Haryana

StateCommission

A/1130/2016

M/S KOTAK MAHINDRA LIFE INSURANCE - Complainant(s)

Versus

SMT LALITA - Opp.Party(s)

K.S.CHEEMA

09 Nov 2017

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

         

                                       

First Appeal No  :      1130 of 2016

Date of Institution:      28.11.2016

Date of Decision :      09.11.2017

 

1.      M/s Kotak Mahindra Old Mutual Life Insurance Company Limited, 1^st Floor, Garg Complex, Adjacent to Hotel Golf, G.T. Road, Panipat through its Branch Manager.

2.      M/s Kotak Mahindra Old Mutual Life Insurance Company Limited, 7^th Floor, Kotak Infiniti Building No.21, Infinity Park Office, W.E. Highway, General A.K. Vaidya Marg, Malad Mumbai-400097, India through its Manager.

                             Appellants-Opposite Parties

 

Versus

Smt. Lalita wife of late Sh. Ramesh, residentof House No.792, Near Panchayat Bhawan, Village and Post Office Madlauda Sub Tehsil Madlauda, District Panipat-Haryana.

Respondent-Complainant

 

 

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

                             Shri Balbir Singh, Judicial Member.

                             Shri Diwan Singh Chauhan, Member.

 

                                                                                                                   

Argued by:          Shri Hitender Kansal, Advocate for appellants.

                             Shri Sawan Choudhary, Advocate for respondent-complainant.

                            

                                                   O R D E R

 

 

NAWAB SINGH J.(ORAL)

 

By filing this appeal, Kotak Mahindra Old Mutual Life Insurance Company Limited and its functionary-opposite parties (for short, ‘Insurance Company’) have challenged the order dated October 26^th, 2016 passed by District Consumer Disputes Redressal Forum, Panipat (for short ‘the District Forum’) whereby complaint filed by Lalita-complainant was allowed. The Insurance Company was directed to pay Rs.4,90,000/- (sum assured); Rs.4000/- compensation and Rs.2200/- litigation expenses to the complainant on account of death of her husband Ramesh.

2.      Ramesh-since deceased (for short, ‘life assured’), husband of the complainant purchased Kotak Endowment Plan Policy from the Insurance Company.  The date of commencement of the policy was December 24^th, 2012.  The date of maturity was December 2032.  The term of the policy was 20 years.  The life assured died on August 28^th, 2013.  The complainant filed claim with the Insurance Company but the same repudiated on the ground that the life assured was a patient of liver cirrhosis. Aggrieved of the repudiation, the complainant filed complaint under Section 12 of the Consumer Protection Act, 1986 before the District Forum.

3.      In appeal before this Commission, learned counsel for the Insurance Company has urged that the life assured purchased the policy on December 24^th, 2012 and he was suffering from chronic liver disease prior to the purchase of the insurance policy as per record (Annexure 1) of Bhagwan Mahavir Hospital, Delhi and the report (Annexure A-2) of Dr. C.H. Asrani.

4.      Per contra, learned counsel for the complainant has urged that the life assured was admitted in Bhagwan Mahavir Hospital, Delhi on December 05^th, 2012 and was discharged on December 12^th, 2012 but that was on account of fever and not for the disease of liver cirrhosis. 

5.      Perusal of the record of Bhagwan Mahavir Hospital, Delhi (Annexure -1) shows that the life assured was admitted on December 05^th, 2012 and was discharged on December 12^th, 2012.  The expenses incurred by him was Rs.34,910/-.  The operative part of the report is reproduced as under:-

          “…..It appears in blood in about 6 weeks after infection and disappears by 3 months.  The presence of HBsAg is frequently associated with infectivity. HBsAG persistence for more than 6 months indicates a carrier state or chronic liver disease.”

6.      The report suggests that the life assured was hospitalized for eight days for liver related disease and was diagnosed to have cirrhosis of liver prior to the purchase of the insurance policy. 

7.      It is a well settled proposition of law that a contract of insurance is based on the principle of utmost good faith – uberrimae fidei, applicable to both the parties.  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.” 

8.      In Kapil Sharma Vs. Life Insurance Corporation of India, III (2013) CPJ 684 (NC), Hon’ble National Consumer Commission, New Delhi held as under:-

   “6. The contract of insurance is based on the doctrine of utmost good faith and life assured was under an obligation to disclose each and every aspect with respect to his health at the time of submitting proposal form. Insured had not disclosed fact of being alcoholic for last 15 to 20 years and suffering from Cirrhosis for last one year and had not disclosed fact of remaining on leave on medical grounds for about 3½ months and in such circumstances, on account of suppression of material facts regarding health, respondent has not committed any error in repudiating claim filed by the petitioner.”

 

9.      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………….”

10.    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.  ………..”

11.    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…..”  

12.    On the aforesaid facts and principles enunciated, it stands established to the hilt that Ramesh was suffering from cirrhosis of liver prior to the purchase of the policy and he suppressed this fact. The Insurance Company was not liable to indemnify the complainant.  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.

13.    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 09.11.2017

(Diwan Singh Chauhan) Member

(Balbir Singh) Judicial Member

(Nawab Singh) President

UK