RESERVED

State Consumer Disputes Redressal Commission

U.P., Lucknow.

Appeal No.1511 of 1997

1- Life Insurance Corporation of India through

    Divisional Manager, 113/2, Rajpur Road,

    Dehradun.

2- Branch Manager, LICI, Branch Office,

    Deoband, Distt. Saharanpur (U.P.)        ….. Appellants.

Versus

Smt. Mithlesh w/o (Late) Sri Satya Prakash Chauhan

C/o Sri Surendra Kumar Sharma, Mohalla: Bazar Kala,

Rampur Manihasal, Tehsil: Deoband,

Distt: Saharanpur (U.P.)                             .…Respondent.

Present:-

1- Hon’ble Sri A.K. Bose, Presiding Member.

2- Hon’ble Sri Jugul Kishor, Member.

Sri Sanjai Jaiswal for the appellants.

None for the respondent. 

Date          8.1.2015

JUDGMENT

Sri A.K. Bose,  Member- Aggrieved by the judgment and order dated 29.7.1997 passed by the Ld. DCDRF, Saharanpur in complaint case No.236 of 1993, the appellants Life Insurance Corporation of India and another have preferred the instant appeal under Section 15 of the Consumer Protection Act, 1986 (Act 68 of 1986) on the ground that the impugned order is arbitrary, perverse and is bad in the eye of law. It was delivered without proper appreciation of law and/or application of mind on the basis of surmises and conjunctures  only and,

(2)

therefore, it has been prayed that the same be set aside in the interest of justice and fair play, otherwise the appellants will suffer irreparable loss.

          The factual Matrix of the case, in brief, is that the husband of the complainant Sri Satya Prakash Chauhan applied for a Life Insurance Policy under Term and Table: 14-15 for a sum assured of Rs.40,000.00 and accordingly, filled a proposal form on  27.3.1991 and deposited Rs.1,445.00 towards payment of initial premium. The proposal form was accepted on 5.10.1991 and accordingly, the Policy Bond No.270061382 was issued. However, the policy holder Sri Satya Prakash Chauhan expired on 12.6.1991 i.e. before acceptance of the proposal. An investigation, conducted by the appellant LIC, revealed that the policy holder had concealed material facts relating to status of his health in the proposal form. He was an employee of Kisan Sahkari Chini Mills Ltd., Badaun and his service record indicated that he was on medical leave from 1.7.1988 to 19.7.1988 i.e. for 19 days. He again took medical leave from 1.11.1989 to 7.11.1989 and extended the same to 23.1.1990 i.e. for 85 days on ground of illness due to Tuberculosis. He was again on leave from 18.6.1990 to 20.6.1990 and extended the same upto 3.9.1990 i.e. for a period of 98 days as he underwent an operation due to a fracture in the leg. However, he concealed all these facts in the proposal form and thereby, duped the appellants LIC in accepting the proposal.

From perusal of the records, it further transpires that after the death of the deceased on 12.6.1991, his widow/

(3)

nominee Smt. Mithlesh filed a claim petition which was, however, repudiated on ground of concealment of previous ailments in the proposal form, forcing the respondent/complainant Smt. Mithlesh to file complaint case no.263 of 1993 before the Ld. DCDRF, Saharanpur. The Forum below after hearing the parties allowed the complaint and directed the appellants LIC to pay the amount insured under the policy with interest. Aggrieved by this judgment and order, the instant appeal was preferred.

From perusal of the records, it transpires that the notice was issued to the respondent Smt. Mithlesh to file her objections. From perusal of the order sheet dated 5.5.2001 (sic), it transpires that Sri V.P. Sharma appeared on behalf of the respondent and obtained certified copy of the stay order on 29.5.2001 but did not file any objection. Thereafter, the appeal was taken for hearing on 31.5.2011 and the case was reserved for judgment. However, it was released on 28.2.2012 by the then Bench; and accordingly, a fresh notice was given to the respondent by the Registrar of this Commission by means of Service Postage Stamp (SPS) on 20.3.2012. Thus, the service over him was deemed sufficient on 1.12.2014 and consequently, the appellant was heard exparte. It was argued that the policy holder expired on 12.6.1991 whereas the policy was accepted on 5.10.1991 i.e. after the death of the proposer, therefore, the matter relates to unconcluded contract. It was also argued that the proposer concealed the material facts relating to the status of his health in the proposal

(4)

form and thereby, duped the appellants to accept the proposal.  In supported of its arguments the LIC submitted the rulings laid down in P.J. Chacko and Anr. vs. Chairman, Life Insurance Corporation of India & Ors.,  AIR 2008 S.C. 424, Ganeshlal Ghanshyam Das Tambi vs. New India Assurance Co. Ltd. & Ors., IV(2011) CPJ 232 (NC), LIC India & Anr. vs. Vimal Verma, IV(2011) COJ 144 (NC), Bhanwri Devi vs. Bhratiya Jeevan Bima Nigam & Anr., IV(201) CPJ 71 (NC), Budhiben Pababhai vs. LIC of India & Ors., I(2010) CPJ 92 (NC), Bhagwati Prasad Borasi vs. Life Insurance Corporation of India, II(2009) CPJ 19 (NC), Kokilaben Narendrabhai Patel vs. Life Insurance Corporation of India, IV(2010) CPJ 86 (NC) and Shankar Soni vs. Life Insurance Corporation of India, IV(2008) CPJ 74 (NC). The appellants also filed ruling laid down in LIC of India vs. Raja Vasireddy Komalavalli Kamba and Ors., AIR 1984 SC 1014, LIC of India & Ors. vs. Rakshna Devi, Civil Appeal No(s). 808 of 2007, LIC of India vs. Mala Goyal , I(2013) CPJ 193 (NC), Satwant Kaur Sandhu vs. New India Assurance Company Limited, Civil Appeal no.2776 of 2002, Komal Sharma & Ors. vs. Life Insurance Corporation of India & Ors., I(2013) CPJ 606 (NC), LIC of India vs. Vidya Devi & Anr., III(2012) CPJ 288 (NC), LIC of India vs. M. Gowri & Ors., 1986-95 Consumer 1387 (NS).

We have gone through the rulings carefully and have perused the records in the light of the same. Admittedly,

(5)

the proposer was an employee of Kisan Sahkari Chini Mills Ltd., Badaun (U.P.) and he was on medical leave from 1.7.1988 to 19.7.1988 i.e. for a period of 19 days. He was again on leave from 1.11.1989 to 7.11.1989 and extended the same upto 23.1.1990 i.e. for a total period of 85 days on account of Tuberculosis. He was again on medical leave from 18.6.1990 to 20.6.1990 and thereafter, extended the same upto 30.9.1990 i.e. for 98 days and during this period underwent a surgery due to fracture in leg. He concealed all these material facts in the proposal form relating to status of his health and replied all the questions in negative. However, the documentary evidence, as per the service book of the proposer proved the factum of Tuberculosis, surgery and long leave on medical ground. Thus, the repudiation on ground of concealment of material fact relating to status of health and previous ailments appears to be justified. In P.J. Chako's case (supra) the Hon'ble Apex court was pleased to hold that the policy can be repudiated on ground of deliberate wrong answer given by the insured, having a great bearing on the contract of insurance. In Ganeshlal Ghanshyam Das Tambi's case (supra), it was held by the Hon'ble National Commission that the contract of insurance is based on utmost good faith between the contracting parties and any breach of the same can not be justified. In Vimal Verma's case (supra), it was held by the Hon'ble National Commission that contract of insurance is based on principle of ubberima fides and suppression of any material information by the proposer

(6)

would amount to breach of contract. Similar view was taken in other cases cited hereinabove. Considering the totality of the circumstances and on the basis of settled principles of law, we are of the considered view that the instant matter relates to suppression of material facts about the status of the health on the insured prior to filling up of the proposal form and, therefore, the appellant LIC was justified in repudiating the claim on ground of concealment of material fact. The Forum below failed to take due notice of the same before passing the impugned judgment and, therefore, committed mistake of facts and law and, therefore, the impugned judgment dated 29.7.1997 can not be allowed to sustain.

          Apart from this, it is evident from the documentary evidence that the proposal form was filled on 27.3.1991. The proposer Sri Satya Prakash Chauhan expired on 12.6.1991. However, the policy bond bearing no.270061382 was accepted on 5.10.1991 i.e. after the death of the proposer. Thus, the matter relates to unconcluded contract. The proposer expired before acceptance of the proposal. It is a settled law that the contract of insurance does not become effective unless the same is accepted. In Raja Vasireddy Komalavalli Kamba's case (supra), the Hon'ble Apex Court was pleased to hold that acceptance of the policy is completed only when it is communicated to the offerer. A mere retention of premium can not be construed as acceptance. Similarly, in Rakshna Devi's case (supra), the Hon'ble Apex Court was pleased to hold that if before acceptance

(7)

the offerer dies, the offer immediately lapses as there can not be any acceptance after the death. Similar views were taken in other rulings cited hereinabove. Thus, the matter relates to unconcluded contract and the Forum below failed to take this factum into consideration also before passing the impugned judgment and, therefore, the same can not be allowed to sustain on this ground.

The matter relates to acceptance of the policy after death of the proposer and concealment of material facts relating to the status of health in the proposal form and repudiation on ground of concealment appears to be justified. The impugned judgment is beyond the facts, circumstances and evidence available on record and is, therefore, liable to be set aside.        

ORDER

The appeal is allowed and the judgment and order dated 29.7.1997 passed by the Ld. DCDRF, Saharanpur in complaint case no.236 of 1993 is set aside. No order as to costs. Certified copy of the judgment be provided to the parties in accordance with the rules.

         (A.K. Bose)                               (Jugul Kishor)

    Presiding Member                             Member

Jafri

PA II Court No.5