1.      Heard Mr. Neeraj Gupta, Advocate, for Life Insurance Corporation of India and Mr. Anil Kumar Mishra, Advocate, for Vijay Pal Singh, in both the appeals.

2.      Life Insurance Corporation of India (the opposite party) (hereinafter referred to as the Insurer) filed First Appeal No. 778 of 2013 and Vijay Pal Singh (the complainant) filed First Appeal No. 297 of 2014, from the order of State Consumer Disputes Redressal Commission U.P. dated 19.09.2013 passed in Consumer Complaint No. 25 of 2008, whereby the complaint was partly allowed and the Insurer was directed to pay Rs.1600000/- along with interest @ 9% per annum, from 23.05.2008 till the date of payment and Rs.10000/- as costs to the Insured. Both the appeals arise from same order as such they were consolidated and heard together and are decided by a common judgment.

3.      FA778/2013 has been filed with delay of 23 days. The appellant has filed IA No.7027 of 2013, for condonation of delay in filing the appeal. It has been stated that after receiving certified copy of the impugned order, it was sent to Zonal Office for granting approval for filing the appeal. After approval, it was sent to Regional Manager (Legal), Delhi, where, it was received on 30.10.2013. Then the papers were handed over to the Advocate, who drafted the appeal etc. and filed it on 11.11.2013. Cause shown is sufficient. Delay in filing the appeal is condoned.

4.      FA297/2014 has been filed with delay of 201 days. The appellant has filed IA No.8956 of 2014, for condonation of delay in filing the appeal. It has been stated that after receiving the certified copy of the impugned order, the appellant consulted with an advocate at Delhi on telephone for filing the appeal, who informed that limitation for filing the appeal was 90 days and advised to come along with all the papers of the complaint. In December, 2013, he met in an accident and remained in treatment/physiotherapy till April, 2014. Thereafter, he could come to Delhi and the appeal was prepared and filed on 09.05.2014. Cause shown is sufficient. Delay in filing the appeal is condoned.

5.      Vijay Pal Singh filed Consumer Complaint No.25 of 2008, for directing the Insurer to pay insurance claim of (i) Rs.1200000/- under Insurance Policy No.254243993, Rs.400000/- under Insurance Policy No.253721300, Rs.500000/- under Insurance Policy No.252860717 and Rs.500000/- under Insurance Policy No.253176933,(total Rs.2600000/-), with interest @ 10% per annum from the date of death of Anil Kumar, life insured, till its realization, (ii) Rs.50000/- for mental and physical harassment (iii) Rs.100000/- and Rs.20000/- for financial loss (iv) Cost of litigation and (v) any other or further relief which may deem fit and proper in the circumstances of the case.

6.      It has been stated in the complaint that Anil Kumar, son of the complainant, obtained Life Insurance Policy No.253176933, (sum insured was Rs.5 lacs) on 02.04.2003 (proposal dated 27.10.2003), Life Insurance Policy No.252860717 (sum insured was Rs.5 lacs) on 28.04.2003 (proposal dated 19.04.2003), Life Insurance Policy No.253721300 (sum insured was Rs.4 lacs) on 28.05.2005 (proposal dated 21.06.2005) and Life Insurance Policy No.254243993 (sum insured was Rs.12 lacs) on 16.03.2006 (proposal dated 28.04.2006), from the Insurer. In all these policies, the complainant was nominee. Anil Kumar was a cloth merchant and was paying premium of the policy regularly. Anil Kumar died on 31.07.2006, in a car accident on Kariappa Road, police station Rakabganj, district Agra. Anil Kumar was himself driving his Santro car, registration No. U.P.-41 Z-2255, on 31.07.2006 at 2:00 AM, which was burnt during drive, in front of PWD Colony Rakabganj and Anil Kumar died on the spot. The incident was informed to police station Rakabganj, district Agra, who investigated the incident and sent the dead body for post mortem. The complainant submitted his insurance claim under the aforesaid policies on 06.09.2006 with Branch Office (opposite party-3) along with all the requisite papers but the claim was not settled. The complainant gave a reminder dated 03.04.2007 and legal notices on 21.05.2007 and 17.09.2007 but nothing was done. The complainant took information regarding disposal of his claim under Right to Information Act, 2005, but correct reply was not given. Then this complaint was filed.

7.      The Insurer filed its written reply and contested the complaint, in which the material facts have not been denied. It has been stated that as the claim was for higher amount, as such, time was taken in investigation in the matter, due to which settlement was delayed. The claims under Policy No.253176933 and Policy No.252860717 was settled but the claims under Policy No.253721300 dated 28.05.2005 (proposal dated 21.06.2005) and Policy No.254243993 dated 16.03.2006 (proposal dated 28.04.2006) were repudiated vide letters dated 21.06.2008, on the ground that the deceased Insured had obtained Endowment Plan Policy No.10154482 (for risk coverage of Rs.700000/-) and Term Assurance Plan Policy No.10155018 (for risk coverage of Rs.1300000/-) from HDFC Standard Life Insurance Company Ltd. on 04.01.2005 and Policy No. C-101690490 (for risk coverage of Rs.400000/- dated 02.08.2005 from TATA AIG Life Insurance Company Ltd. and the facts relating to these policies were concealed in the proposal form filled up at the time of obtaining Policy Nos.253721300 and  254243993. These were concealments of material facts as such the subsequent policies vitiated.                                                

8.      The complainant filed various documentary evidence and his Affidavit of Evidence. The Insurer also filed documentary evidence and Affidavit of Evidence of Krishna Bihari Lal, Administrative Officer (Law). State Commission, after hearing the parties by order dated 19.09.2013, allowed the complaint and directed the Insurer to pay Rs.1600000/-, along with interest @ 9% per annum under Policy Nos.253721300 and  254243993, from 23.05.2008 till the date of payment and Rs.10000/ as the cost of litigation. Both the parties have filed their separate appeals from the aforesaid order.

9.      There is no dispute between the parties that in the proposal forms as filled up on 21.06.2005 relating to Policy No.253721300, the deceased insured did not disclose about the policies obtained from HDFC Standard Life Insurance Company Ltd. on 04.01.2005 i.e. Policy Nos.10154482 and 10155018. Similarly in the proposal form for obtaining Policy No.254243993 dated 28.04.2006, the deceased insured did not disclose about his obtaining the aforementioned policy of HDFC Standard Life Insurance Company Ltd. and Policy No. C101690490 obtained on 02.08.2005 from TATA AIG Life Insurance Co. Ltd. The arguments of the counsel for the complainant are that the proposal forms were filled up by the agent of the Insurer, who had mentioned the policies obtained from Life Insurance Corporation of India i.e. Policy No.2531769933 and 252860717, which were obtained prior to Policy No.253721300. Similarly in the proposal form of Policy No.254243993, the agent has disclosed three policies of Life Insurance Corporation in the proposal form. For the reasons best known to the agent, he did not disclose the policies obtained from HDFC Standard Life Insurance Company Ltd. and TATA AIG Life Insurance Company Ltd. in the proposal form. There was no fraudulent intention for non-disclosure of the policies obtained from HDFC Standard Life Insurance Company Ltd. and TATA AIG Life Insurance Company Ltd. nor it induced in any way to the Insurer in granting the impugned policies. It was a bona fide mistake committed by the agent of the Insurer. On this ground, the claim cannot be repudiated. In the present case, the death of the life insured was accidental and not caused due to any disease, therefore, the three policies obtained from private companies were not at all relevant in the matter. He relied upon the judgment of this Commission in OP Nos.164 & 272 of 2001, Asha Garg and Ors. Vs. United India Insurance Company Ltd. and Ors., (decided on 24.11.2005), RP No.4502 of 2010, Life Insurance Corporation of India Vs. Smt. Shahida Begum, (decided on 06.07.2011), RP No.1117 of 2014, Sahara India Life Insurance Company Ltd. Vs. Rayani Ramanjaneyulu, (decided on 01.08.2014), RP 587 of 2015, Smt. Sulochana Indurkar Vs. The Life Insurance Corporation of India & anr., (decided on 11.09.2015), RP No.2021 of 2009, Life Insurance Corporation of India and Ors. Vs. Chawali Devi, (decided on 03.12.2015), RP No.4204 of 2011, Aviva Life Insurance Company Ltd. and Ors. Vs. Rekhaben Ramjibhai Parmar, (decided on 12.04.2017). He submitted that State Commission has granted sum assured, but in the case of death in Policy No.254243993, the sum assured together accrued bonus was liable to be paid and in Policy No.253721300 double amount of sum assured was liable to be paid. The complainant has filed this appeal for this amount as mentioned in the policies.

10.    The counsel for the insurer submitted that non-disclosure of the Policies No.10154482 and 10155018 obtained from HDFC Standard Life Insurance Company Ltd. and Policy No.C101690490 obtained from TATA AIG Life Insurance Company Ltd. amounts to concealment of material facts. The contract of insurance is based on principle of utmost good faith i.e. uberrimae fidei. The concealment of facts, relating to the policies obtained from private insurance company vitiated the policies as such the claim was repudiated under the law. He relied upon the judgment of this Commission in Dineshbhai Chandarana Vs. Life Insurance Corporation, MANU/CF/0104/2010, LIC of India Vs. Vidya Devi, [2013] 1 CPR (NC) 25 and M/s. ICICI Prudential Life Insurance Co. Ltd. Vs. Lalita Jain, [2015] 2 CPR (NC) 199. 

11.    I have considered the arguments of the counsel for the parties and examined the record. As stated above, that the policies obtained from HDFC Standard Life Insurance Company Ltd. dated 04.01.2005 and TATA AIG Life Insurance Company Ltd. dated 02.08.2005 were not disclosed in Policies No.253721300 and 254243993, respectively. Section 45 (2) of the Insurance Act, 1938 is quoted below:- 

“(2)    A policy of life insurance may be called in question at any time within three years from the date of insurance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:

          Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based.

Explanation I- For the purposes of this sub-section, the expression “fraud” means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy:-

(a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;

(b) the active concealment of a fact by the insured having knowledge or belief of the fact;

(c) any other act fitted to deceive; and

     (d)  any such act or omission as the law specially declares to be fraudulent.

Explanation II- Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.”

12.    This provision came for consideration in Life Insurance Corporation of India Vs. Asha Goel (Smt.) & anr., (2001) 2 SCC 160, Supreme Court held that on a fair reading of this Section, it is clear that it is restrictive in nature. It lays down three conditions for applicability of the second part of the Section namely: (a) the statement must be on a material matter or must suppress facts which it was material to disclose, (b) the suppression must be fraudulently made by the policy-holder and (c) the policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose. Mere inaccuracy or falsity in respect of some recitals or items in the proposal is not sufficient. The burden of proof is on the insurer to establish the circumstances and unless the insurer is able to do so there is no question of policy being avoided on the ground of misstatement of fact.

    The expression fraud has been defined under the Insurance Act, 1938 as such Supreme Court has held that explanation to Section 19 of the Contract Act, 1872 is irrelevant for the purposes of insurance policies.

13.    Thereafter, in exercise of powers conferred by Clause (zc) of Sub-section (2) of Section 114-A of the Insurance Act, 1938, read with Sections 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999, Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations, 2002 was framed.

Regulation 2 (1) (d) “Proposal Form” means a form to be filled in by the proposer 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 risk, to determine the rates, terms and conditions of a 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 underwriting the risk to be covered by the insurer;”

14.    Explanation (2) to Section 45(2) of Insurance Act, 1938 clearly states that mere silence as to the facts likely to affect the assessment of the risk by the insurer is not fraud. Explanation to Regulation 2 (d) of Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations, 2002, confined the scope of the term “material”, which has to be considered in the context of underwriting the risk to be covered by the Insurer. According to the judgment of Supreme Court in Asha Goel’s case (supra), burden was upon the insurer to prove that non-disclosure of three policies, obtained from private insurance companies were material and in case these policies were disclosed then either the insurer had  rejected the proposal or  had  charged  some extra premium.   In the written reply, filed  before State Commission, the Insurer has nowhere stated that under  any circular/rules  of Life  Insurance  Corporation of India, in case the policies obtained from private insurance company would have been disclosed then the insurer has either rejected the proposal or had charged extra premium for grant of the policy under the Tariff rules.

15.    Therefore, non-disclosure of three policies obtained from private insurance company was not a material fact to repudiate the claim of the complainant under these policies. It is also relevant to mention that the impugned policies are not the medi-claim policies nor the death of the insured had occurred due to any disease.

16.    This Commission in Aviva Life Insurance Co. Ltd. and Ors. (supra) has held that:  

“15.     In CEO, Sahara India Life Insurance Company Ltd. and another Vs. Rayani Ramayanjneyulu in SLP(c) No. 30740 of 2014 (decided on 21.11.2014) the Hon’ble Supreme Court has reconfirmed that for any omission or commission of an Insurance Agent, the insured or his or her LRs cannot be made to suffer, The main question involved in Sahara India case (Supra) was that the insured did not mention about the previous insurance policies. The Hon’ble Apex Court upheld the judgment of this commission that by no stretch of imagination the information about any previous insurance policies could be held to be material. The Court has observed that it was difficult to fathom as to why these facts would influence the judgment of a prudent insurer in fixing premium or determining the cover or whether he would like to take the risk.  There appears to be a mistake committed by the Agent and repudiation on this ground alone smacks of mala-fide intention on the part of the OP. This view has been  reiterated by this Commission in  Smt. Sulochna Indukar Vs. the Life Insurance Corporation of India in  R.P. No. 587 of 2015 dated 11.09.2015, wherein the repudiation on similar grounds, viz. that the insured had suppressed information regarding his previous insurance policies, has been held to be bad.”

17.    In Asha Garg and Ors. Vs. United India Insurance Company Ltd. and Ors. (supra) this Commission refer Regulation 2(1)(d) of  Insurance Regulatory and Development Authority (Protection of Policyholder’s Interests) Regulations, 2002, and held as follows:-

“29.   Therefore, it appears that to avoid harsh operation of the contract of insurance and to safeguard the interests of the insurers, in exercise of powers conferred by Clause (zc) of sub-section (2) of Section 114A of the Insurance Act, 1938 read with Sections 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999, the Authority has framed Insurance Regulatory and Development Authority (Protection of Policy Holders’ Interest) Regulations, 2002. Regulations, inter alia, provide what is the material for the purpose of the insurance policy to mean all important, essential and relevant information in the context of underwriting the risk be covered by the insurer. 

The word ‘material’ has been defined to mean and include all of important, ‘essential’ and ‘relevant’ information in the context of underwriting the risk to be covered by the insurer.  

18.    In Life Insurance Corporation of India Vs. Smt. Shahida Begum (supra), this Commission has specifically held that non-disclosure of previous policies as mentioned in Schedule-A while taking the policies as mentioned in Schedule (B) specifically, when there is not even an iota of evidence to suggest that there was mala fide intention on the part of the assured person to do so. There is no material on record to prove that the assured person was not keeping good health at the time of taking insurance policy in large number, but paying huge sums of insurance premium. 

O R D E R

In view of aforementioned discussions First Appeal No.778 of 2013 is dismissed. First Appeal No.297 of 2014 is allowed. The insurer is directed to pay accrued bonus on policy No.253176933 and double amount of sum assured in policy No.253721300 along with interest @9% per annum from the date on which State Commission has calculated the interest till actual date of payment.