Saira Banu V/S LIC of India - Consumer Court Case

Kerala

StateCommission

A/09/315

LIC of India - Complainant(s)

Versus

Saira Banu - Opp.Party(s)

G.S.Kalkura

08 Mar 2010

ORDER

First Appeal No. A/09/315

(Arisen out of Order Dated 28/02/2009 in Case No. CC 106/07 of District Ernakulam)

1. LIC of IndiaKerala		...........Appellant(s)
Versus
1. Saira BanuKerala	...........Respondent(s)

BEFORE :

HONORABLE SRI.M.V.VISWANATHAN PRESIDING MEMBER

PRESENT :

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ORDER

KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACAD, THIRUVANANTHAPURAM

APPEAL. 315/09

JUDGMENT DATED: 8.3.2010

PRESENT

SMT.VALSALA SARANGADHARAN : MEMBER

SRI.M.V.VISWANATHAN : JUDICIAL MEMBER

Life Insurance Corporation of India, : APPELLANT

Rep.by its Divisional Manager,

Divisional Office, Jeevan Prakash,

M.G.Road, P.B.No.1133,

Ernakulam, Kochi-11.

(By Adv.G.S.Kalkura)

Vs.

1. Mrs.Saira Banu.P.K., : RESPONDENTS

Widow of T.M.Abdul Salam,

Theenattu House, Koonamthai,

Edappally, Ernakulam,

Cochin – 24.

2. Mohammed Farizad.T.A.,(Minor),

Aged 12 years S/o T.M.Abdul Salam,

-do-do-

Rep. by his mother and next friend Mrs. Saira Banu.P.K.

3. Baby Fabina.T.A.(Minor),

Aged 11 years, D/o T.M.Abdul Salam,

-do-do-

Rep. by his mother and next friend Mrs. Saira Banu.P.K.

(By Adv.Alias.M.Cherian)

JUDGMENT

SRI.M.V.VISWANATHAN : JUDICIAL MEMBER

Appellant herein is the opposite party and respondents 1 to 3 are the complainants 1 to 3 in CC.106/07 on the file of CDRF, Ernakulam. The complaint therein was filed alleging deficiency in service on the part of the opposite party/LIC of India in repudiating the insurance claim putforward by the 1^st complainant as nominee of the life assured T.M.Abdul Salam whose life was assured by the policy No.774864202 issued by the opposite party LIC of India. The opposite party entered appearance before the Forum below and justified the action of the opposite party/LIC of India in repudiating the insurance claim on the ground of suppression of material facts while submitting the proposal for the policy by the proposer, T.M.Abdul Salam. It was contended that the life assured, T.M.Abdul Salam obtained life insurance policy by suppressing material fats regarding his health condition and habits. Thus, the opposite party prayed for dismissal of the complaint in CC 106/07.

2. Before the Forum below 1^st complainant was examined as PW1 and a witness on their side as PW2. The Asst. Administrative Officer of the opposite party/LIC of India was examined as DW1. Exts.A1 to A16 documents were marked on the side of the complainants and B1 to B12 documents on the side of the opposite party. On an appreciation of the evidence on record, the Forum below allowed the complaint in CC.106/07 directing the opposite party to pay the insured amount of Rs.3,00,000/- to the complaints with interest at the rate of 12% per annum from the date of death of the life assured and compensation of Rs.50,000/- for mental agony suffered by the complainants in repudiating their insurance claim and cost of Rs.1000/-. Aggrieved by the impugned order dated 28.2.09 passed by the CDRF, Ernakulam in CC.106/07, the present appeal is filed.

3. We heard both sides. The learned counsel for the appellant/ opposite party submitted his arguments based on the grounds urged in the memorandum of the present appeal. He vehemently argued for the position that the life assured, T.M.Abdul Salam suppressed material facts while submitting the proposal form for getting the life insurance policy. He relied on B1, B6 and B8 documents issued from Idukki District Co-operative Hospital, Thodupuzha and submitted that the life assured T.M.Abdul Salam had undergone treatment for alcohol dependence syndrome from 20.5.02 to 7.10.02 and that fact was deliberately suppressed by the life assured while submitting the proposal for the life insurance policy. He also relied on B2 proposal form submitted by the life assured for taking the policy which is the subject matter of the complaint in CC.106/07. He pointed out the answers given by the life assured to the questions 11(a),(b) and (h) and submitted that the evidence on record would show that the said answers were given by suppressing the material facts and truth. Thus, the appellant justified its action in repudiating the insurance claim. The appellant challenged the correctness of the impugned order dated 28.2.09 passed by CDRF, Ernakulam in CC.106/07, by relying on the decisions rendered by the Hon’ble Supreme Court and the National Commission. Thus the appellant prayed for setting aside the impugned order passed by the Forum below. On the other hand, the leaned counsel for the respondents/complainants supported the impugned order passed by the Forum below and argued for the position that there was no suppression of material facts warranting repudiation of the insurance claim made by the complainants. He also relied on the testimony of PW2, the doctor who treated the life assured for alcohol dependence syndrome and issued A11 certificate dated 30.1.06. Thus, the respondents prayed for dismissal of the present appeal.

4. The points that arise for consideration are:-

1) Whether there was any deficiency in service on the part of the appellant/opposite party LIC of India in repudiating the insurance claim putforward by the 1^st complainant, the nominee of the life insured, T.M.Abdul Salam?

2) Whether there was any suppression of material facts on the part of the life assured T.M.Abdul Salam while submitting B2 propsal dated 30.3.2005?

3) Is there any legally sustainable ground to interefere with the impugned order dated 28.2.09 passed by CDRF, Ernakulam in CC.106/07?

5. Points 1 to 3:-

The fact that the life assured T.M.Abdul Salam had taken life insurance policy issued by the appellant/opposite party LIC of India is not in dispute. Ext.A9 and B3 are copies of the life insurance policy issued by the appellant/opposite party in favour of the life assured T.M.Abdul Salam. The 1^st complainant is the wife and complainants 2 and 3 are the minor children of life assured T.M.Abdul Salam. Admittedly the said policy insuring the life of T.M.Abdul Salam was issued with effect from 19.2.05. The life assured had also paid the premium for the said policy and the policy commenced from 19.2.05. The 1^st complainant Saira Bhanu.P.K. was shown as the nominee of the life assured. Admittedly the aforesaid policy was issued by accepting the proposal dated 30.3.05 submitted by the life assured for getting insurance policy. Ext.A10 and B2 are the copies of the proposal form submitted by the life assured. It is accepting the above said proposal submitted by the life assured the original of A9 policy was issued. There is no dispute that the life assured T.M.Abdul Salam died on 27.4.05. Thus, the death of the life assured occurred within a short span 2 months and 8 days from the commencement of the policy. Ext.A14 is copy of death certificate issued by Registrar of births and deaths. A14 death certificate would show that the life assured T.M.Abdul Salam died on 27.4.05. It is the case of the complainants that the life assured T.M.Abdul Salam had a natural death. There is also no dispute regarding the natural death of the life assured. But one thing is crystal clear that the life assured had an untimely death as he died at the age of 39.

6. After the death of the life assured the 1^st complainant being the nominee of the life assured submitted the insurance claim. She also submitted the claim statement. Ext.A15 is copy of the claim statement submitted by the 1^st complainant, Saira Bhanu.P.K.. But the said claim for the insurance amount of Rs.3,00,000/- was repudiated by the appellant/opposite party Insurance Co. vide repudiation letter dated 20.3.06. Ext.B1 is copy of the repudiation letter issued by the appellant/opposite party LIC of India to the 1^st complainant repudiating her claim for the sum assured under the said policy. The 1^st complainant preferred a representation to the Zonal office claim review committee and the said review committee upheld the repudiation made by the Divisional office of LIC of India. Ext.B12 is copy of the letter issued by the Senior Divisional Manager informing the 1^st complainant about the decision taken by the zonal office claim review committee upholding the repudiation. It is there after, the complaint in CC.106/07 was filed by the complainants.

7. The reason or ground stated for repudiation of the insurance claim is that the life assured who had submitted the proposal for the insurance policy suppressed material facts and that he gave incorrect answers to the questions put to him in the proposal form as questions 11(a), (b),(c), (h) and (i). On the said ground, the claim was repudiated.

8. It is well admitted that B2 is the proposal submitted by the life assured T.M.Abdual Salam in the prescribed proposal form. The particulars furnished by the life assured to the questions put to him in the proposal form are as follows:-

11(a) During the last 5 years did you consult a medical practitioner for any ailment requiring treatment for more than a week? The answer to the said question was in the negative. He answered as ‘No’.

11(b) Have you ever been admitted to any hospital or nursing home for general check up, observation, treatment or operation? To the said question the answer was ‘No’.

11(c ) Have you remained absent from place of work on grounds of health during the last 5 years? To the said question the answer was ‘No’.

11(h) Do you use or have you ever used alcoholic drinks? The answer to the said question was also ‘No’.

11(i) What has been your usual state of health? The answer was ‘good’.

9. The definite case of the appellant/opposite party LIC of India is that the aforesaid answers given to question Nos. 11(a), (b),(c),(h) and (i) were wrong, incorrect answers and that by giving such answers the life assured suppressed material facts regarding his health condition and also with respect to his habits. According to the appellant/opposite party the aforesaid answers would amount to suppression of material facts which were known to the proposer as false and incorrect answers.

10. The 1^st complainant was examined as PW1 she deposed before the Forum below that her husband, the life assured T.M.Abdul Salam was in the habit of consuming alcohol and he had undergone de-addiction treatment in October 1995 at SH Hospital, Thodupuzha and that the life assured T.M.Abdul Salam was in that hospital for about 2 months as inpatient. It is also deposed that the life assured T.M.Abdul Salam had undergone
de-addiction treatment at Co-operative hospital, Idukki from May, 2002 to October 2002. She had also admitted the fact that even after the aforesaid de-addiction treatment in 2002, the life assured consumed alcohol occasionally. The oral evidence tendered by the 1^st complainant before the Forum below would make it abundantly clear that the aforesaid answers given to question Nos.11(a), 11(b), 11(c) 11(h) and 11(i) were incorrect and wrong answers. This would in turn give an indication that the life assured submitted the B2 proposal by suppressing the true facts.

11. On the side of the complainants Dr.Sudarsan attached to District Co-operative Hospital, Idukki was examined as PW2. In his chief examination he deposed that an individual by name Abdul Salam was treated for stopping his consumption of alcohol. PW2 further deposed that consumption of alcohol is not an illness and that the person who consumes alcohol can not be treated as a patient. But PW2 in his chief examination has further deposed that T.M.Abdul Salam was treated for alcohol dependence syndrome. PW2 has also admitted that A11 certificate dated 30.1.2006 was issued by him. He also admitted that B1 certificate was also issued by him. Ext.B1 is the certificate of hospital treatment issued by PW2 Dr.Sudarsan to the appellant/opposite party LIC of India in the prescribed printed form. In B1 certificate it is stated that T.M.Abdul Salam policy No.774864202 was treated as an inpatient from 20.5.02 to 7.10.02 and the said patient was admitted in the hospital for alcohol dependence syndrome. A11 certificate dated 30.1.2006 issued by PW2 Dr.Sudarsan would also make it clear that the said patient by name T.M. Abdul Salam was treated as an inpatient from 20.5.02 to 7.10.02. It is also stated in A11 certificate that at the time of discharge from the hospital the patient was healthy and fit to join duty. Thus, B1 and A11 certificates issued by PW2 doctor attached District Co-operative Hospital Idukki would make it clear that the life assured T.M.Abdul Salam was treated for alcohol dependence syndrome and he was trteated as an inpatient from 20.5.02 to 7.10.02.

12. PW2 doctor Sudarsan in his cross examination by the learned counsel for the opposite party/LIC of India has admitted that the internal organs like liver, heart, pancreas etc can be affected in some cases of drunkenness “

In his re examination he deposed that the internal organs of T.M.Abdul Salam were not considerably affected. “

The aforesaid answer would also give an indication that there was something wrong with the internal organs of the life assured. It would also show that PW2 was not sure and certain about the health condition of the internal organs of the patient T.M.Abdul Salam.

13. PW2, Dr.Sudarsan in his cross examination has categorically admitted that the life assured T.M.Abdul Salam was a patient and he had undergone treatment for alcohol dependence syndrome for about 5 months from 20.5.02 to 7.10.02. He further deposed that usually deaddiction treatment would last for 3 weeks to 3 months and in rare cases it may last for 6 months to 1 year. It is also deposed by PW2 that the duration depends upon the withdrawal symptom and also depends upon the time required for repairing the internal organs of the patient. This answer given by PW2 would give an indication that the internal organs of the life assured T.M.Abdul Salam were affected and that is why the treatment continued for about 5 months. Thus, PW2 has admitted the fact that consumption of alcohol is not a disease or ailment but alcohol dependence syndrome is a disease or ailment and it requires medical treatment and that is why the life assured T.M.Abdul Salam was treated as an inpatient for alcohol dependence syndrome for a period of 5 months. The evidence of PW2 and the certificates issued by him would make it more than clear that the life assured was an alcoholic and he was in need of treatment and he was treated for alcohol dependence syndrome. The other medical records produced from the district Co-operative Hospital, Idukki would also make it clear that the life assured T.M.Abdul Salam had undergone treatment for alcohol dependence syndrome. The evidence of PW1 would show that the life assured had also undergone treatment during the year 1995 for the very same ailment of alcohol dependence syndrome. The evidence of PW1 would also give an indication that even after the said treatment for alcohol dependence syndrome, the life assured T.M.Abdul Salam continued his habit of consuming alcohol. Thus, the evidence available on record would make the position crystal clear that the life assured T.M.Abdul Salam was in the habit of consuming alcohol and that he had undergone treatment for alcoholism. But those facts regarding his health condition and also regarding his habit of consuming alcohol were not disclosed in proposal submitted by the proposer for the life assurance. The circumstance would also make it clear that the life assured deliberately concealed those facts while submitting the proposal. It would also show that the life assured willingly and deliberately gave false or incorrect answers to the questions put to him in the proposal form. So, the case of the appellant/opposite party LIC of India that the life assured suppressed material facts and that the life assured gave incorrect statements or answers to the questions while submitting the proposal form for the life insurance policy is to be upheld.

14. The next aspect for consideration is as to whether false and incorrect statements or answers given by the life assured while submitting the proposal for the insurance policy can be treated as material facts. It is to be noted that it is for the insurance Co./insurer to decide what and which facts it requires for their purpose for acceptance of the proposal. It is for the insurer to decide on analysis of the answers given by the proposer whether the proposal is to be accepted or rejected. It is for arriving at such a conclusion the questions are formulated in the proposal form and that the proposer is expected to answer those questions truly and honestly without suppressing any facts. In this circumstance it can only be inferred that the questions

formulated in the proposal form as questionnaires are only the necessary and required questions for collecting the material facts from the proposer. In such a situation, the proposer is expected to give correct answers to those questions without suppressing any fact. If any answer given to the said questions is false or that the proposer suppressed any fact, it would amount to suppression of material facts. Those incorrect or false statements or suppression of facts are sufficient for the insurer to rescind the contract.

15. The appellant /opposite party LIC of India relied on B10 copy of relevant page of the underwriting manual issued by LIC of India. B10 underwriting manual as amended upto September 2003 would show that in case of a proposer who is in the habit of consumption of alcohol the acceptance of the policy has to be done by the zonal office or the central office and in that case the LIC of India can also obtain the result of medical investigations like SGOT,SGPT,GGTP and also the report of a physician. This B10 underwriting manual would give an indication that the questionnaires formulated in the proposal form regarding the habit of the proposer like consumption of alcohol has got very material importance in taking the decision as to whether proposal is to be accepted or rejected. In this circumstance it can be concluded that the said questions regarding the health condition and also the habit of the proposer were very important. Those questions are to be considered as material facts. But unfortunately the Forum below failed to consider the importance of those questions. The Forum below came to the wrong conclusion that those questions are not related to material facts. The aforesaid finding and conclusion of the Forum below are liable to be set aside.

16. The respondents/complainants have contended that there was no suppression of material facts by the proposer T.M.Abdul Salam and that all the details were given to the LIC agent and that LIC agent filled up the proposal form and answered those questions in negative form. Thus, the respondents/complainants would contend that there is no suppression of material facts on the part of the proposer namely life assured T.M.Abdul Salam; but those negative answers were given by the LIC agent. It is to be noted that the LIC agent was not expected to give any false statement suppressing material facts. He has not been specifically authorized to fill up the proposal form. Even if the LIC agent assisted the proposer in filling up the proposal form, no liability can be fastened upon the LIC of India. The LIC agent is not expected to accept any risk for or on behalf of the life insurance corporation of India or to bind the LIC in any extent. It is the settled position that any assistance rendered to the proposer by the LIC agent can not be treated as the assistance rendered by the LIC agent for and on behalf of the LIC of India. If any such assistance has been rendered by the LIC agent in filling up the proposal form, then the LIC agent will be doing such assistance not as an agent of the LIC of India but only as an agent of the proposer. The appellant/opposite party LIC of India much relied on the agent Rules 1972 published in gazette of India 1^st May 1972 and canvassed for the position that the LIC agent has not been authorized to do any such act and that even if any such act is done by the agent, the aforesaid actions on the part of the LIC agent cannot considered as an action of the LIC of India. But those actions only be treated as the actions of the agent of the proposer/life assured. The learned counsel for the appellant/opposite party much relied on clause 8(4) of the said Rules. It reads as follows:-

8(4): Nothing contained in this regulations shall be deemed to confer any authority or an agent to collect any moneys or to accept any risk for or on behalf of the Corporation or to bind the Corporation in any manner whatsoever.

Provided that an agent may be authorized by the Corporation to collect and remit renewal premiums under policies on such conditions as may be specified. The aforesaid clause 8(4) of the agents Rules (regulations) would make it clear that the action of the LIC agent in filling up the proposal form cannot be treated as an action of the LIC agent for or on behalf of the Corporation and the said action will not in any way bind the appellant/LIC of India in any manner whatsoever. In such a situation even if the LIC agent rendered any assistance to the proposer in filling up the proposal form, the aforesaid action will not in any way bind the appellant/LIC of India; but the said action can only be treated as the action of the agent on behalf of the propser. In the said circumstance the aforesaid LIC agent acted only as an agent of the proposer/life assured.

17. Another important aspect to be noted at this juncture is the declaration given by the proposer. Admittedly the proposer T.M.Abdul Salam affixed his signature to the said declaration. The proposer T.M.Abdul Salam was an educated man. PW1, the 1^st complainant has admitted that her husband T.M.Abdul Salam had studied upto Pre-degree and he was engaged in business activities. PW1 has no case that the proposer T.M.Abdul Salam signed the declaration in the proposal form without understanding the contents of the same. Therefore, it can very safely be concluded that the answers to those questions were given by fully knowing the same and that the said answers were given by the proposer by suppressing the material facts. So, it can very safely be conclude that B2 proposal was submitted by the proposer T.M.Abdul Salam with his full knowledge and volition and nobody can be found fault with in giving false and incorrect statements in the form of answers to the questionnaire in the proposal form.

18. The Forum below passed the impugned order based on some presumptions and assumptions. But those presumptions and assumptions have no factual support. On the other hand, those presumptions and assumptions were drawn based on some surmises and conjuctors. The Forum below relied on the dictionary meaning of the word syndrome and came to the conclusion that alcohol dependence syndrome cannot be classified as a disease or ailment. It is true that the syndrome is a set of physical conditions which would show that a particular person has a particular disease or medical problem. The said meaning would make it clear that syndrome denotes existence of some disease or medial problem. The Oxford Concise dictionary has given the meaning of the word syndrome as a group of symptoms of diseases. The aforesaid descriptions given for the word syndrome would make it more clear that the word syndrome is related to disease. Nobody can say AIDS is not a disease. AIDS means acquired immuno deficiency syndrome.

19. The Forum below has not properly appreciated the evidence of PW2 Dr.Sudarsan and B1 and A11 certificates issued by him. A close scrutiny of the testimony of PW2 with that of B1 and A11 certificates would make the position more clear that alcohol dependence syndrome is a disease and the same can be cured by medical treatment. It is admitted by PW2 that the life assured T.M.Abdul Salam was treated for the disease known as alcohol dependence syndrome and for that disease he was treated as inpatient for about 5 months. By ignoring the aforesaid materials the Forum below presumed that the proposer T.M.Abdul Salam had no intention to suppress such facts regarding his habit and regarding his treatment for the said disease of alcohol dependence syndrome. It is to be noted hat PW1 and PW2 had no such case that the life assured T.M.Abdul Salam never considered his disease of alcohol dependence syndrome as not an ailment or disease and that the proposer had no intention to suppress those facts while submitting the proposal form. But the Forum below presumed those things without any material to support the said finding and conclusion. It may be correct to say that the aforesaid presumptions and assumptions were drawn by the Forum below on account of sympathy for the widow and the minor children of the life assured. But the Forum below has conveniently forgotten that sympathy or compassion cannot outweigh the decision of law. So, the finding of the Forum below that there was no suppression of material facts by the life assured cannot be upheld.

20. The Forum below has also relied on Section 45 of the Insurance Act; but the Forum below failed to note the fact that the provisions of Section 45 of the Insurance Act has no application in the present case on hand. Admittedly, the insurance policy in the present case commenced on 19.2.05; the life assured T.M.Abdul Salam died on 27.4.05; the insurance claim was repudiated by the LIC of India on 20.3.06. The insurance claim was repudiated within 2 years of the commencement of the insurance policy. There can be no doubt that the provisions of the Section 45 of the insurance act can be made applicable only after the lapse of 2 years. Thus, it can very safely be concluded that the provisions of Section 45 of the Insurance Act have no application in the present case. But unfortunately, the Forum below relied on the provisions of Section 45 of the Insurance Act. It has relied on the decision rendered by the Hon’ble Supreme Court in Mithoolal Nayak Vs LIC of India reported in AIR 1962 SC 814. The aforesaid decision was based on the 2^nd part of Section 45 of the Insurance Act. It is true that the burden is upon the insurer to establish the facts regarding suppression of fact and that the fact suppressed was material and that the suppression was effected to defraud the other part. But those ingredients have to be established only in the case of application of the provisions of Section 45 of the insurance act. But in the present case on hand, the provisions Section 45 of the Insurance Act have no application. Thus, in that respect also the Forum below has gone wrong.

21. The Forum below compared suppression of the material fact with that of an ordinary suppression of fact in a marriage proposal. It is to be noted that even in the case of marriage proposal material and important facts should be disclosed and there cannot be suppression of such facts. Because of suppression of those facts now a days divorce cases are escalating in alarming situation. The Forum below cannot be justified in supporting the suppression of material facts by the proposer while submitting B2 proposal. Infact the Forum below ought to have agreed to the decision taken by the Chairman of the Review Committee. The impugned order passed by the Forum below directing the appellant/opposite party LIC of India to pay the insured amount of Rs.3,00,000/- to the complainants cannot be upheld. The aforesaid order was passed without appreciating the facts, circumstances and evidence of the case in the correct perspective. The Forum below has also failed in evaluating the factual position and also the position of law. The impugned order dated 28.2.09 passed by CDRF, Ernakulam in CC.106/07 warrants interference. Hence the impugned order is set aside. These points are answered accordingly.

In the result the appeal is allowed. The impugned order dated 28.2.09 passed by CDRF, Ernakulam in CC.106/07 is set aside. The complaint in CC.106/07 is dismissed. The parties are directed to suffer their respective costs through out.

SRI.M.V.VISWANATHAN :JUDICIAL MEMBER

SMT.VALSALA SARANGADHARAN :MEMBER

PRONOUNCED :

Dated : 08 March 2010

[HONORABLE SRI.M.V.VISWANATHAN]PRESIDING MEMBER