Life Insurance Corporation of India vs BRIGJITH LUKE

OPPOSITE parties 1 to 3 in O.P. No. 985/1996 of the Consumer Disputes Redressal Forum, Ernakulam are the appellants.

THE complainants in the said OP were the widow and three children of one deceased K.T. Luke who had taken a policy of insurance with opposite parties 1 to 3. THE policy is dated 29.1.1993 and the assured sum was Rs. 50,000/-. THE assured met with an accident on 11.3.1994, he succumbed to the injuries on 1.5.1994. THE 1st complainant, nominee made a claim for the policy amount, that was repudiated by the opposite parties. THE repudiation was intimated to the complainant by Exbt. A4; therefore complaint was filed before the District Forum. The opposite parties filed their version in which the main contention was that, the repudiation was valid as the assured was guilty of wilful suppression of material facts. They alleged that, he was suffering from serious ailments from 7.2.1992 onwards and he was also on medical leave for 40 days from 7.2.1992. He was treated as an in-patient for diabetes and gastritis. Adding to that he had hypertension also. In view of the same, his policy was repudiated which under law is valid. Hence they pleaded that, the complainants are not entitled to get any relief.

Before the District Forum on behalf of the complainants Exbts. Al to A5 were produced and on the side of the opposite parties Exbts. B1 to B12 were produced. On a consideration of the said material the District Forum came to the conclusion that the opposite parties are not entitled to repudiate the claim. Therefore it made a direction to the opposite parties to consider the claim submitted by the first complainant as a claim submitted for and on behalf of complainants 2 to 4 and to settle the claim on merits within a period of one month. It is the aforesaid direction that is under challenge, in this appeal.

LEARNED Counsel for the appellant while maintaining that, the repudiation is valid, argued that, in view of the fact that the insured had suppressed material facts which he was bound to disclose, even though the repudiation was after two years, from the date of commencement of the policy, the repudiation will not be affected by Section 45 of the Insurance Act. Learned Counsel for the appellant also maintained that, what is already pleaded is sufficient to bring out the requirements of Section 45 and he has also moved an application for amending paragraph 1 of the version. Of course, in the existing paragraph it was pleaded that, the insured was suffering from diabetes and gastritis from 7.2.1992 and that he took leave for number of days. Therefore, the endeavour of the learned Counsel was to maintain, though it was not specifically pleaded that the aforesaid statement was fraudulently made, the fact alleged therein would bring out a case aforesaid. According to the learned Counsel for the appellant, the District Forum was wrong in holding that the opposite parties cannot repudiate the claim on account of Section 45 of the Act. "45. Policy not to be called in question on ground of mis-statement after two years. No policy of life insurance effected before the commencement of this Act shall, after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy holder and that the policy holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose : Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal".

IN terms of the said section a repudiation cannot be valid after two years of the commencement of the policy unless the insurer shows that the statement made by the insured was though inaccurate or false such statement was on material matter or suppressed facts which it was material to disclose, that it was fraudulently made by the policy holder and that the policy holder knew at the time of making it that the statement was false. IN terms of the Section 45 learned Counsel for the respondent pointed out that, when it is obligatory for the opposite party to establish that the statements were fraudulently made, it is undoubtedly their duty to plead the same specifically and then prove the same. According to the learned Counsel for the respondent, mere suppression of material facts by itself need not necessarily generate an inference that, such suppression was fraudulently made; it was urged by him that, even the section envisages that, where there is suppression of facts, it must be shown that the same was material to disclose and that such suppression was fraudulently made. What is attempted to project by the opposite party is that, there is no specific pleading that there was suppression of material facts and such suppression was fraudulently made. The death of the assured was not on account of any disease, but was on account of an accident. It is necessary to note that, Exbt. B3 certificate would show that the insurer was suffering from diabetes from 7.2.1992 and that he was treated for 8 days for diabetes. The statements in Exbt. B9 proposal form in the context of Exbt. B3 may show that the statement concerning the said aspect in the proposal form is not correct. Exbt. A5 repudiation letter also does not specifically state that fraudulently material facts were not revealed. But the infirmity on account of lack of pleading even now persists inasmuch as the pleading by the opposite parties is not sufficient to take out the case from the mischief of Section 45. As indicated, the death has no relationship at all with the disease which the insurer was suffering from, for the death, admittedly, was on account of a motor accident. With due regard of the aforesaid aspect, we are not in a position to agree with the learned Counsel for the appellant. The appeal is without merit and hence is liable to be dismissed, which accordingly is hereby dismissed. Appeal dismissed.