JUSTICE V.K. JAIN (ORAL)

Late Shri Ashok Kumar Goyal obtained a money back policy, for 10 years from the petitioner company, for a sum assured of Rs.10 lakhs on 5.3.2013. The annual premium payable by him was fixed at Rs.95832.46/-. Shri Ashok Kumar Goyal expired on 22.11.2014 more than one and a half year after the policy was issued. Being his legal heirs, the complainants submitted a claim for payment in terms of the policy,  which the deceased had taken in his life time. The claim was, however, rejected on the ground that the insured was a known case of DM and a chronic alcoholic and smoker for last 30 years. Being aggrieved from the rejection of the claim, the complainants approached the concerned District Forum by way of a consumer complaint.

2.      The complaint was resisted by the insurer primarily on the ground that the insured had obtained the policy by a misrepresentation of material facts as regards the state of his health since he was a known patient of DM for the last 9 to 15 yeas, besides being a chain alcoholic and smoker for last 30 years.

3.      The District Forum vide its order dated 23.11.2015  allowed the complaint and directed the insurer to pay a sum of Rs.10 lakhs to the complainants along with interest @ 9% p.a. from the date of repudiation of the claim and the cost of litigation quantified at Rs.10,000/-

4.      Being aggrieved from the order passed by the District Forum, the petitioner company approached the concerned State Commission by way of an appeal. Vide impugned order dated 8.4.2016, the State Commission dismissed  the appeal  the appeal filed by the insurer. Being still dissatisfied, the petitioner company is before this Commission by way of this revision petition.

5.      The first question which arises for consideration in this case is as to whether the insured late Shri Ashok Kumar Goyal was suffering from DM at the time the proposal for taking the insurance policy was submitted by him. The onus was upon the insurer to prove the misrepresentation alleged to have been made by the insured, meaning thereby that it was for insurer to prove that he was suffering from DM at the time the proposal was submitted. Admittedly, no doctor was examined by the petitioner before the District Forum nor was the affidavit of any doctor filed to prove that the deceased was suffering from DM on 24.2.2013 when the proposal form was submitted. The deceased breathed his last in Medanta Hospital. The Death Summary issued by Medanta Hospital (Global Health Pvt. Ltd.) would show that the patient was a known case of type-2 Diabetes Mellitus with underlying CLD when he was admitted in the hospital on 18.10.2014. The above-referred Death Summary, however, does not indicate since when the deceased was suffering from Diabetes Mellitus. Therefore, the Death Summary does not show that the deceased was suffering from Diabetes Mellitus on 22.2.2013 when the proposal was submitted by him to the insurer. The initial assessment and treatment report of Medanta Hospital which is available on page 105 to 108 of the paper-book also does not indicate since when the deceased was suffering from Diabetes Mellitus though it does show that he was an alcoholic and smoker for 30 years. The deceased was also treated in the Dayanand Medical College & Hospital, Ludhiana before he was admitted in Medanta Hospital. The aforesaid document also does not show that the insured was suffering from Diabetes Mellitus as on 22.3.2014. Though the diagnosis of the insured in Dayanand Medical College & Hospital, Ludhiana does show that  type-2 Diabetes Mellitus, it does not indicate the duration of the said disease.

6.      The learned counsel for the petitioner company has drawn my attention to the progress sheet of Medanta Hospital which is available on page 109 of the paper-book. The person who recorded the aforesaid progress sheet noted on 26.10.2014 at 5.40 p.m. that the deceased was suffering from type-II DM and was a chronic alcoholic and chronic smoker for 30 years. There is an addition of the words “X 15 years” in between the 3^rd  and 4^th  line of the progress sheet. It is thus evident that the duration of Diabetes Mellitus was not written in a continuous flow when the aforesaid progress sheet was recorded. It is not known when, by whom and under what circumstances the aforesaid addition came to be made between line 3^rd and 4^th of the progress sheet on 26.10.2014. The petitioner company did not examine the author of the aforesaid progress sheet to prove that the aforesaid addition was made by him at the time of writing the progress sheet and that  it was not an interpolation made at a later point of time. The progress sheet was not summoned before the District Forum directly from Medanta Hospital but was collected by the investigator appointed by the insurer and a copy was placed before the District Forum. Therefore, the authenticity of the aforesaid addition could not be established by the insurer. In these circumstances, when neither the Death Summary issued by the Medanta Hospital not the Discharge Summary by Dayanand Medical College & Hospital, Ludhiana  gives any indication of the duration of Diabetes Mellitus, it would be difficult to hold relying solely upon the above-referred addition in the progress sheet, that the deceased was suffering from Diabetes Mellitus at the time the proposal was submitted by him on 22.2.2010.

7.      It has been noted in the medical record of Dayanand Medical College & Hospital, Ludhiana as well as in the record of Medanta Hospital that the deceased was an alcoholic and a smoker for 30 years. The history of the patient in the record of the hospital is recorded on the basis of the information supplied either by the patient himself or by a friend or relative who accompanies him and, therefore, is not likely to be incorrect. There can be no reason for the doctor who treats the patient in the hospital to make a false record of the history of the patient. An accurate recording of the history of the patient is necessary for giving an appropriate treatment to him and, therefore, the doctor, in my opinion, is not likely to record a false history of the illness of the patient. Therefore, I have no hesitation in holding that the deceased was a smoker as well as an alcoholic at the time the proposal was submitted by him.

8.         A perusal of the proposal shows that the deceased had disclosed in the aforesaid document that he was an alcoholic and was consuming wine. There is no evidence of the deceased consuming an alcoholic drink other than wine. Therefore, there was no misrepresentation by the deceased as regards his being an alcoholic. However, in the proposal form the deceased gave a false answer as regards his habit of smoking. He replied in negative as to consumption of tobacco and smoking and therefore, to this extent a misrepresentation was made by him to the proposal form.

9.      The next question which arises for consideration is as to whether a false statement as regards his smoking habit amounts to misrepresentation on a material fact or not. If the policy of the insurer is to deny insurance to a person who has been smoking or a person who has been smoking for a long period, the concealment of the smoking habit particularly when a person has been smoking for such a long duration would amount to concealment of a material fact since in the event of the aforesaid habit being disclosed, the insurance would be denied to him. If, however, the policy of the insurer is not to deny the insurance even to a person who has been smoking for a long duration, it would be difficult to say that such a misrepresentation was on a material fact.

10.    When this petition came up before this Commission on 4.7.2016, the petitioner was directed to file an affidavit stating therein as to whether the policy would have been granted to the deceased or not had he disclosed that he had been smoking for more than 5 years before submitting the proposal.    The petitioner company, in compliance of the aforesaid direction, has filed an affidavit of Motty John who has stated that had the policyholder disclosed the fact that he had been smoking for more than 5 years before submitting the proposal, the policy would have been issued but the  premium would have been on higher side. Thus the policy of the insurer was not to deny insurance to a smoker though it would have charged a higher premium while insuring the life of such a person. The affidavit filed by the petitioner company does not indicate the extent to which the premium would have increased in the case of a smoker. Considering all the facts and circumstances of the case, I am of the considered view that the insurer should pay 75% of the insured amount to the complainants, without any interest on that amount, provided payment is made in a time-bound manner. Such an order, in my view, would meet the ends of justice since there will be some penalty for not disclosing the habit of smoking to the insurer and at the same time it will not fully deny the benefit of the insurance policy to the legal heirs of a person who did not pay the full premium applicable in his case.

11.    For the reasons stated hereinabove, the revision petition is  disposed  of with the following direction:-

(i) The petitioner company would pay 75% of the sum insured i.e. Rs.7,50,000/- (75% of the sum assured of Rs.10 lakhs) to the complainants within four weeks from today failing which, the aforesaid payment shall carry interest @ 9% p.a. from the date of filing of the complaint.

(ii)      In the facts and circumstances of the case, there shall be no order as to costs.