- Heard the arguments of learned Counsel for both the parties.
- The basic issue involved in this Revision Petition is whether there was full disclosure of the annual income of the Policy Holder, who is the Petitioner/ Complainant in this Revision Petition in her Proposal Form and which was the cause for cancellation of the Insurance Policy. While Kota District Consumer Disputes Redressal Forum (for short District Forum) has allowed the Complaint and considered that there was nothing wrong in the disclosure of the income by the Policy Holder, the State Consumer Disputes Redressal Commission, Rajasthan (for short State Commission) dismissed the Complaint on the ground that when the Policy was taken for investment of premium amount in share market “the Complaint could not come within the purview of the Consumer Protection Act”.
- The Petitioner took a Life Insurance Policy from the Respondent/ Insurance Company on 27.02.2009 and paid the annual premium for four years. On 18.04.2012, the Respondent/ Insurance Company cancelled the Policy on the ground that the annual income declared by the Policy Holder in the Application Form was found to be incorrect. On perusal of the Proposal Form, which is placed as evidence, the annual income stated by the Petitioner is Rs.2 lakhs. However, the income from other sources box has been left blank. The Insurance Company has taken the ground that income, as stated in the Complaint, from the shop was only Rs.7,000/- and not Rs.2 lakhs. On perusal of the Complaint, it is seen that the Complainant has very clearly submitted in her Complaint that the income from running the shop was Rs.7,000/- per month and rent @ Rs.10,000/- per month was also received, which brings the annual income to Rs.2,04,000/-.
- It is the argument of learned Counsel for the Insurance Company that the breakup of the income was not provided in the Proposal Form and, therefore, the full disclosure of the income was not made, which is a violation of the principle of Insurance Policy and also Section 19 of the Indian Contract Act, 1872.
- Learned Counsel for the Petitioner submitted that the disclosure of income was made in the Proposal Form as Rs.2 lakhs and the only omission that can be ascribed that the breakup was not given. He further submitted that as per Section 45 of the Insurance Act, 1938, the Policy cannot be called in question on ground of misstatement after three years. Even before the amendment the Policy could not be questioned after the lapse of two years. More than three years had passed since the issue of the Policy.
- After hearing the arguments of learned Counsel of both the parties and on perusal of the record, we find that there was no material withholding of information on the part of the Petitioner/ Insured insofar as her annual income is concerned. The Insurance Company has not been able to adduce any evidence against the claim of the Petitioner that she was not earning Rs.10,000/- per month by way of rent. In our considered opinion, the fact that the Petitioner left the income from other sources blank cannot be considered to be a fundamental breach of the Insurance Policy. Further, Section 45 of the Insurance Act, 1938 would apply and, therefore, at this juncture raising question of not disclosing the annual income does not arise. It is also to be born in mind that the Insurance Company has already paid to the Petitioner certain amount, which shows the weakness in the argument of the Insurance Company.
- The State Commission’s Order dismissing the Complaint on the ground of the Policy having been taken for investment of premium amount in share market does not make any sense. The Policy was that of Life Insurance. The premium was being regularly paid. The question of what the Insurance Company does with the premium amount is not relevant for deciding the Consumer Complaint and, therefore, the State Commission Order dated 06.08.2019 suffers from illegality and is set aside.
- Accordingly, the Order of the District Forum dated 24.10.2018 is upheld. Considering that an amount of Rs.73,921/- has already been paid by the Insurance Company on 18.05.2020 towards the premium amount along with certain interest, such amount shall be deducted from the amount payable by the Order of the District Forum.
- The Revision Petition is accordingly allowed and disposed of.
- Pending application, if any, also stands disposed of.
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