Life Insurance Corporation of India vs VIPIN JAIN

CLAIM of the respondent against Life Insurance Policy obtained by his deceased wife was repudiated solely on the ground that the deceased had deliberately made wrong statement in the proposal form that she did not have any earlier policy whereas subsequent inquiry showed that she had taken a policy No. 111870729 on 28.3.1995 which was only three months prior to the proposal of the insurance policy in question. However the District Forum on the complaint of the respondent vide impugned order dated 24.3.2003 directed the appellant to pay to the legal heirs of the deceased the whole amount due with all the accrued benefits in respect of policy No. 112088527 with interest @12% p.a. from 17.2.1998 till payment and also to pay Rs. 5,000 a cost of the litigation.

THROUGH this appeal the impugned order has been assailed mainly on the basis of Section 45 of the Insurance Act, 1938 and the general principle that a person who does not come with clean hands has no right to be heard or entitled to any relief. At the outset we would refer to Section 45 of the Act which reads as under: 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 of 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 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 object of Section 45 in our view is only in respect to those persons who make wrong statement or concealment of fact, which is directly, related to the report of any medical officer or health or any other documents, leading to the issue of policy, which become cause of death.

In the instant case the respondent was a housewife and a lady and therefore could not have understood the nuance of taking second policy from the agent inspite of having obtained one such policy about three months back. It was not the concealment of such fact which could have ousted her from claiming the benefits under the second policy had she concealed such facts as related to the health or medical report etc., that she would have certainly rendered herself disentitled to the claim and the appellant was competent to invoke Section 45 of the Act.

THE object of obtaining any insurance policy is mainly in our view to protect the interest of the surviving legal heirs for looking after their needs. For this purpose the material and the most important fact, which is relevant is the state of health of a person and the treatment obtained by him in the past for any serious disease, which during the subsistence of the policy would have been responsible for death. However the contention of the Counsel for the appellant that income of the insured has also to be taken into consideration as it should be commensurate with the sum insured does not find favour with us as it is no concern of the insurer to see as to how much income insured is having and whether insured is in position to pay the premium or not. Any person who obtains insurance policy becomes entitled to its benefit in his capacity as insured and it is immaterial whether the insured contributes to the instalments himself or pays the premium from any other sources, the insurance policy cannot be placed on the same pedestal as the ''Benami transactions''. In view of the foregoing reasons we do not find any infirmity in the impugned order so far as the benefit attached to the policy are concerned but feel inclined to interfere with the interest awarded @ 12% as only those consumers are entitled to the interest where there is any term of the contract or on account of equity and fair play or justice. Otherwise in terms of Section 14 of the Consumer Protection Act, 1986, the consumer is entitled to an amount of compensation only for the loss or injury due to negligence on the part of the O.P.

TAKING overall view of the matter we partly allow the appeal by way of substituting the interest with Rs. 10,000 as compensation which shall include the cost of litigation. The aforesaid payment shall be made within one month. Appeal is disposed of in above terms. Bank Guarantee/FDR, if any, furnished by the appellant be returned forthwith. A copy of this order as per the statutory requirements be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to Record Room. Appeal partly allowed.