Haryana

Ambala

CC/313/2016

Sapna - Complainant(s)

Versus

Life Insurance Corporation - Opp.Party(s)

H.S. Mann

27 Feb 2018

ORDER

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AMBALA

 

                                                          Complaint case no.        : 313 of 2016.

                                                          Date of Institution         : 09.08.2016.

                                                          Date of decision   : 27.02.2018.

 

Sapna wife of late Shri Ramesh Kumar son of Shri Ram Kishan aged 38 years resident of 121-A, Shanti Nagar, Singhanwala, Ambala City.

 

……. Complainant.

                                      Versus

 

1.Life Insurance Corporation of India through its Manager Commercial, Division Office, 489, Model Town, Karnal.

2.Life Insurance Corporation of India through its Manager, LIC Building, near Vijay Cinema, Aggarsain Chowk, Ambala City.

                                                                             ….…. Opposite parties.

 

BEFORE:   SH. D.N. ARORA, PRESIDENT

                   SH. PUSHPENDER KUMAR, MEMBER         

                   MS. ANAMIKA GUPTA, MEMBER                 

 

Present:       Sh.Harinder Singh Maan, counsel for complainant.

                   Sh.Dev Batra, counsel for OPs.

 

ORDER

                   The complainant has filed the present complaint under Section 12 of the Consumer Protection Act, 1986 with the averments that husband of the complainant had obtained a policy No.178399389 for a sum of Rs.6 lac from OPs for a period from 25.06.2014 to 25.06.2015 and at the time of obtaining the policy the husband of the complainant was examined medically by the doctor of OPs and he had paid the installments of premium to the tune of Rs.9982/- regularly. The insured fell ill in April, 2015 and ultimately expired on 07.07.2015 and after his death the complainant had submitted claim with the Os and also submitted requisite documents with it but the OPs vide letter dated 28.05.2016 repudiated the claim on the ground that the insured was suffering from seizure disorder, pyclonephirities disease and was alcoholic and smoker whereas he was not suffering from any such disease. However, he was suffering from multiple myeloma since April, 2015 and remained under treatment. The policy was obtained on 25.06.2014 when her husband was hale and hearty and had discharged his official duties without any leave.  The act and conduct of the Ops clearly amounts to deficiency in service and unfair trade practice on their part. In evidence the complainant has tendered affidavits Annexure CW1/A, Annexure CW2/A and documents Annexure C1 to Annexure C15.

2.                          On notice Ops appeared and filed joint reply wherein it has been submitted that insurance contract is based on the principle of “Uberimma Fides” means “Utmost Good Faith” and the declaration made by the proposer in the proposal form dated 13.06.2014 forms the basis of contract.  The life insured had made deliberate mis-statements and withheld material information from the department regarding his health because he was suffering from seizure disorder for the last 6 years with alcoholic abuse before the date of proposal. As per Section 45 of Insurance Act 1938 clause “Forfeiture in Certain events” of policy bond and the declaration made by him in proposal form, the claim has rightly been repudiated. The complaint has been filed with baseless grounds that the life insured was suffering from Multiple Myeloma since April, 2015. As per medical terms “Multiple Myeloma is a cancer that forms in a type of white blood cell called a plasma cell and same accumulate in bone marrow. Multiple Myeloma is considered treatable but generally incurable. The life insured was K/C/O Pyelonephritis and he was alcohol user and smoker from 20 years. Due to suppression of the material information the claim had rightly been repudiated and repudiation letter for the same had already been communicated to the complainant on 28.05.2016. As per medical policy it remains the liability of the policy holder to disclose all facts about the health and habits to the doctor. There is no deficiency in service on the part of OPs and prayer for dismissal of the complaint has been made. In evidence, the OPs have tendered affidavit Annexure RX and documents Annexure R1 to Annexure R8.

3.                We have heard learned counsel for the parties and gone through the case file very carefully.

4.                Undisputedly, the husband of the complainant had obtained an insurance policy from the Ops. The grouse of the complainant is that her husband died during the period of insurance policy but the OPs have repudiated the claim despite the fact that it was the duty of the insurance company to indemnify the same.  In support of his contention learned counsel for the complainant has placed reliance of case law titled as Abdul Lathee & Others Vs. The Life Insurance Corporation of India & Others 2014 (3) CLT 386 (NC) wherein Hon’ble National Commission has held that Fraudulent Suppression- Death of insured due to cancer- Repudiation of claim on the ground that insured suppressed the previous illness i.e. bipolar mood disorder- Held- There is no nexus at all between the illness suppressed and cause of death i.e. cancer- Insured did not suppress any mater fact with any fraudulent intention- Revision petition. Allowed.

5.                On the other hand learned counsel for the OPs argued that the policy in question has been obtained by concealment of the material facts because at the time of obtaining the policy in question the life insured was having pre-existing disease. The insurance company has rightly repudiated the claim of the complainant as per Section 45 of the Insurance Act 1938.  Moreover, it is admitted by the complainant that her husband was suffering from Multiple Myeloma since April, 2015 and as per medical terms “Multiple Myeloma is a cancer that forms in a type of white blood cell called a plasma cell and same accumulate in bone marrow. Multiple Myeloma is considered treatable but generally incurable. The life insured was K/C/O Pyelonephritis and he was alcohol user and smoker from 20 years.

6.                   It is a well settled proposition of law that a contract of insurance is based on the principle of utmost good faith – uberrimae fidei, applicable to both the parties.  The rule of non-disclosure of material facts vitiating a policy still holds the field.  The bargaining position of the parties in a contract of insurance is unequal. The insured knows all the facts, the insurer is unaware of anything which may be material to the risk. Very often, it is the insured who is the sole person who has this knowledge.  The insurer may not even have the means to find out facts which would materially affect the risk.  The law, therefore, enjoins on the insured an absolute duty to disclose correctly all material facts which are within his personal knowledge or which he ought to have known had he made reasonable inquiries.  A contract of insurance, therefore, can be repudiated for non-disclosure of “material facts.”  On this point reliance can be taken from case law titled as M/s Kotak Mahindra Old Mutual Life Insurance Company Limited and others 2017 (4) CLT 84 wherein Hon’ble State Commission Haryana has held as under :

7.      In Mithoo Lal V. Life Insurance Corporation of India , AIR 1962 Supreme Court 814, Hon’ble Apex Court held as under:-

“Contract of life insurance entered into as a result of fraudulent suppression of material facts by policy holder- Policy is vitiated and person holding assignment of policy cannot claim benefit of contract………….”

8.      Hon’ble Apex Court in Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. – (2000) 2 SCC 734 held as under:-

“It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and the good faith forbids either party from non-disclosure of the facts which the parties know.  ………..”

9.      In Revision Petition No.967 of 2008, Life Insurance Corporation of India versus Smt. Neelam Sharma, decided on September 30^th, 2014, Hon’ble National Commission observed as under:-

“8.       In Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, it has been observed by the Supreme Court that the expression “material fact” is to be understood in general terms to mean as any fact which would influence the judgment of a prudent Insurer, in deciding whether to accept the risk or not.  If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form.  Any inaccurate answer will entitle the Insurer to repudiate their liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance, which is based on the principle of utmost faith –uberrima fides.  Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. (See: United India Insurance Co. Ltd. Vs. M.K.J. Corporation [(1996) 6 SCC 428].  It has also been emphasized that 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.”

“11.     Having given our anxious consideration to the material on record, we are of the opinion that the answers given by the Insured in the proposal form were untrue to his knowledge. There was clear suppression of “material facts” in regard to the health of the Insured.  It was not for the Insured to determine whether the information sought for in the aforesaid questionnaire was material for the purpose of the two policies…..”  

In the present case the proposal form Annexure R1 has been filled up by the life insured wherein it has been mentioned that he is having no pre-existing disease but perusal of the treatment record i.e. Surgical Pathology record PGI issued by PGI, Chandigarh wherein it has been mentioned that 49 years male patient with chronic alcohol abuse, seizure, disorder for last 6 years now presenting with low backache and chest pain for two months, uremic symptoms for 3 months and pedal edema for 6 months. The laboratory features being anemia (Hb- 7.5 gm/dl after 1 PRBC) rise in serum creatinine to 10 mg/dl 3 + albuminuria. Normal serum albumin (4 mg/dl) total protein 7.5 mg/dl lytic lesions on skeletal survey and kidney size is USG being 9.2 and 10.4 cm respectively, overall features are of kappa restricted light chain cast nephropathy. As per above said record it is clear that the patient was suffering with chronic kidney disease (pyclonephirities) alongwith Multiple Myeloma Malignant bony lesions. The complainant in legal notice served upon the OPs Annexure C12 has specifically mentioned that in para No.3 that at the time of obtaining policy her husband was medically examined before obtaining the policy, therefore, question of having pre-existing disease does not arise at all.   No doubt in reply of the notice the OPs have admitted that medical was done but despite that it was the duty of the policy holder to disclose all the material facts about his health whether he is suffering with any chronic disease or not because at the time of obtaining the policy general medical checkup was got done but in the present case the complainant was suffering with chronic disease such as with chronic kidney disease (pyclonephirities) alongwith Multiple Myeloma Malignant bony lesions for the last 6 years, therefore, this plea is also not sustainable and is being rejected. The case law relied upon by learned counsel for the complainant is not helpful to the present case, therefore, same is being distinguished.

7.                          In view of the position as discussed above, it is well proved that life insured was having pre-existing disease before the inception of the policy in and the policy in question has been obtained by misrepresenting the material fact qua the health status form the insurance company and the repudiation made by is justified. Therefore, the present complaint is without any merit and the same is accordingly dismissed leaving the parties to bear their own costs. A copy of this order be supplied to the parties free of costs. File be consigned to the record room after due compliance.

ANNOUNCED ON: 27.02.2018

                                               

(PUSHPENDER KUMAR)     (ANAMIKA GUPTA)      (D.N.ARORA)                      MEMBER                  MEMBER               PRESIDENT