KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACADU THIRUVANANTHAPURAM APPEAL NO.141/2006 JUDGMENT DATED:28-06-2010. PRESENT SRI. M.V. VISWANATHAN : JUDICIAL MEMBER SRI.M.K. ABDULLA SONA : MEMBER 1.Life Insurance Corporation of India, Divisional Office, Jeevan Prakash, M.G.Road, P.B.No.1133, Ernakulam-682 011. : APPELLANTS 2.Branch Manager, LIC of India, Muvattupuzha Branch, Muvattupuzha-686 661. (By Adv:Sri.R.S.Kalkura) Vs. Valsala Alias, W/o late N.C.Alias, Nadukudiyil House, : RESPONDENT Kothamangalam.P.O, Ernakulam Dist. (By Adv:Sri.Tom Joseph) JUDGMENT SHRI.M.V. VISWANATHAN: JUDICIAL MEMBER Appellants were the opposite parties 1 and 2 and respondent was the complainant in CC.446/05 on the file of CDRF, Ernakuam. The complaint therein was filed alleging deficiency of service on the part of the opposite parties in repudiating the insurance claim preferred by the complainant with respect to the two life insurance policies taken by the complainant’s husband Alias as the life assured. The opposite parties entered appearance and filed joint version denying the alleged deficiency of service. They justified the action of the LIC of India in repudiating the insurance claim preferred by the complainant. It was contended that the life assured late Mr.Alias suppressed material facts in the proposal for the said two life insurance policies and thereby the LIC is justified in repudiating the insurance claim based on the said two policies. 2. Before the Forum below, the complainant was examined as PW1 and the witness from the side of the opposite party/LIC of India was examined as DW1. Ext.A1 to A5 and B1 to B13 documents were produced and marked on the side of the parties to the said complaint. On an appreciation of the evidence on record, the Forum below passed the impugned order dated:30/12/2005 directing the opposite parties to pay the insurance claim amount of Rs.5.lakhs to the complainant with interest at the rate of 12% per annum from the date of the claim till payment and cost of Rs.5000/-. Hence the present appeal. 3. We heard both sides. The learned counsel for the appellants/opposite parties relied on the entries in B3 to B6 porposals submitted by the life assured Sri.Alias and also the documentary evidence adduced as Ext.B8 to B13 and argued for the position that there was suppression of material fact regarding health condition of the life assured while submitting the proposals for the aforesaid 2 life policies. It is submitted that the appellants/opposite parties are perfectly justified in repudiating the insurance claim on the ground that there was suppression of material facts. He also relied on the decision rendered by the Hon’ble Supreme Court in P.C.Chacko and Another Vs. Chairman, LIC of India and Others reported in 2008 SAR (Civil) 44. Thus, the appellants/opposite parties prayed for setting aside the impugned order passed by the Forum below and also for dismissal of the complaint in CC.446/05 filed before the Forum below. On the other hand, the learned counsel for the respondent/complainant supported the impugned order passed by the Forum below. He argued for the position that there was no nexus between the cause of death of the life assured and the alleged suppression of fact in the proposals. It is also submitted that the proposal forms were filled by the agent of the LIC and that the life assured had no role in filling the aforesaid proposal forms. Thus, the respondent prayed for dismissal of the present appeal. 4. The points that arise for consideration are:- 1. Whether the appellants/opposite parties can be justified in repudiating the insurance claim preferred by the respondent/complainant on the strength of the two life policies issued in the name of late Sri.N.C.Alias? 2. Whether there was any deficiency of service on the part of the appellants/opposite parties in repudiating the insurance claim on the ground of suppression of material facts by the life assured while submitting the proposals for the two life policies? 3. The Forum below can be justified in passing the impugned order dated:30/12/2005 in CC.446/05 directing the opposite parties to pay the insurance amount of Rs.5.lakhs to the complainant with interest and costs? 5. Points 1 to 3:- There is no dispute that the life assured late Sri.N.C.Alias had taken two life insurance policies from the opposite party/LIC of India for an amount of Rs.5.lakhs. One policy was for Rs.4.lakhs and the other policy was for Rs.1.lakh. The respondent/complainant is the widow of the life assured late Sri.N.C.Alias and that the respondent/complainant is also the nominee of the life assured. Admittedly the life assured N.C.Alias died on 12-12-2004 due to “Hepato Cellular Carcinoma”. There is no dispute that after the death of the life assured the respondent/complainant being the widow and nominee of the life assured preferred claim for the insured amount of Rs.5.lakhs and that the opposite parties repudiated the aforesaid insurance claims. 6. The ground stated for repudiating the insurance claim was that the life assured had suppressed material information regarding his personal history and health at the time of effecting the insurance with LIC of India. Ext.A3 is copy of the repudiation letter dated:30/3/2005 issued by the Senior Divisional Manager, LIC of India to the respondent/complainant, Smt.Valsa Alias. In the said repudiation letter it was also stated that while submitting two proposals for the life policies the proposor furnished incorrect answers to the questions asked in the proposals; that the proposor did not disclose the illness of Atopic Dermatitis and also the treatment of the assured in the hospital and that the life assured made deliberate mis-statements withholding material information at the time of effecting the assurance. 7. The appellants/opposite parties produced Ext.B3 to B6 proposals submitted by the life assured for the aforesaid two policies. DW1, the Assistant Administrative Officer, LIC of India, Divisional Office, Ernakulam has also deposed about the proposals submitted by the life assured for the aforesaid 2 policies; that the proposals were submitted before the Branch office as well as the divisional level and in all the proposals the insured was asked about his personal history and that the life assured answered all those questions. As per the said answers the proposor (Life assured) had no sort of illness and that he had never undergone treatment of any of those diseases mentioned in the questionnaire. It was also answered that the life assured has been in good state of health. The aforesaid proposals were also signed by the proposor with a declaration stating that the details furnished in the proposal form are correct and in the event it is found that any of the statement is untrue, the LIC of India will be at liberty to make the contract of insurance null and void and all money in respect there of shall stand forfeited to the Life Insurance Corporation of India. It is also to be noted that the proposor/Life assured affixed his signature to the said proposals after fully understanding the contents thereof. The proposor himself has written in vernacular that he understood the translation of the statements in the proposals and only there after the proposor affixed his signature “8M1a1UA \*ea A<HaHUDTdU )gUe8a ” Thus, it can be concluded that the proposor, the life assured, N.C.Alias submitted B3 to B6 proposals for the said 2 life policies after fully understanding the contents of the same and he has also declared the correctness of the answers given in the said proposals. 8. The respondent/complainant has got a case that the proposor was not aware of the answers given to the questions in the proposal forms and those proposal forms were filled by the LIC agent. But there is nothing on record to support the aforesaid case of the respondent/complainant. On the other hand Ext.B3 to B6 proposals would show that the proposor, N.C.Alias submitted the proposals after fully understanding the answers given to the questions. Ext.B3 and B4 proposals would also make it abundantly clear that the entries in the proposals were translated to the proposor in Malayalam and proposor affixed his signature in the said proposal by fully understanding the same. So, it can very safely be concluded that Ext.B3 to B6 proposals were submitted by the proposor N.C.Alias taking the two life policies. 9. Ext.B8 is the medical record sheet issued by Dr.Renji Jos, M.D, Consultant Physician, M.B.M.M Hospital, Kothamangalam. This medical record sheet was submitted by the doctor attached to Mar Baselios Medical Mission Hospital at the request of LIC. A perusal of Ext.B8 document would show that the life assured N.C.Alias was treated in that hospital on 21/10/1987 for Atopic Dermatitis. It would also show that the life assured, N.C.Alias was treated with oral hypo glycemics on 6/11/1989 and subsequently it was discontinued on 4/4/1991 following the normal blood sugar values. It is further stated in B8 medical record sheet that the aforesaid treatment with oral hypo glycemics restarted on 6/9/1991 following which the patient was on regular anti diabetic treatment. This would show that the life assured N.C. Alias was a diabetic continuously from 1991 onwards. Ext.B7 is the covering letter issued from Mar Baselios Medical Mission Hospital for forwarding B8 medical record sheet of N.C.Alias. 10. Ext.B9 is the medical attendance certificate issued by Dr.Renji Jos, MD, Consultant Physician, MBMM Hospital, Kothamangalam. It is dated:19th January 2005. B9 certificate would make it clear that the life assured, N.C.Alias died on 12/12/2004 due to Hepato Cellular Carcinoma with Hepato renal failure. The aforesaid certificate would also make it clear that the patient, N.C.Alias was treated by the doctor for diabetes during the 3 years preceding his last illness and that the patient was having cirrhosis of liver. In B9 certificate the secondary cause of death is shown as cirrhosis. Thus, B9 certificate issued by the doctor attached to MBMM, Kothamangalam would also make it clear that the life assured Alias N.C. was a diabetic patient. It would further show that at the time of submitting the proposal for the life insurance policies the proposor was a diabetic patient. The fact that the life assured N.C.Alias was a diabetic while submitting the proposals for the policy is not disputed by the respondent/ complainant, the widow of the life assured. There can be no dispute or doubt about the fact that the life assured was a diabetic patient at the time of submitting the proposals for the policy and also at the time of securing the aforesaid 2 life policies. 11. The available documents on record would establish the case of the appellants/opposite parties that the life assured suppressed material facts regarding his health condition while submitting the proposals for the policy. Thus, it would clinchingly establish the case of the appellants/opposite parties that the life assured deliberately withheld the true facts regarding his state of health. In other words, the life assured was not prepared to disclose the true fact regarding his state of health and that the life assured suppressed those facts from the appellants/opposite parties. It is correct to say that the medical records available on record would establish that the life assured died due to hepato cellular carcinoma. It would also show that at the time of submitting the proposals or obtaining the aforesaid 2 life policies the life assured was not affected by hepato cellular carcinoma and that the said disease of hepato cellular carcinoma was detected on 8/7/2004 by undergoing ultra sound scanning. The respondent/complainant can also be justified to some extent that the cause of death of the life assured has no nexus with the disease of diabetes which was suppressed by the life assured while submitting the proposals for the policy. But the materials on record would show that the life assured suppressed material facts. It is a well settled position that contracts of insurance are contracts uberrimafides and every material fact is to be disclosed and that if it is found that any material fact had been suppressed or not disclosed, the other party will get the right to rescind the contract. In other words, it is the duty of the parties to the insurance contract to disclose the material facts and the suppression or failure to disclose those facts would give a valid ground for rescission of the contract. 12. The next aspect that would emerge for consideration is as to whether the fact suppressed or not disclosed can be considered as material fact or facts. In this context the definition for “proposal form” and the term ‘material’ as disclosed in regulation 2 (1)(d) of the Insurance Regulatory and Development Authority (Protection of policy holder’s interest) regulations, 2002 can be referred to. It is as follows:- “Proposal Form” means a form to be filled in by the proposor for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the reason, to determine the rates, terms and conditions of the cover to be granted. Explanation- “Material” for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of hand writing the risk to be covered by insurer”. 13. The aforesaid definition for the word ‘material’ would make it clear that it would take in all important, essential and relevant information for the purpose of deciding the insurer as to whether to undertake the risk or not. If that be so, the questionnaire included in the proposal form and the answers to the said questionnaire are to be treated as important, essential and relevant information for the insurer. If answers to the said questionnaire are not true or correct or the proposor failed to disclose the real facts can be treated as suppression of material fact or facts. In such a situation, the insurer will be at liberty to rescind the contract of insurance. So it can be concluded that there need not be any nexus between the actual cause of death and the material facts suppressed for rescission of the contract of insurance. Therefore it can very safely uphold that the appellants/opposite parties (LIC of India) had sufficient ground to resend the contract of insurance. Hence we hold that the appellants/opposite parties repudiated the insurance claim on valid grounds. 14. The respondent/complainant would urge that the said two policies were issued in the name of the life assured after conducting medical check up and medical examination by the panel doctors of LIC. It is to be noted that the life assured was aged 62 years and so the insurance company referred the proposor for medical examination and in the said medical examination nothing could be detected adverse to the issuance of the policy. The mere fact that the doctors could not detect any disease which was affected by the proposor cannot be taken as a ground to hold that the insurer is bound to honour the life policies issued after medical check up or medical examination. Whether medical check up was conducted or not, it was the duty of the proposor to disclose the material facts regarding his state of health. The questionnaire in the proposal form would make it clear that the proposor was expected to give answers to the state of health of the proposor at the time of submitting the proposal. It is established that the proposor failed to disclose true fact regarding his health condition. In other words, the proposor suppressed material fact regarding his health condition. So, the appellants/opposite parties can very well repudiate the insurance claim on the ground that the proposor suppressed material facts while submitting the proposals for the said policies. Thus, in all respects it can very safely be concluded that there was no deficiency of service on the part of the appellants/opposite parties in repudiating the insurance claims preferred by the respondent/complainant being the widow and nominee of the life assured, late Sri.N.C.Alias. It can also be held that the appellants/opposite parties repudiated the insurance claim on valid grounds. Unfortunately, the Forum below has not considered the provision of law regarding repudiation of insurance claim based on suppression of material facts. The decision rendered by the Hon’ble Supreme Court in P.C.Chacko and Another Vs. Chairman, Life Insurance Corporation of India and Others reported in 2008 (1) SCC 321 would show that the insurance company is to be justified in repudiating the insurance claim on the ground that the insured suppressed material facts. In a subsequent decision LIC of India and Others Vs. T.Venkateshwaralu in Civil Appeal Nos:1682/04 and 1602/04, the Hon’ble Supreme Court have given the direction that in future the judgment of the Hon’ble Supreme Court rendered in P.C.Chacko and Another Vs. Chairman, LIC of India and Others shall be strictly followed by all Courts and Consumer Fora in the country. So the impugned order dated:30-12-2005 passed by CDRF, Ernakulam in CC.446/05 is liable to be set aside. Hence we do so. These points are answered accordingly. In the result the appeal is allowed. The impugned order passed by the Forum below is quashed. The complaint in CC.446/05 on the file of CDRF, Ernakulam is dismissed. The parties are directed to suffer their respective costs through out. M.V. VISWANATHAN: JUDICIAL MEMBER M.K. ABDULLA SONA : MEMBER VL. | 
