1.     This complaint under section 12 of the Consumer Protection Act, 1986 (in short, the ‘Act’) has been filed by the widow and nominee of her late husband Mr. Rakesh Jain, who had purchased a MetLife Family Income Protector Plus Insurance Policy (in short, ‘the policy’) from the Opposite Party for a term plan of 15 years on 07.03.2016 (effective from 19.02.2016) on half yearly premium instalment of Rs.1,14,632/-. The life assured expired on 21.05.2016 and the claim under the said policy was disallowed by the Opposite Party. The Complainant has alleged deficiency in service and unfair trade practices and is, therefore, before this Commission with the prayer that the Opposite Party pay the amount of the sum insured of Rs.90,00,000/- along with Rs. 2,00,00,000/- for mental agony and Rs.2,50,000/- as legal expenses along with other relief on directions.

2.     The Complainant states that the policy was approved after thorough and comprehensive medical examination, including clinical investigations, of the Deceased Life Assured (DLA) by a Doctor empanelled on the panel of the Opposite Party. The fact of the DLA being a diabetes patient, on medication, had been disclosed to the authorized agent of the Opposite Party. The DLA was diagnosed for the first time in April, 2016, with Chronic Kidney Disease, (CKD Grade-V) and he was admitted to Indraprstha Apollo Hospital, Sarita Vihar, Delhi and put on Maintenance Haemeo Dialysis (MHD).

3.     On 15.05.2016, the DLA was again admitted to the same hospital for a kidney transplant on 17.05.2016, but unfortunately expired after the said procedure on 21.05.2016. A claim was preferred by the Complainant on 18.06.2016 which was repudiated by the opposite party. It is alleged that the refusal to admit liability is arbitrary and malafide on the grounds of non-disclosure of material facts, since the DLA had no prior illness relating to kidney which was detected for the first time in April 2016 and the fact of his being a diabetes patient had been disclosed to the agent of the Opposite Party at the time of filling up of the proposal form. The Opposite Parties are, therefore, charged with unfair trade practices and deficiency in providing services. The legal notice dated 10.08.2016 was not replied by the Opposite Party. Hence, this complaint.

4.     The Complaint was resisted by the Opposite Party by way of reply. The following preliminary objections were taken that (i) the DLA violated the principle of Uberrima fides (utmost good faith) since it had suppressed material evidence that the DLA suffering from Diabetes mellitus for the past 25 years in the proposal form; (ii) this Commission lacked pecuniary jurisdiction under the Act to entertain the complaint; (iii) it is settled law that when an insurer repudiates its claim on bonafide grounds, it does not constitute ‘deficiency in service’; and (iv) the Complainant is a nominee of a policy obtained by suppression of material information and therefore disentitles the nominee to benefits under the said policy.

5.     On merits, it is contended that medical examination by the doctors on the panel of the opposite party was done prior to the policy being approved as per the averments of the DLA in the proposal form and that no evidence had been brought on record that the deceased had apprised the agent of his being a diabetic patient on medication while filling up the proposal form. The DLA’s categorical declaration in the negative regarding this illness violated section 45 of the Insurance Act, 1938.  Opposite Party states that repudiation is not on account of the kidney ailment but on account of suppression of material information in regard to DM-II. The repudiation is justified on the grounds of terms and conditions of the policy, which clearly provides for repudiation in the event of suppression of material information.

6.     The Complainant filed rejoinder and both the parties filed their affidavit in evidence as well as their short synopses of arguments. I have heard the learned counsel for both the parties and carefully considered the material available on record.

7.     The Learned Counsel for the Complainant argued that there was deficiency in service under section 2 (1) (g) of the Act and has relied upon Hon’ble Supreme Court’s judgment in Jose Philip Mampillil Vs. Premier Automobiles Ltd. & Anr. 2004 (1) SCR 1095, wherein compensation was awarded for mental agony on account of delivery of a defective car to be paid jointly and severally. She also argued that as regards deficiency in service as per the judgment of the Hon’ble Supreme Court in General Motors (India) Private Limited Vs. Ashok Ramnik Lal Tolat & Anr. in Civil Appeal No(s). 8072-8073/2009, dated 09.10.2014, it was laid down that:

“18. The Act is a piece of social legislation to provide a forum to the consumers who are taken for a ride by suppliers of goods and services. The redress is provided to a consumer against any deficiency in service as well as against any loss or injury arising out of “unfair trade practice”. By later amendment, scope of a complaint can cover not only individual consumer but also consumers who are not identifiable conveniently.

However, the complainant has to make an averment and make a claim. Section 12 of the Act permits not only a complaint by a consumer to whom goods are sold or delivered but also any recognised consumer association or one or more consumers on behalf of and for the benefit of all consumers but still, a case has to be made out and the affected party heard on such issue. We are conscious that having regard to the laudable object of the social legislation to protect the interest of consumers, liberal and purposive interpretation has to be placed on the scheme of the Act avoiding hyper technical approach. At the same time, fair procedure is hall mark of every legal proceeding and an affected party is entitled to be put to notice of the claim with such affected party has to meet.”

8.     The Complainant reiterated that the policy had been approved by the Opposite Party based on medical tests including clinical examination of blood, which included the tests for blood, sugar, diabetes, urine and kidney function test which did not detect the pre-existence of any disease. Therefore, the action of the Opposite Party in repudiating the claim was arbitrary and amounted to unfair trade practices and deficiency in service, having accepted the premium on behalf of the DLA.

9.     The Opposite Party, while reiterating its contentions made in the reply, essentially relied upon the Judgments of the Hon’ble Supreme Court in: (a) Reliance Life Insurance Co. Ltd. & Anr. Vs. Rekhaben Nareshbhai Rathod CA No.4261 of 2019 decided on 24.04.2019; and (b) Satwant Kaur Sandhu vs. New India Assurance Co. Ltd. CA No.2776 of 2002 decided on 10-07-2009. It was argued that the contract of insurance is based on the principle of uberrima fides and that when information on a specific aspect is asked for in the proposal form, the assured was under a solemn obligation to make a true and full disclosure of the information which is within his knowledge, and that it is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. It is also argued, on the basis of Rekhaben (supra), that as held in VK Srinivasa Setty vs. M/s. Premier Life and General Insurance Co. Ltd. AIR 1958 Mys 53 decided on 09.10.1957.

“…….a person who affixes his signature to a proposal which contains a statement which is not true, cannot ordinarily escape from the consequence arising therefrom by pleading that he chose to sign the proposal containing such statement without either reading or understanding it. That is because, in filing up the proposal form, the agent normally, ceases to act as agent of the insurer but becomes the agent of the insured and no agent can be assumed to have authority from the insurer to write the answers in the proposal form.

If an agent nevertheless does that, he becomes merely the amanuensis of the insured, and his knowledge of the untruth or inaccuracy of any statement contained in the form of proposal ideas does not become the knowledge of the insurer.”

    (Emphasis added)

10.   From an analysis of the submissions of both the parties, it is apparent that the Opposite Party approved an insurance policy in the name of the DLA, based on his medical examination and declaration in the proposal form. Admittedly, the proposal form in the Column Nos. 5 & 6 pertaining to “Any Kidney, Liver, Bladder disorder or prostate disease, blood/protein in Urine and Diabetes, Thyroid or any other gland related disorders”, was answered in the negative. The argument of the Complainant that the fact of the pre-existence of Diabetes Mellitus II had been disclosed to the agent of the Opposite Party at the time of taking of the policy, is not supported by any evidence of this fact that is brought on record by the Complainant. As held by the Hon’ble Supreme Court in Rekhaben (supra), the said agent who admittedly filled up the form on behalf of the DLA had ceased to be the agent of the Opposite Party and was, in fact, acting as the agent of the Complainant at the time of filing up of the form. Hence, the argument that the insurance agent who filled up the form was in the knowledge of the pre-existence of his diabetes and failed to disclose the same should not result in the DLA or his nominee being put to disadvantage cannot be sustained.

11.   The fact of the DLA suffering from the Diabetes Mellitus II is admitted by the Complainant. The non-disclosure of the pre-existence of this disease, in the proposal form is, therefore, violative of the principle of uberrima fides on which a contract of insurance pertaining to life insurance rests. In view of the above, the conclusion that the insurance policy was obtained through the suppression of material facts is inescapable. The contention of the Opposite Party that had this fact been in its knowledge, it may have considered taking a different view on the insurance policy itself is, therefore, valid.

12.   For the aforesaid reasons, the complaint is liable to fail. Accordingly, the complaint is disallowed. In view of the facts of the case, parties shall bear their own costs.