Orissa

StateCommission

A/441/2017

Divisional Manager, Life Insurance Co. of India - Complainant(s)

Versus

Smt. Anjali Das - Opp.Party(s)

M/s. N.N. Mohapatra & Assoc.

22 Feb 2019

ORDER

STATE CONSUMER DISPUTES  REDRESSAL COMMISSION, ODISHA,  CUTTACK

FIRST APPEAL  NO. 441  OF 2017

(From an order dated 6.6.2017 passed by the District Forum, Balasore  in C.D. Case No. 144 of 2013)

         

1.       Divisional Manager,

Life Insurance Corporation of India,

Cuttack Division,

At/Po/Dist – Cuttack

 

2.       Branch Manager,

Life Insurance Corporation of India,

Jaleswar Branch,

At/Po – Jaleswar, Dist – Balasore, Odisha

                                                            …    Appellants

Vrs.

            Smt. Anjali Das, aged about 42 years,

W/o Arjun Chandra Das,

At – Basulidiga, Po – Dundakot,

Ps – Singla, Dist – Balasore

 

                                                                …  Respondent

                                                                 

        For the appellants    : M/s  N.N.Mohapatra and Associates

        For the respondent  : M/s B.P.Das and Associates

 

 

P R E S E N T:

                

                   THE HON’BLE SHRI JUSTICE B.K.PATEL, PRESIDENT

                                                                        AND                                                                  

                    DR. SMARITA MOHANTY, MEMBER

DATED THE 22nd FEBRUARY, 2019

O R D E R

DR. SMARITA MOHANTY, MEMBER

This appeal is directed against the order dated 6.6.2017 passed by learned District Forum, Balasore in C. D. Case no. 144 of 2013.

2.       Gist of the complaint is that complainant’s father the insured had obtained three policies from the O.Ps representing Life Insurance Corporation of India (LIC), vide policy nos. 586511035, 586520881 and 586523023 for sum assured of Rs.2.5 Lakhs, Rs.2 Lakhs and Rs.1 Lakh commencing from 21.11.2005, 28.3.2006 and 28.4.2006 respectively. The insured died on 9.1.2008. After the death of the insured complainant, being the nominee, claimed against the said policies by submitted all required documents to O.P. no.2 on 19.12.2008. But O.Ps., vide their letter dated 28.3.2011 repudiated her claim on the ground of “withholding material information regarding his age at the time of effecting the assurance.” The complainant, therefore, prayed for settlement of claim of the three policies along with compensation and cost of litigation.

3        Appellant no.1 appeared but did not file any written version. Appellant no.2 neither appeared nor filed any written version. Hence, appellants were set ex parte.

4.       After hearing from the side of complainant and on consideration the materials available on record learned District Forum passed the impugned order, the operative part of which reads as follows:-

 “The Consumer case is allowed on ex-parte against the O.Ps. with cost. The O.Ps. are directed to pay the Sum Assured of Rs.5,50,000/- of all three Policies basing on the age given in the Policy document, on production of the required documents by the Complainant along with compensation of Rs.2,000/- and Rs.1,000/- for litigation expenses within 60 days from receipt of this Order, failing which it will carry interest @ 9% per annum from the date of order till realisation. The Complainant is at liberty to realize the same from the O.Ps. as per Law.”

5.       LIC have filed the present appeal on the grounds that learned District Forum should not have allowed the case of complainant/ respondent solely on her pleadings without asking her to disprove the ground of repudiation and that the complaint case was allowed illegally on the ground that complainant’s claim remained unchallenged. It is contended that the decision of the National Commission relied by learned Forum in Para 4 of impugned order is not applicable to the facts and circumstances of this case.

6.       We heard Mr. N. N. Mohapatra, learned counsel for the appellants and Mr. B. P. Das, learned counsel for respondent at length. We have also perused the materials on record.

7.       Learned counsel for appellants argued that in the letter of repudiation of appellants issued as early as on 28.3.2011 it has been clearly mentioned that LIC are in possession of sufficient material evidence collected during enquiry to show that the deceased life assured had grossly understated his age by about 7 years and that evidence in the possession of LIC goes to show that the age was 69 years and not 62 years as stated in the proposal and that the life assured induced the LIC to allow the proposal on the basis of false statement. Therefore, it was argued,  in view of provision under Section 45 of the Insurance Act, since the policy was obtained by committing fraud, it was for the complainant to disprove the allegation made in the repudiation letter. Learned District Forum should not have based their findings simply on the basis of pleadings in the complaint and documents filed by the complainant.

8.       On the other hand learned counsel for respondent argued supporting the impugned order. It was strenuously contended that in view of unamended as well as amended provision u/s 45 of the Insurance Act, the letter of repudiation dated 28.3.2011 calling in question the policy is without jurisdiction and illegal.

9.       Admittedly, respondent’s father had obtained three policies from the LIC vide policy nos. 586511035, 586520881 and 586523023 for sum assured of Rs.2.5 Lakhs, Rs.2 Lakhs and Rs.1 Lakh commencing from 21.11.2005, 28.3.2006 and 28.4.2006 respectively.  Policy holder died on 9.1.2008. After his death respondent being the nominee claimed against the said policies. Appellants repudiated the claim on the plea that deceased had withheld material information regarding his age in the proposal form.

10.     The findings and conclusion of the learned District Forum in the impugned order at Paragraphs - 3 and 4 read as follows:-

“3. Basing on the above averments and the documents relied upon by the Complainant, it has been argued by the Advocate for the Complainant that without any bonafide reason, the O.P. – Insurance Company has repudiated the claim, for which the Complainant is unable to get the maturity values of three life Insurance Policies of her deceased father amounting to Rs.5,50,000/- with another amount of Rs.50,000/- towards compensation for mental harassment and Rs.20,000/- towards litigation expenses.

4. The O.Ps have not filed any written version as mentioned earlier. But, the repudiation letter available in the case record relied by the Complainant discloses that the age of the deceased was 62 years at the time of commencement of the Policy and the evidence in the possession of O.Ps shows that this was around 69 years of age, for which proposals under the above plans would not have been allowed if he had disclosed the correct age at the time of effecting the above insurance. So, the above mentioned policies are based on a false statement by the deceased regarding age. But, no document has been produced by the O.Ps regarding reason for repudiation of the claim. Out of three Policies, in the Policy No. 586511035, the Date of Birth of the deceased Policy holder has been mentioned as 04.07.1944, when the commencement of the Policy was 21.11.2005. In the rest two Policies, the Date of Birth has not been mentioned, but only age has been mentioned as 62 years. Basing on the Authority of the Hon’ble National Commission, New Delhi reported in the case of L.I.C. of India (Vrs.) Promila Malhotra in F.A.No.146 of 1995 decided on 04.03.2002, it has been argued that Insurance Policy cannot be called in question merely on the ground of misstatement after two years.”

11.     Thus, not only the learned District Forum has observed that in the absence of any pleading or evidence on behalf of the LIC, there is no scope for the District Forum to disallow the claim of the complainant but also in passing the impugned order the learned District Forum has relied upon a decision of the National Commission in L.I.C. of India (Vrs.) Promila Malhotra rendered on 04.03.2002 in F.A.No.146 of 1995.

12.     The copy of the above said decision filed on behalf of the complainant before us at Paragraph – 3 reads as follows:-

“In the present case more than two years had elapsed between the date of issue of policy and the date of death. Therefore, the policy not be called in question, by the insurer on the ground that the statement made in the proposal form or any report of the medical officers, or referee or friend of the insured or in any other document of the company leading to issue of policy, was inaccurate or false unless the insurer shows that such information was on a material matter and that it was fraudulently made by the policy-holder. The onus of proving all these facts lies with the insurer. Insurer has merely relied upon two certificates of hospitalisation of the deceased. One when he was hospitalised in Ganga Ram Hospital from 18.9.89 to 5.10.89 for treatment of hypertension and thereafter he was hospitalised in Batra Hospital in January, 1990 where he died. In the form, which was supplied by the LIC to the Hospital Authority, it is mentioned that patient had suffered from hypertension for 14 years. No attempt was made to summon any evidence from any of the hospitals or examine anyone who might have seen the history sheet recorded at the time of admission each of the hospital. The LIC authorities have also withheld the report of their doctor which is submitted at the time of issuing the policy. Both the hospitalisation were subsequent to the issue of policies. No attempt has been made to ascertain as to whether deceased was treated earlier. The majority has rightly come to the conclusion that the onus which was on the LIC has not been discharge by it on account of their failure to adduce proper evidence. Therefore, contention of 14 years history remained unproved. The least LIC was to do to serve interrogatory on widow requiring her to answer the interrogatory on the spot. In addition to that no doctor has been examined nor any affidavit of any medical expert has been produced to show that the deceased was suffering from kidney failure or of the high blood pressure which was of the nature which has indirect nexus with the kidney failure, the disease which caused his death. Considering all these facts and the facts that nothing prevented LIC for proving this case we are not inclined to disturb the majority view and in fact we do not agree with the President of the State Commission. His view that the detailed evidence cannot be led in summary proceedings, was not correct. There was absolutely nothing to prevent parties from leading evidence on affidavit and it was not proper on the part of the dissenting President to direct the complainant to seek remedy in civil court. In the light of above discussions, this appeal is dismissed.”

          Observations and conclusion of the National Commission were based upon the provision u/s 45 of the Insurance Act prior to substitution thereof with effect from 26.12.2014.

13.     In the present case, the date of commencement of the last of the three policies was 28.4.2006. The insured deceased father of the complainant died on 9.1.2008. The LIC called in question the policy by repudiation letter dated 28.3.2011 i.e., more than 4 years after the date of the commencement of the policy.

14.     Unamended provision of section 45 of the Insurance Act reads as follows:-

“45. Policy not to be called in question on ground of mis-statement after two years -   No policy of life insurance effected before the commencement of this Act  shall, after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the  ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other documents leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed  facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.”                        

15.     Thus, unamended section 45 of the Insurance Act  puts an embargo on the insurer to call in question policy after 2 years.

16.     The amended provision of section 45 of the Insurance Act which came into force with effect from 26.12.2014 reads as follows:-

“45. Policy not to be called in question on ground of mis-statement after three years – (1)   No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy of the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.

(2) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:

Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the ground and materials on which such decision is based.

Explanation I – For the purposes of this sub-section, the expression “fraud” means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy:-

(a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;

(b) the active concealment of a fact by the insured having knowledge or belief of the fact;

(c) any other act fitted to deceive; and

(d)any such act or omission as the law specially declares to be fraudulent.

Explanation II – Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.

(3) Notwithstanding anything contained in sub-section (2), no insurer shall repudiate a life insurance policy on the ground of fraud if the insured can prove that the mis-statement of or suppression of a material fact was true to the best of his knowledge and belief or that there was no deliberate intention to suppress the fact or that such mis-statement of or suppression of a material fact are within the knowledge of the insurer:

Provided that in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policy holder is not alive.

Explanation – A person who solicits and negotiates a contract of insurance shall be deemed for the purpose of the formation of the contract, to be the agent of the insurer.

(4) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:

Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision to repudiate the policy of life insurance is based:

Provided further that in case of repudiation of the policy on the ground of mis-statement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy till the date of repudiation shall be paid to the insured or the legal representatives or nominees or assignees of the insured within a period of ninety days from the date of such repudiation.

Explanation – For the purposes of this sub-section, the mis-statement of or suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.

(5) Nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.”

17.     Thus, in effect and essence, as is evident from the headings of the amended and unamended provision of section 45 embargo  of the period of 2 years was extended to 3 years in favour of the insurer by way of amendment. The amended provision is not retrospective in operation. It is well settled that in respect of a beneficial legislation an amendment detrimental to the interest of the beneficiary cannot be interpreted retrospective on the basis of an amendment. However, in the present case on the face of it, insurance has made an attempt to call in question the policy on the basis of repudiation letter dated 28.3.2011.

18.     The repudiation letter dated 28.3.2011 in its entirety reads as follows:-

“Smt Anjali Das

D/O Late Lachhaman Mohapatra

                        At – Basulidiha,

                        PO – Dundakote, Via – Jamsuli

Dist. Balasore, Pin – 586520881

 

Madam,

 

Re: Death Claim against Policies Nos.586511035,(S.A.:2,50,000,P&T:1741)586523023,(S.A:1,00,000,P&T:1410)586520881(S.A.:2,00,000,P&T:14-13) in the name of Lt.Lachhaman Mohapatra.

 

With reference to your claims under the above policies on the life of the above mentioned deceased, we have to inform you that we have decided to repudiate all liabilities under the policies on account of the deceased having withheld material information regarding his age at the time of effecting the assurance with us.

In this connection we have to inform you that in the proposals for assurances signed by him on 24.11.05, 28.03.06 & 29.04.06 respectively in answer to question 1-A, requiring him to give his age nearer birth-day and date of birth, he gave it as 62 years. We may, however, state that these answers were false as we have secured evidence to show that the deceased had grossly understated his age by about 07 years at the time of proposing for the assurances. The evidence in our possession goes to show that the deceased was around 69 years of age and therefore the proposals under the above plans would have not been allowed if he had disclosed the correct age at the time of effecting the above insurances and on the other hand, he induced us to issue the above mentioned policies on a false statement made by him in the proposals and personal statements regarding his age.

We have, therefore, in terms of the policy contracts and the Declarations contained in the said forms of proposals and personal statements repudiated the claim and accordingly we are not liable for any payment under the policies and nothing is payable against the above claims.

In case you are not satisfied with the above decision and feel that we have not considered any particular facts and circumstances in support of your claim, you may send your representation within a month for re-consideration of your claim to our Zonal Office at the following address:

           The Zonal Manager,

           LIC of India, East Central Zonal      

          Office,Jeevan Deep Buildings, 5th             

          Floor, Patna – 800001

                                                                                                                                                  

      Yours faithfully,

                                                                                       Sd/-

                                                                       Sr. Divisional Manager”

 

19.     Nowhere in the repudiation letter there has been any allegation of fraud. It is rather stated that the deceased has understated his age and made a false statement. It has also been mentioned that Insurance Company secured evidence to establish such allegation.

20.     In spite of opportunity, LIC did not file written version and chose not participate in the complaint. In the absence of any denial to the pleadings in the complaint and in the absence of positive pleadings in support of denial made to the contents of the pleadings in the complaint, in view of the doctrine of non-traverse, the LIC has absolutely no scope to set up a new case at the appellate stage. Moreover, neither in the appeal memo nor in the course of hearing in the appeal, LIC whispered a word regarding any reason whatsoever which prevented LIC from filing written version and participating in the complaint.

21.     In view of the above, there is absolutely no scope for the LIC either in law or on the basis of materials on record to defend the letter of repudiation of the policy. The contentions raised by the appellant – LIC are not tenable and the appeal is, therefore, liable to be dismissed.

22.     Accordingly, the appeal is dismissed and the impugned order is confirmed. The LIC is liable to satisfy the award with interest at the rate of 9% per annum as directed by the learned District Forum.

          Records received from the District Forum be sent back forthwith.

 

 

                                                        (Dr. S.Mohanty)                                 (Justice B.K.Patel)

                                                                 Member                                               President