LIFE INSURANCE CORPORATION OF INDIA vs Sohan Lal Sen

THIS appeal has been filed by the appellant under Section 15 of the Consumer Protection Act, 1986 (the Act) against order dated 28.2.1997 passed by the District Forum, Ajmer by which the complaint of the respondent was allowed in the manner that the appellant was ordered to pay Rs. 25,000 the amount of insurance policy to the respondent complainant along with other benefits with interest @ 18% from 29.6.1994.

THE necessary facts giving rise to this appeal are as follows: That the complainant respondent had filed a complaint before the District Forum on 25.1.1995 inter alia stating that he and his wife Smt. Jamna Devi (now deceased) had taken a joint life insurance policy bearing No. 18097574 for a sum of Rs. 25,000 from the appellant. It was further stated in the complaint that on 23.3.1994 the deceased had died. Thereafter the claim was preferred by the respondent in capacity as nominee of the deceased before the appellant and that claim was repudiated by the appellant through letter dated 31.12.1994 inter alia stating that before issuance of the policy i.e., on 10.10.1993, the deceased was suffering from the disease of haematemisis with portal hypertension and spleenography for the last seven years and for that she had taken treatment from the hospital and these facts were not disclosed by the deceased at the time of filling in up the proposal form i.e., on 10.10.1993 and thus the deceased had given false statement on the ground of withholding correct information, the claim was repudiated. Thereafter the present complaint was filed by the complainant respondent. A reply was filed by the appellant Insurance Co. on 6.12.1995 and the appellant had taken the same stand which was taken by them in repudiation letter dated 31.12.1994 and it was further stated by the appellant that the deceased was suffering from the disease of haematemisis since 1987 and before the death she was got admitted in JLN Hospital, Ajmer on 3.3.1994 where she remained upto 23.3.1994 and she had died while she was admitted in the hospital and the cause of death which was assigned was the failure of circulatory as a result of portal Hypertension Haematemisis and thus it was a case of suppression of material facts about her health on the part of the deceased and the claim was rightly repudiated. Hence complaint be dismissed. After hearing both the parties the District Forum allowed the complaint of the respondent as stated above inter alia holding that it was not a case of suppression of material facts. Aggrieved from the said order this appeal has been filed by the appellant and the main contention of the learned Counsel for the appellant is that since at the time of filling in up the declaration form i.e., on 10.10.1993 and prior to that since the deceased was suffering from the disease haematemisis with portal hypertension. Therefore, the appellant had legal right to repudiate the claim of the complainant 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 appellant in repudiating the claim of the complainant respondent through letter dated 31.12.1994 and the learned District Forum has seriously erred in decreeing the claim of the complainant respondent. 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 has supported the impugned order of the learned District Forum.

WE have heard the learned Counsel appearing for the parties and gone through the entire materials available on record. There is no dispute on the point that deceased had taken insurance policy bearing No. 18097574 for Rs. 25,000 from the appellant and the declaration form was filled in up by the deceased on 10.10.1993.

THERE is no dispute on the point that the deceased had died on 23.3.1994.

THERE is also no dispute on the point that death of the deceased had taken place within two years of the insurance of the policy in question. There is no dispute on the point that from the record submitted by the appellant the fact that the deceased was admitted in JLN Hospital, Ajmer on 3.3.1994 and at that time she was having the problem of vomiting and blood clots and as per the record of the hospital it was opined that she might be suffering from Haematemisis since 1987 and she had blood vomiting on 3.3.1994 and died on 23.3.1994.

THERE is also no dispute on the point that cause of death which was assigned by the doctors was circulatory failure as a result of portal hypertension haematemisis.

THERE is also no dispute on the point that at the time of filling in up the declaration form on 10.10.1993 for taking insurance policy, the deceased had not mentioned about the disease Haematemisis. There is also no dispute on the point that the claim of the complainant respondent was repudiated by the appellant through letter dated 31.12.1994 on the ground that though deceased was suffering from the disease Haematemisis but that fact was suppressed by her at the time of filling in up the declaration form on 10.10.1993.

THUS , in the facts and circumstances just narrated above, the question for consideration is whether repudiation of claim of complainant respondent by the appellant on the ground of suppression of disease Haematemisis was justified or not or whether the findings of the District Forum decreeing the claim of the complainant respondent 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 sine obligation of good faith applies to both equally and in this respect, the decision of the Honble Supreme Court in M/s. Modern Insulators Ltd. v. Oriental Insurance Company, I (2000) CPJ 1 (SC)=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.

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

THE Honble National Commission in National Insurance Co. Ltd. v. Bipul Kunda, II (2005) CPJ 12 (NC)=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. As already stated above, the death of the deceased had taken place within two years of the issuance of the policy.

IT may be stated here that where the insurer wishes to call in question a policy within two years of its being effected, it is enough if the insurer is in a position to show 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 is inaccurate or false.

IT may further be stated here that even if the death takes place within two years, mis -representation, if any, that should be material in the sense of having some effect upon life expectation whether direct or indirect and if it is found material that defence could be taken by the Insurance Company, not otherwise. 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 knowlingly the person taking out the insurance had made mis -statement. But if any one suffers from seasonal diseases or 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.

KEEPING the above principles in mind, the facts of the present case are being examined. In this case the policy was taken by the deceased on 10.10.1993 and prior to that no prof had been given by the appellant to show that she was ever admitted in the hospital for the treatment of disease Haematemisis.

SO far as the disease of Haematemesis is concerned it means, the act of vomiting blood. The blood may have been swallowed (e.g. following nosebleed or tonsillectomy) but more often arises from bleeding in the oesophagus, stomach, or duodenum. Common causes are gastric and duodenal ulcers and varicose veins in the oesophagus.

THUS this disease relates to the vomiting of blood and that could be for so many reasons and as per the case of the appellant the deceased was suffering from the disease since 1987 and if the policy was taken in the year 1993 and no proof had been shown that she had taken the treatment of the disease prior to 10.10.1993. In such a case it could not be said that it was a case of suppression of material information by the deceased to the appellant. So far as the disease Spleenography is concerned it means a disease pertain to spleen.

THE immediate cause of death of the deceased was circulatory failure and that was due to portal hypertension and Haematemisis. Meaning thereby the immediate cause of death was the result of hypertension as a result of which heart was effected and the deceased died.

THE disease Hypertension means tension or tonus that is greater than normal. A condition in which the patient has a higher blood pressure that judged to be normal. In our considered opinion, the disease Hypertension 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. Hypertension is not a permanent disease and it sometimes increases and sometimes it reduces. Thus, non -mentioning of such type of disease in the declaration form would not amount to mis -statement in real sense.

THUS since there was no record to prove that the deceased was a patient of Haematemisis before filling in up the declaration form, therefore, non -mentioning of such type of diseases 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 appellant was not justified in repudiating the claim of the respondent complainant on the ground of suppression of material facts by the deceased especially when the immediate cause of death was hypertension which resulted in the heart failure. Therefore, from every point of view it was not a case of mis -statement and the findings of the 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 hence this appeal deserves to be dismissed.

SO far as the argument that other benefits must have not been allowed to be given to the respondent is concerned, it may be stated here that no policy had been produced by the appellant before the District Forum and thus if the Forum had ordered that respondent would be entitled to the amount of insurance policy along with other benefits, it had not committed any mistake. On point of interest: In this case, the learned District Forum has awarded interest @ 18% p.a. from 29.6.1994.

IN our considered opinion, the rate of interest awarded by the learned District Forum appears to be on higher side and furthermore, awarding of interest from 29.6.1994 was also not proper and correct one and interest must have been awarded from the date of repudiation letter and looking to the facts and circumstances of the case we deem it just and proper to award interest at the rate of 9% p.a. from the date of repudiation letter i.e., 31.12.1994 till realization and to that extent the impugned order of the District Forum is liable to be modified. Accordingly, the appeal filed by the appellant is dismissed. However, the complainant respondent would get interest on the sum awarded by the District Forum at the rate of 9% p.a. from 31.12.1994 instead of 18% p.a. from 29.6.1994 and to that extent on point of interest, the impugned order of the District Forum stands modified accordingly. Appeal dismissed.