BHUKYA BHADRAMMA,W/O LATE BHUKYA EAMU - Complainant(s)
Versus
THE .BR.MANAGER,LIFE INSURANCE CO.OF.INDIA. - Opp.Party(s)
G.RAJENDRA PRASAD
28 Jul 2010
ORDER
Complaint Case No. CC 92/09
1. BHUKYA BHADRAMMA,W/O LATE BHUKYA EAMU
R/O TIRLAPURAM,BUDDARAM,GARLA,KHAMMAM
BEFORE:
HONORABLE V.J.Praveena PRESIDING MEMBER
HON'ABLE MR. D.CHIRANJEEVI BABU PRESIDENT
PRESENT:
ORDER
BEFORE THE DISTRICT CONSUMER FORUM :: WARANGAL Present : Sri D. Chiranjeevi Babu, President. And Smt. V.J. Praveena, Member. Wednesday, the 28th day of July, 2010. CONSUMER COMPLAINT NO.92/2009 Between: Bhukya Bhadramma, W/o.Late Bhukya Ramu, Aged:30 years, Occu:Housewife, R/o. Tirlapuram Village, Post;Buddaram, Garla Mandal, Khammam District. … Complainant And 1. The LIC of India, rep.by its Branch Manager, Branch Office, Mahabubabad Warangal – 506 101. 2. The LIC of India, rep.by its Senior Divisional Manager, Divisional Office, Balasamudram, Hanamkonda, Warangal Dist. … Opposite Parties Counsel for the Complainants :: Sri G.Rajendra Prasad, Advocate. Counsel for the Opposite Parties :: Sri K.S. Raju, Advocate. This complaint is coming for final hearing before this Forum, the Forum pronounced the following order. CC 92/2009 -- 2-- ORDER Sri D. Chiranjeevi Babu, President. This complaint is filed by the complainant Bhukya Bhadramma against the opposite parties under section 12 of Consumer Protection Act, 1986 for a direction to pay sum assured amount of Rs.1,00,000/- with all accrued benefits, bonus and upto date interest from the date of death of the deceased till realization under the Policy bearing No.687477702 and to award damages and costs. The brief averments contained in the complaint filed by the complainant are as follows: The case of the complainant is that the complainant is the wife of late Bhukya Ramu who died on 29-07-2007 due to Jaundice. During his life time the said Ramu obtained Policy bearing No.687477702 from opposite party NO.1 for Rs.1,00,000/- commenced from 28-03-2006. The deceased obtained another policy bearing NO.686906316 for Rs.50,000/- from opposite party No.1. For both the policies, the complainant is the nominee. After the death of the deceased the complainant submitted the claim forms to opposite party No.1 by enclosing the original policy bonds and all necessary documents and requested to settle the claims. The opposite parties have settled one claim of the policy bearing NO.686906316 with all benefits and paid the claim amount to the complainant through cheque without any objection, but they have repudiated the claim under the Policy No.687477702 on the ground that the particulars of the previous policy was suppressed by the life assured. The repudiation letter issued by the opposite party NO.2 was received by the complainant on 14-05-2008 but the same was misplaced at the house of the complainant and the same will be filed after tracing out. The complainant is having only the postal cover of repudiation letter of opposite party NO.2 which contains the date of dispatch on 10-05-2008. The repudiation made by the opposite parties is false and incorrect. The act of opposite parties amounts to deficiency of service. Hence, filed this complaint praying to direct the opposite parties to pay Rs.1,00,000/- with all accrued benefits under the Policy NO.687477702 with damages and costs. The opposite parties filed the Written Version stating that they admitted that the deceased obtained two policies and the complainant is the nominee for the two policies. Further stated that the Life Insurance is a subject matter of Solicitation and the Insurability of the proposer is verified CC 92/2009 -- 3-- on the basis of scientific assessment called Underwriting. The insurance need i.e, the amount of insurance allowable to the proposer is directly related to his Age, health, Educational qualification and earning capacity/economic status. For this reason, the proposal for insurance contains a Question which reads as follows: Q.NO.9: Please give details of your previous insurance (including policies surrendered/lapsed during last 23 years). Answer NIL. The aforesaid life assured in his proposal dated 31-03-2006 for insurance has replied in Negative to the Question 9 of the said proposal. The deceased life assured had intentionally suppressed the material fact of his previous policy/existing life insurance for a Sum Assured of Rs.50,000/-, thereby contravened the doctrine of UBERRIMAE FIDES i.e, Utmost good faith” and suppressed the material facts, so as to fraudulently obtain higher amount of insurance on his life than what he is eligible as per underwriting rules of the opposite parties corporation. Further stated that upon careful consideration of all facts and evidences on record a Standing Committee consisting of Senior Managers from the departments of Legal, Claims, New Business and Customer Relationship Management, after applying their collective wisdom, and with a consumer centric Approach, have decided to admit the liability under the aforesaid policy for 50% of the sum assured as Exgratia, so as to restrict to total allowable sum assured with Notarised Stamped Declaration as age proof, i.e, Rs.50,000/-, since an amount of Rs.50,000/- under the earlier policy had already been paid to the complainant/Nominee. The fact of Part Repudiation of the claim under the above said policy was communicated to the complainant by way of Reg.letter dated 31-03-2008 which is admitted by the complainant. An extra premium of Rs.1.50 per 1000 sum assured was imposed by the opposite parties corporation at the time of acceptance of risk, which clearly shows that the nature of Age proof submitted was of Non Standard nature. All the averments made against the opposite parties corporation are false and baseless. The averment that since claim is settled under Policy NO.686906316 for a sum assured of Rs.50,000/-, the other claim shall also be settled is Fully Untenable. With regard to question NO.9 the deceased given answer NIL that is the reasons only he cheated the insurance and requested this Forum to dismiss this case. CC 92/2009 -- 4-- Now the point for consideration is: 1) Whether there is any deficiency of service on the part of the opposite parties? 2) To what Relief? Point NO.1:- After arguments of both side counsels we are of the opinion that it is a fit case tobe allowed. The main argument of opposite parties Advocate is that when the policy holder obtained one policy and at the time of obtaining second policy he has to intimate in proposal form. Further the maximum insurance cover will be restricted only Rs.1,00,000/-. When there is a condition that Maximum insurance cover will be restricted only Rs.1,00,000/- certainly the insurance has to disclose the same before the deceased prior to taking of second policy. But there is no evidence to show that the insurance had disclosed the same before the deceased. It is the duty of the insurance before obtaining the policy from the policy holder they have to disclose all the Rules, conditions before the insured, but in this case probably the insurance has not disclosed all the rules, and conditions before the insured. When there is no evidence to show that the insurance has disclosed all the facts, rules and conditions before the insured, it is clear that the insured does not know the facts and conditions. If he really he knows about these facts certainly he will not obtain the second policy. It is the duty of the insurance they have to disclose the same fact before the deceased by way of saying that the maximum insurance cover will be restricted to Rs.1,00,000/-. Previously he obtained for one policy i.e, for Rs.50,000/- and another policy for Rs.1,00,000/-, so it is fault of the insurance only. Further the deceased already given age proof, declaration with regard to age proof i.e, enough for him because he is an innocent. Another thing i.e, the argument of opposite parties Advocate is that he suppressed the material facts with regard to Question No.9. For this our answer is that he has not suppressed the material facts because it is only a simple thing. At the time of giving policies by insurance to so many persons it is their duty that before giving the policies to the persons certainly they have to explain or disclose the rules and conditions of the said policy or previous policies. In this case we do not find out anywhere that the insurance disclosed about the said fact i.e, they have disclosed that the maximum insurance cover will be restricted to Rs.1,00,000/-. So it is clear that on the face of the insurance CC 92/2009 -- 5-- that they have not disclosed the same above fact before the deceased. When the insurance has not disclosed the same before the deceased certainly his nominee is entitled to get the policy amount. The question of suppression of real facts by the deceased life assured or the complainant herein does not arise. The policy holder has not suppressed the material facts as contended by the opposite parties. The agent as well as Development Officer for the policy bearing No.686906316 for sum assured of Rs.50,000/- as well as for the present policy for Rs.1,00,000/- are one and the same. Taking Rs.50,000/- policy is within the knowledge of concerning officers of Life Insurance Corporation of India i.e, opposite parties. Therefore repudiating the policy on the said ground is illegal and not maintainable at all. There is a citation in III (1996) CPJ 8 (SC) SUPREME COURT OF INDIA UNITED INDIA INSURANCE CO. LTD., … Appellant Vs M.K.J. Corporation … Respondent. Consumer Protection Act, 1986 – 2(1)(g) – Deficiency in Service – Insurance Act, 1958-Section 64(U)- Insurance- Exclusionary clause-Complainant was holding two insurance policies-Leather inn process was damaged due to the employees strike – Lodged claim with the Insurance Co,- Claim not settled – Complaint allowed by the Commission – Hence appeal- Whether the Insurance Policy covers the risk ? – (Yes) – Whether it is the duty of insurers or the agents to disclose al material facts ?-(Yes)-Whether the insured bound by subsequent exclusionary clause?-(No). According to above Supreme Court Decision it is a fundamental principle of Insurance Law that utmost good faith must be observed by the contracting Parties. It is the duty of the insurance and their agents to disclose all material facts within their knowledge ii) MADHY PRADESH STATE CONSUMERDISPUTES REDRESSAL COMMISSION,BHOPAL BHAGWAN SINGH -Appellant. Versus LIFE INSURANCE CORPORATION OF INDIA & ORS - Respondents CC 92/2009 -- 6-- 1) Consumer Protect Act,1986-Section 2(1)(g)-Insurance-Four policies taken-Repudiation of claim – Contention, non-disclosure of previously obtained policies-All policies issued officers supposed to ascertain from their record about status of earlier policies, if any- Proposer cannot be blamed for something, well within knowledge of respondent LIC – Repudiation wholly unjustified-LIC liable. (ii) According to above decision the issuing officer supposed to ascertain from their records about status of earlier policies if any proposer cannot be blamed for something well within the knowledge of officials of LIC. Therefore, repudiation held to be unjustified. ii) The complainant is herewith submitting a decision reported in 2009(1)CPR 142 RAJASTHAN STATE CONSUMER DISPUTES REDRESSAL COMMISSION JAIPUR Madan lal --Appellant Versus LIC of India and Ors. --Respondent Consumer Protection Act,1986-Sections 12 and 17- Life Insurance Policy claim – Claim repudiated on ground that insured while taking policy on 28-11-1996 suppressed fact of an earlier policy taken in Sep,1996 and as per table pertaining to category a self employed woman could betaken an insurance policy maximum to a sum assured of Rs.50,000/- Policy in question was for Rs.50,000/- and earlier policy was also for Rs.50,000/- and insured had died of heart attack on 19-12-1997 –District Forum dismissed complaint accepting the defence – Appeal - Utmost good faith to be observed by contracting parties in the matter of insurance –Agents of LIC were bound to disclose full information relevant and advantageous to insured – LIC failed to prove that non-mentioning of taking earlier policy was with ulterior motive or with fraudulent intention- if a fact had a bearing on cause of death it would become material – Repudiation of claim was unjustified and Forum failed to appreciate in correct legal perspective –Appellant held entitled to policy amount with interest at 9% p.a. We already stated in supra that Utmost Good Faith means both the parties deserve good faith. It is a fundamental principle of insurance law that utmost good faith must be observed by the contracting parties. Good faith forbids either party from concealing (non disclosure) what he privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. Just as the insured has a duty to disclose, CC 92/2009 -- 7-- ‘similarly it is the duty of the insurers and their agents to disclose all material facts within their knowledge since obligation of good faith applies to them equally with the assured. We already stated in supra that the insurance has not disclosed the Rules and Conditions of the policy before the deceased. It is crystal clear that the complainant by examining himself as PW-1 and the documents filed in support of his contentions, the contentions made by the opposite parties is nothing but imaginary which cannot be looked into, as they failed to prove their contentions before the Hon’ble Forum. The citations already disclosed in supra are applicable to the case of the complainant against the opposite parties. Further the opposite parties cited a judgment in P.C.Chacko and another Vs Chairman, Life Insurance Corporation of India and others. (2008) 1 Supreme Court Cases 321. Civil Appeal NO.5322 of 2007 decided on November, 20, 2007. Insurance Act, 1938 – S.45 – Repudiation of claim under insurance policy on ground of misstatement – Held, misstatement by itself not reason for recession of the policy unless the same is material in nature – However, a deliberate wrong answer given by insured having a great bearing on contract of insurance may lead to policy being vitiated in law – Policy can be repudiated if obtained with a fraudulent act – In the present case, the insured obtained a life insurance policy through his brother, who was an authorized agent of Insurance Company concerned – Though the insured had undergone an operation for adenoma thyroid prior to the instant policy, while answering the questions in the application form for obtaining the policy, he denied that he had undergone any operation – Claim under the policy repudiated on ground of said wrong answer or non disclosure – Contract of Insurance or nay clause thereof was not unreasonable, unfair or irrational – There was nothing to show that repudiation of policy was not done with extreme care and caution or was otherwise invalid. – In view of the above held, Division Bench of High Court was justified in upholding the recession of policy in question – Contract Act, 1872 – Ss.17, 18 and 19 – Penal Code, 1860 – S.25 – Contract – Void and voidable contracts – Formation defects rendering contracts voidable – Misrepresentation and non-disclosure – Specific Relief Act, 1963 – S.27 – Applicability of S.27(1)(a). CC 92/2009 -- 8-- This citation is applicable to the case of the opposite parties because we already stated in supra that it is the duty of the insurer that he has to disclose all rules regulations and conditions of the policy. Then only the person has to mention in proposal form. Without knowing all the conditions how he could mention anything in the proposal form. So the insurer has not disclosed the rules and conditions of the policy that is the reason only the deceased obtained two policies. For the foregoing reasons given by us, we come to the conclusion that we see no grounds to dismiss this case and we answered this point accordingly in favour of the complainant against the opposite parties. Point No.2: To what Relief:- The first point is decided infavour of the complainant against the opposite parties this point is also decided in favour of the complainant against the opposite parties. In the result this complaint is allowed and we direct the opposite parties to pay an amount of Rs.1,00,000/-(Rs.One lakh only) to the complainant along with interest @7.5% p.a. from the date of filing of the complaint i.e, 01-06-09 till the date of deposit. The opposite parties are also directed to pay Rs.500/- (Rs.Five hundred only) towards costs. A month’s time is granted to the opposite parties for the compliance of the order. (Dictated to the Stenographer, transcribed by her, corrected and pronounced by us in the open Forum today, the 28h July, 2010). President Lady Member District Consumer Forum, Warangal CC 92/2009 -- 9-- APPENDIX OF EVIDENCE WITNESSES EXAMINED On behalf of Complainant On behalf of Opposite Parties Affidavit of complainant No.1 filed. Affidavit of opposite party No.1 filed. EXHIBITS MARKED ON BEHALF OF COMPLAINANT 1. Ex.A-1 is the Premium Notice. 2. Ex.A-2 is the Death Certificate. 3. Ex.A-3 is the Postal Cover of opposite parties. 4. Ex.A-4 is the Original Renewal Premium Receipt issued by opposite parties. 5. Ex.A-5 is the Original Default notice issued by opposite parties. 6. Ex.A-6 is the office copy of legal notice issued to opposite parties, dt.12-10-2009. 7. Ex.A-7 is the Postal Receipt. 8. Ex.A-8 is the Postal Acknowledgment. 9. Ex.A-9 is the Status Report of the policy No.686906316. ON BEHALF OF OPPOSITE PARTIES 1. Ex.B-1 is the proposal for insurance. 2. Ex.B-2 is the LIC Underwriting Manual. 3. Ex.B-3 is the Declaration of Age. 4. Ex.B-4 is the Notarized Affidavit dt.31-03-2006 containing declaration of age by the deceased life assured. PRESIDENT
[HONORABLE V.J.Praveena]
PRESIDING MEMBER
[HON'ABLE MR. D.CHIRANJEEVI BABU]
PRESIDENT
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