JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)

Late Shri Mohan Lal, husband of the complainant took an insurance cover under group cover life of the petitioner company.  He having died on 07.10.2015 within two years of taking the policy, a claim for payment in terms of the said insurance policy was lodged by the complainant with the petitioner bank.  The claim was rejected vide letter dated 11.02.2016, which to the extent it is relevant reads as under:

“Late Mohan Lal, while applying for enrolment under the SBI Rin Raksha Home Loan Scheme had agreed ‘Declaration of Good Health’ when mentions that he was of sound health and was not suffering or had never suffered from any Critical Illness or any condition requiring medical treatment for illness, as on date of enrolment.

As per the medical treatment papers dated May 2014 available with us, Late Mohan Lal was suffering from Chronic Obstructive Pulmonary Disease with Pneumonia prior to the date of enrolment of  policy.

The deceased Life Assured had given a false Good Health, Declaration and had not disclosed material fact at the time of entry it to the scheme the claim has repudiated.”

Being aggrieved from the repudiation of the claim, the complainant approached concerned District Forum by way of a consumer complaint. 

2. The complaint was resisted by the petitioner primarily on the ground that while taking the insurance cover, the complainant had suppressed material fact with respect to the state of his health since he didn’t disclose that he was suffering from Chronic Obstructive Pulmonary Disease with Pneumonia before he had applied for the insurance cover on his health. 

3. The District Forum having allowed the consumer complaint, the petitioner approached the concerned State Commission by way of an appeal.  The State Commission having dismissed the appeal, the petitioner is before this Commission by way of this Revision Petition.

4. A perusal of discharge summary issued by Sacred Heart Hospital, Jalandhar in respect of late Sh. Mohan Lal then aged 56 years would show that he was admitted in the said hospital on 14.05.2014 with complaint of breathlessness for 3 months, knee pain and abdominal fullness.  His ailment was diagnosed as COPD Pneunonitis.  He was treated symptomatically while in hospital and was fit at the time he was discharged.  Several medicines were prescribed to him at the time he was discharged from the hospital.  The prescriptions issued by the doctors of the Sacred Heart Hospital, Jalandhar would show that late Sh. Mohan Lal was under treatment of the said doctors and had been prescribed medication from time to time.  A large number of medical prescriptions issued prior to the submission of the proposal for obtaining the insurance cover have been filed by the petitioner company.

5. The submission of the learned counsel for the respondent/complainant is that no doctor having been examined from the hospital, the medical record relied upon by the petitioner was not duly proved.  As noted earlier, the claim was repudiated vide letter dated 11.02.2016.  In the repudiation letter, it was clearly stated that as per the medical treatment, papers of May, 2014, Sh. Mohan Lal was suffering from Chronic Obstructive Pulmonary Disease with Pneumonia prior to the date of enrolment of policy and that he had given a false good heath declaration and had not disclosed his past history.  Despite that, the complainant who is none other than the wife of deceased didn’t even claim that the deceased had not suffered from Chronic Obstructive Pulmonary Disease with Pneumonia.  Therefore, the ground on which the claim was repudiated was not specifically controverted in the consumer complaint filed by the respondent.

6. In its written version to the consumer complaint, the petitioner company specifically referred to the treatment of the deceased in Sacred Heart Hospital, Jalandhar.  It was expressly stated in Para-6 of the written version that Sh. Mohan Lal was suffering from Chronic Obstructive Pulmonary Disease with Pneumonia prior to the date of enrolment into the insurance cover.  The discharge sheet of Sacred Heart Hospital, Jalandhar was specifically referred in Para-7 of written version filed by the opposite party.  The certificate of hospital treatment issued by Dr. Tarun Aggarwal was referred in Para-8 and 9 of the written version.  The leave taken by him on medical grounds was referred in Para-10 of the written version.  Despite detailed averments with respect to the treatment of the deceased Mohan Lal in Sacred Heart Hospital, Jalandhar having been given in the written version, the said illness was not disputed either by way of a rejoinder or by way of an affidavit.  Thus, the ailments on account of which the deceased was admitted in Sacred Heart Hospital, Jalandhar and was treated in the said hospital were not disputed by the complainant.  If she was disputing the record of medical treatment relied upon by the petitioner, she ought to have done so by filing a rejoinder or an affidavit by way of evidence, after the said written version had been filed by the petitioner company.  From whatever angle I look at it, the facts remain the complainant did not dispute the allegations of admission of late Sh. Mohan Lal in Sacred Heart Hospital, Jalandhar and his treatment in the said hospital, at any point of time, since the consumer complaint was instituted.  In fact, this was not her stand even during arguments before the State Commission that the deceased was never admitted in Sacred Heart Hospital, Jalandhar.  Therefore, I am unable to accept the contention that the petitioner company cannot rely upon the medical record with respect of the treatment of the deceased in Sacred Heart Hospital, Jalandhar.

7. While submitting the proposal late Sh. Mohan Lal was required to answer several questions with respect to the state of his health.  Some of the question required to be answered by him were as under:

i. Have you consulted any doctor for surgical operations or have been hospitalised for any disorder other than minor cough, cold or flu during the last 5 years?

ii. Have you ever had any injury, major surgical operation or received any treatment for any medical conditions for a continuous period of more than 14 days? (except for minor cough, cold, flu, appendicitis & typhoid).

iii. Have you suffered from any other diseases not mentioned above.

The answers given by the deceased were in negative to all the above referred questions.  Since he had suffered from Chronic Obstructive Pulmonary Disease with Pneumonia, he had been hospitalised for about one week and had also been under regular treatment of the doctors as is evident from the medical prescriptions filed by the petitioner, he ought to have disclosed the said ailment as well as his hospitalisation in Sacred Heart Hospital, Jalandhar.  The ailment from which the deceased was suffering cannot be said to be minor cough, cold and flu.  Therefore, the said ailment was required to be disclosed at the time of submitting the proposal for obtaining insurance cover on his life.  That having not been done, there is no escape from the conclusion that the deceased insured had concealed facts with respect to the state of his health which had influenced the decision of the insurer on the question as to whether the insurance cover should be granted to him or not.  It is quite possible that had his past ailment and treatment been disclosed by the deceased, insurance cover would have been refused to him and he would have been asked to undergo further medical investigation.

8. In a recent decision, LIC of India Vs. Manish Gupta – Civil Apeal No.3944 of 2019, decided on 15.04.2019, the proposal form required a disclosure as to whether the proposer had suffered from Cardiovascular disease.  He responded in negative to the said question. The complainant underwent a surgery and submitted a claim which was repudiated on the ground that he was suffering from a pre-existing illness. Upholding the repudiation of the claim, the Hon’ble Supreme Court inter alia held as under:-

“Moreover, non-disclosure of any health event is specifically set out as a ground for excluding the liability of the insurer.”

“A contract of insurance involves utmost good faith. In Satwant Kaur Sandhu Vs. New India Assurance Company Ltd., this Court has held thus:

“...Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. 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. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment.”

……….The documentary material indicates that there was a clear failure on the part of the respondent to disclose that he had suffered from rheumatic heart disease since childhood. The ground for repudiation was in terms of the exclusions contained in the policy. The failure of the insured to disclose the past history of cardiovascular disease was a valid ground for repudiation.”

In another recent decision, Reliance Life Insurance Co. Ltd. & Anr. Vs. Rekhaben Nareshbhai Rathod – Civil Appeal No.4261 of 2019, decided on 24.4.2019, the Hon’ble Supreme Court interalia observed as under:-

“26.    …………..It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.

The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) “there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurane”. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.

29.     We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form.  …………..”

9. For the reasons stated hereinabove, the order passed by the State Commission cannot be sustained and same is hereby set aside.  Consequently, the Consumer Complaint is dismissed, with no order as to costs.