Punjab

Ludhiana

CC/20/136

Ranjit Kaur - Complainant(s)

Versus

M/s Edelweiss Tokio Life Ins.Co.Ltd - Opp.Party(s)

Pankaj Kaushik

01 Nov 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:136 dated 11.08.2020.                                                         Date of decision: 01.11.2023.

 

Ranjeet Kaur d/o. Harvel Singh, r/o. H. No.207, Ward No.9, Jogi Basti, Dharamkot, Moga-142042. (Nominee in the instant policy).                                                                                                               ..…Complainant

                                                Versus

1. M/s. Edelweiss Tokio Life Insurance Co. Ltd., through its Managing Director having its Registered office at 5^th Floor, Tower 3, Wing B, Kohinoor City, Kira Road, Kurla (W), Mumbai-400063.
2. M/s. Edelweiss Tokio Life Insurance Co. Ltd., through its Manager having its office at 6^th Floor, SCO 16-17, Fortune Chambers, Feroze Gandhi Market, udhiana-141001 (Punjab)                                                                                                                             …..Opposite parties 

Complaint Under section 35 of the Consumer Protection Act.

QUORUM:

SH. SANJEEV BATRA, PRESIDENT

SH. JASWINDER SINGH, MEMBER

MS. MONIKA BHAGAT, MEMBER

 

COUNSEL FOR THE PARTIES:

For complainant             :         Sh. Manjeet Singh, Advocate.

For OPs                          :         Sh. Ajay Chawla, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                In brief, the facts of the case are that the father of the complainant Sh. Harvel Singh (hereinafter called as DLA) purchased a Life Insurance Policy namely Zindagi Plus (Non linked, non-participating term insurance plan) for a sum of Rs.25,00,000/-  vide policy No.400237469E for a period of 20 years from opposite party No.2 in which the complainant was a nominee. The DLA paid the premium as per premium schedule and also submitted proposal form filled by the representative of the opposite parties. The complainant further stated that the life assured died on 19.02.2020 and she submitted claim with opposite parties by submitting all the required documents. She also visited office of opposite party No.2 but she was told that her case is under process and insurance amount shall be released to her. The complainant shocked to receive repudiation letter dated 31.03.2020 stating that the claim of complainant had been repudiated on the ground that the LA had concealed the fact of having applied for 21 other insurance policies at the time of opting for the instant policy and consequently decided to refund the premium amount already paid by the complainant after utilized it for more than a year.  The complainant further stated that the said fact was never concealed by the LA and this fact was disclosed to the authorized person of the opposite parties at the time of filling the proposal form and also handed out a list of current/existing policies at that time.   The complainant further stated that most of the insurance claims on account of death of LA have already been released by the other companies. According to the complainant, some of the policies were more than 4-5 years old. The complainant initiated review application for reconsideration of the claim which was declined by the OPs vide communication dated 30.04.2020.

 

The complainant also sent a legal notice dated 11.05.2020 upon the opposite parties but no reply was recevied. The complainant further stated to have suffered mental tension, agony, harassment etc. due to deficiency in service and unfair trade practice on the part of the opposite parties for which she is entitled to compensation. In the end, the complainant has prayed for issuing direction to the opposite parties to release the insured amount on account of death of life assured along with interest as well as compensation of Rs.5,00,000/- and litigation expenses of Rs.1,00,000/-.

2.                          Upon notice, the opposite parties filed joint written statement and by taking preliminary objections, assailed the complaint on the ground of maintainability of the complaint, suppression of material facts by the complainant; lack of jurisdiction and cause of action. The opposite parties stated that Sh. Harvel Singh the father of the complainant (herein after referred to as LA) had submitted to the opposite parties, an Electronic Proposal/ dated 07.07.2019, for purchasing Edelweiss Tokio Life-Zindagi Plus Plan, which was accepted on the standard rates based on the information provided by the DLA and consequently a policy was issued bearing Policy No.400237469E with the risk commencement date as 29.07.2019 the basic sum assured was Rs.25,00,000/-. The policy term was 20 years and premium paying term was annual. The complainant was appointed as nominee by the DLA. The DLA purchased the policy at his own free will through online/electronic mode (self purchased policy) and as such, the DLA was well aware of the terms and conditions of the policy.   

On the basis of the information furnished in the proposal form, the said policy was issued.

                   The opposite parties further stated that on 19.02.2020, Sh. Harvel Singh i.e. Life Assured died and after his death the complainant being his daughter and nominee intimated them about the death of the life assured and completed all the requisite formalities as directed by the Opposite Parties for the purposes of getting the benefits of the insurance policy. On receiving of the death claim statement and it being a very early claim (within about Seven months from issuance of policy), the OPs conducted an investigation with regard to the death claim and during investigation it was revealed that the DLA applied for more than 20 policies with various insurance companies as per table given below. The DLA was able to purchase about 15 insurance policies whereas 7 proposals for purchase of insurance policies were declined by various insurance companies on various grounds & such material information was intentionally withheld by the DLA while submitting the electronic proposal form to the opposite parties. Details of other insurance policies issued by various insurance companies & details of the proposal declined by other insurance companies to the DLA are reproduced as under:-

Policy No.	Insurance Company	Life Assured	Date of policy	Sum assured
2030093	Exide Life	Harvel Singh	-	25,00,000/-
3655536	Exide Life	Harvel Singh	15-Nov-17	512679
39116640	Exide Life	Harvel Singh	-	25,00,000
45QH758639 Proposal declined	SBI Life	Harvel Ram	12-Aug-14	25,00,000
51759378	Reliance Life	Harvel Ram	28-Aug-14	10,00,000
17058367 Proposal declined	HDFC Life	Harvel Ram	29-Aug-14	35,17,500
51814132	Reliance Life	Harvel Ram	18-Sep-14	3,75,000
51856650	Reliance Life	Harvel Ram	28-Oct-14	5,00,000
1GPZ034380   Proposal declined	SBI Life	Harvel Ram	16-Oct-15	25,00,000
19639141	ICICI Pru Life	Harvel Ram	31-Dec-15	50,25,640
20251286 Proposal declined	ICICI Pru	Harvel Ram	19-Sep-15	40,21,579
330578363	Bajaj Life	Harvel Ram	16-Nov-16	25,00,000
9100132404	Canara HSBC	Harvel Ram	02-Jun-17	25,00,000
517400177551 Proposal declined	Aegon Life	Harvel Ram	28-Jun-17	55,00,000
307040485	Max Life	Harvel Ram	09-Jul-17	7,00,000
1443311 Proposal declined	Future Generali	Harvel Ram	28-May-18	22,00,000
51856650	Reliance Life	Harvel Ram	28-10-14	5,00,000
22586776	PNB Met Life	Harvel Ram	18-06-18	10,00,000
53345827410	SBI Life	Harvel Ram	19-07-18	30,00,000
1.80815E+11	Aegon Life	Harvel Ram	04-09-18	23,50,000
53251239	Reliance Life	Harvel Ram	11-09-18	3,68,297
1443278 Proposal declined	Future Generali		24-05-18	1,57,650

 

The OPs further stated that during submission of the proposal form a specific question was asked by them to the deceased life assured which he answered in negative. Relevant questions & Answers of the proposal form are reproduced, as under:-

8. Insurance History:

		Life to be insured	Proposer/spouse
1.	Has any proposal/application for revival on your life or health insurance with Edelweiss Tokio Life Insurance Co. or any other Life Insurer, ever been declined/postponed/offered accepted at changed/special terms?	[y] [N]	[y] [N]
	If yes, Name of the Insurer	Reason:	When (Date):
2.	Have you ever received or do you now receive any disability or critical illness benefits from any insurance company?	[y] [N]	[y] [N]
3.	Details of any existing/proposed insurance with Edelweiss Tokio Life Insurance Co. and/or with any other Life Insurance Company in India and Overseas (in INR).	[y] [N]	[y] [N]
		Life to be insured	Proposer/spouse
	Policy/Proposal Number
	Insurance Company’s Name
	Year of issue of policy or Date of Proposal
	Sum Assured
	Annualized Premium
	Status of the Policy
	Acceptance Terms: Standard/Substandard

According to the OPs, the policy was issued to the DLA on the basis of proposal for insurance which was submitted by the DLA. However, after issuance of the policy by the OPs to the DLA & during the death claim investigation, the OPs came to know that the deceased life assured submitted false information at the proposal stage Since, insurance is based on the "principles of utmost good faith" & the risk under any proposal/application for insurance is always assessed wholly upon the information provided in the said proposal form, if the such false submission made by the DLA would have come to the knowledge of the opposite parties at the proposal stage, the decision of the opposite parties would have been different, hence, the OP's vide repudiation letter dated 31.03 2020 repudiated the claim of the complainant because the DLA failed to disclose his previous insurance history in the proposal form which amounts to misrepresentation/non disclosure of material information of the DLA. The DLA had specifically agreed to the declaration stated in the sub section 7 of Section 15 of the Proposal Form, which is also reproduced as under:-

“7. I/We understand that the statements and declarations made under this proposal for insurance will be the basis of the contract of insurance between me/us and the company, and that the Company believing the same to be true will rely and act on them. In the case of any non-disclosure/misrepresentation of material facts by me/us, I/We understand that action shall be initiated by the company immediately in accordance with the provisions of Section 45 of the Insurance Laws (Amendment) Act, 2015 as amended from time to time, and in the case of fraud by me/us, I/We understand that the company shall take action against the fraud immediately, in accordance with the provisions of Section 45 of the Insurance Laws (Amendment) Act. 2015 as amended from time to time.”

 

The opposite parties further stated that had the DLA disclosed the aforesaid previous insurance history in the proposal form, they would not have issued the subject policy under any circumstances. However, the OPs refunded the amount of premium i.e. Rs.18877.14/- to the nominee.  The opposite parties had no other alternative but to repudiate the claim of the complainant after taking into consideration the provisions of Section 45 of the Insurance Act, 1938. The opposite parties further stated that they have rightly repudiated the claim of the complainant.                    

                   On merits, the opposite parties reiterated the crux of averments made in the preliminary objections and facts of the case. The opposite parties have denied that there is any deficiency of service and have also prayed for dismissal of the complaint.

3.                In support of her claim, the complainant tendered her affidavit Ex. CA in which she reiterated the allegations and the claim of compensation as stated in the complaint. The complainant also tendered documents Ex. C1 is the copy of insurance policy, Ex. C2 is the copy of death certificate of Harvel Singh, Ex. C3 the copy of repudiation letter dated 31.03.2020 issued by the opposite parties, Ex. C4 is the copy of passbook of Harvel Singh, Ex. C5 is the copy of letter dated 30.04.2020 of declining the review, Ex. C6 is the copy of legal notice dated 11.05.2020 and closed the evidence.

4.                On the other hand, counsel for the opposite parties tendered affidavit Ex. RA of Sh. Ankur Chadha, Chief Compliance Officer of  the opposite parties along with documents Ex. OP1 is the copy of  resolution, Ex. OP2 is the copy of proposal form, Ex. OP3 is the copy of insurance policy/documents, Ex. OP4 is the copy of repudiation letter dated 31.03.2020, Ex. OP5 is the copy of email dated 13.03.2020 and closed the evidence.

5.                We have heard the arguments of the counsel for the parties and also gone through the complaint, affidavit and annexed documents and written reply along with affidavit and documents produced on record by both the parties.

6.                The complainant, being daughter and nominee of DLA Harvel Singh, has raised a grievance with regard to repudiation of death claim and cancellation of the life insurance policy. Admittedly, DLA was a holder of Edelweiss Tokio Life-Zindagi Plus Plan Ex. C1 for a sum assured of Rs.25,00,000/- having a validity of 20 years commencing from 29.07.2019. A yearly premium of Rs.18,877/- was payable. LA has obtained this policy by submitting an application form Ex. C1 along with proposal form Ex. OP2 wherein he has answered the relevant questions with regarding to holding of earlier insurance policies in the column of insurance details as “NO”.

7.                Acting upon the information so received by the opposite parties, the insurance policy was issued and the policy documents were sent to the registered address of the DLA. However, the DLA expired on 19.02.2020 i.e. within 7 months from the date of issuance of the policy. The opposite parties on receipt of claim settlement form, construed it as ‘early claim’ and initiated an independent risk investigation. After careful scrutiny of the information and documents, it transpired that DLA had concealed material facts pertaining to his existing insurance policies prior to applying the present policy. The opposite parties declared the policy nu and void ab-intio vide letter dated 31.03.2020 Ex. C3 = Ex. OP4. However, the opposite parties refunded the premium amount of Rs.18877.14/- to the nominee i.e. complainant.  The operative part of the said letter is as under:-             

“It was revealed during investigation of your claim that the Deceased Life Insured had applied for twenty-one life insurance policies from different life insurance companies before applying for the subject policy. However, the Deceased Life Insured had answered the questions under Section 8(Insurance History) of the proposal form dated July 07, 2019 in the negative and the aforesaid section is reiterated below for your reference:-

8. Insurance History:

		Life to be insured	Proposer/spouse
1.	Has any proposal/application for revival on your life or health insurance with Edelweiss Tokio Life Insurance Co. or any other Life Insurer, ever been declined/postponed/offered accepted at changed/special terms?	[y] [N]	[y] [N]
	If yes, Name of the Insurer	Reason:	When (Date):
2.	Have you ever received or do you now receive any disability or critical illness benefits from any insurance company?	[y] [N]	[y] [N]
3.	Details of any existing/proposed insurance with Edelweiss Tokio Life Insurance Co. and/or with any other Life Insurance Company in India and Overseas (in INR).	[y] [N]	[y] [N]
		LIfe to be insured	Proposer/spouse
	Policy/Proposal Number
	Insurance Company’s Name
	Year of issue of policy or Date of Proposal
	Sum Assured
	Annualized Premium
	Status of the Policy
	Acceptance Terms: Standard/Substandard

Thus, the aforesaid previous insurance history was not disclosed by the Deceased Life Insured in the proposal form which amounts to misrepresentation/non-disclosure of material information of the Deceased Life Insured.

Further, the Deceased Life Insured had specifically agreed to the following declaration under sub-section 7 of Section 15 of the proposal form:

 I/We understand that the statements and declarations made under this proposal for insurance will be the basis of the contract of insurance between me/us and the company, and that the Company believing the same to be true will rely and act on them. In the case of any non-disclosure/misrepresentation of material facts by me/us, I/We understand that action shall be initiated by the company immediately in accordance with the provisions of Section 45 of the Insurance Laws (Amendment) Act, 2015 as amended from time to time, and in the case of fraud by me/us, I/We understand that the company shall take action against the fraud immediately, in accordance with the provisions of Section 45 of the Insurance Laws (Amendment) Act. 2015 as amended from time to time.

It is pertinent to note that the above-mentioned previous insurance history of the Deceased Life Insured was material information which was relevant to the Company for underwriting the Policy and had the Deceased Life Insured disclosed the aforesaid previous insurance history in the Proposal Form, the Company would not have issued the subject policy under any circumstances.

In view of the above, your claim is hereby repudiated by the company on the ground of non-disclosure of previous insurance history of the Deceased Life Insured in accordance with the policy terms and conditions. However, the total premium amounting to Rs.18,877.14 paid by the Deceased Life Insured under the Policy will be refunded to your bank account shortly.”

8.                Perusal of record shows that DLA stated to have been died on 19.02.2020 i.e. after about 7 months from the issuance of the policy. Death certificate of DLA is Ex. C2. It is pertinent to mention that DLA was born on 08.07.1962 and at the time of obtaining the policy he was aged about 47 years and at the time of death, he was about 48 years of age. The complainant did not elaborate any facts and circumstances leading to natural death of DLA in a comparatively younger age nor any affidavit of herself or of any attendant was produced in whose presence DLA breathed his last. Even no medical document was brought on record to show that DLA was taken to some hospital before he was declared dead or brought dead. The complainant was required to dispel suspicious circumstances with regard to “natural death” of DLA. The opposite parties in their written statement specifically provided the details of the previous multiple insurance policies held by the DLA and have specifically pleaded the execution of well planned external fraud by the complainant or DLA but the complainant did not opt to file any rejoinder to the contents of the written statement. Even in her affidavit, the facts which were specifically in the knowledge of the complainant were not divulged raising a serious doubt with regard to bonafide of the claim.

9.                It is evident that the repudiation in the present case was within the two years from the commencement of the insurance cover which lead to invoking of Section 45 of the Insurance Act, which reads as under:-

“Section 45

(1) No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.

(2) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:
Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based.

Explanation I. -For the purposes of this sub-section, the expression "fraud" means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy: -

(a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;

(b) the active concealment of a fact by the insured having knowledge or belief of the fact;

(c) any other act fitted to deceive; and

(d) any such act or omission as the law specially declares to be fraudulent.

Explanation II. -Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.

(3) Notwithstanding anything contained in sub-section (2), no insurer shall repudiate a life insurance policy on the ground of fraud if the insured can prove that the misstatement of or suppression of a material fact was true to the best of his knowledge and belief or that there was no deliberate intention to suppress the fact or that such misstatement of or suppression of a material fact are within the knowledge of the insurer:

Provided that in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policyholder is not alive.

Explanation. -A person who solicits and negotiates a contract of insurance shall be deemed for the purpose of the formation of the contract, to be the agent of the insurer.

(4) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:

Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision to repudiate the policy of life insurance is based:

Provided further that in case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy till the date of repudiation shall be paid to the insured or the legal representatives or nominees or assignees of the insured within a period of ninety days from the date of such repudiation.

Explanation. -For the purposes of this sub-section, the misstatement of or suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.

(5) Nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.”

 

10.              It is settled proposition of law that the contract of insurance is based upon the principle of  ‘Uberrima Fides’ and both insurer and insured are under legal obligation to provide the correct and authenticated information at the time of the policy. The information regarding holding of earlier prior insurance policies, age, proof of income and medical history are some of the criteria which are to be disclosed truthfully by the proposer. In the present case, the opposite parties had sought intimation from the DLA with respect of previous multiple policies which was not disclosed and suppressed the material facts.

11.              In its judgment Satwant Kaur Sandhu Vs New India Assurance Co. Ltd. Civil Appeal No.2776 of 2002 decided n 10.07.2009, the Hon’ble Supreme Court of India has held that if there was clear suppression of material facts in regard to the health of the insured, the insurer was fully justified in repudiating the insurance contract. The Hon’ble Supreme Court of India has further held in Reliance life Insurance Co. Ltd. and others Vs Rekhaben Nareshbhai Rathod in 2019 (2) R.C.R. (Civil) 909 that two months prior to policy obtained from appellant insured obtained policy from another company and this fact was not disclosed by the insured. Repudiation was made within two years period from commencement of insurance cover. The proposer was aware of contents of form that he was required to fill and disclosure of material for assessment of risk which was being taken by insurer which entitled the insurer to repudiate the claim.  

12.              As a result of above discussion, the complaint fails and the same is hereby dismissed. However, there shall be no order as to costs. Copies of order be supplied to parties free of costs as per rules. File be indexed and consigned to record room.

13.              Due to huge pendency of cases, the complaint could not be decided within statutory period.

 

(Monika Bhagat)          (Jaswinder Singh)                      (Sanjeev Batra)                       Member                     Member                                       President         

 

Announced in Open Commission.

Dated:01.11.2023.

Gobind Ram.