DIVISIONAL MANAGER, L.I.C.OF INDIA vs SUNITA SHARMA

THIS is a Revision Petition against the order of the State Commission of Uttar Pradesh dated the 22nd March, 1993 in Appeal No. 362/SC/92. By this order, the State Commission confirmed the findings as recorded by the District Forum. The District Forum by its order dated the 28th March, 1992 directed that the Revision Petitioner herein, the insurer, should pay to the Respondent Complainant the policy amount of Rs. 50,000/-with 14% interest per annum from the 29th August, 1988 to the actual date of payment. In addition, a compensation of Rs. 500/- was also awarded.

THE facts of the case are that the Complainant''s deceased husband late Shri Hari Om Sharma, Jr. Engineer, State P.W.D., had taken out a policy for Rs. 50,000/- on his own life on the 20th March, 1988. Shri Sharma died on 29th August, 1988. The Revision Petitioner, Insurance Company, has stated that as it was an early claim, the Revision Petitioner, as usual, got the matter investigated which revealed that the deceased insured has suppressed material facts relating to the state of his health in the proposal form submitted at the time of taking the insurance policy. According to the Revision Petitioner, the insurer, the deceased had been suffering from mitral stanosis for about 17 years, from breathless ness for 7 years and that about 9 months prior to the submission of the proposal for the issue of the policy he had undergone operation for appendicitis and was on medical leave from 8.6.1987 to 1.7.1987. The Revision Petitioner maintained that the deceased had intentionally concealed these material facts in the proposal form amounting to fraudulent suppression of facts. Consequently, by a detailed speaking order of 1st April, 1990, the Revision Petitioner had repudiated all liability under the policy by the deceased having withheld correct information regarding the state of his health at the time of effecting the insurance. The State Commission pointed out that the Revision Petitioner L.I.C. had failed to get the insured (now deceased) examined by an authorised Medical Doctor of the Corporation, that it had written off its liability under the policy without giving any specific reasons. It held that the cause of death was "fever" and it had no relationship with the appendicitis breath-lessens and mitral stanosis. As such it rejected the appeal of the L.I.C.

WE have gone through the record and after hearing the parties we are of the view that the District Forum and the State Commission are patently in error in passing an award against the Insurance Company and in favour of the Complainant. In the first instance the repudiation of the claim under the policy by the Revision Petitioner, L.I.C. was by a speaking order, the reasons stated in which cannot be said to be irrelevant or extraneous. It cannot also be said that the repudiation was not made in good faith. As such, there was no deficiency in service and, therefore, there was no bona fide complaint maintainable before Consumer Forums.

ON merits also, it has been fully established that the insured had concealed material facts while taking the insurance policy and it entitles the L.I.C. to repudiate its liability under the policy, inasmuch as a policy of insurance evidences a contract founded on good faith. We, therefore, allow the Revision Petition and set aside the order of the State Commission and the District Forum. There is no order as to costs.