1.       There are 6 appeals filed by 6 Insurance Companies assailing the orders dated 25.01.2017 and 26.04.2018 passed by the Andhra Pradesh State Consumer Disputes Redressal Commission (hereinafter referred to as the State Commission) allowing the claim in 6 complaints arising out of repudiation of insurance claims on the ground of suppression of non-disclosure of pre-existing policies held by the Insured Smt. Narayanamma where the nominee (Dereddy Sreedhar Reddy) was the complainant. The complainant has filed 5 appeals assailing the same orders of the State Commission for enhancement of the rate of interest and extending the period of payment.

2.       The Insured died on 21.09.2013 allegedly on account of poisoning due to snake bite as per the hospital report and the certificate issued by the Civil Assistant Surgeon, Government Area Hospital, Adoni, Andhra Pradesh.

3.       The Insured was holding multiple policies issued by the 6 Insurance Companies but the proposal forms did not disclose the correct status of the other pre-existing policies that were acquired by the Insured and in some of them there was a partial disclosure.

4.       All the claims were repudiated by the respective Insurance Companies, the common ground whereof was non-disclosure of the pre-existing policies.  The State Commission, after having traversed the facts and having discussed the law on the issue, came to the conclusion that non-disclosure of pre-existing policies did not amount to suppression of material facts and therefore the claims deserve to be allowed.  Accordingly, the State Commission allowed all the complaints, awarding the insured amount with 9% interest from the date of the orders till actual payment coupled with Rs.25,000/- as litigation costs.

5.       Aggrieved, all the Insurance Companies have come up in appeal challenging the orders and praying for setting aside of the same on several grounds, the primary challenge being on the strength of the judgment of the Apex Court in the case of Reliance Life Insurance Co. Ltd. and Anr. Vs. Rekhaben Nareshbhai Rathod (2019) 6 SCC 175.  

6.       The 6 Insurance Companies that have filed their separate appeals are (i) First Appeal No. 759 of 2017 (SBI Life Insurance Co. Ltd. Vs. Dereddy Sreedhar Reddy); (ii) First Appeal No. 809 of 2017 (Shriram Life Insurance Co. Ltd. Vs. Dereddy Sreedhar Reddy); (iii) First Appeal No. 815 of 2017 (Bharti Axa Life Insurance Co. Ltd. & Anr. Vs. Dereddy Sreedhar Reddy); (iv) First Appeal No.979 of 2017 (Reliance Life Insurance Co. Ltd. & Ors. Vs. Dereddy Sreedhar Reddy); (v) First Appeal No. 1085 of 2017 (ING Vysya Life Insurance Co. Ltd. & Ors. Vs. Dereddy Sreedhar Reddy); and (vi) First Appeal No. 1128 of 2018 (ICICI Prudential Life Insurance Co. Ltd. & Ors. Vs. Dereddy Sreedhar Reddy).

7.       The complainant has filed the other 5 appeals arising out of the same impugned orders for partial relief to the extent of enhancement of the rate of interest from 9% to 12% and further for extending the date from which the payment is to be made, namely, from the date of loss or date of repudiation instead of the date of the order of the State Commission.  

8.       There is a third dimension also raised by the complainant that the disclosure of all the policies and particulars were made to the agent and therefore this is not a case of non-disclosure. This issue has however been answered against the complainant by the State Commission and therefore in the appeals filed by the complainant, one of the grounds raised is that disclosure to the agent absolves the claimant of any further obligation to disclose, hence, the said finding should be set aside.  It is also the contention that the finding of the State Commission regarding the status of income/financial capacity of the Insured is a finding that cannot be sustained. 

9.       The complainant has however not filed any cross-appeal as against ICICI Prudential Life Insurance Co. Ltd. 

10.     The appeals filed by the complainant are (i) First Appeal No. 801 of 2017 (Dereddy Sreedhar Reddy Vs. M/s ING Vysya Life Insurance Co. Ltd. & Ors.); (ii) First Appeal No. 802 of 2017 (Dereddy Sreedhar Reddy Vs. M/s SBI Life Insurance Co. Ltd. & Ors.); (iii) First Appeal No. 803 of 2017 (Dereddy Sreedhar Reddy Vs. Reliance Life Insurance Co. Ltd. & Ors.); (iv) First Appeal No. 804 of 2017 (Dereddy Sreedhar Reddy Vs. Bharti Axa Life Insurance Co. Ltd. & Anr.); and (v) First Appeal No. 805 of 2017 (Dereddy Sreedhar Reddy Vs. Shri Ram Life Insurance Co. Ltd.). 

11.     All the 11 appeals were taken up together on 06.11.2017 and a query was raised by the Commission which is as follows:  

“As per record, mother of the Appellant/Complainant had taken 16 life insurance policies from different insurance companies. Out of which, three insurance policies were taken in the year 2008 while the remaining of the policies were taken during the period from January, 2013 to July, 2013, while the life assured passed away in September, 2013.

To fully appreciate the matter, Appellant may file an affidavit indicating therein the following information; how many insurance policies were taken by the life assured with the date of proposal and type of policy with basic sum insured and amount of premiums paid for those insurance policies. This affidavit should also contain information regarding the total annual income along with source of the same of the life assured.

The Respondent may file true copy of the Income Tax Returns of the life assured, filed before the State Commission for the years 2010-11, 2011-12 and 2012-13.

Some other insurance companies have also filed Cross Appeals against the present Appellant, which are pending before this Commission, such as Shriram Life Insurance Company, Ing. Vysya Life Insurance Co. Ltd, SBI Life Insurance Co. Ltd, Reliance Life Insurance Co. Ltd. and Bharti Axa Life Insurance Co. Ltd. The Appellant may also mention in his affidavit what is the fate of those insurance policies taken from the other Insurance Companies, whose Appeals are not listed before me today. The affidavit be filed within four weeks.

List on 13.12.2017.

Respondents to be informed of the next date of hearing.”

12.     In compliance of the aforesaid order, the complainant/appellant has filed an affidavit on 17.05.2019, disclosing the chart of all the policies that were taken by the Insured from 2001 to 2013.  The said chart is extracted hereunder:

13.     The policies mentioned at Sl.No. 1 to 5 are not in dispute as they were prior to 2013 and those claims have already been settled.  The dispute is in respect of the policies from Sl.No. 6 to 16 as indicated in the chart that are covered under the 6 appeals filed by the Insurance Companies.

14.     Learned counsel for the Insurance Companies have advanced similar arguments but have taken the Bench through the proposal form in respect of each of the policies. 

15.     In First Appeal No. 759 of 2017 (SBI Life Insurance Co. Ltd. Vs. Dereddy Sreedhar Reddy) in column-11 of the proposal form, which is at page-65 of the paper-book, the query is “DO YOU HAVE ANY OTHER INDIVIDUAL LIFE INSURANCE POLICY OR HAVE YOU APPLIED FOR ONE?”, the Insured has ticked the square containing the endorsement of the word “No”.  The rest of the columns have also been indicated to be not applicable.  The date of this proposal is 10.01.2013.  It is thus evident from the chart admitted by the complainant that on that date there were 5 existing policies, namely, those mentioned at Sl.No. 1 to 5 which are not disclosed in the proposal.

16.     Then comes First Appeal No. 809 of 2017 (Shriram Life Insurance Co. Ltd. Vs. Dereddy Sreedhar Reddy) where 3 proposal forms were given for policies, the first on 11.01.2013, the second on 06.07.2013 and the third on 08.07.2013.  These 3 proposal forms are at pages 57, 59 and 62 of the paper-book.  The column number is 8 where the query raised is “Please give details of your existing life insurance policies with any life insurance company?”.  The Insured has endorsed the words “not applicable” and there is no disclosure about any policy therein.  The same position exists with regard to the second proposal form referred to above and the third proposal form as well.  Thus, there is no disclosure of either the policy taken from SBI Life Insurance Co. Ltd. or the other 5 policies at Sl.No.1 to 5 of the chart referred to above.

17.     The third appeal is First Appeal No. 815 of 2017 (Bharti Axa Life Insurance Co. Ltd. & Anr. Vs. Dereddy Sreedhar Reddy) where the proposal form is dated 19.03.2013.  In the column (ii) of the proposal form under the heading “Details of existing/proposed insurance” 2 policies have been disclosed, the first with the Reliance Life Insurance Co. Ltd. and the second of the HDFC Endowment Assurance Policy which are mentioned amongst Sl.No. 1 to 5 of the chart indicated above.  However, this proposal form does not disclose the policy taken from SBI Life Insurance Co. Ltd. on 10.01.2013 and the 3 proposals of policy with Shriram Life Insurance Co. Ltd. referred to hereinabove.  Thus, there is concealment with regard to the other policies and there is only a partial disclosure of just 2 policies referred to above, which is evident from the endorsement at page-111 of the paper-book of this appeal.

18.     In First Appeal No. 979 of 2017 (Reliance Life Insurance Co. Ltd. & Ors. Vs. Dereddy Sreedhar Reddy), which is a policy with the Reliance Life Insurance Co. Ltd., the proposal form is dated 14.02.2013.  In this policy also only 2 of the policies of 2008 were disclosed as is evident from page-87 of the paper-book.  None of the other policies except these 2 that were taken before this proposal have been disclosed and therefore here also a substantial number of policies were not disclosed and information with regard to only 2 policies was given.  Thus, there is a partial disclosure only.

19.     Coming to First Appeal No. 1085 of 2017 (ING Vysya Life Insurance Co. Ltd. & Ors. Vs. Dereddy Sreedhar Reddy), the proposal form is dated 18.01.2013. In Section-IV thereof that requires “Details of Existing/ Simultaneously Applied Insurance Cover on the Life to be Assured”, the disclosure is with regard to the policies taken in the name of the son of the Insured but so far as the existing policies of the Insured are concerned, the same has been clearly endorsed with the words “not applicable”.  Thus, there is a complete non-disclosure of the policies taken by the Insured which is evident from page-86 of the paper-book.

20.     The last proposal is in First Appeal No. 1128 of 2018 (ICICI Prudential Life Insurance Co. Ltd. & Ors. Vs. Dereddy Sreedhar Reddy).  This policy was applied online and the proposal form is dated 28.03.2013.  In this case against column-IV under the heading “Previous Policy Details” reference has been given of only 2 policies, the first taken from Reliance Life Insurance Co. Ltd. and the other from the SBI Life Insurance Co. Ltd.  Thus, there is only a disclosure of 2 of the policies whereas the balance of the policies are nowhere mentioned and as such it is evident that either there has been a complete non-disclosure or a partial disclosure in all the proposal forms tendered by the Insured.

21.     In all these cases the State Commission has recorded a finding that such non-disclosure does not in any way effect the entitlement of the claim, for which reliance was placed on several judgments that were cited and have been referred to in the impugned orders.  In essence, the finding recorded by the State Commission is that such non-disclosure was not a material fact and, hence, the claim cannot be denied.  This has been countered by the learned counsel for the Insurance Companies citing the decision in the case of Reliance Life Insurance Co. Ltd. and Anr. Vs. Rekhaben Nareshbhai Rathod (Supra) where the doctrine of uberrima fidei has been discussed vis-à-vis a relationship based on a good faith on the part of the Insured with the Insurer.

22.     It is here that the learned counsel for the complainant contends that such disclosure had been made to the Insurance Agent and, if the form is deficiently filled up, then there is no concealment or suppression on the part of the Insured so as to disentitle the claimant from receiving the benefits out of the insurance cover.  The question of non-disclosure as also any liability of the agent was raised and discussed in detail and then in paragraphs 16 to 30 it has been held by the Apex Court in the above-noted judgment that the duty of good faith justifies the complete disclosure as the object of the proposal form is to gather information about a potential client in order to enable the Insurance Company to receive all material information for assessing the risk and fix the premium for each potential client.  The proposal forms are a significant part and any suppression, untruth or inaccuracy would be a breach of duty of good faith, rendering a policy voidable by the Insurer.  It was also held that the system of adequate disclosure helps both the parties to meet at a common point and narrow down the gap of information asymmetries.  It was further held in paragraph-31 that such a disclosure in the proposal form is material and then in paragraphs 32 and 33 it was held as under:

“32. In the present case, the insurer had sought information with respect to previous insurance policies obtained by the assured. The duty of full disclosure required that no information of substance or of interest to the insurer be omitted or concealed. Whether or not the insurer would have issued a life insurance cover despite the earlier cover of insurance is a decision which was required to be taken by the insurer after duly considering all relevant facts and circumstances. The disclosure of the earlier cover was material to an assessment of the risk which was being undertaken by the insurer. Prior to undertaking the risk, this information could potentially allow the insurer to question as to why the insured had in such a short span of time obtained two different life insurance policies. Such a fact is sufficient to put the insurer to enquiry.

33. The learned counsel appearing on behalf of the insurer submitted that where a warranty has been furnished by the proposer in terms of a declaration in the proposal form, the requirement of the information being material should not be insisted upon and the insurer would be at liberty to avoid its liability irrespective of whether the information which is sought is material or otherwise. For the purposes of the present case, it is sufficient for this Court to hold in the present facts that the information which was sought by the insurer was indeed material to its decision as to whether or not to undertake a risk. The proposer was aware of the fact, while making a declaration, that if any statements were untrue or inaccurate or if any matter material to the proposal was not disclosed, the insurer may cancel the contract and forfeit the premium. MacGillivray on Insurance Law [ 12th Edn., Sweet and Maxwell (2012). See p. 257 for cases relied upon.] formulates the principle thus:

“… In more recent cases it has been held that all-important element in such a declaration is the phrase which makes the declaration the “basis of contract”. These words alone show that the proposer is warranting the truth of his statements, so that in the event of a breach of this warranty, the insurer can repudiate the liability on the policy irrespective of issues of materiality.”

23.     It is therefore no longer res integra that non-disclosure of a material fact allows the Insurer to render a policy voidable.  Applying the said ratio, the impugned orders are unsustainable.

24.     The other argument of the learned counsel for the complainant was that the Insured, who was a lady, stated to be only class-6 pass, was unaware of the contents of the form and would therefore stands absolved of the consequences of appending the signatures to the proposal.  The Apex Court in the aforesaid judgment rejected this argument and held in paragraph-34 as follows:

“34. We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form. Barely two months before the contract of insurance was entered into with the appellant, the insured had obtained another insurance cover for his life in the sum of Rs 11 lakhs. We are of the view that the failure of the insured to disclose the policy of insurance obtained earlier in the proposal form entitled the insurer to repudiate the claim under the policy.”

25.     The Insured had acquired 11 policies in seriatim one after the other.  It cannot therefore be inferred that the she did not know about the other policies.  It is also on record that there is a partial disclosure in some of the policies.  Consequently, the requirement of disclosure was known, both to the Insured and the Agent.  Accordingly, the consequences of non-disclosure as well were known to them.   

26.     The State Commission has proceeded to rely on some judgments that were also discussed by the Apex Court and then in paragraphs-35 and 36 it was held that any plea of an inaccuracy arising out of the agent cannot be a ground for any explanation once the Insured has affixed the signatures on the proposal form.

27.     Thus, according to the ratio of the judgment of the Apex Court referred to hereinabove, the Insured had taken multiple policies and there was a failure on her part to disclose the pre-existing policies as required under the proposal forms.  Even otherwise, it is evident that in some of the policies only a partial disclosure was made and as such it cannot be said that the Insured or the agent were not aware of the various policies having been acquired by the Insured, which were altogether 16 in number.

28.     The income tax returns of the Insured indicated an income of about Rs.3,00,000/- but before the State Commission broad statements were made regarding agricultural income, income from business and even income from dividends and bonds.  No evidence was led to believe the same and consequently it is also doubtful about the sources of income of the Insured.  Learned counsel for the Insurance Companies have further submitted that the human life value is also assessed while assessing the potential of an Insured that is dependent on the entire income of a person and the capacity to pay the premium.  They contend that this can only be assessed if there is a voluntary and correct disclosure of the status of income, which in the present case was not done correctly, and the allegations made in the complaint to that effect were not proved. 

29.     In my opinion as well, a satisfaction on that count is also material, nonetheless the withholding of the information in respect of the pre-existing policies in view of the law discussed hereinabove is sufficient to negative the claim of the complainant.

30.     The State Commission while proceeding to record its finding has observed that the policies were obtained by the Insured without disclosing the pre-existing policies, yet it has also opined that the same is not fatal and while recording its finding has noted that the legal position with regard to repudiation of the claim on the basis of pre-existing policies has been in a fluid situation in the light of the discussion made before it.  The State Commission has made these observations on 25.01.2017 when the orders were delivered but this fluid situation now stands settled by completely overruling the view taken by the State Commission in the judgment of Reliance Life Insurance Co. Ltd. and Anr. Vs. Rekhaben Nareshbhai Rathod (Supra). 

31.     An argument was advanced on behalf of the complainant/appellant taking a clue from the proposition as contained in the judgment of the Apex Court that in case the agent had not disclosed the previous policies in the form even though it had been informed by the Insured, then a dispute in regard to such a repudiation of a claim can be subjected to a challenge in a civil suit, for which reference has been made to paragraph-22 of the judgment in the case of Reliance Life Insurance Co. Ltd. and Anr. Vs. Rekhaben Nareshbhai Rathod (Supra).  Suffice it to say that if the learned counsel finds this to be a viable proposition, then it is open for him to advice the complainant for exploring any such possibility.  It is not for this Commission to extend any suggestion on that count.

32.     Consequently, the reasoning given by the State Commission is clearly in conflict with the settled law as of now and, hence, the impugned orders in the 6 appeals filed by the Insurance Companies cannot be sustained.  The appeals therefore have to be allowed on the admitted position of non-disclosure of pre-existing policies by the Insured and therefore the complaints cannot succeed.  The complainant had based his claim evidenced by non-disclosure in the proposal forms that cannot be accepted in the light of the law laid down by the Apex Court referred to above.  These 6 appeals (First Appeals No. 759, 809, 815, 979 & 1085 of 2017 and 1128 of 2018) are therefore allowed and the impugned orders dated 25.01.2017 and 26.04.2018 passed by the State Commission are set aside.

33.     As a consequence of the above, the contention raised by the complainant in the 5 appeals filed by him also cannot survive for any consideration as the appeals filed by the Insurance Companies have been allowed.  The 5 appeals (First Appeals No. 801, 802, 803, 804 & 805 of 2017) filed by the complainant are therefore dismissed.

34.     All 11 appeals stand disposed of accordingly.  All pending applications also stand disposed of.