BEFORE:

HON’BLE MR. SUBHASH CHANDRA, PRESIDING MEMBER

For the Appellant                Mr Rajesh Mahendru, Advocate

For the Respondent              NONE

ORDER

1.      This appeal under the Consumer Protection Act, 1986 (in short, the “Act”) is directed against the order dated 21.11.2019 of the Uttar Pradesh State Consumer Disputes Redressal Commission, Lucknow in Complaint no. 51 of 2015 allowing the complaint and directing the respondent to pay the respondent the sum insured under the life insurance policies obtained by the late mother of the respondent along with interest @ 9% and Rs 10,000/- as litigation costs.

2.     We have heard the learned counsel for the appellant. The respondent remained unrepresented despite entering appearance on caveat. We have perused the records and given careful consideration to the submissions and the material on record. The delay of 122 days in the filing of the appeal was considered in light of the application seeking condonation of the delay. For the reasons stated therein, the delay was condoned in the interest of justice.

3.     The relevant facts of the case, in brief, are that Smt. Rajani Chaudhary, the late mother of the respondent, who is a minor represented by her father in this appeal as the natural guardian, had obtained two life insurance policies nos. 225621619 and 225621624, both dated 28.02.2012 (in short, the “Policies”) from the appellant.  The Deceased Life Assured (DLA) already held two other life insurance policies from the appellant vide Policy No. 212380729 dated 23.04.1999 and Policy No. 221424592 dated 07.10.2001 for various sums assured. Under these Policies, the nominee was Sri Kamlapati Chaudhary, the husband of the DLA. According to the appellant, the DLA did not disclose the fact of these existing Policies in Column No. 9 of the Proposal Forms dated 15.01.2012 at the time of applying for the same. It is also stated that the DLA stated in Column No. 11 relating to ‘Personal History’ that her health was ‘Good’ and that she was not under any treatment for any medical ailment. The appellant approved the two Policies applied for and paid the premium of Rs 77,117/- and Rs 63,311/- respectively. The respondent was the nominee in both the Policies. The Life Assured expired on 23,05.2013 and a claim was preferred. As the death occurred within 2 years of the sanction, it was investigated by the appellant as per Rules. The official of the appellant who investigated the claim reported that (i) the DLA had been suffering from schizophrenia for the past 10-15 years and that this fact had not been disclosed and (ii) the DLA was a housewife and not an astrologer with independent source of annual income of Rs.3.00 lakhs. The medical details of the DLA were sought from the respondent on whose behalf the husband of the DLA submitted details about mental illness dated 20.02.2014 stating that she was in sound health.

4.     Vide letter dated 28.02.2014 the appellant repudiated the claims on the ground that the DLA had stated at the time of medical check-up on 15.01.2012 in the Proposal Form that she had not consulted any doctor for any ailment requiring treatment for more than a week or that she had not suffered any disease relating to the nervous system whereas she had been suffering from schizophrenia for 10 years and had undergone treatment for the same. The fact that she had not provided complete details of the second proposal was also noted and the claims repudiated on the grounds that the DLA had intentionally concealed material facts which rendered the claims liable for rejection without any liability on the appellant. This order was challenged before the State Commission in CC No. 51 of 2015 which was decided, on contest, in favour of the respondent by way of a majority decision on reference to the President of the State Commission in view of difference in opinion between the Members. This order is impugned before us.

5.      On behalf of the appellant it was argued that the mandatory investigation into the claim as the death was within 14 months of the commencement of life cover had revealed that the DLA had been treated by many doctors at the Mental Hospital, Bareilly, one Dr Madhukar in Faizabad and Dr Abhinav Pandey in Lucknow for mental health issues. Dr Madhukar had vide his email dated 12.12.2013 certified that the DLA was suffering from Manic Depressive Psychosis for nearly 5 years and Dr Abhinav Pandey had stated through email dated 25.02.2014 that the said Smt Rajani Chaudhary was under his treatment from 07.03.2013 to 18.05.2013 for Bipolar Affective Disorder. It had also been found that the DLA was a housewife with no independent source of income as claimed in the Proposal Form. It was argued that the appellant was not required to prove the medical opinions filed by it through supporting affidavits of the doctors under the Evidence Act as this fact was not disputed by the respondent. The appellant relied upon this Commission’s judgments in Life Insurance Corporation Vs. Krishan Chander Sharma, II (2007) CPJ 51 NC to contend that the mere absence of an affidavit of a doctor was not adequate reason to reject the proof and on Pushpa Chauhan Vs. Life Insurance Corporation, RP No. 209 of 2017 dated 02.02.2011.

6.      It was contended that the claim was repudiated on grounds of supressing material evidence which, if correctly disclosed, would have had a bearing on the approval of the Policies in question. Reliance was placed on the judgments of the Hon’ble Supreme Court in LIC Vs. Manish Gupta, (2009) 11 SCC 371 and Branch Manager, Bajaj Allianz Life Insurance Vs. Dalbir Kaur, AIR 2020 SC 5210 which relied upon the ratio laid down in Satwant Kaur Sandhu Vs. New India Assurance, (2009) 8 SCC 316 dated 10.07.2009 in CA No.2776 of 2002 that:

20. … in a Contract of Insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a “material fact”. If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise, that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of Insurance.

Reliance was also placed on the law laid down by the Hon’ble Supreme Court in Reliance Life Insurance Vs. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175 dated 24.04.2019 in CA No. 4261 of 2019 wherein it was held, on the basis of the doctrine of uberrima fidei, that:

26. … The object of the proposal form is to gather information about a potential client allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. In a proposal form, the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer.

…..

The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this court held in Satwant Kaur (supra) “there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a Contract of Insurance”. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.

It was therefore contended that duty of full disclosure required that no information of substance be concealed from the insurer and that in the present case both medical condition and the other Policy was concealed. It was accordingly contended that the State Commission had erred in its finding and therefore fallen in error in setting aside the letter of repudiation and was therefore perverse. 

7.      On behalf of the respondents, who remained unrepresented despite notice, the arguments before the State Commission were taken as his final submissions. Respondent’s case is that the letter of repudiation dated 28.02.2014 was based on two grounds, that the DLA was suffering from schizophrenia and that he had not disclosed other policies in his name which was not disclosed in the Proposal Form. It is denied by respondent that the DLA was suffering from schizophrenia or that there was a deliberate intention to conceal the earlier policies which were within the knowledge of the appellant based on its records. It was contended that the appellant was obligated to disclose the proof of the grounds on which repudiation was done. As per the written statement filed by respondent, the occupation of the DLA was clearly indicated to be an Astrologer and therefore self-employed. The DLA was an M. Phil. qualified person and it was asserted that the examining doctor at the time of the Policies, Dr Vijaya Srivastava, had not recorded any behaviour or symptoms associated with schizophrenia. It was contended that while there was no dispute with regard to the Policies in question, the cause of death mentioned in the enquiry report is “heart attack” and not schizophrenia. It is further contended that the enquiry was conducted by an officer of the appellant, S.K. Srivastava, and no affidavit of any doctor has been brought on record. Hence it is argued that the appellant has relied upon fabricated documents to deny the respondent its legitimate claim under the Policies. Reliance was placed on the judgment of the Hon’ble Supreme Court in Life Insurance Corporation of India & Ors., Vs. Asha Goel & Anr., I (2001) SLT 89 wherein insurance companies had been cautioned to decide claims after due application of mind.   

8.      The State Commission in Complaint No. 51 of 2015 has held, by majority decision, after a reference was made to the President in view of a difference of opinion between the Members who arrived at dissenting conclusions, as under:

Hon’ble Member Shri Govardhan Yadav has mentioned about the judgement of Hon’ble State Commission in the matter of LIC and Anr. Versus Smt. Chawla Devi, Revision Petition No. 2021/2009 in which judgement had been given on 03.12.2015 in which the Hon’ble National Commission has said that without the affidavit of the doctor, no certificate is admissible in evidence and on that basis, no insurance scheme can be rejected.

In view of the aforesaid analysis and other after considering the entire facts and evidence, I am of the view that the certificate and documents which have been produced by the opposite party Life Insurance Corporation of India to prove the prior illness of the mother of the complainant, the insured Smt. Rajni Choudhary is not fit to be read in evidence as per law. Therefore, the opposite party Life Insurance Corporation of India has failed to prove the illness of the mother of the complainant prior to obtaining the insurance policy in question. Therefore, I am in agreement with the conclusion drawn by the Hon’ble Member Shri Govardhan Yadav in this regard and I support the conclusion given by him.

               ……

The opposite party Life Insurance Corporation of India has repudiated the insurance claim under both the policies of the mother of the complainant by two separate letters dated 28.02.2014 from which it is apparent that the proposal for both the policies have been filled by the complainant on 15.01.2012. At that time no policy had been issued to her. The proposal for both the policies were filled on the same day. Therefore, both the policies were before the insurance corporation and it is wrong to say that it has been concealed from the insurance corporation.

The wrong information about occupation and income has not been mentioned as a ground in the repudiation letter. Therefore, the opposite party life insurance corporation of India cannot take a new ground to repudiate the insurance claim of the complainant in the complaint.

On the basis of the aforesaid analysis, I support the conclusion drawn by the Hon’ble Member Shri Govardhan Yadav and his judgement and order.

[ Emphasis supplied ]

9.      The law laid down in Satwant Kaur Sandhu (supra) and Rekhben Nareshbhai Rathod (supra) by the Hon’ble Supreme Court is clear that the disclosure of all facts is mandatory in a contract of insurance and that it is not open for the proposed insured to decide whether a fact is ‘material’ or not. However, it is relevant to consider whether and how the ratio of these judgments applies to the instant case. In the facts of the instant case, as both Policies were applied for on the same day, the question of a prior Policy being in place could not have been declared. However, from the material on record that includes a copy of the Proposal Form brought on record by the appellant itself, it is clearly stated in Col. 7 the response to the question “Is your life now being proposed for another assurance or an application for revival of a policy on your life or any other proposal under consideration in any office of the Corporation or to any other Insurer? If yes, give details.” has been recorded as “Yes, one more proposal”. Therefore, it is evident that there was no wilful concealment of the fact of the other Policy which was applied for on the same day by the DLA. The contention of the appellant that this fact was concealed deliberately and that if disclosed would have had a material influence on its decision while approving the Policies cannot be appreciated.

10.    It is also evident from the record that the DLA was examined by a doctor in respect of both the Policies and that there is no adverse finding to warrant denial of the insurance cover on the ground of any pre-existing illness or disease. The ground taken by the appellant that the DLA was suffering from schizophrenia/manic depressive psychosis disorder for nearly 10 years is based on the enquiry by an official of the appellant insurance company and although supported by emails of the concerned documents, the same is not supported by affidavits. The contention of the respondent that unless supported by affidavits, the emails do not have evidentiary value has been upheld by the State Commission. The appellant has relied upon the judgments of this Commission in Krishan Chander Sharma (supra) and Pushpa Chauhan (supra) to contend that the affidavits of the doctors are not warranted in view of the admission of the illness by the respondent. This contention, however, cannot be accepted since there is a clear denial of the alleged illness. No documents of treatment including any prescriptions or admission in a hospital either prior to or after sanction of the policies have also been brought on the record. In the absence of any affidavit of the doctors, the appellant’s contention that the DLA was suffering from schizophrenia prior to the obtaining of the Policies cannot be sustained.  

11.    From the foregoing discussion, it is evident that the fact of the other Policy was in the knowledge of the appellant on the day the Proposal Form was filed. There was no deliberate or wilful concealment of this information which had been declared by the DLA herself. As regards the stated illness of the DLA, the appellant has failed to establish any evidence by way of treatment records of prescriptions of medication or hospitalization and has sought to rely on emails that are not supported by any affidavit on part of the doctors. The cause of death has been recorded by the doctor to whose clinic the DLA was brought as possible respiratory failure and has been recorded in the Divisional Office, Lucknow Claimant’s Statement as “heart attack”. The contention that there was deliberate concealment of material evidence on this account has not been conclusively established by the appellant. The State Commission has rightly held that the repudiation of the claims under the Policies were arbitrary and perverse amounting to deficiency in service. The finding of the State Commission that the respondent was entitled to the claim therefore does not warrant interference.  

12.    In view of the foregoing, this first appeal is liable to fail. Accordingly, the appeal is disallowed and the order of the State Commission is upheld.

 13.   Pending IAs, if any, stand disposed of with this order.