LIFE INSURANCE CORP. OF INDIA vs SMT. P. BHARATHI DEVI

This revision petition has been filed by Life Insurance Corporation of India against the order dated 30.12.2006 of the Andhra Pradesh State Consumer Disputes Redressal Commission, (in short ''the State Commission'').

Brief facts of the case are that late P.ChandraSekhar was the husband of the complainant and was a holder of LIC policy Nos.651958533 and 652827490 for assured sums of Rs.50,000/- and Rs.5,00,000/- respectively commencing from 28.9.1998 and 26.3.2002. On 8.3.1999 the said policy holder underwent Laproscopic Cholostectomy Operation and was discharged on 10.3.1999. On 16.10.2002 the said policy holder got again chest pain and was admitted in Gupta''s Hospital Sanjeeva Reddy Nagar, Nandyal and there died on the same day due to suspected cardiac haemorrhage. Hence the death information was given to the Insurance company and the claim form was submitted by the complainant along with the relevant documents to the Insurance Company which was repudiated by the Insurance Company on 31.10.2003 on the ground that the policy holder with-held the correct information as to his health and his suffering from diabetes and undergoing cholostectomy operation. The complainant filed a consumer complaint before the District Consumer Forum Kurnool, (in short ''the District Forum''), which dismissed the complaint on 11.8.2004. A.

Being aggrieved by the order of the District Forum, the complainant preferred an appeal before the State Commission, wherein the following order was passed by the State Commission on 30.12.2006.:- "We allow this appeal directing the Opposite Parties jointly and severally to pay the insurance amount of Rs.50,000/- towards Policy No.651958533 and Rs.5,00,000/- towards Policy No.652827490 with interest @ 9% p.a., from the date of repudiation i.e., 31.10.2003 till the date of realization together with costs of Rs.3,000/-. Time for compliance six weeks."

Hence, the revision petition by the opposite parties/Insurance Company.

We heard the learned counsel for both the parties and perused the documents thoroughly.

Learned counsel for the petitioner stated that the insured had not declared his correct health status while submitting the revival application form for his lapsed policy No.651958533 and similarly while submitting the proposal form for the second policy No.652827490, which was starting from 26.3.2002. The insured was admitted for gall-bladder disfunctioning and underwent laparoscopic cholostectomy operation on 8.3.1999. This operation was an important event in the medical history of the insured, but nothing was mentioned in his application for the renewal of the lapsed policy and in the proposal form of the second policy. Not only this, after the issuance of the second policy, the insured again developed chest pain and was admitted in Care Hospital, Hyderabad and underwent laparoscopic cholostectomy surgery on 28.8.2002. Learned counsel also mentioned that as per the Medicit Hospital Hyderabad, case-sheet vide I.P No.5285802 dated 23.8.2002 the said policy holder was known diabetic and underwent treatment for one year for myocardial infection. Condition No.5 of the policy also makes void the policy for withholding any material information and all the amounts paid to the corporation are forfeited. Learned counsel also pointed out that in the proposal form for second policy No.652827490, the insured has given ''No'' information against the column 11(a) and Column 11 (b) which relate to the question whether the proposer has remained admitted to any hospital for a week or has been admitted to any hospital or nursing home for general check-up, observations, treatment or operation. The insured has given ''no'' answer to this question whereas the fact is that he was admitted and got the laparoscopic cholostectomy operation done in the year 1999. Similarly in column 11 (d) the specific information has been asked whether the proposer is suffering from the ailments pertaining to liver, Stomach, Heart, Lungs, Kidney, Brain or Nervous system? Even against this column ''No'' has been written whereas he was suffering from gall-bladder dis-function and laparoscopic cholostectomy operation was performed in the year 1999. Thus, the insured has clearly suppressed material information, which is violation of the terms and conditions of the policy. The petitioner has rightly repudiated the claim on the basis of the suppression of the material facts.

The learned counsel for the petitioner also cited the judgment in P.C. Chacko and Anr. Vs. Chairman Life Insurance Corporation of India &Ors., (2008) 1 SCC 321, wherein the following has been held:- Insurance Act, 1938- S. 45- Repudiation of claim under Insurance policy on ground of misstatement- Held, misstatement by itself not reason for rescission of the policy unless the same is material in nature- However, a deliberate wrong answer given by insured having a great bearing on contract of insurance may lead to policy being vitiated in law- Policy can be repudiated if obtained with a fraudulent act- In the present case, the insured obtained a life insurance policy through his brother, who was an authorised agent of Insurance Company concerned- Though the insured had undergone an operation for adenoma thyroid prior to the instant policy, while answering the questions in the application form for obtaining the policy, he denied that he had undergone any operation- Claim under the policy repudiated on ground of said wrong answer or non-disclosure- Contract of insurance or any clause thereof was not unreasonable, unfair or irrational- There was nothing to show that repudiation of policy was not done with extreme care and caution or was otherwise invalid- In view of the above, held, Division Bench of High Court was justified in upholding the rescission of policy in question-"

Learned counsel for the respondent stated that the insurance was taken before the operation of laparoscopic cholostectomy in 1999 and therefore, for the first policy, it can not be said that correct information was not given in the proposal form. The renewal of lapsed policy is only the continuation of the original policy. Discontinuance was only because of non-payment of due premia. The policy was renewed as per the terms and conditions of the company and all due amounts were paid. Hence, this will be treated as continuance of the original policy. So far as the second policy is concerned, the insured was never admitted for more than a week in any hospital and therefore, ''No'' information was provided in the proposal form. The proposer underwent ECG test and only on the satisfactory result, the opposite parties issued the policy, therefore, the repudiation of the claim is not justified.

We have gone through the records and have considered the arguments advanced by both the parties. It is admitted fact that the first policy No.651958533 for Rs.50,000/- was issued prior to the laparoscopic cholostectomy operation in the year 1999. Policy had lapsed for non-payment of premium, which was later revived by the petitioner on deposition of due amount by the insured. As after the laparoscopic cholostectomy operation in the year 1999, the health condition of the insured was satisfactory, he submitted his health status report. Though, he has signed a declaration in the prescribed format, which may not appear true in respect of the word ''operation'', but we are of the view that the effect of renewal of a lapsed policy would only mean continuation of the original policy. As no separate proposal form was filled up for renewal of the policy, the original proposal form will remain valid for this policy. From this aspect, we are of the opinion, that the insured cannot be held liable for not disclosing his laparoscopic cholostectomy operation in the revival application because the proposal form was filled much prior to this operation. Treating the renewal of the policy No.651958533 as continuation of the policy from the year 1998, we are of the view that the repudiation in respect of this policy is not justified by the petitioner.

In respect of the second policy No.652827490, the proposal form has been signed by proposer on 20.1.2002. Here in the personal history column, the following information has been given by the petitioner. ""11 (a) During the last five years did you consult a medical practitioner for any ailment requiring treatment for more than a week?----- No

11(b) Have you ever been admitted to any hospital or nursing home for general check-up, observation, treatment or operation? ------No

11(d) Are you suffering from or have you ever suffered from ailments pertaining to liver, Stomach, Heart, Lungs, Kidney, Brain or Nervous system?

-----No"

Even, if we take the information given by the proposer against 11(a) to be true, we find that the information given against the column 11(b) and 11(d) are definitely not correct as the insured was treated in the year 1999 for gall-bladder disfunction, which is part of liver and had undergone laparoscopic cholostectomy operation. Thus, we find that the insured had definitely withheld a very important information in respect of his operation in the proposal form. Accordingly, we are of the opinion that the repudiation of policy No.652827490 for Rs.5,00,000/- is justified.

Based on the above examination, the revision petition is partly allowed and petitioner Insurance Company is directed to pay Rs.50,000/- (Rupees Fifty Thousand only) along with interest as ordered by the State Commission to the complainant in respect of policy No.651958533. The petitioner Insurance Company would not be liable to pay any amount against second policy No.652827490 for Rs.5,00,000/- (Rupees Five Lakh only). The order dated 30.12.2006 of the State Commission stands modified to this extent. The petitioner will also be liable to pay cost to the complainant as ordered by the State Commission. No order as to costs for this revision petition.