DIVISIONAL MANAGER, L.I.C. OF INDIA vs Parbati Das

THIS appeal is directed against the final order passed by the District Consumer Forum, Cuttack in C.D. Case No. 341/93. The Life Insurance Corporation of India, who was the opposite party in the aforesaid case, is the appellant.

THE respondent, as the complainant, filed the aforesaid case praying for compensation for the deficiency in service on the part of the Life Insurance Corporation of India. Her case is that her deceased husband late Rajendra Prasad Das was a Government employee and had insured his Life under" Jiban Mitra Scheme" for Rs. 40,000/-and was regularly paying the premium till June, 1991. THE said policy under the "Jiban Mitra Scheme" is a double cover endowment plan according to which in the event of death prior to the date of maturity the beneficiary of the policy shall be entitled to get double the sum assured. THE policy holder in the present case died on 23.7.91 in the S.C.B. Medical College Hospital, Cuttack having been admitted on the previous day. After his death the complainant applied to the L.I.C. for payment of the maturity value of the insurance as per the terms of the policy. THE L.I.C. repudiated the entire claim of the complainant on 16.7.92 on the ground that the husband of the complainant suppressed the information relating to the disease he was suffering from in the proposal form. THE present appellant, as the opposite party filed a show cause denying its liability. Apart from taking the plea that the claim is barred by limitation and is not maintainable before a Consumer Forum. It was alleged that the deceased gave incorrect answer and suppressed material facts regarding his state of health in the proposal form, while answering to question Nos. 18 and 22. In answering question No. 18 he stated that he did not suffer from any disease of the kidney prostrate or urinary system at any time and in answering question No. 22 the proposal form recorded that he had not been hospitalised for any disease. After his death the L.I.C. made some investigations and it was revealed from the bed-head ticket pertaining to the deceased husband of the complainant that 15 years earlier he was suffering from nephritis and had been treated for the same in the same hospital for about 6 months. THE hospital records further revealed that he died of acute renal failure on the following day of his admission in the hospital. Since the policy of insurance is based on good faith, it was said that the policy became invalid and unenforceable because of the incorrect answers and suppression of material fact in the proposal form. The District Forum after hearing both the parties and after examining documents related to the case, came to a conclusion that there was no suppression of material fact by the complainant at the time of submitting the proposal for the policy in question. The District Forum also came to the conclusion that there has been deficiency of service on the part of the L.I.C. in not paying the maturity value of the policy to the nominee of the policyholder, namely, the complainant. It therefore, directed that the maturity value of the policy should be paid to the complainant alongwith all other additional and incidental benefits provided under the terms of the policy. It also directed that interest @ 18% per annum should be paid to the complainant from 16.7.90 upto the date of payment. Compensation of Rs. 2,000/- has also been awarded in her favour. Hence this appeal.

The statement of the appellant in the show cause filed before the District Forum was reiterated in appeal by the learned Counsel appearing for the appellant. He strongly argued that the bed-head ticket that was produced before the District Forum being a public document, should have been accepted as correct and consequently the answers given in the proposal form should have been taken to be incorrect amounting to suppression of material fact. The bed-head ticket no doubt indicates that the husband of the complainant suffered from nephritis 15 years back and was treated in the same hospital for 6 months but at the same time it records that the patient was suffering from acute urinary system at the time of his admission. It is not known who supplied the information to the Doctor who recorded in the bed-head ticket to the effect that he was suffering from nephritis 15 years back. It is also not known as to whether he was admitted to the hospital for treatment of nephritis 15 years back. To establish a material fact for the purpose of acceptance or refusal of the proposal the District Forum has rightly said that no corroborative evidence has been adduced by the L.I.C. in order to come to a conclusion that the policy holder was guilty of suppression of material fact which would have played a vital role in the matter of acceptance of rejection of the proposal. This being the only evidence in support of the Corporation relating to suppression of material fact, we are unable to accept the same. As mentioned in some earlier cases, in order to hold that a fact which is alleged to have been suppressed, is a material fact, it must have relevancy as to the risk of future life of the proposer. The validity of the policy of insurance would not depend on the fact as to whether a proposer was a truthful man or a liar. If a fact which is material for the purpose of taking a decision whether the proposal would be accepted by the L.I.C. was knowingly suppressed by the proposer, it can be said that the policy of insurance was vitiated by the suppression. We do not find the aforesaid evidence in the present case to come to a conclusion that the policy of insurance was vitiated by the answers given in the proposal form. We, therefore, agree with the District Forum that the benefits under the policy is payable to the complainant which has been prescribed to be paid. We, therefore, find no merit in this appeal. It has however been argued by the learned Counsel appearing for the appellant that the rate of interest awarded by the District Forum is excessive inasmuch as it is much above the rate of interest given by Banks. Taking into consideration of the facts and circumstances of the case, we reduce the rate of interest from 18% per annum to 16.5% per annum to be payable to the complainant from the date of repudiation by the L.I.C. till the date of payment by them. Since the complainant is being compensated by way of payment of interest, we do not find any reason to award further compensation in favour of the complainant. We, therefore, set aside the award of compensation of Rs. 2,000/- but allow a sum of Rs. 200/- as cost of litigation in favour of the complainant-respondent. In the result the judgment passed by the District Forum is confirmed with the aforesaid modification and the appeal is accordingly disposed of. We expect that the appellant will comply with the order within 2 months. Appeal disposed of. ____________