Haryana

StateCommission

A/198/2017

AVIVA LIFE INSURANCE CO. - Complainant(s)

Versus

RAKESH - Opp.Party(s)

NITESH SINGHI

05 Sep 2018

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

         

                                       

First Appeal No  :       198 of 2017

Date of Institution:      22.02.2017

Date of Decision :      05.09.2018

 

1.      Aviva Life Insurance Company Limited, Aviva Tower, Sector Road, Opposite DLF Gold Course, DLF, Phase V, Sector 43, Gurgaon-122003.

 

2.      Aviva Life Insurance Company Limited, Delhi Road, Hisar through its Branch Manager.

                             Appellants-Opposite Parties

 

Versus

Rakesh son of Sh. Dharampal, resident of Village Ghotra Patta, Tehsil Bhadra, District Hamumangarh.

Respondent-Complainant

 

 

 

CORAM:             Hon’ble Mr. Justice Nawab Singh, President.

                             Shri Balbir Singh, Judicial Member.

                                                                                                                            

Argued by:          Shri Nitesh Singhi, Advocate for appellants.

                             Shri J.S. Thind, Advocate for respondent-complainant.

 

                                                   O R D E R

 

 

 

NAWAB SINGH J.(ORAL)

 

The instant appeal filed by Aviva Life Insurance Company Limited and its functionary-opposite parties (for short, ‘Insurance Company’) calls in question the correctness of the order dated September 26^th, 2016 passed by District Consumer Disputes Redressal Forum, Hisar (for short ‘the District Forum’) whereby complaint filed by Rakesh-complainant was allowed. The Insurance Company was directed to pay Rs.17,19,000/-, that is, sum assured alongwith interest at the rate of 9% per annum from the date of filing the complaint, that is, July 25^th, 2013 till realization to the complainant on account of death of his mother.

2.      Sajna-deceased (hereinafter referred to as ‘Person Insured’)-mother of complainant, purchased life insurance policy from the Insurance Company.  The sum assured was Rs.17,19,000/-. The policy term was 20 years.  The date of commencement was August 31^st, 2012.  The maturity date was August 31^st, 2032.  The Person Insured died on November 14^th, 2012 due to heart attack. The claim submitted by the complainant was repudiated by the Insurance Company on the ground that prior to the purchase of the insurance policy, the person insured was a known case of parotid malignancy. Aggrieved thereof, the complainant filed complaint under Section 12 of the Consumer Protection Act, 1986. 

3.      The question for consideration before this Commission as to whether the Insurance Company was justified in repudiating complainants’ claim or not?

4.      The Person Insured purchased insurance policy from Insurance Company. She died during the subsistence of the insurance policy. Prior to the purchase of the Insurance Policy, the Person Insured was a known case of parotid malignancy as is evident from the report dated July 22^nd, 2012 (Annexure A-5).  The person insured was taking treatment from S.M.S. Medical College and Hospital, Jaipur. Since, she had pre-existing disease, as such, the Insurance Company was not liable to pay insured amount.

5.      The rule of non-disclosure of material facts vitiating a policy still holds the field.  The bargaining position of the parties in a contract of insurance is unequal. The insured knows all the facts, the insurer is unaware of anything which may be material to the risk. Very often, it is the insured who is the sole person who has this knowledge.  The insurer may not even have the means to find out facts which would materially affect the risk.  The law, therefore, enjoins on the insured an absolute duty to disclose correctly all material facts which are within his personal knowledge or which he ought to have known had he made reasonable inquiries.  A contract of insurance, therefore, can be repudiated for non-disclosure of “material facts.” 

6.      In Mithoo Lal V. Life Insurance Corporation of India , AIR 1962 Supreme Court 814, Hon’ble Apex Court held as under:-

“Contract of life insurance entered into as a result of fraudulent suppression of material facts by policy holder- Policy is vitiated and person holding assignment of policy cannot claim benefit of contract………….”

7.      Hon’ble Apex Court in Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. – (2000) 2 SCC 734 held as under:-

“It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and the good faith forbids either party from non-disclosure of the facts which the parties know.  ………..”

8.      In Revision Petition No.967 of 2008, Life Insurance Corporation of India versus Smt. Neelam Sharma, decided on September 30^th, 2014, Hon’ble National Commission observed as under:-

“8.       In Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, it has been observed by the Supreme Court that the expression “material fact” is to be understood in general terms to mean as any fact which would influence the judgment of a prudent Insurer, in deciding whether to accept the risk or not.  If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form.  Any inaccurate answer will entitle the Insurer to repudiate their liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance, which is based on the principle of utmost faith –uberrima fides.  Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. (See: United India Insurance Co. Ltd. Vs. M.K.J. Corporation [(1996) 6 SCC 428].  It has also been emphasized that it is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known.”

“11.     Having given our anxious consideration to the material on record, we are of the opinion that the answers given by the Insured in the proposal form were untrue to his knowledge. There was clear suppression of “material facts” in regard to the health of the Insured.  It was not for the Insured to determine whether the information sought for in the aforesaid questionnaire was material for the purpose of the two policies…..”  

9.            On the aforesaid facts and law enunciated above, it stands established to the hilt that the Person Insured was suffering from pituitary tumor with left parotid tumors with acute onset loss consciousness, prior to the purchase of the insurance policy and she suppressed this fact. Thus, the District Forum fell in error in allowing the complaint and as such the impugned order cannot be allowed to sustain. The appeal is accepted, the impugned order is set aside and the complaint is dismissed.

10.    The statutory amount of Rs.25,000/- deposited at the time of filing the appeal be refunded to the appellants against proper receipt and identification in accordance with rules, after the expiry of period of appeal/revision, if any.

 

Announced 05.09.2018

(Balbir Singh) Judicial Member

(Nawab Singh) President

 UK