BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
F.A. 785/2008 against C.C. 101/2006, Dist. Forum, Srikakulam
Between:
1. The Zonal Manager,
LIC of India, South Central Zonal Office
Saifabad, Hyderabad
2. The B ranch Manager,
LIC of India, Rajam
Srikakulam Dist. *** Appellants/
Ops
And
Vana Ramudamma
W/o. Simhachalam Naidu
Age: 52 years, Kimi Village
Veeraghattam Mandal
Srikakulam Dist. *** Respondent/
Complainant
Counsel for the Appellants: Mr. M. Venkataramana Reddy
Counsel for the Respondent: M/s. G.V.R. Reddy
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
&
SMT. M. SHREESHA, MEMBER.
TUESDAY, THIS THE TWENTY THIRD DAY OF NOVEMBER TWO THOUSAND TEN
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
*****
1) This is an appeal preferred by the insurance company opposite parties 1 & 2, against the order of the Dist. Forum directing it to pay Rs. 75,000/- covered under the policy with interest @ 9% p.a., together with compensation and costs.
2) The case of the complainant in brief is that she is the mother of the deceased policyholder V. Govinda Rao Naidu. He had taken an LIC policy for Rs. 75,000/- in the year 2000 wherein she was kept as nominee. The policy premium had to be paid half yearly at Rs. 2,557/-. He died on 14.1.2005. The policyholder had failed to pay instalments due. When the policy was lapsed the same was revived on 16.10.2003 on payment of paid up value of Rs. 15,000/-. He was paying the premium till his death. He was
hale and hearty at the time of taking policy. When she made claim, followed by legal notice the claim was not settled. It was repudiated alleging that the assured had suppressed his ailment at the time of reviving the policy. Assailing the repudiation she claimed Rs. 75,000/- covered under the policy together with compensation of Rs. 25,000/- towards mental agony, and costs.
3) The insurance company resisted the case. While admitting issuance of policy in favour of son of the complainant wherein she was kept as nominee, however alleged that he had committed default in payment of premia. He did not pay the premium till 16.10.2003. He underwent kidney transplantation at Osmania General Hospital on 13.8.2003 for his chronic renal failure. The policy was revived on 16.10.2003 after receiving two half yearly premiums due by February, 2003 and August, 2003 on the strength of personal statement of health dt. 16.10.2003 that he was hale and hearty. Suppression of vital information regarding his health would entail repudiation of the claim. It was against the terms and conditions of the policy. The complainant was entitled to paid up value excluding revival and vested bonus of Rs. 14,100/-. It had issued a discharge voucher. Therefore it prayed for dismissal of the complaint with exemplary costs
4) The complainants in proof of her case filed her affidavit evidence and got Exs. A1 to A6 marked, while the appellants filed the affidavit evidence of its Manager and got Exs. B1 to B6 marked.
5) The Dist. Forum after considering the evidence placed on record opined that the insurance company had failed to prove that the life assured had suppressed the material fact regarding his health at the time of taking the policy, and therefore liable to pay policy amount and directed the insurance company to pay Rs. 75,000/- with interest @ 9% p.a., from 21.7.2006 till the date of realization together compensation of Rs. 1,000/- and costs of Rs. 1,000/-.
6) Aggrieved by the said order, the insurance company preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that at the time when the policy was revived on 16.10.2003 he suppressed that he underwent treatment on 21.9.2001 for kidney ailment. He was suffering from kidney problem and the kidney was transplanted in Osmania General Hospital prior to revival of the policy, and this fact was suppressed by him. The Dist. Forum did not consider Exs. B1 to B6 and therefore the complainant was not entitled to any amount. It prayed that the complaint be dismissed with costs.
7) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
8) It is an undisputed fact that the complainant is the mother and nominee under the policy of her son V. Govinda Rao Naidu assured sum of Rs. 75,000/- covering the period from 28.2.2000 to 28.2.2015 vide Ex. B1. He had to pay half yearly premium at Rs. 2,557/-. It is also not in dispute that the assured had failed to pay the instalments regularly, and the policy was lapsed. Thereupon on the statement given by him under Ex. B3 on 16.10.2003 that he was not ailing and his health condition was good, the insurance company had revived the policy after collecting the paid up value of Rs. 15,000/-.
9) It is not in dispute that the deceased was having kidney problem and his kidney was transplanted in Osmania General Hospital on 13.8.2003 for his chronic renal failure vide discharge summary Ex. B5. At the cost of repetition, we may state that by that date he was not having good health. He underwent renal transplantation. Obviously the policyholder did not inform that he had renal failure and got the kidney transplanted, and was under treatment not only in Osmania General Hospital but also in N. J. Institute of Oncology, Hyderabad vide Ex. B6. The assured had suppressed this vital or material fact at the time when he sought for revival of the policy vide his statement Ex. B3, the basis for which the policy was revived.
10) In P.C. Chacko & anr Chairman, Life Insurance Corporation of India reported in III (2008) CPJ 78 (SC) the Supreme Court held:
“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 policy holder 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.”
No doubt this suppression is vital. The complainant being the nominee at the most would get the paid up value of Rs. 15,000/- and vested bonus of Rs.
14,100/- which were secured by policy of Rs. 10,300/- with interest thereon for Rs. 1,346/-. The complainant would not be entitled to entire amount covered under the policy as the assured had suppressed the material fact. It is not known whether the amount was received by the complainant which was sent by the insurance company. In case the complainant had not received the amount the insurance company is directed to pay the above said amount.
11) In the result the appeal is allowed setting aside the order of the Dist. Forum. Consequently the complaint is allowed in part directing the insurance company to pay paid up value of Rs. 15,000/- and vested bonus of Rs. 14,100/- which were secured by policy of Rs. 10,300/- with interest thereon on Rs. 1,346/- if not paid, within four weeks from the date of receipt of this order. Rest of the order of the Dist. Forum is set-aside. However, parties are directed bear its own costs.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
Dt. 23. 11. 2010.
*pnr
C. C. TITLE
