Life Insurance Corporation of India vs S. Rajalakshmi

THE opposite parties in COP No. 167/99 on the file of the District Consumer Disputes Redressal Forum, Chengalpattu, are the appellants herein. THE respondent filed the complaint alleging as follows : Her husband Sanjeevi proposed for insuring his life with the 2nd opposite party/2nd appellant. A policy for Rs. 1,54,000 was taken. He died on 12.12.1997 within six months of commencement of the policy on account of heart attack. THE claim made by the respondent was rejected by the appellants on the ground that the deceased had suppressed material facts with regard to his health condition at the time of submitting the proposal for insurance.

THE appellants contended that on investigation of the claim, it was found that the life assured was an alcoholic, suffered from peptic ulcer prior to submitting the proposal for insurance. He was treated by Dr. M.A. Ilangovan of R.K. Pet and that as per the leave records available with the employer he was on medical leave for treatment of peptic ulcer for about 48 days from 29.6.1996 to 15.8.1996; that this vital material fact about his health condition had been suppressed in his proposal form for insurance on 26.2.1997. In such circumstances, the repudiation was in order. Before the District Forum, Exs. A-1 to A-4 were marked on the side of the complainant and no document was filed on the side of the opposite parties. There was no oral evidence let in.

On the materials placed, the District Forum, by order dated 3.7.2000, held that the LIC had repudiated the claim only on the ground that the deceased was on medical leave for 48 days as he was suffering from peptic ulcer and that he had taken treatment under Dr. M.A. Ilangovan and since the said Doctor was not examined before the District Forum about the health condition of the deceased, there was no evidence in support of the stand of the appellants. Further, as the deceased had died due to massive heart-attack only and not due to peptic ulcer and as there was no connection between the two, the repudiation was not proper. In that view, by order dated 3.7.2000, the District Forum awarded a sum of Rs. 1,54,000 with costs Rs. 2,000 payable within two months from the date of receipt of the order, failing which the amount would carry interest at 12% p.a. from the date of delivery of the order till payment. It is as against that the present appeal has been filed.

THE learned Counsel Mr. T. Ravi Kumar, appearing for the appellants made the following submissions : THEre was suppression of material facts by deceased in respect of his health condition while submitting the proposal form and under Section 45 of the Insurance Act, the policy could be repudiated. THE contract between the parties being one of utmost good faith, suppression by the deceased entitled the appellants to repudiate the contract. THE Zonal Claims Committee of the LIC headed by a retired Judge of the Madras High Court had gone through the case papers and it confirmed that the repudiation was proper. THE deceased was on medical leave for 48 days from 29.6.1996 to 15.8.1996 and had undergone treatment under Dr. M.A. IIangovan and the available records would prove that there was suppression of material facts by the deceased. If only the material information had been given, LIC would not have issued the policy in the first instance. On verification, it was found that the deceased was an alcoholic. He was suffering from peptic ulcer and was not keeping good health. He had misled LIC into issuing the policy. Several decisions of the Supreme Court and the National Commission holding that suppression of material information would entail repudiation have not been taken into consideration by the District Forum while deciding the complaint. THE present case fell within two years of takirg the policy and hence the provisions of Section 45 of the Insurance are attracted. As such the doctor need not give evidence to substantiate the document. Ex. A-1 contains the details of the health condition of the proposer. To the questions therein the answers given by the deceased while taking the proposal were not correct.THE questions had been wrongly answered by the deceased suppressing the material information. Per contra, the learned Counsel appearing for the respondent/complainant submitted that the complainant had stated that the deceased was compelled to take medical leave to take care of agricultural operations as the other leave options were exhausted and in such circumstances, the appellant had not established that the deceased suffered from any ailment which had been suppressed by him. If only he was suffering from peptic ulcer, the question of suppression of material fact would arise. It was for the Insurance Company to disprove the stand of the complainant by examining the Doctor who issued the certificate to show that the deceased actually suffered from peptic ulcer and that the deceased had not obtained the medical certificate to carry out agricultural operations. Even otherwise, assuming without admitting that the deceased was suffering from peptic ulcer, it had no connection with cardiac arrest which was the cause for his death. The deceased had not committed any wrong excepting to obtain leave stating wrong reason. It was for the employer to take appropriate action and the appellants could not repudiate the claim.

IT is a matter of record that the deceased was on leave for over 40 days towards the end of 1996 and the reason for his absence was that he was suffering from peptic ulcer. According to the complainant, the deceased did not suffer from any peptic ulcer, but as he had exhausted all other leave options, he sought leave on medical grounds and availing the same, he was engaged in agricultural operations. IT is not open to the complainant to say that for allegedly producing a false medical certificate it was for the department to take action. The department appears not to have taken any action and we cannot take judicial notice of the fact that a person applying for medical leave on account of some health problem does not really have any health problem but it was for some other purpose that he had availed medical leave. We have therefore.to assume, unless contrary is proved, in the present case that the deceased was suffering from peptic ulcer. If he was suffering from peptic ulcer, it was his bounden duty to disclose it while submitting the proposal for insurance. Admittedly, he had not mentioned that. Section 45 of the Insurance Act would immediately be attracted as the death had taken place within two years period from the date of taking policy as contemplated therein. In Senior Divisional Manager & ors. v. Smt. Raksha Goyal, II (2002) CPJ 92 (NC), it has been held that the official record of the insured showing his leave on medical ground could not be disputed. In that case, one Goyal had taken insurance on 18.8.1889. He died on 30.12.1990. He suffered heart attack. The Insurance company repudiated the policy on the ground that the insured Goyal had concealed material facts relating to the illness in the proposal form and stated that he had never been admitted, that hospital nor had he any type of ailment. He also stated that he did not take any medical leave from his office. IT was found that he had taken leave on medical grounds on a number of occasions. In that context, the National Commission held that the official record of the insured showing his leave on medical grounds could not be disputed. Of course, there were certificates from the doctors produced. The National Commission set aside the order of the State Commission which allowed the complaint. [See also Sr. Divisional Manager, LIC of India v. Smt. Gangamma & Anr., III (2002) CPJ 56 (NC)=2002 (3) CPR 24]. IT has been held by this Commission in Smt. Jothi Ammal v. LIC of India & Anr., 2003 (3) CPR 249, that under Section 45 of the Insurance Act it is not necessary for the insurer to establish that suppression was fraudulently made. This Commission dismissed the complaint holding that suppression of material facts in the proposal form would vitiate the contract of insurance and would enable the insurer to repudiate the contract for non-disclosure of previous medical status of the assured which amounted to suppression of material facts ; that in that case, the repudiation of contract would not amount to deficiency in service. [See also : Sreedevi Amma v. LIC of India & Anr., I (2005) CPJ 77 (NC)=2005 (1) CPR 39 (NC)]. In another case decided by this Commission on 21.6.2004 in AP No. 627/99, it was found that the insured had suppressed material facts while taking the policy and he had given the declaration knowing it to be false, it was held that the contract of insurance being one based on good faith any suppression of material facts would render the contract invalid. We may also notice that under Section 45 of the Insurance Act, 1938, which runs as follows: "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 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 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:"

the onus shifts to the insurer only after the two years period contemplated under this section. In the instant case, the report of Dr. M.A. Ilangovan clearly shows that the deceased was suffering from peptic ulcer. The period of two years had not expired at the time the insured died; hence, the doctor''s statement has to be accepted. In view of the discussion above, the order of the District Forum cannot at all be sustained.

IN the result, the appeal stands allowed. The order of the District Forum is set aside and the complaint is dismissed.

IT is seen that the appellants deposited the entire award amount before the District Forum in a Fixed Deposit Receipt bearing No. 671013 for Rs. 1,72,100 by virtue of a Memo dated 6.6.2001 along with the original receipt issued by the District Forum pursuant to the order by this Commission in CMP No. 250/2001 dated 21.5.2001. As observed by the National Commission in Raksha Goyal''s [referred to supra] case, it is upto the appellants to exercise their discretion by showing compassion and taking a sympathetic view in the matter and they may allow a portion of the amount to be taken by the respondent/complainant. Appeal allowed.