The brief facts of the case in brief are that Late Shri Doeswell Lating the father of the Complainant had opened a Life Insurance Policy being No 482096831 on 14.07.2000 for a sum assured for Rs 50,000/ with the OP i.e. The Life Insurance Corporation of India Ltd, Shillong, for which an amount of Rs 1,510/ was payable quarterly as premium. Late D.Lating subsequently fell sick and was on medical treatment in GNRC Hospital, Guwahati and due to his sickness the he could not pay his premium in respect of the aforesaid Life Insurance Policy and as a result the said policy lapsed. After recovery from his illness the deceased father of the Complainant paid the entire outstanding premium along with fine and late fee on 02.12.2005 and subsequently the lapsed policy was revived by the OP. Soon after reviving of the Policy the father of the Complainant expired on 12.05.2006, and the cause of death was due to Myocardial Infarction as certified by Dr Mrs B.Kurbah, Senior Medical and Health Officer, Civil Hospital, Shillong. The Complainant being the nominee in the said policy filed an application for claim of full sum assured of Rs 50,000 plus other bonus and interest in respect of the death of her father. In reply to Complainant s application, the OP no 3 i.e. Senior Divisional Manager, LIC Guwahati vide letter dated 29.12.2007 stated that the revival of the lapsed insurance policy by the deceased is void and all money paid towards revival of the said policy and subsequently thereto belongs to the LIC, and further mentioned that LIC can entertain claim for the paid up value of the Policy only with vested bonus which were secured by the Policy on the date of lapse. On 24.04.2008 Complainant sent a written representation to the OP No.2 i.e. Zonal Manager LIC of India Kolkata for reconsideration. OP No.1 vide letter dated 31.03.2008 informed the Complainant to accept a cheque amounting to Rs 16,500/ which the Complainant did not accept since she had sought for full death claim benefit with accrued bonus and interest up to date. Complainant on 23.06.2008 sent a reminder requesting the OPs to settle her claim in full. On 05.12.2008 a Pleader s Notice was sent since the OPs but they failed to settle her claim. On 19.11.2008 OP No.3 sent a letter to Complainant that the claim have been repudiated and nothing is payable to the Complainant. OP no. 3 replied to Pleader s notice vide letter dated 30.12.2008 stating that repudiation was due to concealment of material information with regard to health history by the late father of the Complainant at the time of reviving the policy. The OP therefore could not settle the claim of the complainant and hence this case.
The OP filed their show cause on 26.06.2009 wherein they had mentioned that the claim of the Complainant was processed and partially repudiated for concealment and mis statement of material information at the time of getting the policy revived and that the OP would pay only for the paid up value of the policy with vested bonus which were secured by the policy on the date of lapse and accordingly a discharge voucher and cheque of Rs 16,500/ was sent to the Complainant which she refused to accept. Hence there was no deficiency in service. The OP further mentioned that the contract of Insurance is a contract of utmost good faith and the revival of the policy is based upon the Declaration of Good Health by the life assured and Full Medical Report. The policy was admittedly revived with effect from 02.12.2005 on the strength of the aforesaid declaration. OP further mentioned that according to medical reports supplied by GNRC Hospital Guwahati, it certified that the father of the Complainant had visited the hospital since 28.12.2004 to 09.05.2006 for treatment of Polythristis and that the father of the Complainant was also granted leave from his office on medical ground for period from 01.12.2004 to 30.03.2005 and 31.03.2005 to 03.06.2005. OP mentioned that the lapsed period of the policy was from July 2004 to October 2005. OP further mentioned that the office orders issued by Director of Health Service, Meghalaya and GNRC Hospital reports shows that the deceased father of the Complainant was suffering from various ailments for which he has to undergo investigations and treatment at GNRC. But at the time of revival of the policy he concealed all the material information relating to his health during the lapsed period and made incorrect statement about his health. Therefore as per terms of the Insurance the claim was found to be not payable except the reduced paid up value of the premium prior to the revival of the policy.
In the rejoinder filed by Complainant, she mentioned that the deceased father of the Complainant had completed 5 years since the date of commencement of the policy i.e. from 14.07.2000.That due to ill health he could not pay the premium but when he was medically declared fit to resume his duty, he revived back his lapsed policy by paying all the outstanding premium with interest, fines and penalties on 02.12.2005. The deceased policy holder was in good shape of health at the time of opening the policy. The Complainant also stated that the original copy of the Insurance Policy Certificate was submitted to the Insurance Company at the time of filing the claim application. The Complainant further mentioned that the revival of the lapsed policy is a continuation of the old policy and the repudiation of the claim on the ground of mis statement regarding health condition is out of the question. The Complainant also mentioned that it is an admitted fact that the deceased father of the Complainant was treated at GNRC Guwahati as he was suffering from Polythristis but his actual cause of death was due to Myocardial Infraction as certified by Senior Medical doctor. The Complainant hence prayed that OP should pay the whole amount of Rs 80,000/ as claimed in the petition plus other benefits.
In the evidence stage, the Complainant stated that she do not know how her father died but as per doctor certificate it was shown that the cause of his death was due to Myocardial Infraction and that she is aware of the policy of her father and that she is a nominee of the said policy. She also stated that since 2004 her father was under medical treatment and that the policy got lapsed due to non payment of premium.
CPW2 Shri Phrenly Lyting stated that the deceased father of the Complainant was known to him for the last 15 years and that he was in good health in the year 2000. He stated that the deceased father of the Complainant fell sick in the year 2004 and had gone to Guwahati for medical treatment and later on he died of cardiac arrest. In the cross examination he mentioned that the deceased had shown him the policy but he had no idea that the said policy got lapsed and do not know that he had given a false declaration at the time of reviving the policy.
CPW3 Smti Roselyne Dkhar, Development Officer LIC, stated that she do not know Late Shri Doeswell Lating. She stated that when the policy holder does not pay premium for the period of 6 months the policy lapses and to revive a lapsed policy one has to declare his health statement in Declaration of Good Health form and has to pay all due premiums including interest and late fees. She stated that Shri Doeswell Lating was in good health at the time of taking the policy. She further stated that at the time of revival of the policy, apart from personal statement regarding health form another form i.e. Medical Examiner s Confidential Report is to be filled up and the policy holder has to sign and even the doctor of the Corporation has to sign. In this case Shri Dhruba Jyoty Goswami had signed and she had also put her signature in the said form. CPW3 was never cross examined.
CPW4 Smti B.S. Pahsyntiew who is the agent of the Company stated that she knows the deceased who took the policy in the year 2000 and she was the agent in the said policy. The deceased s daughter was put as his nominee. She stated that the policy he took is the Money Back Policy which is a non medical policy. She was not aware that the policy got lapsed. She was also not aware that the deceased was suffering and had gone for treatment. She further stated that in the revival form, the deceased himself filled up the in Personal Statement Regarding Health Form and she had put her signature as witness. In her cross examination she stated that she do not remember exactly when was the policy was taken but it was in the year 2001 or 2002. She stated that at the time of taking the policy the deceased person did not give any declaration about health but appeared to be healthy. The policy was for a 12 years term. She knew that the deceased did not pay two of his premium amount and therefore this policy lapsed but do not remember when was this lapsed occurred but the policy was revived through her. She is also aware that when policy is revived one has to give a health declaration. The deceased person did submit a declaration of health and confirmed that the deceased gave a declaration of good health submitted on 01.12.2005. She is not aware that at the time of submission of declaration the deceased person was not in good health and was undergoing treatment in GNRC Hospital. She further stated she is not aware that on account of the fact that the policy holder made a false declaration of good health, whether he is entitled or not to full benefits under the revived policy.
In the written argument filed by Complainant, she reiterated the fact as stated in the complaint petition and rejoinder. The Complainant relied on Section 45, Special Provision Law of the Insurance Act, 1938 which lays down Policy not to be called in question on ground of mis statement after two years No policy of Life Insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee or friend of the insured or in any other document leading to the issue of the policy was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulent made by the policy holder and that the policy holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose. The Complainant also relied upon judgement passed by National Commission reported in 2009 CJ 1040 NC in LIC versus Gowramma. The Commission has referred to a judgement passed by the Supreme Court AIR 1962 SC 814 in which the Honble Supreme Court has clearly held that for purposes of Section 45 of the Life Insurance Act, 1938, the period of two years has to be counted from the date on which the policy was originally effected and not from the date of revival of the policy. In view of the above findings the Honble Commission dismissed the revision petition.
In the written argument filed the OP, it submitted that a contract of insurance is based on Uberna fide i.e. utmost good faith. While entering into a contract of insurance one have to display utmost good faith and cannot do anything which may be construed as acting in any manner which is malafide. A Malafide action is against the principle on which such contracts are not enforceable. In the instant case the deceased gave false and misleading answers knowing the same to be false and this misleading has rendered the contract as void. The revival of the policy was on the strength of the DGH and FMR submitted by the deceased and on the basis of the answer supplied by him. When he has given false answers the contract of insurance is coloured by fraud. The OP relied upon Section 17 and 17 2 of the Contract Act, which defines fraud and the act of the Complainant, amounted to fraud as defined under Section 17 of the Contract Act and therefore the OP had every right to repudiate the claim and prayed for dismissal of the case.
After perusal of materials on record and submissions made by both parties, the Forum makes the following observations
1. The policy was taken in the year 2000 which lapsed in the year 2004 and revived in the year 2005 after payment of the due premiums and penalties.
2. The Medical Report was actually done by the Officers from the LIC only which certified that on examination the applicant appeared healthy. In the Personal Statement Regarding Health the agent herself had signed as a witness.
3. The Policy of the Deceased Doeswell Lating was originally effected on 14.07.2000 and revived on 02.12.2005 for the full sum assured. Hence the said policy had clearly completed more than 5 years. The revival of the lapsed policy does not constitute a new contract but a continuation of the original policy.
4. Repudiation of the claim on the ground of misstatement regarding condition of health at the time of reviving the lapsed policy is erroneous and contrary to the Section 45 of the Life Insurance Act, 1938. We stand by the order passed by the Supreme Court which says, period of two years has to be counted from the date on which the policy originally effected and not from the date of revival of the policy. In the instant case the deceased had completed 5 years and repudiation of the claim is not justified and purely a deficiency in service.
This Forum therefore decided the case in favour of the Complainant. The OP is directed to pay to the Complainant the insured amount of Rs 50,000/ along with other bonus, interest and other benefits as admissible under the Act and also to pay an interest at 6 percent per annum from the date of repudiation and Rs 10,000/ as compensation for deficiency in service.
We further direct that the OP is to make payment to Complainant within 30 days from the date of receipt of this Order.
Case disposed off.
