The claim by wife of the policy holder for assured sum of Rs.1.00 Lakh on account of death of the complainant’s husband on 13-11-2011 within 10 days after the lapsed policy was revived by the LIC on
04-11-2011 has been repudiated and hence the present complaint seeking compensation alleging deficiency in service.

            2.  The letter of repudiation (Ex.A.1) dated 05-10-2013 is as under;

            “Re: Death claim policy No.664972753 on the name of Late Rudrappa S/o Mariyappa Tidi, Sum Assured Rs.100,000 P/PT/PPT:179/20/20.

With reference to your claim under the above policy we have to inform you that the policy was allowed to lapse by non-payment of the premium due 12/2009 & not acquiring any paid-up value.  The Policy was revived on 04.11.2011 for the full sum assured on the strength of a Personal Statement regarding health made by the deceased on 04.11.2011.  In the said Personal Statement regarding health submitted for revival of policy, completed by the deceased life assured he had answered the following questions as stated below in the Personal statement of health as below:

DGH Form

We hold evidence to show that the life Assured had suffered from Jaundice for which he took medical treatment from a doctor prior to revival of the policy.  He did not, however, disclose these facts in his said Personal Statement regarding health.

It is therefore, evidence that he made deliberate mis-statements and with-held material information from us regarding his health at the time of getting the policy revived and hence in terms of the Declaration signed by him at the foot of the said Personal Statement regarding health, the revival of the Policy is hereby declared void and all moneys paid towards revival of the policy and subsequent thereto belongs to us.

For your information, we sent herewith a copy of the Personal Statement regarding health referred to above.”

            3.  The claim before this Forum is also contested on similar grounds.

            4.  Personal Statement regarding the health said to have been given by the deceased policy holder on 04-11-2011 is at Ex.B.3, which document has been prepared by one Sharanappa.B.Radder, LIC Agent, which discloses that the policy holder was a Teacher by his occupation.  It is specifically stated that the policy holder was in good sound health.  Answer to Question No.1 given in the negative.

            5.  The Medical Attendance Certificate as per Ex.B.1 issued by Dr.D.M.Aravatagimath, which discloses that the policy holder was consulting the doctor for 15 days prior to his death and he was suffering from some disease for about 20 – 25 days prior to his death and patient was first seen by the medical attendant who issued Ex.B.1 certificate about 15 days earlier to death.  The Certificate, Ex.B.5 also given by same Dr.D.M.Aravatagimath, Ashwini Clinic, Kanakagiri certifying that his patient Rudrappa was under treatment for hepatitis (Jaundice) on 0211-2011 and 06-11-2014 as outpatient.  The evidence of this doctor has been recorded through a Commissioner appointed by this Forum wherein also the doctor has deposed that deceased Rudrappa was suffering from severe jaundice.

6.  In the case of P.C.Chacko and another V/s Chairman, Life Insurance Corporation of India and other (2008) 1 SCC 321 the Hon’ble Supreme Court has held as under:-

“16. The purpose for taking a policy of insurance is not, in our opinion, very material.  It may serve the purpose of social security but then the same should not be obtained with a fraudulent act by the insured.  Proposal can be repudiated if a fraudulent act is discovered.  The proposer must show that his intention was bona fide.  It must appear from the face of the record.  In a case of this nature it was not necessary for the insurer to establish that the suppression was fraudulently made by the policyholder or that he must have been aware at the time of making the statement that the same was false or that the fact was suppressed which was material to disclose.  A deliberate wrong answer which has a great bearing on the contract of insurance.  If discovered may lead to the policy being vitiated in law.”

            7.  The Supreme Court decision cited above is not applicable to the facts of the present case as alleged suppression of material facts are with reference to the revival of the policy and not before the contract of insurance by which policy can be issued.  It may be noted that no fresh policy was issued after revival of the policy. 

            8.  The dictionary meaning of the word ‘Revive’ is

drawn into activity;          

• Bring to activity
• Restore to use or activity
• Act of running legal force of contract
• Reestablishment of legal validity of the contract.

In the instant case, the policy was revived before the death of the policyholder and therefore the contract was binding on the Insurance Company as no new contract has been contracted.  No separate policy has been issued after revival.  Therefore, principle of “Novation” does not apply.

9.  In LIC V/s Guruvinder Kaur – III (2013) CPJ 116 (NC), it was observed as follows;

“5. Complainant has suppressed fact of lapse and revival of policy in his complaint.  Complainant simply mentioned in para 11 of the complaint that petitioner was explained about the true facts regarding the illness that the deceased suffered right renal calculi only after September 2003.  In the complaint it has not been mentioned that these facts were disclosed by the deceased to petitioner.  During court of arguments, respondent submitted that at the time of revival of policy, these facts were disclosed to the agent of the petitioner, but agent has filled wrong answers in the personal statement regarding health.  This fact cannot be believed because this declaration dated 1.11.2003 given at the time of revival of the policy has been signed by the deceased and answers to question No.2 are in negative which runs as under:

Q.No.2: (a) Have you suffered from any illness
/disease requiring treatment for a week of more?      :  No

(b) Did you ever have any operation, accident or

       injury?                                                                            : No

(c)  Did you ever undergo ECG, X-ray screening, Blood

       Urine or Stool Examination                                      : No.

6.  Apparently, these answers are wrong in the light of admissions in the complaint itself in which complainant has mentioned that deceased suffered right renal calculi in September, 2003.  Record furnished by petitioner clearly proves that decease was admitted in Jeevan Mala Hospital on 08.9.2003, operated on the same day on account of right non-functioning Kidney secondary to right renal calculi and right ureteric calculi and was discharged on 11.9.2003.  As per deceased’s previous treatment summary recorded by Sir Ganga Ram Hospital, deceased underwent treatment in September 2003.  Admittedly, this fact does not find place in personal statement regarding heal submitted on 1.11.2003 at the time of revival which amounts to suppression of material facts.  It was held by me in R.P. No. 3848/2007, LIC V. Smt. Kempamma decided on 24.1.2013 that at the time of revival of policy, new contract comes into existence and if assured suppresses material fact or gives false declaration regarding his health, Insurance Company is entitled to repudiate claim.

10.  As against this decision of the National Commission, counsel for the complainant has relied upon the decision of the National Commission in LIC V/s Gowramma – III (2009) CPJ 25 (NC) in paragraph 7, 8 & 9 of this decision, it has been observed as follows;

“7.  It is not disputed before us that the Policy was not repudiated on the ground that at the time when initial Policy was taken, there was any misrepresentation or initial concealment of facts by the deceased.  In the present case, two years had elapsed after the issuance of the Policy and the burden to prove that the deceased had concealed the facts was the Insurance Company in terms of Section 45 of the Life Insurance Act, 1938.

8.  Mr.Ashok Kashyap, learned Counsel appearing for the petitioner, relying upon a judgment passed by a 4-Member Bench of this Commission in L.I.C. of India and Another v. Parveen Dhingra reported in II (2003) CPJ 70 (NC), contended that the revival of the Policy constituted new contract between the parties and two years have to be counted from the date of revival of the Policy.   This submission cannot be accepted in view of the law laid down by the Hon’ble Supreme Court of India in Mithoolal Nayak v. Life Insurance Corporation of India reported in AIR 1962 Supreme Court 814 in which Hon’ble Supreme 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 para 7 of the said Judgment, Hon’ble Supreme Court observed as under:

“7. We shall presently consider the evidence, but it may be advantageous to read first Section 45 of the Insurance Act, 1938, as it stood at the relevant time.  The section, so far as it is relevant for our purpose, is in those terms –

‘No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years 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 fraudulently 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.

It would be noticed that the operating part of Section 45 states in effect (so far as it is relevant for our purpose) that no policy of life insurance effected after the coming into force of the Act shall, after the expiry of two years from the date on which it was effected, be called I 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; the second part of the section is in the nature of a proviso which creates an exception.  It says in effect that if the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently 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, then the insurer can call in question the policy effected as a result of such inaccurate or false statement.  In the case before us the policy was insured on March 18, 1945 and it was to come into effect from January 15, 1945.  The amount insured was payable after January 15, 1968 or at the death of the insured, if earlier.  The respondent company repudiated the claim by its letter dated October 10, 1947.  Obviously, therefore, two years had expired from the date on which the policy was effected.  We are clearly of the opinion that Section 45 of the Insurance Act applies in the present case in view of the clear terms in which the section is worded, though learned Counsel for the respondent company sought, at one stage, to argue that the revival of the policy some time in July, 1946 constituted in law a new contract between the parties and if two years were to be counted from July, 1946, then the period of two years had not expired from the date of the revival.  Whether the revival of a lapsed policy constitutes a new contract or not for other purposes, it is clear from the wording of the operative part of Section 45 that the period of two years for the purpose of the section has to be calculated from the date on which the policy was originally effected; in the present, case, this can only mean the date on which the policy (Ex.P-2) was effected.  From that date a period of two years had clearly expired when the respondent company repudiated the claim.  As we think that Section 45 of the Insurance Act applies in the present case, we are relieved of the task of examining the legal position that would follow as a result of inaccurate statement made by the insured in the proposal form or the personal statement, etc. in a case where Section 45 does not apply and where the averments made in the proposal form and in the personal statement are made the basis of the contract.” 

                                                                (Emphasis supplied)

  9.  In view of the law laid down by the Supreme Court of India, no reliance can be placed upon the judgment of this Commission in Parveen Dhingra’s case (supra_.  Judgment of the Supreme Court in Mithoolal Nayak’s case (supra), perhaps, was not brought to the notice of the 4-Member Bench which heard Parveen Dhingra’s case (supra).  The judgment of the Supreme Court being binding on all the Courts and Tribunals has to be preferred and followed.” 

11.  Thus, there are two decisions of the National Commission on the same point before this Forum.  We propose to follow earlier decision, because the said decision has followed statement of law enunciated by the Supreme Court.  In the circumstances we disagree with the opinion expressed in the latest decision of the National Commission.

12.  In the view which we have now taken, repudiation of the claim on the ground that the personal statement given by the deceased on
04.11.2011 are deliberate mis-statement regarding his health cannot be a justified ground. 

13.  At the end of paragraph – 7 of the decision reported in AIR – 1962 (SC) 814, the question before consideration ‘Whether revival of lapsed policy constitutes new contract or not for other purpose.  It is clear from the wording of the operative part of Section – 45 within a period two years for the purpose Section – 45 has to be calculated from the date on which the policy originally effected.

14.  In the instant case, the LIC has not stated under which Section of the policy document or provision of law they are repudiating the claim.  According to us, there is no such entitlement to the LIC to repudiate the claim on the basis that personal statement prepared by the LIC agent on 04-11-2011 can be a ground for repudiation of the claim. 

15.Certen citations with list furnished by the advocate for OP in the proceedings on 03-03-2015 need not be discussed in view of the decision of the Supreme Court referred by us in Paragrah – 10 of this Judgment following the decision of the Supreme Court in Mitulal Naik V/s LIC case, which must be known to the LIC also.  Many of the citations referred to suppression of material facts at the time of making proposal, which are not relevant for the purpose of this case considering the fact that the repudiation is not on the ground of suppression of material facts at the time of proposal for policy by the policy holder. 

16.  For the reasons given above, the LIC is directed to pay sum of Rs.1,00,000=00 (Rupees one lakh only) to the complainant with interest at 10% p.c. from the date of repudiation of the claim on 05-10-2013 till actual payment towards compensation for deficiency in service.  The LIC to file compliance report within six months.

// ANNEXURE //

List of Documents Exhibited for the Complainant.

Witnesses examined for the Complainant / Respondent.