L.I.C. Of India vs K. MUTHAMMAL

THE complainant''s case is that her husband during his life-time had taken three policies out of which the claims under policies bearing Nos. 041622625 and 740810275 were accepted by the opposite parties and honoured. But the opposite parties repudiated the claim with regard to policy No. 740812709 which was for a sum of Rs. 50,000/-, on the ground that the complainant''s husband had suppressed material facts regarding his health when making the proposal for the said policy and, therefore, the claim is not acceptable to them. THErefore, according to the complainant, the stand of the opposite parties is unjustified and thus there is deficiency in service and hence the claim for a direction to the opposite parties to pay a sum of Rs. 50,000/- due under the said policy with interest and a sum of Rs. 25,000/- as compensation towards mental agony and hardship and for costs.

THE opposite parties took the stand that Policy No. 740812709 was issued on 1.1.1997, the death had taken place within a year and thus it was an earlier claim and, therefore, the opposite parties, after investigation, rightly repudiated the claim. THEy further contended that the complainant was suffering from diabetes from the year 1992 and was taking treatment from TANCEM Dispensary. Thus the complainant''s husband suppressed this fact at the time when he took his policy and since it is a matrial fact, suppression the same would render the contract void, since the contract is one based upon good faith. THErefore, according to them, it was repudiated for proper reason and the opposite parties were, therefore, justified in repudiating the claim. The lower Forum, upheld the complainant''s case and ordered the opposite parties to pay the policy amount of Rs. 50,000/- within a month. Hence this appeal by the opposite party.

The order passed by the lower Forum is really sketchy and without any discussion. The Act provides only for a summary inquiry which does not mean that a case should be disposed of in such a manner and in a careless fashion without discussing the merits of the contentions raised by the parties.

WE are satisfied that the complaint has to be dismissed. Of course, the complainant''s husband had taken totally three policies, of which the claim towards the policy Nos. 041622625 and 740810275 have been honoured. But it does not follow that the claim under the disputed policy No. 740812709 should also be accepted by the opposite parties. The policy had been issued on 1.1.1997. The death had taken place on 11.5.1997. The complainant was an employee in Tamil Nadu Cements Corporation Ltd. The opposite parties have produced the records from TANCEM where the complainant''s husband had been employed, to show that he was on medical leave in 1994 for about 26 days, for about 9 days in 1995 and for about 10 days in 1996. They have also produced a certificate from the Doctor of TANCEM, Alangulam to the effect that the complainant''s husband was a patient of Diabetes Mellitus since 1992 and he was taking treatment from TANCEM Dispensary from 1992 for the said illness and that he was taking both Insulin injection and oral medicine as well. While so, we find that in the proposal form, the column relating to his personal history, he had answered all the questions in the said colum in the negative and specifically mentioned that he has been keeping good health and that he never consulted any Doctor and that he was not suffering from diabetes. He has signed the declaration form stating that the statements given by him are true and correct and that he has not suppressed any fact. But we find that he has suppressed the fact that he was suffering from Diabetes Mellitus from the year 1992. The contract of insurance being one based upon good faith, any suppression of material facts would undermine the very validity of the contract and the contract would stand ab initio void. Therefore, on the basis of the belief that the proposer has the insurability, the proposal is accepted by the Insurance Company. Basing upon the representation made by the proposer, the policy is being issued. The contention that he was examined by a panel of Doctors of the Insurance Company is not material. Nor the question whether without examining the proposer the LIC could have accepted the policy would loom large, since in this case the death had taken place within a year of the policy and, therefore, there is no necessity to establish the nexus between the cause of death and the illness of diabetes. Suffice it to put it so, that the complainant''s husband had suppressed the fact that he was suffering from diabetes. He has not only suppressed that fact but also has declared that he has been maintaining good health. The contract of insurance being one based upon good faith, when such material facts are suppressed and misrepresented, the contract itself would stand vititated on that ground and, therefore, the opposite parties were justified in repudiating the claim. Therefore, in such circumstances, we hold that the order of the lower Forum cannot be sustained and deserves to be set aside. In the result, this appeal is allowed, but without costs. The order of the lower Forum will stand set aside. The complaint will stand dismissed without costs. Appeal allowed.