Life Insurance Corporation of India vs Rajkumari

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 4.2.2005 passed by the learned District Forum, Jaipur-II, Jaipur, in Case No. 430/2004 by which the complaint filed by the complainant-respondent under Section 12 of the Act of 1986 was allowed in the manner that the appellants were directed to pay to the complainant-respondent a sum of Rs. 1,60,000 as claim amount in respect of policy No. 193810621 along with all benefits, within a period of two months from the date of order and in case the above amount was not paid by the appellants within two months, the respondent-complainant would get interest at the rate of 9% p.a. from the date of order till realization and further, the complainant-respondent was awarded a sum of Rs. 5,000 as compensation and Rs. 1,000 as cost of litigation.

THE necessary facts giving rise to this appeal are as follows: On 19.7.2004, the complainant-respondent had filed a complaint under Section 12 of the Act of 1986 before the District Forum, Jaipur-II, Jaipur, stating inter alia that her son Pradeep Singh (hereinafter referred to as "the deceased") had taken insurance policy bearing No. 193810621 from the appellants on 25.1.2002 for Rs. 1,60,000 and that policy came into force with effect from 28.4.2001. It was further stated in the complaint that premium of the said policy was being paid regularly, but unfortunately, deceased had died on 15.5.2003. Since the complainant-respondent being mother of deceased was nominee, therefore, she preferred a claim before the appellants, but that claim was repudiated by the appellants through letter dated 25.2.2004 (Annex. 1) stating inter alia that the deceased in his declaration form, which was filled in up at the time of effecting policy, has suppressed his illness that he had suffered from migraine and had taken treatment for headache prior to proposal and further, he had a head injury in 1991 and he had remained unconscious for 8-9 days and apart from this, he was a chain smoker and addicted to alcohol and these facts were not disclosed by the deceased in his proposal form and thus, deceased had given false statement and on the ground of withholding correct information, the claim of the complainant-respondent was repudiated. THEreafter, the present complaint was filed by the complainant-respondent. A reply was filed by the appellants and they have taken the same stand that was taken by them in the repudiation letter dated 25.2.2004 (Annex. 1) and in support of that, they have also filed some documents. A rejoinder was filed by the complainant-respondent stating that since the death of the deceased had taken place because of brain tumour, therefore, according to the complainant-respondent, deceased was suffering from brain tumour, which was not known to her and deceased at the time of filling in up the declaration form and since in the month of July, 2002, condition of deceased suddenly became deteriorated, therefore, he was got admitted in Santokba Durklabhji Hospital, Jaipur and his C.T. Scan was got done and he was being examined by Neurologist and thereafter, he was shifted to SMS Hospital, Jaipur, where he died on 15.5.2003. Since the deceased had died because of brain tumour and since at the time of filling in up the declaration form, it was not known to the deceased or complainant-respondent that deceased was suffering from brain tumour, therefore, there was no suppression of material fact on the part of the deceased. After hearing both the parties, the learned District Forum, Jaipur-II, Jaipur, through impugned order dated 4.2.2005 allowed the complaint of the complainant-respondent in the manner as indicated above holding inter alia: (i) That it was not a case of suppression of material fact. (ii) That since before issuance of policy, the deceased was got medically examined by the appellants and no disease was found and since at the time of filling in up the proposal form for taking policy and prior to taking of policy, the deceased was not aware that he was suffering from brain tumour, therefore, it cannot be said that the deceased has deliberately concealed the fact about his illness and after concealing material facts, he has obtained the policy. Furthermore, since the death of the deceased had taken place after two years of issuance of policy, therefore, in view of the provisions of Section 45 of the Insurance Act, 1938, the claim could not be repudiated on ground of suppression of material facts. (iii) That the claim of the complainant-respondent was wrongly repudiated by the appellants through letter dated 25.2.2004 (Annex. 1). Aggrieved from the said order dated 4.2.2005 passed by the learned District Forum, Jaipur-II, Jaipur, this appeal has been filed by the appellants

. In this appeal, the main contention of the learned Counsel for the appellants is that since the deceased was having a head injury in the year 1991 and he was chronic patient of migraine, therefore, trouble in his brain was from the very beginning and this fact was concealed or suppressed by the deceased while filling in up the declaration form and thus, the findings of the learned District Forum to the effect that there was no suppression of material facts on the part of deceased, are wholly erroneous, perverse and illegal one and thus, the same cannot be sustained and liable to be quashed and set aside and this appeal deserves to be allowed.

On the other hand, the learned Counsel appearing for the respondent-complainant 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 respondent and gone through the entire materials available on record. There is no dispute on the point that deceased had taken insurance policy from the appellants on 25.1.2002 and that policy came into force with effect from 28.4.2001 and death of the deceased had taken place on 15.5.2003 meaning thereby after two years of issuance of policy.

FROM the certificate containing discharge summary of deceased issued by Santokba Durklabhji Hospital, Jaipur, the following facts have emerged: (i) That deceased was admitted in Santokba Durklabhji Hospital, Jaipur, on 23.7.2002 and he was discharged from that hospital on 24.7.2002. (ii) That deceased was suffering from the disease of migraine. (iii) That deceased had head injury in the year 1991 and he had remained unconscious for 8-9 days. (iv) That he was addicted to smoking and alcohol.

From the certificate dated 27.12.2003 containing admission and discharge record of deceased issued by SMS Medical College, Jaipur, it appears that deceased was having brain tumour and immediate cause of death was cardio respiratory arrest. Thus, in the facts and circumstances just narrated above, the question for consideration is whether it was a case of suppression of material facts or not.

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 Modern Insulators Ltd. v. Oriental Insurance Company, I (2000) CPJ 1 (SC)=II (2000) SLT 323=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 concealment of material facts. Apart from this, Section 45 of the Insurance Act is the fundamental provision governing the repudiation of a claim on the ground of suppression. For convenience and reference, Section 45 is extracted as follows: "No policy of life insurance effected before the commencement of the 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 shall, 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 proposal for insurance or in any report of a medical officer or referee or friend or the insured on in any other document leading to issue of the policy was inaccurate or false unless the insurer shows that such statement (was on 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 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."

Thus, information given by insured in proposal form regarding state of health and age is the basis of contract of insurance. Contracts of insurance are of utmost good faith. Accordingly, where the insured takes out a policy by suppressing the material fact that he suffered from cancer, the contract is vitiated and no claim is admissible under the policy. However, in terms of Section 45 of the Insurance Act, repudiation of such claim after two years of the date of effecting insurance, is prohibited. But, for that, it must be proved by the insurer that at the time of making contract, the insured had knowingly or deliberately made false statement or suppressed material facts, which were within his knowledge.

SUPPRESSION of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose. In the above background, we may notice that there are following three conditions for the applicability of the second part of Section 45 of the Insurance Act: (i) the statement must be on a material matter or must suppress facts which it was material to disclose; (ii) the suppression must be fraudulently made by the policy holder; and (iii) 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.

IN this respect, the latest judgment of the Hon''ble National Commission in National INsurance Co. Ltd. v. Bipul Kunda, II (2005) CPJ 12 (NC)=2005 CTJ 377 (CP) (NCDRC), may be referred to where it was 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. As already stated above, the death of the deceased had taken place after two years of the issuance of the policy. If the policy is called in question after passing of two years of its being effected, heavy burden lies on the insurer and the insurer has a harder risk as the insured will get the protection of Section 45 of the Insurance Act and in such case, insurer is required to prove the following facts: (i) That policy holder concealed or suppressed material facts. (ii) That such suppression or concealment was fraudulently made by the policy holder. (iii) That policy holder was aware at the time of making the statement that it was false or that it suppressed facts which it was material to disclose. In other words, policy holder knowingly or deliberately gave incorrect information in the personal statement.

In this case, there is no dispute on the point that prior to issuance of policy, the deceased was having migraine problem and there is also no dispute on the point that deceased had head injury in 1991.

BEFORE proceeding further, some thing should be said about "Migraine". Migraine

MIGRAINE: A familial disorder marked by periodic, usually unilateral, pulsatile headaches that begin in childhood or early adult life and tend to recur with diminishing frequency in later life. Hemicranial headache due to disturbance in the normal calibre of the cranial blood vessels. May be precipitated by trauma, and has a number of clinical variants. Migraine: Paroxysmal attacks of headache, frequently unilateral, usually accompanied by disordered vision and gastrointestinal disturbances. Thought to be the result of vasodilation of extracerebral cranial arteries. An estimated 8 million people in the U.S. suffer from migraine headaches.

No doubt the deceased was suffering from the disease "migraine", but the question is whether the suppression of that disease would amount to concealment or suppression of material matter or mis-representation in real sense or not.

THE test to determine materiality is whether the fact has any bearing on the risk undertaken by the insurer. If the fact has any bearing on the risk, it is a material fact; if not, it is immaterial. In our considered opinion, there are certain diseases such as kidney, heart and brain and they are connected with the life span of a person and if any mis-statement is made in respect of such type of diseases by the person seeking insurance, in such case it can be believed that knowingly the person taking out the insurance has made mis-statement. But if any one suffers from temporary illness such as fever, cough cold etc., and the same was not mentioned at the time of taking insurance, it cannot be stated in true sense that a mis-statement in respect of the state of health has been made by the person seeking insurance.

THE disease "migraine" is a familial disorder marked by periodic, usually unilateral, pulsatile headaches that begin in childhood or early adult life and tend to recur with diminishing frequency in later life. Therefore, in our considered opinion, the disease "Migraine" cannot be treated as a disease in the same manner as the diseases such as kidney, heart and brain, which directly affect the life span of a person. Migraine is not a permanent disease, but it is a recuring disease and a person suffering from migraine can survive for a longer period as it is evident that in America about 8 million people are suffering from migraine headaches. Migraine can never be the cause of death itself. Thus, Migraine could not be said to be fatal one and, therefore, non-mentioning of such type of disease in the declaration form would not amount to mis-statement in real sense.

APART from this, the deceased was having migraine problem and head injury in 1991 and declaration form was filled in up by deceased on 25.1.2002 meaning thereby after more than ten years and migraine itself is not a disease, but it is a recurring disease and it may lead to other diseases, but since the health of deceased was perfect since 1991 upto June, 2002, therefore, if so-called disease "migraine" was not mentioned by deceased while filling in up the declaration form, it would not amount to concealment or suppression or mis-statement of a material matter in real sense.

FURTHERMORE, the immediate cause of death of deceased was cardio respiratory arrest accompanied by brain tumour. The word "tumour" means swelling or enlargement that can be developed at any part of the body and since it was developed in the brain, therefore, present case is of brain tumour.

The deceased was having migraine problem and head injury in 1991 and he took treatment, but at that time, brain tumour was not diagnosed and thus, at that stage, the deceased was not having any brain tumour.

THE introduction of CT and MRI has revolutionized the diagnostic and therapeutic approach to brain abscess. When CT scan was got done in July, 2002, it was found that the deceased was having brain tumour and prior to that, it was not known that the deceased was having brain tumor. Thus, when the declaration form was filled in up by deceased on 25.1.2002, he was not having any knowledge that he was suffering from brain tumour and the brain tumour was diagnosed in July, 2002 after filling in up the declaration form and after issuance of policy. Had brain tumour would have been detected before the issuance of policy and in case, that fact would have been suppressed, then the case of the appellants would have been found favourable. However, since the fact that the deceased was having brain tumour came to light when CT scan was got done in July, 2002, therefore, to say that prior to July, 2002, deceased was having brain tumour cannot be accepted.

APART from this, there is no nexus between the cause of death of deceased and migraine. The deceased was having migraine problem and head injury in 1991 and he died on 15.5.2003 i.e., after about 12 years and thus, the immediate cause of death of deceased could not be said to be migraine, which was suppressed by the deceased. Thus, even if the deceased was suffering from migraine at the time when he made the proposal, migraine 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 that he was suffering from migraine at the time when he made the proposal, the liability under the policy could not be denied on the ground of suppression of material facts. The death of the deceased having not been connected with migraine, it cannot be considered to be material so far as death of the deceased is concerned. Consequently, it cannot be said that there was suppression of material facts and, therefore, no liability of the Corporation arose under the policy.

THUS, for the reasons stated above, it is held that non-mentioning of the disease "migraine" in the declaration form by the deceased does not amount to suppression or concealment of material fact or mis-statement in real sense and, therefore, the appellants were not justified in repudiating the claim of the respondent-complainant on the ground of suppression of material facts and the appellants have repudiated the claim of the complainant-respondent without any basis and on wrong assumption and in an arbitrary manner and in view of this, the findings of the learned District Forum decreeing the claim of the complainant-respondent are liable to be confirmed as they are based on correct appreciation of entire materials and evidence available on record and they do not suffer from any basic infirmity, illegality or perversity and this appeal deserves to be dismissed. Accordingly, this appeal filed by the appellants is dismissed. Appeal dismissed.