LIFE INSURANCE CORPORATION OF INDIA LTD vs Kantaben

FIRST Appeal No. 145 of 1993 by Life Insurance Corporation of India (for short called L.I.C.) and First Appeal No. 232 of 1993 by Smt. Kantaben, the complainant is directed against the order dated 16.2.93 passed by the State Commission, Gujarat at Ahmedabad, directing the L.I.C. to refund the premium to the complainant after holding that the policy is void.

THE complainant is the widow of deceased Shri Ramabhai Patel who had during his life time taken a policy of insurance for Rs. 1 lakh vide proposal No. 9517877 dated 9 9.89. Shri Patil died on 22nd December, 1989 after a period of three months of the taking of the policy. The complainant being a nominee in the policy, lodged a claim with the L.I.C. which made inquiries and investigations. By letter dated 18.6.90, the L.I.C. repudiated all liabilities under the policy on account of the deceased having withheld correct information regarding his health at the time of effecting the assurance. The basis of repudiation is the proposal for assurance dated 9.9.89 wherein the deceased had given false answers with the intention of concealment of material facts relating to his health and obtaining the policy by nondisclosure of the fact that he was suffering from cancer and had been taking treatment. The State Commission found that the insured has not disclosed his previous ailments, that according to Dr. Jitendra Patel, Baroda, he gave treatment to the insured in July, 1989, that the deceased was operated by Dr. Mukund Patel for gland and then he was referred to Ahmedabad for cancer treatment and that Dr. Mukund Patel had given a certificate dated 14.5.90 the investigation report shows that the deceased was suffering from cancer on left neck gland for which biopsy was done which revealed Metastatic Aden carcinoma. The State Commission also observed that when the policy was taken by the insured, the medical examination must have been made and as the biopsy had been done there might be a physical scar on the neck which could have been easily seen by the doctor of L.I.C. or its agent. The State Commission made certain disparaging remarks against the functioning of the L.I.C., its doctors and agents. The State Commission, however, rejected the complaint, but directed the L.I.C. to return the premium to the complainant.

WE have re -examined the material on record. The contracts of insurance are of utmost good faith. The proposer for Life Insurance is under an obligation to disclose all material facts within his knowledge relating to the state of his health at the time of making the proposal. The averments made as to the State of health of the insured in the proposal form and the personal statements therein are the basis of the contract between the parties. The terms of the policy make it abundantly clear that L.I.C. has acted upon it by entering into the contract of insurance with the deceased. The insured had not disclosed his previous ailments in his proposal dated 9.9.89 and, in fact, he had fraudulently suppressed ihat he was suffering from cancer. The certificate dated 14.5.90 of Dr. Mukund Patel, letter of Dr. Vijay C. Thakar dated 8.5.90 and the Histology Report dated 12.8.89 which are part of the record reveal the state of health of the insured and the treatment for cancer and ultimately reference on 26.8.89 by Dr. D. Patel to Ahmadebad for ''chemo -therapy'' etc. It is manifest that the deceased intentionally concealed the facts that he was suffering from cancer and that he was taking treatment therefor. The contract of insurance was entered into as a result of fraudulent suppression of material facts by the insured and thus the policy is vitiated. Therefore, no claim is admissible under a policy which is vitiated.

THE State Commission made certain adverse observations against the L.I.C. without there being any basis or justifying material on record. It is a mere surmise to say that if the biopsy had been done, there must have been a physical scar on the neck which could have been easily seen by the Doctor of L.I.C. or its agent. The State Commission is oblivious of the advanced technology in the field of taking specimens for biopsy which in some cases could be by a prick of thin needle without leaving any scar. State Commission should not have treaded this field merely on conjectures and surmises. We, therefore, expunge all those remarks. Though allegation was made by the complainant in the complaint that the services of the opposite party, appellant herein hired suffered from deficiency but there is no evidence to support that allegation. The policy taken by the deceased is vitiated by reason of suppression of material facts by the insured and the L.I.C. was justified to repudiate its liability under the policy. Thus unless there is deficiency in the rendering of service, the complainant is not entitled to any relief.

THE Supreme Court in Mitholal Nayak v. Life Insurance Corporation of India, AIR 1962 SC 814 upheld the principle in the case that when the contract is bad on the ground of fraud the party who has been guilty of fraud cannot ask for the refund of the money paid under the contract. The policy taken by the deceased is vitiated by fraud committed by him upon LIC. It was ruled by the Supreme Court : ''This brings us to the last question, namely, whether the appellant is entitled to a refund of the money he had paid to the respondent -company. Here again one of the terms of the policy was that all moneys that had been paid in consequence of the policy would belong to the Company if the policy was vitiated by reason of suppression of material facts by the insured. We agree with the High Court that where the contract is bad on the ground of fraud, the party who has been guilty of fraud or a person who claims under him cannot ask for the refund of the money paid. It is a well established principle that the Courts will not entertain an action for money had and received, where, in order to succeed, the plaintiff has to prove his own fraud. We are further in agreement with the High Court that in cases in which there is a stipulation that by reason of a breach of warranty by one of the parties to the contract, the other party shall be discharged from the performance of his part of the contract neither Section 65 nor Section 64 of the Indian Contract Act has any application.

THE complainant is thus not entitled to the refund of the premium paid under the policy taken by the deceased. The appeal filed by the L.I.C. is allowed and the order of the State Commission is set aside, with the result that the appeal of the complainant as well as the complaint fail and are hereby dismissed. We, however, leave the parties to bear their own costs throughout. Ordered accordingly.