Life Insurance Corporation of India vs ASHOKE KUMAR KUNDU

THIS appeal is against an order of the Calcutta District Forum allowing a claim of Life Insurance which was repudiated by the Life Insurance Corporation of India on the ground of suppression of material facts in the proposal form of the insurance policy. The facts in the short compass are as follows :

ONE Sital Chandra Kundu secured a life insurance policy for Rs. 50,000/- on his own life on 28.3.87. It was an endowment policy for 18 years and one of the sons of the assured named Ashoke Kumar Kundu was appointed the nominee. The policy holder was admitted to the S.S.K.M. Hospital on 17.8.88 for certain ailment and was discharged from the hospital on 12.11.88. Thereafter he went to his native village at Gangpur, District Hooghly. From there he was admitted again in the Sadar Hospital at Arambagh where he expired on 18.12.88 at the age of 53 years on account of cancer in the stomach. His nominee in due course filed claim papers for realisation of the insurance money, but the claim was repudiated by the L.I.C.I. on the ground that the assured in his proposal form suppressed material facts about ailments suffered by him prior to the proposal and furnished wrong information in respect of certain diseases asked from him in the proposal form. Against this decision the heirs of the assured filed complaint before the Calcutta District Forum and the Forum after hearing the respective parties allowed the case in favour of the complainant. Against the said order, the present appeal has been filed by the L.I.C.I. The points for determination are : (1) If there was deficiency of service on behalf of L.I.C.I. in repudiating the claim, and (2) if the decision of the C.D.F. in allowing the claim has been a correct one. DECISION

The grounds which weighed with the C.D.F. in allowing the complainant''s case maybe stated as follows :- (i) No medical certificate about the treatment of Sital of diabetes was procured and even if it is accepted that he had such a disease, it did not affect his claim as he died of cancer in the stomach. (ii) A certificate of sound health was issued by the L.I.C.I''s doctor on examination at the time of acceptance of the policy and as such the Corporation is estopped from challenging it. (iii) A policy cannot be called in question after the expiry of two years on the ground that some statements leading to the issue of the policy were inaccurate.

THE question that the assured had diabetes is proved by the certificate of hospital treatment dated 30.3.89 issued by the S.S.K.M. Hospital, vide Annexure-E to the Memo of Appeal. It appears from the said certificate that the exact history of the case was reported by the patient himself at the time of his admission. This report has not been challenged from any quarters and no evidence has been adduced to prove that it is a false certificate. From this certificate it appears that the patient had himself reported that his diabetes was detected three years back preceding the admission in the hospital (the date of his admission is 7.10.88, indoor admission No. 20585). He also reported that he had Jaundice three years back. But from the answers given by him in the proposal form against Item Nos. 18,19 and 20 he has denied the attack of Jaundice and diabetes and any treatment in any hospital for those diseases. If the statement given by the patient in the hospital is true, (and we find no reason to hold it as false) it must be held that he suppressed the aforesaid diseases in the policy for. The view of the District Forum is that even if it is accepted that the assured had diabetes at the time of taking the policy and that he suppressed the fact at the time of filling up the form, it does not affect the merits of the complainant''s claim as Sital died not of diabetes but of Cancer. The reasoning is not a sound one. The contract of insurance is uberrima bides and the person seeking insurance is duty bound to disclose all material facts relating to the risk involved in the policy of insurance. A life insurance in particular is dependent on the expected span of a men''s life as it is really a contract of speculation. So every fact which may affect a men''s chance of longevity is material even if it may affect the length of life distantly. Diabetes and jaundice are two vital diseases to influence a contract of life insurance and hence those are specifically mentioned in the questionnaire mentioned in the form of a policy. By replying as to the existence of these diseases by the answer "No" the policy holder must have suppressed some material facts affecting the life to be insured. His subsequent admission of the existence of those two diseases before the Hospital Authorities is important and its veracity cannot be doubted, because the previous history of disease is expected to be in the special knowledge of the patient and no motive can be attributed to making any possible false statement in this regard.

THAT a contract for life insurance is dependent on the utmost good faith has been very scholarly discoursed by a Division Bench of the Hon''ble High Court in P. Sarojini v. L.I.C.I. of India A.I.R. 186 Kerala 201. The Court has discussed the nature of a life insurance policy by quoting from the books of different authorities and has stressed on the importance of making a clean disclosure of all material facts by a policy holder. The question of creating an estoppel against the L.I.C.I. on the ground that its Medical Officer had examined the policy holder before the issue of the policy and given a certificate is also not acceptable as such certificate does not cure the defect of a policy which is otherwise vitiated by misrepresentation and suppression of fact. This question has also been discussed in the aforementioned case decided by the Kerala High Court. Lastly we come to the effect of Section 45 of the Insurance Act, 1938 on the instant life insurance policy. The District Forum has held that the policy was represented by the L.I.C.I. after the existing of two years from the date of the policy and that as such it could not be repudiated on the ground that there was inaccuracy in any statement made before the doctor. The scope and effect of Section 45 have been discussed at length by the Supreme Court in Mitholal Nayek v. L.I.C.I., A.I.R. 1962 Supreme Court 814. The second part of Section 45 provides the excepted provisions which would affect the general bar imposed on the first part of the section. According to the Supreme Court as held in the aforesaid case the three conditions for the application of the second part of Section 45 are, - (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.

As discussed above the disclosure of the diseases of diabetes and Jaundice was a material fact in the present policy of life insurance and that it was disclosed to the Hospital Authority but suppressed from the L.I.C.I. So suppression must have been fraudulently made. Thus the bar under Section 45 of the Insurance Act would not be applicable here.

FROM all the facts discussed above it must be held that the repudiation of claim was rightly done here. So there was evidently no deficiency on the part of the L.I.C.I. in repudiating the claim. The finding of the District Forum, is, therefore, wrong and is liable to be set aside.

THE appeal is accordingly allowed. THE impugned order dated 29.4.94 passed in C.D.F. Case No. 978/94 is hereby set aside and the said case is dismissed for default. Having regard to the facts of the case, the parties are to bear their own costs both in the lower Forum and in the State Commission. ORDER I beg to differ with the decisions of the Learned President on the grounds-firstly that the Learned President has strongly relied upon the questionaire filled in and issued on 30.3.89 by Medical Officer, S.S.K.M. Hospital, Calcutta wherein it has been stated that assured was diabetic detected 3 years back and was also attacked with Jaundice 3 years back while the assured died on 18.12.88. The Medical Officer has issued the said form of questionaire from the case history given by the assured at the time of admission into the hospital and such case history was supplied by the assured casually or on probability and tentatively in answer to a question if any illness preceded or co-existed at the time of his/her admission into Hospital for which the same can not be taken as exclusive evidence that he was diabetic or suffered from Jaundice 3 years back i.e. at the starting of 1986. The Jaundice is casual disease while diabetes though not casual but remained subsided or under control by restricted diet and by treatment. It is to be noted that at the time of proposal for L.I.C. policy if the assured had any feelings or knowledge about the said disease. Practically there is no such proof of knowledge of the assured about the said alleged ailment at that time.

Considering the aforesaid facts, we are of opinion that as the assured died on 18.12.88 out of Cancer of stomach which has no nexus with the ailments of diabetes or Jaundice allegedly suffered by the assured three years back is merely a probability, as such those are not material or vital suppression by the assured which would vitiate the contract of Insurance which had remained in force for well two years after alleged sufferings from Jaundice or diabetes. It is to be noted that the certificate of favourable report about the state of health of the assured by the own doctor of L.I.C. is not disputed and the risk has been accepted willingly and premium due thereof. The burden has to be discharged by L.I.C. to prove ailment of the assured at the time of taking the policy but the L.I.C.I. had miserably failed to do so by not producing any evidence even at the stage of the trial before the District Forum which could vitiate the contract and establish fraud or suppression on the part of the deceased assured at the time of proposal and the execution of the policy.

HARYANA State Commission in the case of Life Insurance Corpn. of India v. Smt. Taravati reported in 1994 (1) C.P.R. 456 in the similar circumstances as stated above has held that after a forceful contest by the insured the L.I.C.I. even at that stage had lead no evidence to establish as they necessarily must that the deceased had made suppressions which were material to the execution of the policy dated 28.3.87 at the time of execution of proposal form etc. and it unhesitatingly confirmed forth-right view of the District Forum. Similarly, in the case of Sanjiv Mahendralal Shah v. L.I.C.I. reported in 1994 (1) C.P.R. 736 the Gujarat State Commission held that it is well-known that educated and affluent persons rush to doctors regularly to check their health and if the checking does not disclose any disease they are supposed to give affirmative statement of good health. If there is any medical evidence suggesting to the assured that there is any serious disease winch requires a disclosure then assured is bound to disclose the same. But there is no such opinion or any existence of disease, where no treatment has either been prescribed or taken; merely because there was a suspicion or merely because for checking the health the assured might have consulted a doctor can not be considered non-disclosure. There is no burden to disclose the positive opinion regarding good health. The Insurance had not produced any evidence to show that assured was suffering from any disease at that material time of taking the policy which required disclosure.

IN the said case at the time when the claim was rejected there was no material before the L.I.C, to come to the conclusion that the deceased had Cancer prior to that proposal and that she knew that she had Cancer. Even in the written statement the INsurance Company has not disclosed as to how they came to know that she had knowledge that she had Cancer and she had taken any advice or treatment prior to the date of proposal. The National Commission in the case of Consumer Education & Research Society & Anr. v. Life Insurance Corporation of India & Anr. reported in II (1994) C.P.J. 77 (N.C.D.R.C.) held that in the absence of any definite medical finding that the cardiac arrest in this case was a consequence of the caesarean operation and that the pregnancy clause was attracted in this case. We cannot also overlook the fact that in the practice of modern medicine caesarean operation has become almost a routine procedure. The National Commission are therefore of the view in the said case that the repudiation of the claim under the policy was not justified. In all the aforesaid cases it held deficiency in service on the part of L.I.C.I. In the present case also the L.I.C.I. has not produced any definite finding that the Cancer was a consequence of diabetes or Jaundice or the assured suffered from Jaundice or diabetes at the time of execution of the proposal form of the policy. Therefore rejection of claim of the assured is unjustified as such the said rejection is deficiency in service.

IN the light of my aforesaid discussion, I am in agreement with the findings of the Calcutta District Forum and reject the appeal and affirm the Judgment and order dated 29.4.94 passed in C.D.F. Case No. 878 of 1990. Appeal rejected.