1.      Heard Mr. Satyam Dwivedi, Advocate, for the appellant and Mr. Sanjeev Kumar Verma, Advocate, for the respondents.

2.      Bajaj Allianz Life Insurance Company Limited has filed above appeal against the order of State Consumer Disputes Redressal Commission, Punjab, dated 25.07.2014 passed in CC/72/2010, allowing the complaint and directing the appellant to pay Rs.25/- lacs with interest @9% per annum, from 11.09.2009 till the date of payment, as the insurance claim, Rs.one lac as compensation for harassment and Rs.11000/- as litigation costs. 

3.      Tarsem Masih (respondent-1) filed CC/72/2010 for directing the appellant to pay Rs.25/- lacs along with interest @12% per annum from the date of the claim till the date of actual payment, as insurance claim. The complainant stated that he was real brother of Prem Masih (deceased life assured) (for short the DLA), resident of Ward No.4, Fatehgarh Churian, tehsil and district Gurdaspur, Punjab and was residing in America. The DLA submitted Proposal Form and deposited the premium of Rs.500000/- on 30.08.2008 for “Non-Participating Unit Linked Plan- Bajaj Allianz Fortune Plus”. After conducting relevant inquiry the opposite party issued “Non-Participating Unit Linked Plan- Bajaj Allianz Fortune Plus” Policy No.0107525167 of Bajaj Allianz Life Insurance Company Limited, in which, the complainant was nominee. Date of commencement of the policy was 28.10.2008, Date of commencement of risk was 29.10.2008, Term of the policy was 20 years and Annual Premium was Rs.500000/- payable on or before 28^th October of every year. Sum Assured was Rs.25/- lacs, which was minimum death benefit. Maturity benefit was Fund value on the date of maturity. Prem Masih died on 30.10.2008 due to ‘massive heart attack’. The complainant submitted claim form, claiming the sum insured. The claim was payable under Clause-6 of the policy. But the opposite party, vide letter dated 11.09.2009, rejected the claim on the ground that the DLA had misrepresented his occupation and income and submitted fake documents in proof of income, along with proposal form. Due to false representation, the policy was void. The complainant stated that proposal form for the policy in question and two other proposal forms for the policy of the opposite party in the name of Geeta Masih wife of the complainant were filled up by the representative of the opposite party and the premium of Geeta Masih were Rs.11/-lacs and Rs.5/- lacs respectively. All the three premium were given from one and same account. The DLA had agricultural income and his annual income was mentioned as Rs.8/- lacs per annum. There was no false representation. Before issuing policy the opposite party had conducted inquiry as such rejection of the claim on this ground was illegal. On these allegations, the complaint was filed.

4.      The appellant/opposite party filed its written reply and contested the complaint. The opposite party stated that after receiving the claim form, the opposite party appointed an investigator for investigation of the insurance claim. The Investigator obtained letter dated 25.05.2009 issued by Market Committee, Batala, stating that Form-J, allegedly issued by M/s. Amritpal Commission Agent, was a fake document inasmuch as no licence was issued by Market Committee, Batala to M/s. Amritpal Commission Agent. Licence No.2214/BTA/S.A.M.S. was issued in the name of M/s. Amarjeet Commission Agent, New Grain Market, Batala. Sawinder W/o Prem Masih has given an Affidavit, stating that her family income was Rs.one lac per annum, while in the Proposal Form Annual Income was mentioned as Rs.8/- lacs. As per Sood Paint Proprietor, the DLA was working at their shop as a contractor of white washing and painting of the building from 2002 to 2005 and his income was about Rs.90000/- per annum. In the Proposal Form he had incorrectly mentioned as ‘self-owed business and agriculture. The DLA has given false declaration. Due to mentioning incorrect facts in the proposal form, the policy was void under clause-12 of the policy. The policy was issued on 28.10.2009 and dispatched on 02.11.2009, with a letter giving an option to the DLA to avoid the policy within 15 days after receiving the policy, in case, terms were not accepted. The DLA died on 30.10.2009 as such it was non-concluded contract. No claim was payable under the policy. The claim has been rightly repudiated. The contract of insurance is a contract of utmost good faith. Concealment of material facts vitiates the policy. The complaint has not been filed by a duly authorised power of attorney holder and is not maintainable. There was no deficiency in service on the part of the opposite party.   

5.      State Commission, after hearing the parties, by judgment dated 25.07.2014, held that Tarsem Masih was the nominee in the policy as such, the complaint filed by him was maintainable. The DLA filled up the proposal form and deposited first premium on 30.08.2009. The opposite party accepted the Proposal Form and the premium and issued policy on 28.10.2009, i.e. before the death of the DLA. As such there was a concluded contract between the parties. Commencement of the risk was 29.10.2009 and the DLA died on 30.10.2009 as such the insurance claim was payable. A perusal of proposal form shows that no document i.e. Form-J was attached with it and such the letter dated 25.05.2009 issued by Market Committee, Batala is irrelevant. The proposal form was filled up on the same day on which two more proposal forms for issue of insurance policy in the name of Geeta Masih were filled up. All the three cheques have been paid from the same account and the cheque amounts of Geeta Masih were Rs.11/-lacs and Rs.5/- lacs respectively, while annual income of the DLA was mentioned as Rs.8/- per annum. The opposite party did not demand PAN Card from the DLA, ignoring the instructions of Income Tax Department. Proposal Form was in English language while the DLA made his signatures on it, in vernacular language. As such only on the basis of income, the claim could not be repudiated, which was otherwise payable under the policy. On these finding the complaint was allowed. Hence this appeal has been filed.      

6.      We have considered the arguments of the counsel for the parties and examined the record. Supreme Court in Reliance Life Insurance Company Vs. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175, held that after signing the proposal form, the plea that the contents of the proposal form were in different language and were not read over and explained before making signature, cannot be raised. The contract of insurance is a contract of utmost good faith and it is duty of the insured to disclose correct facts in the proposal form. Whatever are required to be disclosed in the proposal form, are ‘material fact’ from the point of view of the insurer to underwrite the risk. Same principles have been followed in Modern Insulator Limited Vs. Oriental Insurance Company Limited, (2000) 2 SCC 428, Branch Manager, Bajaj Allianz Life Insurance Company Limited Vs. Dalbir Kaur, (2021) 13 SCC 553 and Man Mohan Nanda Vs. United India Assurance Company Limited, (2022) 4 SCC 582.  Supreme Court in Mothoolal Nayak Versus Life Insurance Corporation of India, AIR 1962 SC 814, held that the principle underlying the Explanation to Section 19 of the Contract Act, 1872 is that a false representation, whether fraudulent or innocent, is irrelevant, if it has not induced the party to whom it was made, to act upon it by entering into a contract. But if falsification and concealment had an important bearing in obtaining the other party’s consent, a man acted could not afterwards turn round and say “it could have made no difference if you had known the truth”. The question of waiver does not arise.  

7.      In this case, the claim has been repudiated within two years of the issue of the policy as per provisions of Section 45 of Insurance Act, 1938. The proposal form required to show Annual Income, Present Occupation, Nature of Duties and Employer’s name, which were filled up as “Rs.800000/- p.a., Business, Managerial, Self Occupation, Agriculture. In inquiry, it was found that the DLA had no self-occupied business and his agricultural income was about Rs.one lac per year. The complainant had neither challenged this findings in the complaint nor adduced any evidence to prove that the fact as disclosed in the proposal form were correct. Thus there was material concealment of the fact in obtaining insurance policy.

8.      Other ground raised by the appellant is that the proposal was sent on 30.08.2009 and it was accepted by the competent authority on 28.10.2009. Thereafter, the policy was issued and it was communicated to the DLA through letter dated 02.11.2009 with another letter that if the terms of the policy are not accepted then the DLA had right to go back with the contract within 15 days. DLA died on 30.10.2009, therefore, the policy was not accepted by the DLA and there was no concluding contract between the parties. In this respect, the counsel for the appellant relies upon Section 4 of Indian Contract Act, 1872. It has been argued by the appellant that there was no complete contract between the parties. The respondent has opposed this argument on the ground that this was not a ground for repudiation of the claim, therefore, this ground cannot be raised by the appellant in the complaint.

9.      So far as repudiation of the claim is concerned, we have already found that there was concealment of material fact as such the repudiation of claim was valid. However, it is a matter of fact that before acceptance of the policy, the DLA has died on 30.10.2009. Section 4 of the Contract Act is quoted below: -

“4. Communication when complete.—

The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete,—as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer.”

10.    There was no concluding contract between the parties. Supreme Court in Life Insurance Corporation of India Versus Raja Vasireddy Komalavalli Kamba, AIR 1984 SC 1014 and Mahindra Todi Vs. Birla Sunlife Insurance Company Limited, (2023) 1 SCC 538, held that date of commencement of insurance policy is the date when the competent authority has accepted the proposal form and issued the policy. In such circumstances the appellant was liable to refund the entire premium amount but the appellant has illegally withheld the premium amount.  

O R D E R

    In view of the aforesaid discussion, the appeal is partly allowed. The order of State Consumer Disputes Redressal Commission, Punjab, dated 25.07.2014 passed in CC/72/2010 is set aside. The appellant is directed to refund Rs.500000/- with interest @9% per annum from the date of deposit of the premium till the date of refund within a period of one month from the date of this judgment.