behalf of the opposite parties, the Assistant Secretary, Legal & HPF has filed his affidavit and the documents Exs.B1 to B13.
8. Counsel for the complainant and the opposite parties have filed written arguments.
9. The points for consideration are
i) Whether the repudiation of the claim by the opposite parties is arbitrary?
ii) Whether there was any deficiency in service on the part of the opposite parties in repudiating the claim?
iii) To what relief?
10. POINTS NO.1 & 2: The relationship between the complainant and the deceased and submission of proposal by the deceased husband of the complainant as also his death in a road accident on 8.6.2005 are the facts of which there is no dispute between the parties. The complainant’s husband obtained two life insurance policies bearing numbers 841480167 and 841483913 from the opposite parties. He submitted proposals on 15.10.2004 and 12.03.2005 with a request to issue the insurance policies in his favour. The insurance policies are issued for Rs.2 lakh and Rs.10 lakh . The opposite parties subjected him to medical examination before accepting the proposal and the doctor who examined him reported that he was not suffering from any serious ailments. The deceased also stated in the proposal that he was not suffering from any serious ailment.
11. The ground for repudiation of the claim is that the complainant’s husband was suffering from Tuberculosis and he suppressed the fact in the proposal submitted for the purpose of taking insurance policies. Both counsel have relied upon various decisions of high courts, supreme court and National Commission. The learned counsel for the complainant has relied upon the following decisions:
i) LIC of India and others vs Asha Goel (smt) and another- (2001)2 SCC 160.
ii) LIC of India vs Ambica Prasad Pandey -AIR 1999 MP 13.
iii) New India Assurance Company Ltd vs Tambireddi Subbaragahav Reddy –AIR 1961 AP 295(Vol.48 C.74).
iv) LIC of India vs Joginder kaur and others II(2005) CPJ 78(NC).
v) Surinder Kaur and others vs LIC of India and others II(2005) CPJ 32 (NC).
vi) LIC of India vs Pushpabai Devidas Bansode and others I(2011)CPJ 298.
12. The learned counsel for the opposite party-insurance company has relied upon the following decisions:
i) P.C.Chaco and another vs LIC of India and others in Civil Appeal 5322 of 2007 dated 20.11.2007.
ii) LIC of India vs Smt.Meena Mahalawat in FA No. 1 fo 2004 decdied on 9.09.2008.
iii) LIC of India vs Kishan Chander Sharma in Appeal No. 575 of 1999 decided on 23.01.2006.
13. Asha Goel’s is a case where the claim was repudiated on the premise that the insured suppressed correct information about his health in obtaining insurance policy. The Supreme Court discussed the impact of Section 45 in the claims of the nature involving suppression of the fact as under:
Coming to the question of scope of repudiation of claim of the insured or nominee by the Corporation, the provisions of section 45 of the Insurance Act is of relevance in the matter. The section provides, inter alia, that no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that is suppressed facts which it was material to disclose. The proviso which deals with proof of age of the insured is not relevant for the purpose of the present proceeding. On a fair reading of the section it is clear that it is restrictive in nature. It lays down three conditions for applicability of the second part of the section namely : - (a) the statement must be on a material matter or must suppress facts which it was material to disclose ; (b) the supression must be fraudulently made by the policy holder; and (c) the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose. 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. (para 12).
14. The Supreme Court referred to its earlier decisions in “Mithoolal Nayak vs LIC of India” AIR 1962 SC 814 and “LIC of India vs Channabasamma” (1991) 1 SCC 357. In Mithoolal Nayak’s decision the position of law was stated as under:
“(a) the statement must be on a material matter or must suppress facts which it was material to disclose,
(b) the suppression must be fraudulently made by the policy holder and
(c ) the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.”
15. In Channabasamma’ case, requirement of fulfilling the conditions mentioned in Mithoola Nayak’s decisions is observed as under:
It is well settled that a contract of insurance is contract uberrima fides and there must be complete good faith on the part of the assured. The assured is thus under a solemn obligation to make full disclosure of material facts which may be relevant for the insurer to take into account while deciding whether the proposal should be accepted or not. While making a disclosure of the relevant facts, the duty of the insured to state them correctly cannot be diluted. Section 45 of the Act has made special provisions for a life insurance policy if it is called in question by the insurer after the expiry of two years from the date on which it was effected. Having regard to the facts of the present case, learned counsel for the parties have rightly stated that this distinction is not material in the present appeal. If the allegations of fact made on behalf of the appellant Company are found to be correct, all the three conditions mentioned in the section and discussed in Mithoolal Nayak vs. Life Insurance Corporation of India must be held to have been satisfied. We must, therefore, proceed to examine the evidence led by the parties in the case.
16. In Subba Rahgava Reddy’s case(supra) the Andhra Pradesh High Court dealt with the liability of the insurer “which was disputed on the premise that the policy had no effect as a valid contract owing to misrepresentation or concealment of material facts by the insured in the answers given to certain questions in the proposal as also in the answers given by him in his personal statement made before the medical consultants of the insurers”. The High Court has not believed the evidence of the doctor who examined the insured at the time of submitting the proposal and thus held:
28. After a careful consideration of the whole of the evidence, we are not satisfied that the insurers have succeeded in discharging the onus which lay upon, them. The evidence of D.W. 1 is unreliable. The documentary evidence tendered by the insurers 25 insufficient and inconclusive. The medical evidence adduced by them falls far short of what should be required, especially where charges of fraud are made, but also with respect to the allegation that the statements made by the insured were untrue.
29. ’Hepatitis’, according to the medical dictionary, means ’inflammation of the liver’. The medical consultants of the insurers found that the condition of the liver of the insured was normal. It is quite possible that the insured himself had no knowledge that he was afflicted with that condition. It was explained by D.W. 2 himself, one of the medical consultants of the insurers, that a normal examination for insurance purposes would not reveal ordinary hepatitis and special tests should be done by a technician in a well equipped laboratory. If an experienced Doctor could not without special tests discover the existence of the condition known as hepatitis, is it reasonable to expect the insured, an ignorant lay man, to disclose that disease assuming that he suffered from the same? It is worthy of mention that the obligation to disclose does not extend to matters not within the knowledge of the proponent for insurance,
17. In Ambica Prasad’s case(supra), the Madhyra Pradesh High Court held that the insurance company is required to examine the doctor who examined the insured prior to issuing the insurance policy and the doctor who treated the insured .The High Court observed that:
Though, it has been alleged that the deceased Manwati Bai was examined by. Dr. B. M. Arora of Medical College Hospital, Jabalpur and it was detected that she was suffering from blood cancer, however, neither Dr. Khanna has been examined nor any documents produced to establish the fact.
17. It may also be noticed in this connection that Santosh Kumar Gupta (D. W. 2) who appears to be an employee of Life Insurance Corporation has admitted that before an insurance policy is issued the insured is examined by a Doctor. The certificate by the said Doctor, who examined Manwati Bai at the time of insurance has not been produced nor the said Doctor has been examined, by the plaintiff/respondent.
18. It is clear that it was the burden of the defendant/appellant to prove that there was material suppression of fact by Manwati Bai. It would further appear that though due opportunity was accorded to the defendant/appellant to adduce evidence, but it has failed to adduce relevant and reliable evidence and has thus failed to discharge its burden and failed to establish that the deceased Manwati Bai was suffering from pulmonary tuberculosis or any other serious ailment at the time she was insured.
19. In view of above since it could not be proved that there was any fraudulent or deliberate suppression of any material fact by Manwati Bai, the claim of plaintiff/respondent was rightly decreed by the trial Court. So far as the cross appeal which at the time of arguments has been prayed to be treated as cross objection, it may be noticed that the trial Court has allowed interest @ 6% p.a. from the date of decree. The learned counsel for respondent/plaintiff has urged that, not only higher rate of interest should have been allowed, but he was entitled to get interest from the date of the said policy, as the defendant/ appellant had wrongfully refused to pay the amount. However, it may be noticed that the plaintiff/respondent in para 5 of the plaint has averred that under the terms of policy the claim of interest is barred, hence, no interest is being claimed.
18. In Pushpabai Devidas’ decision (supra), the Maharashtra State Commission referred to the decision of the National Commission to hold that the doctor who examined and treated the insured should be examined or his affidavit has to be filed by the Insurance Company and there should be nexus between the cause of death and alleged suppression of the material fact. The decision of the National Commission referred to in the 13th paragraph of the order read as under:
“Insurance Claim-Repudiation – Suppression of Material fact – Suffering from T.B. – History record filed by doctor and relied upon by the appellant neither supported by any corroborative evidence in the form of affidavit nor does it prove that the said treatment has any nexus to the cause of death – The panel doctor of the appellant could have easily noticed form the x-ray that insured was suffering from T.B. which he did not do – Held that there is no suppression of material fact as alleged by the appellant – The documents filed are unreliable to prove the contentions taken by the appellant – No ground to interfere with the well reason order of the State Commission allowing the complaint.”
19. In Surender kaur’s case(supra) the National Commission held that the case history from the hospital is not sufficient to come to conclusion that the insured suppressed fact of his ill health. The National Commission observed that :
17. In the case in hand it is evident that apart from the certificate Exh. 0-15, of Dr. Rishi K. Arya, a medical and heart specialist, there was nothing on record to prove that the deceased was chronic ALD which led to hepatorenal shutdown with fatal outcome. The opinion of Dr. Rishi K. Arya was based on the history recorded in Form No. 3 which was allegedly received from the hospital indicating that Manjinder Singh was addict to such disease and it was for last 12 years he was suffering from chronic ALD. The State Commission rightly found that his opinion and affidavit was not sufficient for a number of reasons. No postmortem was conducted which was not felt necessary. Taking liquor daily per se could not be held to be a disease or ailment which could be said to have been suppressed fraudulently, unless somebody had been advised so and the concerned doctor diagnosed that he was suffering from Cirrhosis due to ALD PHT disease at the time of taking insurance policy. No record of treatment prior to proposal form had been produced by any doctor nor any reference of any doctor was received by the hospital. If the doctor who treated the deceased had recorded the same in case history that was not sufficient to say that information was given by the insured/diseased. Therefore, the case history given in the record by itself may be just based on hearsay and remained unsubstantiated, without there being any medical evidence or the statement of insured persons himself or of the complainants. It could just be recorded on the basis of ignorant attendants. But the proof in such matters could not be taken lightly, particularly, when the beneficial protection provided by the life insurance is required to be withheld on just technical grounds. Imaginations and surmises cannot take the place of proof. Thus, the very foundation on which Dr. Rishi K. Arya had given his certificate and affidavit is extremely shaky and could not be acted upon by the State Commission, in absence of any affidavit of any doctor who had treated him earlier.
18. The contention that the record of hospital from where the deceased got the treatment was sufficient would be too much to repudiate the claim. Without any proof of history based on statement of unspecified and unnamed person(s) on the date of admission of the deceased Manjinder Singh, LIC would not be sufficient to repudiate the claim unless it was substantiated with medical report for the treatment of a doctor prior to the submission of the proposal form.
20. The same proposition of law is dealt with in Joginder Kaur’ case(supra) that unproved case sheet does not form basis for repudiation of the claim. It was held that:
No affidavit of any doctor who had treated him earlier was produced nor any other material piece of evidence had been produced to support the contention of the petitioner except opinions and inferences based on surmises. Even the investigation report has not been produced though the matter was not investigaed. It is contended that record of Dayanand Medical Hospital wherefrom the deceased got the treatment and O.P. No. 1 had collected death certificate, etc. has allegedly proved that the deceased was admitted on 16.8.1998 in Dayanand Medical Hospital. In this light, in absence of any evidence except filing the proposal form, etc. in the face of affidavits of Surinder Kaur, Inderjeet Kaur and Swaran Singh it is not possible to hold that the deceased was alcoholic. He got study award in his education. Simple allegations made by the petitioner that the deceased was alcoholic; was suffering from diabetes mellitus, and jaundice, etc. would not be sufficient. The unproved case history recorded by some person on the date of admission of Sh. Bachan Singh, the deceased, would not be cogent and convincing evidence to repudiate the claim unless it was coupled with medical report for the treatment prior to submission of the proposal form’.
21. In the decision relied upon by the learned counsel for the opposite party-insurance company , the law laid is that the suppression of material fact as to ill health of the insured makes the contract of insurance void . In Chaco’s decision(supra) it was held;
“ A deliberate wrong answer which has a great bearing on contract of insurance, if discovered, may lead to the policy being vitiated in law – On facts, it has not been shown that repudiation of contract of insurance was not done by insurer with extreme care and caution or was otherwise invalid in law. One ‘Ç’ took an insurance policy on 21.2.1987. He died on 6.7.1987. The claim of his nominees, the appellants, was not acceded to by the respondent-Corporation for non-disclosure and mis-statement in the proposal form. The insured had undergone an operation for Adenoma Thyroid. But in the proposal form in answer to the question as to whether he ever had any operation he replied ‘No’. Therefore, the insurer repudiated the policy on 10.2.1989. However, the suit filed by the appellants for recovery of the insured amount was decreed by the trial court and the single Judge of the High Court declined to interfere. But the Division Bench of the High Court allowed the appeal of the insurer holding that the non-disclosure related to a material fact which was required to be answered correctly. Aggrieved, the plaintiffs filed the instant appeal.
22. Meena Malawat ‘s (supra) is a case where the insured suppressed his actual income. The ratio in the decision has no bearing to the facts of the case on hand.
23. In Krishan Chander’s decision, the National Commission dealt with the facts where the nominee of the insured who filed the complaint admitted that the insured had undergone treatment in hospital and thus it cannot be said that the decision has any application to the facts of the present case.
24. The aforementioned decisions would lay the proposition that the insured should not suppress any material information while filling up the proposal and the insurance company must prove the ground of repudiation by examining the doctors who examined the insured prior to issuing the insurance policy as also the doctor who treated the insured for the disease which is stated to have been concealed by the insured.
25. In the proposal the complainant has answered in negative to the questions No.11(a) to (e) that whether he consulted a medical practitioner for any ailment requiring treatment for more than a week and whether he was admitted to any hospital or nursing home and that he suffered from any serious ailments. He had submitted the proposal on 10.1.2005. He died on 8.6.2005. The commencement of one insurance policy was w.e.f. 15.10.2004 whereas commencement of another insurance policy w.e.f. 13.1.2005. There is no dispute of the fact that the complainant’s husband died in an accident. It is for the opposite party insurance company to establish that the claim was repudiated on application of mind and basing on legally tenable evidence. The opposite party insurance company has filed prescription dated 6.12.2003 issued by Dr.Ramachandra Reddy of People’s Poly Clinic Nellore. The X-ray dated 6.1.2004 and the prescription dated 6.12.2003 are not supported by affidavits of Dr.Ramachandra rEddy who stated to have issued them. As also the prescription dated 2.2.2004 issued by Dr.K.Subba Rao of Sai Clinic is not supported by affidavit or any other evidence. The certificate or the prescription issued by the doctor cannot be stated to have been issued basing on any register or other records maintained by the hospitals. A copy of the certificate dated 25.7.2008 issued by Dr.Subba Rao would show that no record was available in the hospital and yet he would confirm that x-ray was pertaining to the complainant’s husband. It is hard to believe the doctor say that though record was not available and even after four years he could say which x-ray is pertaining to which patient.
26. Copy of form No.5152 was filed by the opposite eparty insurance company along with an application. The counsel for the complainant has raised objection that it is a photo copy and it was not filed along with the written version nor was it mentioned in the written version about the original document. Dr.CLN Reddy had issued form NO.5152. He has mentioned that the patient was suffering from cough with expectoration, breathlessness and fever. The counsel for the opposite party insurance company had not stated as to what happened to original document. The doctor who stated to have issued Form No.5152 is not examined or his affidavit was not filed. It is for the insurance company to establish that the insured was suffering from Tuberculosis, he had knowledge of the disease and he got treated in the hospitals. The opposite parites failed to prove by cogent evidence to establish that the insured suppressed the fact of his ill-health at the time of submitting the proposal.
27. The opposite parties had not filed the affidavit of the doctor who subjected the insured to medical examination. No hospital record is filed nor affidavit of any of the doctor who said to have treated the insured has been filed. The opposite parties have failed to show any ground for repudiation of the claim. In the circumstances, on application of ratio laid in the aforementioned decisions to the facts of the case, we are inclined to hold that the repudiation of the claim is not supported by any evidence and the complainant is entitled to the sum assured under both the insurance policies.
28. In the result the complaint is allowed. The opposite parties no.1 and 2 are directed to pay the sum assured along with bonus and benefits under the insurance policies bearing Nos. 841480167 and 841483913 together with costs of Rs.3,000/-. Time for compliance four weeks.
MEMBER
MEMBER
Dt.25.07.2012
KMK*
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For complainant for opposite parties
NIL NIL
DOCUMENTS MARKED
For complainant
Ex.A1 Copy of policy bearing No.841480167
Ex.A2 Copy of policy bearing No.841483913
Ex.A3 Copy of FIR dt.8.6.2005
Ex.A4 Copy of representation dt.2.11.2006
Ex.A5 Copy of reply dt.12.6.2006
Ex.A6 Copy of reminder dt.28.11.2007
Ex.A7 Copy of legal notice dt.20.04.2010
Ex.A8 Copy of reply dt.24.4.2010
Ex.A9 Copy of legal notice dt.7.5.2010
Ex.A1 0 Coy of repudiation letter dt.6.9.2008
Ex.A11 Copy of repudiation letter dt.6.9.2008
Ex.A12 Copy of covering letter dt.10.06.2010
For opposite parties:
Ex.B1 Letter dated 6.9.2008
Ex.B2 Letter dated 6.9.2008
Ex.B3 Doctor’s Prescription dt.6.12.2003
Ex.B4 X-ray photo film dt.6.1.2004
Ex.B5 Medical test report dt.21.11.2003
Ex.B6 Prescription slips dt.2.2.2004
Ex.B7 Proposal Form dt.24.3.2005 and 10.1.2005
Ex.B8 Policy Bond dt.5.4.2005
Ex.B9 Proposal form dt.10.10.2004
Ex.B10 Policy Bond dt.9.1.2005
Ex.B11 Doctor certificate dt.15.7.2008
Ex.B12 Certificate dt.25.7.2008
Ex.B13 Copy of Form No.5152 dt.20.5.2008
MEMBER
MEMBER
