LIFE INSURANCE CORPORATION OF INDIA vs KULDEEP SINGH

LATE Smt. Bhinder Kaur @ Bhupinder Kaur obtained an insurance policy from the petitioner Life Insurance Corporation of India on 28.01.2004, for a sum of Rs. 3 lacs. She was medically examined before issue of the policy and was declared medically fit. Smt. Bhinder Kaur having expired on 26.10.2004 due to Dysentery and vomiting, the claim as per the terms of the policy was lodged by the complainant for the petitioner corporation. The claim however, was rejected by the petitioner corporation, on the ground that the insured had made incorrect statements and had withheld material facts regarding her health at the time of submitting the proposal form as well as at the time of her medical examination. Being aggrieved from the rejection of his claim, the complainant approached the concerned District Forum seeking payment of the insured amount alongwith compensation and cost of litigation.

THE complaint was resisted by the petitioner corporation primarily on the ground that contract of insurance being based on the number of uberrima fide (utmost good faith), the insured was required to give true and correct information in the proposal form as well as at the time of her medical examination but the insured had concealed a material information that much before applying for the policy, she had undergone a major surgery for removal of her uterus and therefore, the petitioner corporation was however justified in repudiating the claim.

VIDE its order dated 23.11.2006, the concerned District Forum allowed the complaint who directed the petitioner corporation to make the payment of Rs. 3 lacs with interest @ 9% per annum, compensation amount quantified at Rs. 1000/ - and the cost of litigation quantified at Rs. 500/ -. Being aggrieved from the order passed by the District Forum, the corporation approached the concerned State Commission.

VIDE its order dated 10.12.2010, the concerned State Commission dismissed the appeal filed by the corporation. Being aggrieved, the said corporation is before this Commission by way of this Revision Petition.

IT is an admitted position that before submitting the proposal for obtaining the insurance policy, Late Smt. Bhinder Kaur had undergone a surgical procedure for removal of her uterus. In his affidavit filed by way of evidence, complainant Sh. Kuldeep Singh admitted that the uterus of Smt. Bhinder Kaur was removed in an operation though he claimed that after the surgery procedure, she was hale and hearty. Clause 11(a) of the proposal form required the insured to disclose whether during the last five years, she consulted a medical practitioner for any ailment requiring treatment for more than a week. The answer given by her was in negative. Clause 11(b) required her to state whether she had been admitted to any hospital or nursing home for general check -up, observation, treatment or operation. The insured replied in negative. Thus, even before the doctor, she did not disclose that her uterus had been removed.

SECTION 45 of the Insurance Act, to the extent it is relevant for our purpose provides that no policy of life insurance shall, after 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 in any 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 who knew, at the time of making it, that the said statement was false or that it suppressed facts which it was material to disclose.

IN the present case, even two years had not expired from the date of the policy when the insured died. Therefore, the policy could be questioned by the petitioner corporation, if it is shown that a statement made in the proposal was inaccurate or false. It was observed by the Hon''ble Supreme Court in Life Insurance Co. Ltd. Vs. Asha Goel & Anr., 2001 2 SCC 160 that the contracts of insurance including the contract of life assurance are contracts uberrima fides and every material fact must be disclosed, otherwise, it would be a good ground for rescinding of the contract. It was observed that the duty to disclose material facts continues right upto the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called in question. It was further observed that for determining whether there is a suppression of material facts, it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person.

IN Satwant Kaur Sandhu Vs. New India Insurance Co., 2009 8 SCC 316, the Hon''ble Supreme Court emphasized that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not.

THOUGH the term "material fact" has not been defined in the Insurance Act, it is understood to mean any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be "material". In the present case, had the insured disclosed in the proposal as well as to the doctor who examined her, that she had undergone a surgery for removal of uterus, the insurer might have rejected the proposal considering the aforesaid surgical procedure or it might have asked the proposer to undergo a comprehensive medical check -up including further investigations or it might have asked for a higher premium taking, into account the surgical procedure she had already undergone. Therefore, it can hardly be disputed that the information with respect to the aforesaid surgical procedure, was a material information, which went to the root of the contract of the insurance and influenced the decision of the insurer on the proposal form submitted by Late Smt. Bhinder Kaur.

IN LIC of India Vs. Smt. Kusum Patro, 2012 2 CPJ 272 NC , the insured had suffered a serious accident leading to a head injury and proptosys of left eye before taking the insurance policy. The aforesaid information was however, withheld by him while seeking insurance cover. He died due to myocardial infraction, which had no connection with his head injury and the proptosys of his left eye. It was however, held by this Commission that he having concealed material fact from the Corporation, the repudiation of the claim was justified.

FOR the reasons stated above, orders passed by the Fora below are set aside and the complaint is dismissed. No order as to cost.