KERALA STATE CONSUMER DISPUTES REDRESSAL

COMMISSION VAZHUTHACAUD, THIRUVANANTHAPURAM.

APPEAL No. 538/2009

JUDGMENT DATED:28-07-2010

PRESENT:

JUSTICE SHRI. K.R. UDAYABHANU              :PRESIDENT

SHRI.S. CHANDRAMOHAN NAIR                             : MEMBER

1.         The Manager,

LIC of India, Southern Zonal Office,

LIC Building, Anna Salai, Chennai.

2.         The Manager,

LIC of India, Divisional Office,                             : APPELLANTS

Jeevan Prakash, P.B.No.177,

Kozhikkode.

3.         The Manager, (L & HPF),

LIC of India, Divisional Office,

Talap, Kannur.

(By Adv: Sri.G.S.Kalkura)

            Vs.

1.         Smt. P.K.Naseema,

Bismillah Manzil,

Ittandy Poovalappil, Kannur-3.

                                                                                    :  RESPONDENTS

2.         P.V.Santhosh,

D.M.Club Member Agent,

Payyanvellattinkara, P.O.Chalad,

Kannur.

(By Adv:Sri.B.Ajayakumar)

                                         JUDGMENT

JUSTICE SHRI.K.R. UDAYABHANU : PRESIDENT

The appellants are the opposite parties/LIC of India in CC.234/06 in the file of CDRF, Kannur.  The appellants are under orders to pay the assured sum of Rs.75,000/- and a sum of Rs.1000/- as cost to the complainant, the wife of the deceased assured.

2. The case of the complainant is that her husband Sri.C.Aboobacker the policy holder died in UAE on 16/4/2005.  The claim was repudiated on the ground that the fact of undergoing surgery for hernia undergone in July 2004 at West Cost Hospital, Kannur was not disclosed in the proposal.  The complaint has also applied before the Insurance Ombudsman who ordered only to pay a sum of Rs.3000/- on ex-gratia basis.  It is her case that the 4^th opposite party the agent did not ask her husband at the time of signing in the proposal form whether he had any illness or whether he had undergone surgery etc.  Her husband had no knowledge in English.   He had studied only up to the 5^th standard and was a cooli worker.  The complainant also cannot understand English language.  The proposal form was in English.  After 7 months of taking the policy the complainant died due to ischemic heart disease.  It is her case that the surgery undergone for hernia has no nexus with the cardiac disease which is the cause of death.  She has claimed the assured amount and Rs.20,000/- as compensation.

3. Opposite parties 1 to 3/LIC has filed version contending that the surgery undergone for hernia was deliberately suppressed by the deceased.  The action of the 4^th opposite party agent in filling up the proposal form etc was on behalf of the assured and not on behalf of the LIC and at the time he was not acting as the agent of LIC.  The contract of insurance is based on the principle of utmost good faith.  Hence non disclosure of material information is sufficient ground for repudiating the policy.

4. The 4^th opposite party agent did not enter appearance or file version and was set exparte.

5. The evidence adduced consisted of the testimony of PW1, DW1; Exts.A1 to A9, B1 and B2.

6. The Forum has held that there is nothing to show that the surgery undergone for hernia has got any relation or nexus with the cause of death ie heart attack.  It was also noted that the policy was issued on 29/9/2004 and the insured died after for 7 months ie on 16/4/2005.  It was also noted that the 4^th opposite party agent is still working as an LIC agent and that he has purposefully kept away from the proceedings.  The Forum relied on the version of the complainant that the insured was not asked about the questions with respect to the hernia etc.  Hence the lower forum directed the appellants to pay the entire sum assured.  The counsel for the appellant has pointed out that in the complaint itself surgery for hernia undergone on 17/7/2004 is mentioned.  It is pointed out that suppression of material facts sufficient ground for repudiation of the contract as it is vitiated for the above reason.  The counsel has relied on the decision in P.J.Chacko and Another Vs. Chairman, LIC of India and Others, of the Supreme Court (2008 SAR (Civil 44) ) as well as a number of other decisions of the National   Commission that has approved the contention of the opposite party that suppression of material fact with respect to the health of the assured would render the contract invalid.  As pointed out by the counsel for the respondent/complainant the fact that the complainant and her husband were not literate in English in which language is the proposal form stands not disputed.  The fact that the assured had only education up to the 5^th standard and that he had no working knowledge in English was not disputed.  The case of PW1 who allegedly witnessed the deceased signing in the proposal form that the 4^th opposite party agent did not ask questions about the health/illness/treatments undergone by the assured appears genuine.  The very fact that she has disclosed the fact that the deceased had undergone surgery for hernia to the investigator itself would show that the complainant or her husband were not sufficiently knowledgeable about the requirement for disclosing the fact of treatment undergone etc.  Evidently the opposite parties/appellants have not even called for an explanation from the opposite party/LIC agent who is described as DM’s Club Member Agent.  DW1 the Administrative officer of the LIC has admitted that the 4^th opposite party is still working as the LIC agent.  The 4^th opposite party has not appeared or stated his version in the matter. The statement of PW1 that the 4^th opposite party agent did not explain the contents of the proposal form stands proved.  Ext.B1 proposal form is in English and Hindi.  According to PW1 the deceased was only asked to fix his signatures in the required places in Ext.B1.  It appears that there was no question of the deceased or PW1 not disclosing to the 4^th opposite party agent, the fact of hernia operation undergone by him a few months back.  We find that the case of the complainant with respect to the way in which Ext.B1 proposal form was got signed without explaining the details contained in Ext.B1 is totally reliable.  We find that the 4^th opposite party agent has acted in a deceitful manner so that he can procure policy and obtain commission.  It also appears that the appellants/LIC has impliedly conceded to the above course of action by the 4^th opposite party agent who is a senior agent of the LIC going by his designation  as DM’s Club Member Agent.  The tendency on the part of the Agents not to disclose the contents of the proposal form or to persuade the intending assured that they need not disclose the ailments, treatment undergone etc ought to have been checked by the appellants.  The technical reliance on the decisions that the LIC is not bound by the actions of the agent which are not authorized by the LIC as per the relevant rules is not proper in all cases. In the instant case the assured could have obtained the policy after undergoing medical examination or on payment of a higher premium.  It is the haste and greed of the 4^th opposite party agent that resulted in the  non disclosure of the hernia surgery.  It is inconceivable that a person aged 48 (the assured was aged 48 on the date of signing the proposal) would not have suffered from any ailments for the 5 years preceding the signing of the proposal.  Even there is a column that whether during the last 5 years the assured had consulted a medical practitioner for any ailment requiring treatment for more than a week.  There is also a column as to whether the assured ever had any accident or injury.  There are also columns to the effect that whether the assured had ever used alcoholic drinks or had been smoking etc.  We find that it is high time that the insurance company instruct their agents as to the consequences of filling up the columns in the negative or persuading the proposers to fill all the columns in the negative.  Evidently in the instant case the 4^th opposite party a senior agent of the appellants is still an LIC agent and no action has been taken against him.  The appellants at least ought to have held an enquiry in the matter.  We find that there is deficiency of service on the part of the appellants/LIC as well as on the part of the 4^th opposite party/LIC agent although the policy cannot be acted up on as it is vitiated.  In the circumstances the order of the Forum is set aside.   All the same for the deficiency in service on the part of opposite parties 1 to 3/LIC the opposite parties are directed pay a sum of Rs.25,000/-  as compensation to the complainant.  The 4^th opposite party agent is directed to pay a sum of Rs.20,000/- as compensation to the complainant.  The amounts would carry interest at the rate of 9% per annum from the date of complaint ie on 12/10/2006.  The complainant would also be entitled for cost of Rs.1000/- from the opposite parties 1 to 3 and Rs.1000/- from the 4^th opposite party.  The amounts are to be paid within 3 months from the date of receipt of this order failing which the complainant would be entitled for interest at 12% from today.

     In the result the appeal is allowed in part as above.

 The office will forward the LCR along with the copy of this order to the Forum urgently. 

JUSTICE K.R. UDAYABHANU:PRESIDENT

S. CHANDRAMOHAN NAIR : MEMBER

VL.