Before the District Consumer Dispute Redressal Commission [Central District] - VIII, 5th Floor Maharana Pratap ISBT Building, Kashmere Gate, Delhi
Complaint Case No. 36/01.03.2021
Braham Prakash (dead) through
LR/his daughter
Mrs Manju Rani w/o Shri Yogesh Sharma
R/o 2784, Gali Arya Samaj, Bazar Sita Ram,
Delhi-110006
And also :
R/o 1680 Gali Himat Garh, Bazar Sita Ram,
Delhi-110006 …Complainant
Versus
OP1-The Managing Director & Chief Executive Officer
Max Life Insurance Company Limited,
11th Floor, DLF Square, Jacaranda Marg, DLF City Phase II
Gurugram-122002
OP2- The Senior Manager Claims-Claim Support Unit,
Max Life Insurance Company Limited, Operation Centre
2nd Floor, 90A Sector-18, Udyog Vihar,
Gurugram-122015, Haryana . ...Opposite Party
Senior Citizen's Case
Date of filing: 01.03.2021
Coram: Date of Order: 13.06.2024
Shri Inder Jeet Singh, President
Ms. Rashmi Bansal, Member -Female
ORDER
Inder Jeet Singh , President
This case is scheduled today for Order (item no.1)
1.1. (Introduction to case of parties) - The complainant [being nominee/husband of Insured-Smt Sheela Devi ,since deceased] filed the complaint against his Insurers/OPs by making allegations of deficiency of services & unfair trade practice because of want of release of sum insured claim of Rs.9,50,000/- (minimum amount payable, if life insured expired) under "Max Life Fast Track Super Policy no.605973718 [briefly, insurance policy] issued on 31.08.2018 having maturity date of 31.08.2028". It was declined by OPs on the pretext of concealment of disease from proposal form. Whereas, the complainant's wife never concealed any fact, she was not well educated but the proposal form was filled in by the agent of OPs.
The complainant seeks sum insured amount of Rs.9,50,000/- under the insurance policy vide claim no.202021801028 (briefly claim), compensation of Rs. 5,00,000/- on account of harassment, mental agony and distress, apart from litigation costs of Rs. 51,000/- and other appropriate relief under the circumstances.
1.2. The OPs opposed the complainant by denying allegations of deficiency of services & of unfair trade practice, they also justify repudiation of claim. The claim was rightly declined as per terms of policy, since Smt Sheela Devi had suppressed material facts (which surfaced from her medical papers and investigation thereon), that she was operated of left hand about 8 years back; she was also diagnosed of diabetes, hypertension, cervical and lumber spondylosis with ataxia, D3 wedge collapse, compression fracture and depression prior to signing the proposal form. It was not disclosed in the proposal form despite specific columns seeking information about all specified ailments. The complainant had suppressed and failed to disclose this disease and treatment. The policy was obtained by misrepresentation and against the principles of utmost good faith. It cannot be construed deficiency of services or unfair trade practice.
1.3 Although, the complaint was filed by Shri Braham Prakash, being nominee of insured, however, during the pending this complaint, he also expired on 23.11.2023 and his daughter/LR-Smt. Manju Rani was impleaded vide order dated 27.01.2024.
2.1. (Case of complainant) –Complainant’s wife Smt. Sheela Devi/insured had purchased the insurance policy from OP1 and complainant is husband/nominee of the deceased. The policy was issued by OP’s ally Branch of Axis Bank at Darya Ganj, the agent/advisor is Mr. Pandey having agent code no. 472377, who lured the insured by quoting the benefits under the policy and he had filled in the proposal form after asking her the details as required in the proposal form. The insured was not a very educated woman, she relied upon the agent in filling the proposal form and believing the benefits of policy quoted by agents of OPs.
2.2. The insured was issued the insurance policy dated 31.08.2018, she also paid two installments of Rs. 95,000/- each (total amount of Rs. 1,90,000/-) vide ECS in August 2018 and 30.08.2019.
Smt. Sheela Devi was admitted in Park Hospital on 31.01.2020 in emergency and discharged on 12.02.2020 as she was medically fit as per discharge summary (which mentions “at present patient is improved, patient is febrile, patient is hemodynamically stable and now is being discharged in stable condition with further advice”. Thence, the complainant filed claim on 08.08.2020 vide reference no. 202021801028 through the Axis Bank Branch at Daryaganj but the OPs repudiated the claim on 07.11.2020 on the ground that Smt. Sheela Devi had not made complete, true and accurate disclosure of all facts and circumstances as may be relevant for acceptability of proposal form (para 11 of the complaint reproduces those paragraphs) besides, during claim evaluation it has been confirmed that Smt. Sheela Devi was diagnosed with diabetes, hypertension, cervical and lumbar spondylosis with ataxia, D3 wedge collapse compression fracture and depression prior to signing the proposal form. In the light of the above information, we are declining the death claim against the above mentioned policy for reasons of medical non disclosure”.
Smt. Sheela Devi was not very educated lady, OP’s agent had filled in the form and he induced her to sign the form as it is. She had not misrepresented or did any act of fraud, instead the said agent for its own benefit of commission out of policy, misrepresented the insured and under such misrepresentation, she had paid two installments of Rs. 95,000/- each. The claim was repudiated without any substance that too after receiving two installments and the actual intention of OPs are to forfeit the hard earned money of an elderly couple. As per condition no.11.11 of "fraud misrepresentation and forfeiture:, the OPs never re-called the life insurance policy even after two years of its issue and OPs never disclosed any intention of repudiating the insurance policy. Moreover, had Smt. Sheela Devi not expired on 14.06.2020, the respondents would have received the third installment from her as SMS to pay third installment for the year 2020 was being received.
2.3 The complainant had furnished relevant papers including original insurance policy for settlement of the claim but it was not settled and it is deficiency of services, consequently, the complainant suffered immense loss, harassment, mental pain and agony. The complainant also sent legal notice dated 27.01.2021 besides email to the OPs to settle claim but no result. That is why the complaint for release of sum insured of Rs. 9,50,000/- with interest 24%, compensation of Rs. 5 lakh and Rs. 51,000/- towards litigation, besides other relief.
2.4 The complaint is accompanied with copy of policy cover, passbook containing entries of payment of amount of two installments, discharge summary dated 12.02.2020 issued by Park Hospital, death certificate, claim form, legal notice.
3.1 (Case of OPs)- the complaint is opposed by the OPs that there is no cause of action in favour of the complainant and against the OPs. There is concealment of material facts by the complainant as well as violation of conditions of the policy, which does not entitle the complainant for any relief being claimed.
3.2. The contract of insurance is of utmost good faith and every material fact must be disclosed, otherwise there is a good ground for recession of contract. The insured had concealed material fact of her left hand surgery 8 year back in the application form. Moreover, she was diagnosed with diabetes, hypertension, cervical and lumber spondylosis with ataxia, D3 wedge collapse, compression fracture and depression prior to signing the proposal form. Therefore, prima facie the complaint is not maintainable and it is liable to be dismissed. The OPs also deny the other allegations mentioned in the complaint in respect of agent etc. with request that on evaluation of the claim form and papers, it has surfaced that the insured purchased the policy as per their own wishes after being satisfied with the feature of the policy, however, they concealed the material fact in the proposal form. The written statement reproduces clause 11.11 of fraud misrepresentation or forfeiture of the policy. (the reply also refers case law, however, it will be mentioned appropriately in the phase of arguments by the parties). The OPs request for dismissal of the complaint.
3.3 The written statement is accompanied with copies of – Special power of attorney in favour of author of written statement, e-proposal form, consent form for e-proposal form, policy schedule with terms and conditions, death claim form, death certificate, general verification report, discharge summary issued by Park Hospital (DOA 24.07.2018-DOD 03.08.2018), repudiation letter dated 07.11.2023 and other correspondence happened.
4. (Replication of complainant) –The complainant filed detailed rejoinder while reiterating the complaint as correct and denying the allegations of written statement, by relying upon case law (it will be mentioned too appropriately at later stage) and complainant emphasizes that there was no concealment of any fact but the proposal form was filled in by the agent of OPs.
5.1. (Evidence)- The complainant Sh. Braham Prakash (during his life time) had led evidence by filing his detailed affidavit, while fortifying with the documentary filed with the complaint.
5.2. OPs also led their evidence by filing detailed affidavit of Shri Ajay Chancha Deputy Manager - Legal with the support of documents filed with reply,
6.1 (Final hearing) - Both the parties have filed their written arguments. They were also given opportunity to make oral submissions. Thus, Ms Gurpreet Advocate for complainant/LR and Ms Charu Sachdev, Advocate for OPs presented their respective submissions.
6.2 The complainant at the stage of pleadings and arguments refers following cases (for deriving reasons) vis a vis to discuss the case of complainant and OPs:-
(i) Suibha Prakash Motegaonkar and Ors. v. Life Insurance Corporation of India, Civil Appeal No. 8245/2015 dod05.10. 2015 (SC) "by holding that in the said case the assured therein suffered myocardial infraction and succumbed to it. The claim was repudiated by the insurance company on the ground that there was a suppression of a pre-existing lumbar spondylitis. It was in this background that this Court held that the alleged concealment was of such a nature that would not disentitled the deceased from getting his life insured. In other words, the pre-existing ailment was clearly unrelated to the cause of death."
(ii) Manmohan Nanda v. United India Insurance co. Ltd. CA no.
83876/2015 06.12.2021, held :
"52. On a consideration of the aforesaid judgments, the following principles would emerge:
a. There is a duty or abligation of disclosure by the insured regarding any material fact at the time of making the proposal. What constitutes a material fact would depend upon the nature of the insurance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form.
b.What may be a material fact in a case would also depend upon the health and medical condition of the proposer.
c.If specific queries are made in a proposal form, then it is expected that specific answers are given by the insured, who is bound by the duty to disclose all material facts.
d. If any query or column in a proposal form is left blank then the insurance company must ask the insured to fill it up. If in spite of any column being left blank, the insurance company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or nondisclosure of a material fact, and seek to repudiate the claim.
e. The insurance company has the right to seek details regarding medical condition, if any, of the proposer by getting the proposer examined by one of its empanelled doctors. If, on the consideration of the medical report, the insurance company is satisfied about the medical condition of the proposer and that there is no risk of preexisting illness, and on such satisfaction it has issued the policy, it cannot thereafter, contend that there was a possible pre-existing illness or sickness which has led to the claim being made by the insured and for that reason repudiate the claim.
f. The insurer must be able to assess the likely risks that may arise from the status of health and existing disease, if any, disclosed by the insured in the proposal form before issuing the insurance policy. Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition which was disclosed by the insured in the proposal form, which condition has led to a particular risk in respect of which the claim has been made by the insured.
g. In other words, a prudent insurer has to gauge the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so. Such an exercise is dependant on the queries made in the proposal form and the answer to the said queries given by the proposer.
(iii) In LIC of India v. Smt. G.M. Channabasemma (1991) 1 SCC 357, there is an obligation upon the assured to disclose all material facts which may be relevant to the insurer but after issuing a policy, the burden of proving that the insured had made false representations and suppressed material facts is on the insurer. In the said case, it was held that the physician's statement did not lead to a conclusion that the respondent therein was influenced by a serious disease for a long time. On consideration of the evidence led by the parties therein, it was observed that the insurer had failed to prove that the insured was suffering from diabetes or tuberculosis at the time of filling up the proposals for the policies or that he had given any false answer in his statements or suppressed any material fact which he was under a duty to disclose. The finding of the Trial Court that the assured had committed fraud on the insurer while taking out the policies was reversed and the appeal was allowed."
6.3 The OPs also at the stage of pleadings and arguments refers various decision to fortify its own case, which are:-
(a) Satwant Kaur Sandhu Vs.New India Assurance Co. Ltd. (2009) 8 SCC 316-
'when information on a specific aspect is asked for in the proposal form, 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. .
" a medi-claim policy is a non-life insurance policy meant to assure the policy holder in respect of certain expenses pertaining to injury, accidents or hospitalizations".
Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning contract of utmost good faith on the part of the assured. Thus, 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 purposes of the policy or not ."
(b) Haji Ahmed Yar Khan vs Abdul Gani Khan (AIR 1937 Nag 207 at 272) and Mithoolal Nayank Vs LIC AIR 1962 SC 814 & LIC Vs Asha 2001 2 SCC 160, while adjudicating on sec. 4 of the Insurance Act, 1938, it was held, three conditions for later part of section 4 are, the statement must be on material matter, or must suppress facts which it was material to disclose, the suppression must have known at the time of making the statement that it was false or that it was false or that it suppressed facts which was material to disclose.
(c) P C Chacko & antr Vs Chairman, LIC Ltd (AIR 2008 SC 424), held that contract of life insurance are contracts of utmost good faith, every material fact must be disclosed, other there is good ground for recession of the contract.
(d) LIC Vs Smt G M Chanmaparsmma AIR 1991 SC 392 - the contract of insurance is contract of uberrimna fide and there must be complete good faith on the part of the assured. The assured is under solemn obligation to make full disclosure of material facts which may be relevant for insurer to take into account while deciding whether the proposal should be accepted or not.
(e) Guddi Devi Vs LIC (RP no.828/2917 dod 21.02.2018) –It was held that, on the point of non-disclosure chronic kidney disease, it is evident that he had obtained the policy by concealment of a material fact with respect to the state of his health, which influenced the decision of the insurer on the question as to whether to accept the application for grant of insurance or not.
(f) Sr Manager LIC Vs Rajesh Kumar [RP no.650/2020 dod15.10.2020] and Reliance Life Insurance Co Ltd Vs Rekhaben Nareshbhai Rathod CA no.4261/2019)-held the insured by signing that proposal adopts those answers and makes them his own and that would clearly be so, whether the insured signed the proposal without reading or understanding it, it being irrelevant to consider how the inaccuracy arose if he has contracted, as the plaintiff has done in this case that his written answers shall be accurate moreover, once form is filled in through agent, then it becomes agent of insured.
7.1 (Findings)- The submissions of both the side are considered, analyzed and assessed including evidence of parties, the documentary record and precedent/case law. Their rival contentions need not to be reproduced, as it will be considered vis a vis their cases have already been detailed.
7.2. It is manifesting from plain reading of case of parties, that the complainant's wife is insured and the OP1 is the Insurer. The policy issued, its tenure and premium amounts paid are also not disputed. It is also not disputed that the insured was hospitalized and discharged; subsequently she died at her home.
7.3 However, the consumer dispute is 'whether or not the insured/Smt Sheela
Devi had pre-existing disease or was it not declared in the proposal form to OPs? Whether or not the complainant is entitled for sum insured amount or any other relief? To adjudicate the issues under prescribed summary procedure, the evidence of the parties is to be considered.
7.4. After analysing the material on record and by comparing with the provisions of law besides ratio of case laws, the following conclusions are drawn:-
(a) The complainant has filed insurance policy cover (page 10 of complainant's paper book). OPs have also filed e-proposal form (Annexure-B/page 22 of paper book of OPs) and terms & condition policy (Annexure-C/page 27-47). The insured had also signed the consent form for e-proposal form.
(b) As appearing, the insured was not provided with the terms and conditions of policy. But, in Manmohan Nanda Vs United- India Assurance Co. [Civil Appeal no. 8386/2013) decided on 6.12.2021 by Hon'ble Supreme Court of India has also dealt the regulations 'the IRDA (Protection of Policyholder' Interests) Regulations 2002' and it was held (in paragraph 34 thereof) "that just as insured has a duty to disclose all material facts, the insurer must also inform the insured about the terms and conditions of policy that is going to be issued to him and must strictly confirm to the statement in the proposal form or prospectus or those made through its agents. Thus, principle of utmost good faith imposes meaningful reciprocal duties owned by the insured to the insurer and vice-versa".
(c) The case of OPs, precisely, is that the complainant was suffering from various ailments inclusive of diabetes and hypertension, which was not disclosed by her in the proposal form, besides she was operated 8 year back, which surfaced during evaluation of the claim form. On the other side, the case of complainant is that the proposal form was filled in by the agent of OPs, the complainant cannot be blamed for concealment of any fact. It culls out the followings
(i) The OPs have proved e-proposal form and there is also consent given by the insured Smt. Sheela for electronic application, however, the electronic gadgets including its software were under the control and operation of OPs as well as its agent or representatives. It means after consent by the insured to fill the application in electronic form, the rest of things was done and recorded by the OPs or its administration.
(ii) It is never the case of OPs that after filling in the e-application form, its copy was provided to the insured.
(iii) It is also never the case of complainant that she was not suffering from ailments which were diagnosed of diabetes, hypertension, cervical and lumber spondylosis with ataxia, D3 wedge collapse, compression fracture and depression before the filling in application form for insurance policy but e-proposal form was filled in by agent of OPs. To say, the insured Smt. Sheela Devi was having many ailments immediately before filling in proposal form but the same were not mentioned in the proposal form vis-à-vis the complainant claims bona-fide that the proposal form was filled in by the agent of OPs or the insured was not asked about the ailments. But there is statement in the proposal form that insured was not suffering or treated for any of those specified ailments.
(d) The clause 11.11 of the insurance policy talks about fraud, misrepresentation and forfeiture, however, the case of OPs is of fraud and misrepresentation but not of forfeiture since the insurance policy was kept alive and it was not recalled by OPs.
(e) There is Annexure-1 to clause 11.11 and its sub-clause-3 defines fraud means active concealment of fact by the insured having knowledge or belief of the fact. In addition, its sub-clause 7 talks about repudiation on the ground of mis-statement (other than fraud) and consequences of such mis-statement.
(f) The e-proposal form mentions that insured was not suffering from any medical condition nor she was investigated/diagnosed nor treatment for such medical condition and this e-form was not personally filled in by the insured but by the authorized agent of OPs. Therefore, the salient features of this case, shows that there is mis-statement given and recorded in the e-proposal form but it is not a case of fraud or misrepresentation. The case falls within sub-clause (7 ) of Annexure-I of clause 11.11 of insurance policy.
(g) The parties are fortifying their respective case with the support of case law, however, each case has its own features and the salient features of this case are distinguishable there-from.
7.5. Since the insured was suffering from various ailments immediately before the insurance policy was taken, however, those ailments were not stated in the proposal form as it was not physically or personally filled in by the insured but by e-form application by the authorised agent selling products of OPs.
7.7. In terms of sub-clause (7) of Annexure-I of clause 11.11 of insurance policy, the legal consequences are for return of paid premium, therefore, the complainant is held entitled for refund of the premium of Rs. 1,90,000/- collected by the OPs from the insured. The complaint is allowed for Rs. 1,90,000/- in favour of complainant and against the OPs.
8.1. The complainant has sought interest at the rate of 24% pa, however, considering facts & features of case as well as disputed questions involved required adjudication and answered, the complainant's request for interest amount is declined.
8.2 The complainant has also sought damages of Rs.5,00,000/- towards harassment and agony and costs of Rs.51,000/- but on the same analogy of conclusion in sub-paragraph 8.1 above, it is held the complainant is not entitled for any compensation and costs; this request of complainant is also declined.
9. Accordingly, the complaint is allowed in favour of complainant and against the OPs while directing OPs to pay/refund two installment of paid premium amount of Rs.1,90,000/- to the complainant. OPs are also directed to pay the amount within 45 days from the date of this order. In case amount is not paid within 45 days from today, then OPs will be liable to pay interest on that amount and rate of interest will be 6% per annum from the date of complaint till realization of amount.
10. Announced on this 13th day of June 2024 [ज्येष्ठ 23, साका 1946]. Copy of this Order be sent/provided forthwith to the parties free of cost as per rules for compliances, besides to upload on the website of this Commission.
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