Life Insurance Corporation of India vs Rajbai

THIS appeal under Section 15 of the Consumer Protection Act, 1986 (hereinafter referred to as "the Act of 1986") has been filed by the appellants against the order dated 26.7.1997 passed by the learned District Forum, Dausa in Case No. 405/1996 by which the complaint filed by the complainant-respondent No. 1 under Section 12 of the Act of 1986 was allowed in the manner that the appellants were directed to pay to the complainant respondent No. 1 a sum of Rs. 25,000 as insurance claim amount and Rs. 25,000 as accident benefits along with bonus and interest @ 15% p.a. from the date after six months of filing the claim by the complainant-respondent No. 1 before the appellants till realisation and Rs. 400 as cost of litigation.

THE necessary facts giving rise to this appeal are as follows : On 24.10.1996, the complainant-respondent No. 1 had filed a complaint under Section 12 of the Act of 1986 before the District Forum, Dausa stating inter alia that on 18.12.1992, her husband Satyanarain (hereinafter referred to as "the deceased") had taken insurance policy bearing No. 192227147 for Rs. 25,000 from the appellants and that policy came into force with effect from 10.12.1992 and that policy also covered accident benefits. It was further stated in the complaint that the premium of the said policy was being paid by deceased regularly through salary, but unfortunately, deceased had died on 7.2.1995 in the accident and for the said accident, FIR No. 43/1995 was registered at Police Station Bandikui. THEreafter, the respondent No. 1 complainant preferred a claim before the appellants, but that claim was repudiated by the appellants through letter dated 28.3.1996 stating inter alia that prior to taking of the policy in question, the deceased had taken sick leave from 5.2.1990 to 24.2.1990, 25.2.1990 to 8.3.1990 and 9.11.1991 to 22.11.1991 for 20 days, 12 days and 14 days respectively, but these facts were not disclosed by the deceased at the time of filling in up the declaration form on 18.12.1992 and thus, deceased had given false statement and on the ground of withholding correct information, the claim of the complainant-respondent No. 1 was repudiated. THEreafter, the present complaint was filed by the complainant-respondent No. 1. A reply was filed by the appellants and the appellants took the same stand which was taken by them in the repudiation letter dated 28.3.1996 and it was further submitted by the appellants that since the deceased has concealed and suppressed material facts about health, therefore, no illegality or irregularity has been committed by the appellants in repudiating the claim of the complainant-respondent No. 1 through letter dated 28.3.1996 and the present complaint deserves to be dismissed. After hearing both the parties, the learned District Forum, Dausa through impugned order dated 26.7.1997 allowed the complaint of the complainant-respondent No. 1 in the manner as indicated above holding inter alia that repudiation of claim of the complainant respondent No. 1 by the appellants was not justified and it amounted to deficiency in service on the part of the appellants. Aggrieved from the said order dated 26.7.1997 passed by the learned District Forum, Dausa, this appeal has been filed by the appellants. In this appeal, the main contention of the learned Counsel for the appellants is that since at the time of taking policy, the deceased had suppressed relevant and material facts relating to his state of health, therefore, the appellants had the legal right to repudiate the claim of the complainant respondent No. 1 on the grounds of suppression of material facts and breach of principles of utmost good faith by the deceased and thus, no illegality has been committed by the appellants in repudiating the claim of the complainant respondent No. 1 through letter dated 28.3.1996 and the learned District Forum has seriously erred in decreeing the claim of the complainant respondent No. 1. Hence, impugned order cannot be sustained and liable to be quashed and set aside.

On the other hand, the learned Counsel appearing for the complainant-respondent No. 1 has supported the impugned order of the learned District Forum.

WE have heard the learned Counsel appearing for the appellants and the learned Counsel appearing for the complainant-respondent No. 1 and respondent No. 2 present in-person and gone through the entire materials available on record. There is no dispute on the point that deceased had taken insurance policy bearing No. 192227147 for Rs. 25,000 from the appellants and the declaration form was filled in up by deceased on 18.12.1992 and that policy also covered accident benefits.

THERE is also no dispute on the point that deceased had died on 7.2.1995 in the accident and for that accident, FIR No. 43/1995 was registered at Police Station, Bandikui. There is also no dispute on the point that at the time of filling in up the declaration form on 18.12.1992 for taking insurance policy, the deceased had not mentioned about the facts of taking sick leave by him. There is also no dispute on the point that the claim of the complainant respondent No. 1 was repudiated by the appellants through letter dated 28.3.1996 on the ground that at the time of obtaining the policy in question, the deceased had suppressed relevant and material facts relating to his state of health.

THUS, in the facts and circumstances just narrated above, the question for consideration is whether repudiation of claim of complainant-respondent No. 1 by the appellants on ground of suppression of facts by the deceased relating to his state of health and about sick leave taken by him, was justified or not or whether the findings of the District Forum decreeing the claim of the complainant respondent No. 1 could be sustained or not.

BEFORE proceeding further, it may be stated here that it is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of the Insurance Company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally and in this respect, the decision of the Hon''ble Supreme Court in M/s. Modern Insulators Ltd. v. Oriental Insurance Company, AIR 2000 SC 1014 may be referred to. The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. Furthermore, mere concealment of some facts will not amount to cocealment of material facts.

Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.

THE Hon''ble National Commission in National Insurance Co. Ltd. v. Bipul Kunda, 2005 CTJ 377 (CP) (NCDRC) has held that for repudiating a claim of an insured, it is for the insurer to show that a statement on a fact, which was material for the policy, had been suppressed by the insured and that statement was fraudulently made by him/her with the knowledge of the falsity of that statement. In the present case, the deceased had admittedly died because of the fatal injuries sustained by him in an accident and this cause of death has nothing to do with any facts stated to have been suppressed by him at the time of submitting his proposal on 18.12.1992. Moreover, it is question of fact as to whether the proposer had suppressed any material fact relating to his health or not. In the nature of the cause of death of the deceased, such inquiry beomes redundant and unnecessary.

FURTHERMORE, even if the deceased was suffering from any disease at the time when he made the proposal, such disease is not proved to have bearing on the cause which resulted in the death of the deceased. Therefore, even if the deceased had failed to disclose at the time of filling in up the declaration form that he was suffering from any disease and took medical leave, the liability under the policy could not be denied on the ground of suppression of material facts. For the reasons stated above, the appellants were not justified in repudiating the claim of the complainant-respondent No. 1 on the ground of suppression of material facts and the appellants have repudiated the claim of the complainant-respondent No. 1 without any basis and on wrong assumption and in an arbitrary manner and the learned District Forum was right in decreeing the claim of the complainant respondent No. 1. We see no reason to differ with the findings of the learned District Forum decreeing the claim, as they are based on correct appreciation of entire materials available on record and they do not suffer from any basic infirmity, illegality and perversity. Hence, this appeal deserves to be dismissed. However, the learned District Forum was not right in awarding interest @ 15% p.a. from the date after six months of filing the claim by the complainant-respondent No. 1 before the appellants and in our considered opinion, interest should have been allowed at the rate of 9% p.a. from the date of filing complaint till realisation. Therefore, the respondent No. 1 -complainant would be entitled to get interest on the decretal amount at the rate of 9% p.a. with effect from the date of filing complaint till realisation and to that extent, the impugned order of the District Forum is liable to be modified. Accordingly, this appeal filed by the appellants is dismissed. However, on point of interest, the impugned order of the learned District Forum, Dausa dated 26.7.1997 is modified to the extent and in the manner that the complainant respondent No. 1 would be entitled to get interest on the decretal amount at the rate of 9% p.a. with effect from the date of filing complaint till realisation. Appeal dismissed.