Punjab

Ludhiana

CC/20/169

Amandeep Kaur - Complainant(s)

Versus

M/s SBI Life Insurance Co.Ltd. - Opp.Party(s)

Pankaj Kaktia

01 Nov 2023

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, LUDHIANA.

                                                Complaint No:169 dated 08.09.2020.                                                         Date of decision: 01.11.2023.

 

Amandeep Kaur W/o. Sh. Okar Singh, r/o. H. No.209, Jogi Basti, Dharamkot, Near Basi Jewellers, Moga-142042.                                                                                                                                                         ..…Complainant

                                                Versus

1. M/s. SBI Life Insurance Co. Ltd., through its Managing Director having its office at Natraj, M.V. Road & Western Express Highway Junction, Andheri (East), Mumbai.
2. M/s. SBI Life Insurance Co. Ltd., through its Manager having its office at 1^st Floor, above OBC Bank, Near Akalsar Chowk, GT Road, Moga-142001.                                                                                                                                                                       …..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. Nipun Gupta, Advocate.

 

ORDER

PER SANJEEV BATRA, PRESIDENT

1.                In brief, the facts of the case are that the husband of the complainant Sh. Okar Singh (hereinafter called as DLA) purchased a Critical Healthcare-cum-Life Insurance Policy namely Poorna Suraksha for a sum of Rs.35,00,000/-  (Rs.28,00,000/- Life cover + Rs.7,00,000/- Critical Healthcare) vide policy No.2F358600308 for a period of 30 years from opposite party No.2 in which the complainant was a nominee. The DLA paid the premium amount of Rs.9571.38 for life cover and Rs.13,578.62 for critical illness. The complainant further stated that on 03.04.2019, due to heart attack LA underwent treatment at Deepanjali Multi Specialty Hospital, Gohana Road, Near New Bus Stand, Meham (Rohtak) where remained admitted from 03.04.2019 to 06.04.2019. After recovery, LA raised claim for critical health cover with the OPs by submitting all the requisite medical record and documents on 24.04.2019 and he also followed up with the OPs top know about fate of his claim where he was told that his case is under process and same shall be released to him shortly. However, LA received a communication dated 24.07.2019, intimating that his policy has been cancelled unilaterally due to the fact that he had concealed the fact of having other policies at the time of opting for instant policy and the premium amount was credited into account of the LA. The complainant further stated that the LA never concealed the fact having other policies and he gave the particulars of policies at the time of filling the proposal form. The LA handed over list of active policies at the time of filling the proposal form. The policies held by the LA were more than 4-5 years old. The LA served a legal notice dated 23.07.2019 upon the OPs to which the OPs sent an evasive reply dated 20.08.2019. The LA also filed a complaint before the Consumer Forum, Moga but before the decision of the said complaint, the LA died on 14.11.2019 of natural death. The complainant stated that she withdrew the said complaint with liberty to file fresh complaint. Thereafter, the complainant sent a communication dated 22.02.2020 to the OPs intimating the death of LA and seeking release of insurance amount but despite expiry of 4 months, no reply was received. Even the OPs refunded the premium amount after having consumed it for nearly a year. According to the complainant, the LA has not committed any fraud with the OPs. 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. Okar Singh committed a breach of principle of UTMOST GOOD FAITH by suppressing the material facts that he had huge life insurance cover prior to taking SBI Life Insurance policy. Even in the proposal form dated 06.07.2018, the DLA replied in negative to the relevant questions and as such, he deliberately gave false declaration etc. The opposite parties further stated that the policy would not have been issued had the life assured disclosed about his previous  insurance policies as the customer was financially not eligible for the same. The opposite parties denied any deficiency in service on their part.

                   Under the column Brief Facts of the case, the opposite parties have stated that in the proposal Form, Sh. Okar Singh had replied in negative to the question No.11 regarding other insurance policies that “Do you have any other individual life insurance policy or have you applied for one? Further in the proposal form under point No.18, the deceased declared that, “I hereby declare that the foregoing statements and answers have been given by me after fully understanding the questions and the same are true, accurate and complete in every manner and that I have not withheld or omitted to give any information. Further, I have not provided false information in reply to any question. I understand and agree that the statements in this proposal constitute warranties. I do hereby agree and declare that these statements and this declaration shall be the basis of the contract of assurance between me and the SBI Life Insurance Co. Ltd. (Company) and that if there is any misstatement or suppression of material information or if any untrue statements be contained therein or in case of fraud, the said contract shall be treated as per the provisions of Section 45 of the Insurance Act, 1938, as amended from time to time.” On the basis of the proposal form, the opposite parties issued SBI Life – Poorna Suraksha policy No.2F358600308 from 21.07.2018 for 30 years with yearly premium mode and with initial life cover sum assured of Rs.28,00,00/- and initial critical illness sum assured of Rs.7,00,000/-.

                   The opposite parties further stated that they conducted post verification of the life assured Okar Singh and observed that the life assured had not disclosed details of his other life insurance proposals/policies that he had applied for or declined by the other insurance companies in the SBI Life proposal form and thus obtained the insurance cover from the OPs by suppressing material facts.  The opposite parties also submitted the detail of the policies purchased by the insured before the policy in question, which is reproduced as under:-

Insurers	Policy/Proposal No.	Proposal date	Date of commencement of policy	Basic Sum assured	Policy status
Exide life	03434963	21.10.2016	05.11.2016	26 Lacs	Inforce
HDFC Life	18900131	29.12.2016	31.12.2016	35 Lacs	Cancelled (Other insurance)
SBI Life	2F358600308	06.07.2018	21.07.2018	35 Lacs	Repudiated
ICICI Pru	22156981	29.03.2018	NA	55 Lacs	Withdrawn
ICICI Pru	22157581	29.03.2018	NA	54 Lacs	Withdrawn
Reliance Life	53344614	14.11.2018	17.11.2018	1.64 Lacs	Inforce
Reliance Life	53348356	14.11.2018	30.11.2018	35 Lacs	Inforce
Edelweiss Life	000035834E	17.11.2018	NA	25 Lacs	Declined (Proposal stage)
Bajaj Life	0352623201	04.12.2018	04.12.2018	10 Lacs	Health Claim
Edelweiss	000077490E	06.02.2019	NA	25 Lacs	Declined (Proposal stage)
Edelweiss	000077505E	06.02.2019	NA	5 Lacs	Declined (Proposal stage)
Total				107 Lacs

 

The opposite parties further stated that they received various Emails from the various insurance companies with which the DLA got himself insured. Had the complainant informed the Ops regarding his earlier insurance policies they would not have issued the instant insurance policy to the complainant. Thus the DLA had committed breach of doctrine of UTMOST GOOD FAITH by giving false details regarding previous insurance policy/proposal. The DLA was not eligible to get the life insurance cover of Rs.107 Lacs considering his income and profile. According to the OPs, policy of the deceased was cancelled in view of active concealment of material facts and premium amount of Rs.23,150/- was refunded vide direct credit to the bank account no.****3480 maintained with State Bank of India, Dharmkot branch on 08.07.2019. The decision of termination of policy was intimated to the complainant/nominee vide letter dated 24.07.2019.

                   On merits, the opposite parties reiterated the crux mentioned in the preliminary objections and brief 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 the insurance policy, Ex. C2 is the copy of treatment record of Okar Singh with Deepanjali Multispecialty Hospital, Rohtak, Ex. C3 is the copy of cancellation letter dated 24.07.2019, Ex. C4 is the copy of legal notice dated 23.07.2019, Ex. C5 is the copy of reply dated 20.08.2018 to legal notice dated 23.07.2019, Ex. C6 is the copy of death certificate of Okar Singh, Ex. C7 is the copy of complaint moved before Consumer Forum, Moga, Ex. C8 is the copy of death intimation dated 22.02.2020 of Okar Singh to the OPs and closed the evidence.

4.                On the other hand, counsel for the opposite parties tendered affidavit Ex. RA of Ms. Neelam Singh, Authorized representative of the opposite parties along with documents Ex. Annexure-A is the copy of proposal form, Annexure-B is the copy of insurance policy/documents, Annexure-C is the copy of Email received from Exide Insurance, Annexure-D is the copy of Email received from HDFC Standard LIC, Annexure-E is the copy of Email received from ICICI Prudential, Annexure-F is the copy of Email received from ICICI Prudential, Annexure-G is the copy of Email received from Edelweiss Insurance, Annexure-H is the copy of Email received from Bajaj Allianz, Annexure-I is the copy of cancellation letter dated 24.07.2019, Annexure-J is the copy of legal notice dated 23.07.2019, Annexure-K is the copy of reply dated 20.08.2018 to legal notice dated 23.07.2019 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 wife and nominee of DLA Okar Singh, has raised a grievance with regard to cancellation of the life insurance policy. Admittedly, DLA was a holder of Critical Healthcare-cum-Life Insurance Policy namely SBI Life - Poorna Suraksha Ex. C1 = Annexure-B for a sum Rs.35,00,000/-  (Rs.28,00,000/- Life cover + Rs.7,00,000/- Critical Healthcare) vide policy No.2F358600308 for a period of 30 years commencing from 21.07.2018 by paying a premium of Rs.23,150/- LA has obtained this policy by submitting proposal form Annexure-A wherein he has answered the relevant questions with regarding to holding of earlier insurance policies and income as under:-

11. Do you have any other individual life insurance policy or have you applied for one.

No

 

He also submitted the following declaration with regard to information furnished by him in the said form:-

“I hereby declare that the foregoing statements and answers have been given by me after fully understanding the questions and the same are true, accurate and complete in every manner and that I have not withheld or omitted to give any information. Further, I have not provided false information in reply to any question. I understand and agree that the statements in this proposal constitute warranties. I do hereby agree and declare that these statements and this declaration shall be the basis of the contract of assurance between me and the SBBI Life Insurance Co. Ltd. (Company) and that if there is any misstatement or suppression of material information or if any untrue statements be contained therein or in case of fraud, the said contract shall be treated as per the provisions of Section 45 of the Insurance Act, 1938, as amended from time to time.”

7.                Acting upon the information so received by the opposite parties, the insurance policy was issued and the policy documents Ex. C1 = Annexure-B issued to the DLA. However, the opposite parties conducted post verification of the life assured Okar Singh and observed that the life assured had not disclosed details of his other life insurance proposals/policies that he had applied for or declined by the other insurance companies in the SBI Life proposal form and thus obtained the insurance cover from the OPs by suppressing material facts.  In the proposal form, the DLA mentioned his annual income to be Rs.5,00,000/- but he obtained the insurance policies worth Rs.107 Lacs. On 24.07.2019, the insurance company cancelled the policy vide letter Ex. C3 = Annexure-I on the ground of non-disclosure of previous insurance details. The premium of Rs.23,150/- was refunded to bank account No.****3480 held with State Bank of India, Dharmkot Branch on 08.07.2019. The operative part of the cancellation letter is reproduced as under:-

“The above mentioned policy was issued to you with date of commencement as 21/07/2018, based on the information provided in proposal No.2FYA249533 dated 06/07/2018 and believing the information furnished therein to be true and correct, I utmost good faith.

During the profile verification, we have noted that in the proposal form for insurance dated 06/07/2018 you have answered the questions in the proposal form as follows:-

Question No.	Question	Answer
11.	Do you have any other individual life insurance policy or have you applied for one.	No

We have sufficient evidence to prove that you have not disclosed details of other life insurance policies applied and held by you at the time of submission of the proposal form No.2FYA249533 dated 06/07/2018.

Therefore, the said policy has been cancelled in view of non disclosure of previous insurance details. The policy stands cancelled and the premium of Rs.23,150/- received under the policy has been refunded to your bank account No.***3480 held with State Bank of India, Dharmkot Branch on 08/07/2019 vide UTR No.CTG458343200001.”

8.                Further perusal of record shows that DLA stated to have been died on account of “natural death” on 14.11.2019 i.e. after about 16 months from the issuance of the policy. Death certificate of DLA is Ex. C6. It is pertinent to mention that DLA was born on 01.10.1978 and at the time of obtaining the policy he was aged about 40 years and at the time of death, he was about 41 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 with regard to “natural death” of DLA.

9.                It is strange that the complainant did not file formal death claim with the opposite parties. Even in legal notice or in the complaint, she has maintained stoic silence qua lodging of death claim. On the other hand, the Ops have cancelled the policy on 24.07.2019 even before receipt of legal notice dated 23.07.2019 Ex. C4 and reply to legal notice Ex. C5 was sent to the complainant informing about the events that had already taken place with regard to cancellation of the policy and refund of the premium on 08.07.2019. 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.

10.              It is evident that the repudiation in the present case was within the two years from the commencement of the insurance cover which leads 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.”

 

11.              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.

12.              In its judgment Satwant Kaur Sandhu Vs New India Assurance Co. Ltd. Civil Appeal No.2776 of 2002 decided on 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.    

13.              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.

 

14.              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.