STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

Canara HSBC Oriental Bank of Commerce, Life Insurance Company Limited, Registered office at 112, J.C. Road, Bangalore and Corporate office at 2nd Floor, Augusta Point, Golf Course Road, Sector 53, Gurgaon-122 022

……Appellant

V e r s u s

Sunita, Wife of late Shri Rajbir, resident of House No.321, Dadu Majra Colony, U.T., Chandigarh.

              ....Respondent

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:    JUSTICE SHAM SUNDER, PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

                   SH.JAGROOP SINGH MAHAL, MEMBER.

Argued by:  Sh.Deepak Suri, Advocate for the appellant.

              Sh.Ravi Kumar, Advocate for the respondent.

PER  JUSTICE SHAM SUNDER, PRESIDENT

1.             This appeal is directed against the order dated 04.08.2011, rendered by the District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (hereinafter to be called as the District Forum only), vide which, it accepted the complaint, and directed the Opposite Parties (one of which is now appellant), as under:-

“As a result of the above discussion, this complaint is accepted with a direction to OPs to pay the sum assured along with all benefits to the complainant under the policy in question along with interest @ 12% p.a. from the date of repudiation i.e. 18.02.2011 till its realization besides Rs.10,000/- as litigation expenses within one month”.

2.                The facts, in brief, are that the husband of the complainant, took Saral Beema Plan Policy No.009389917 (hereinafter to be referred as insurance policy), for a period of 15 years,  for the coverage proposed amount of Rs. 30,000/- from the Opposite Parties and paid the first premium. At the time of taking the policy, the husband of complainant was hale and hearty. In 2010, her husband, unfortunately, fell sick and, ultimately, died on 1.8.2010, during the currency of the insurance policy. The complainant, being widow of the deceased,  as his nominee, lodged the claim with the Opposite Parties, after completing all the requisite formalities, for settlement of the same. The Opposite Parties, however, repudiated the claim, vide letter dated 18.2.2011, on the ground, that the life insured (now deceased), was suffering from pre-existing disease.      It was stated that the repudiation of claim, by the Opposite Parties, was illegal and invalid. It was further stated that the aforesaid acts, of the Opposite Parties, amounted to gross deficiency, in rendering service. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed.

3.                The Opposite Parties, in their written version, admitted that the husband of the complainant, obtained the insurance policy, referred to above. It was, however, stated that the husband of the complainant was suffering from Diabetes Mellitus and Pulmonary Tuberculosis, at the time of taking the policy and for these diseases, he was taking treatment. It was further stated that the life insured, at the time of filling up the proposal form, and inception of the insurance policy, concealed the material facts, regarding his health and gave a false declaration that he was not suffering from any disease. It was further stated that, under these circumstances, in accordance with the terms and conditions of the policy, taken by the husband (now deceased) of the complainant, the claim lodged by her (complainant),  was legally and validly repudiated. It was denied that there was any deficiency, in rendering service, on the part of the Opposite Parties. The remaining averments, were denied, being wrong.

4.                The Parties led evidence, in support of their case.

5.                At the time of arguments, none put in appearance, on behalf of the complainant, though the Counsel for the Opposite Parties, put in appearance. The District Forum, was however, of the view that the complaint should be decided  on merits.

6.                After hearing the Counsel for the Opposite Parties, and, on going through the evidence, and record of the case, the District Forum, accepted the complaint, in the manner, referred to, in the opening para of the instant order. 

7.                Feeling aggrieved, the instant appeal, has been filed by the appellant/Opposite Party No.2.

8.                We have heard the Counsel for the parties, and, have gone through the evidence and record of the case, carefully. 

9.                       The Counsel for the appellant/Opposite Party No.2, submitted that since Rajbir Singh, husband of the complainant, at the time of filling up the proposal form, and inception of the insurance policy, referred to above, was suffering from preexisting diseases, i.e. Diabetes Mellitus and Pulmonary Tuberculosis,  but neither he, nor the complainant, disclosed this factum, deliberately, and, as such, after his(Rajbir Singh)  death, the complainant being his nominee, was not entitled to any claim. He further submitted that the contract of insurance, is based on good faith. He further submitted that concealment of material facts, by the insured, at the time of filling up the proposal form, and inception of the insurance policy, could be said to be sufficient, to declare such contract as void ab-initio. He further submitted that the order of the District Forum, being illegal, is liable to be set aside.

10.             On the other hand, the Counsel for the respondent/complainant, submitted that husband of the complainant was neither suffering from any disease, nor was he aware of the same, at the time of filling up the proposal form, and inception of the insurance policy. He further submitted that  the husband of the complainant, who was the life assured, was not treated by any Doctor, prior to the date of filling up the proposal form, and inception of the insurance policy. He further submitted that, since no material facts were concealed, by the life assured, at the time of filling up the proposal form, and inception of the insurance policy , the claim of the complainant was illegally repudiated by the Opposite Parties.

11.             After giving our thoughtful consideration, to the rival contentions, advanced by the Counsel for the parties, and the evidence, on record, we are of the considered opinion, that the appeal is liable to be partly accepted, and the impugned order deserves to be modified, for the reasons to be recorded hereinafter. In P.C. Chacko & Anr. Vs. Chairman, Life Insurance Corporation of India & Ors.-2008 (1) RCR (Civil) 127 (SC), the principle of law, laid down, was to the effect, that if there was concealment of any material matter, or suppression of material fact, by the policy holder, the repudiation of claim by the Insurance Company, could be held to be valid.  In para 13 of the aforesaid judgment, the Hon’ble Supreme Court elaborated that there are three conditions, for application of second part of Section 45 of the Insurance Act, which are as under :-

              “(a)  the statement must be, on a material matter, or must suppress facts, which it was material to disclose;

              (b)   the suppression must be fraudulently made by the policy-holder; and

              (c)   the policy-holder must have known, at the time of making the statement, that it was false, or that it suppressed facts which was material to disclose.”

12.             Now let us see, as to whether, in the instant case, it was proved by the insurer that  the life assured(now deceased), at the time of filling up the proposal form, and inception of insurance policy, was suffering from Diabetes Mellitus and Pulmonary Tuberculosis and was aware of the same. Only if, he knew about these diseases, that he could disclose the same, at the time of filling up the proposal form, and inception of insurance policy. No doubt, at the time of filling up the proposal form, the life assured signed the declaration to the effect that he was not suffering from Diabetes etc. Such a declaration made by him, could be said to be correct, as he was not aware, that he was afflicted with any of the aforesaid diseases. No medical record, was produced, by the Opposite Parties, to prove that the life assured was suffering from Diabetes Mellitus and Pulmonary Tuberculosis, or he underwent treatment, for these diseases, for any duration, in any Govt. or Private Hospital or  he was prescribed medicines for these diseases, by the concerned Doctor(s). Even no, affidavit of any of the Doctors, from whom the insured allegedly got treatment for the aforesaid diseases, was produced, on record, to prove this factum. Reliance, no doubt, was placed by the Counsel for the appellant, on Annexure R-2,  a letter dated 15.02.2011, alleged, to have been written by the complainant, widow of the deceased, to the Opposite Parties, wherein, she stated that her husband was treated for Tuberculosis and Diabetes, in July, 2009, in Civil Dispensary Sector 22 and after the treatment, the Doctor had confirmed, that the life assured was not suffering from the aforesaid diseases. First of all, there is no admission on the part of the complainant, that such letter was written by her. The complainant appears to be an illiterate lady. If her signatures were allegedly obtained on such a letter, under some misimpression, by the Officials of the appellant/Opposite Parties, that did not bind her. Even, if it is assumed, that the facts contained in Annexure R-2, letter, allegedly written by the complainant were correct, then, it was the onerous duty of the Opposite Parties, to collect  the record from the Civil Dispensary Sector 22, Chandigarh, regarding the treatment of the husband of the complainant, to prove that he was actually suffering from such diseases and was prescribed medicines. The letter Annexure R-2, does not have any evidentiary value, in the absence of production of the medical record, and the affidavit(s) of the Doctor(s), to prove that the deceased was suffering from the aforesaid diseases, at the time of filling up the proposal form, and inception of insurance policy. The submission of Counsel for the appellant, to the effect, that the life assured concealed the factum, that he was suffering from the aforesaid diseases, at the time filling up the proposal form, and inception of insurance policy, in the absence of any evidence, is not correct.  The District Forum, was right in holding that the Opposite Parties, failed to prove that the life insured was suffering from the aforesaid diseases, or concealed the material facts, at the time of filling up the proposal form, and inception of insurance policy. The District Forum, was also right, in holding that repudiation of claim of the complainant, by the Opposite Parties, was illegal and invalid. The District Forum, was also right in holding that the Opposite Parties were deficient, in rendering service. The findings of the District Forum, in this regard, being correct are affirmed.

13.           The Counsel for the appellant, however, placed reliance on Mithoolal Nayak, Appellant Vs. Life Insurance Corporation of India, Respondent, AIR 1962 Supreme Court 814, Satwant Kaur Sandhu Vs. New India Assurance Company, Civil Appeal No.2776 of 2002, decided on 10.07.2009 by the Apex Court, and Life Insurance Corporation of India Vs. Smt. Omi Devi and others, VOL.CLXIV-(2011-4) PLR 649, in support of his contentions, that since the life assured was suffering from the aforesaid diseases, and he suppressed disclosure of the same, at the time of filling up the proposal form, and inception of insurance policy, the claim was rightly repudiated.  In Mithoolal Nayak `s case (supra), it was proved, that the policy holder had been treated, a few months before he submitted the proposal form, for the insurance of his life, with the Insurance Company, by a physician of repute, for certain serious aliments such as anemia, shortness of breath and asthma. The life assured not only failed to disclose, in his answer, to the question, put to him by the Insurance Company that he suffered from those ailments, but he made a  false statement to the effect that he had not been treated for any such serious aliment. It was, under these circumstances, held that there was a concealment of  material fact by the policy holder, and, as such, the contract of insurance stood vitiated and the policy holder was not entitled to any indemnification. In Satwant Kaur Sandhu`s case (supra), it was proved that the life assured was suffering from Diabetes, as also Chronic Renal Failure. She was on regular haemodialysis, earlier to the filling up the proposal form, and inception of insurance policy. It was, under these circumstances, held, that suppression of material facts, by the life insured, resulted into vitiation of the contract of insurance, based on good faith. In Life Insurance Corporation of India`s case (supra), the Doctor, who was not on the panel of the Insurance Company categorically deposed that he had been giving treatment qua Malignant Ascites from January 1995 onwards, to the life assured. He further deposed that when the patient came to him, he was already suffering from the said disease.  However, the life assured concealed this fact, qua his disease, at the time of applying for the insurance policy. It was under these circumstances, held that on account of suppression of material facts, regarding his disease, the contract of insurance stood vitiated and he was not entitled to any indemnification.  The facts of the aforesaid cases, are clearly distinguishable, from the facts of the instant case. No help, therefore, can be drawn, by the Counsel for the appellant, from the principle of law, laid down, in the aforesaid cases. In the instant case, as stated above, no medical record was produced by the Opposite Parties/appellant, to prove that the life assured was suffering from Diabetes Mellitus and Pulmonary Tuberculosis, or was aware of the same, at the time of filling up the proposal form, and inception of the insurance policy. The letter  Annexure R-2, allegedly written by the widow of the life assured, after his death, has got no evidentiary value, as discussed above. Therefore, the submission of the Counsel for the appellant, in this regard, being devoid of merit, must fail, and the same stands rejected.

14.             The next question, that arises for consideration, is as to whether, the complainant (now respondent), has already received any amount, from the Insurance Company, or not. In para number 5 of her affidavit, the complainant stated that, Rs.3452.63, were refunded to her by the Opposite Parties, through a cheque and the same was got encashed by her. The District Forum was required to allow the complaint, by deducting this amount, but it did not do so. The order of the District Forum, requires modification, to this extent.

15.                     No other point, was urged, by the Counsel for the

parties.

16.           For the reasons recorded above, the appeal is partly accepted, with no order as to costs. The order of the District Forum, is modified, in the following manner:-

17.             Certified Copies of this order be sent to the parties, free of charge.

18.             The file be consigned to Record Room, after completion

Pronounced.

February 6, 2012

Sd/-

[JUSTICE SHAM SUNDER]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Sd/-

[JAGROOP SINGH MAHAL]

MEMBER

Rg