MANGEJ KANWAR vs Life Insurance Corporation of India

THIS appeal under Section 15 of the Consumer Protection Act, 1986 (hereinafter referred to as "the Act of 1986") has been filed by the appellant against the order dated 6.1.2003 passed by the learned District Forum, Jaipur-II, Jaipur in Case No. 657/99 by which the complaint filed by the complainant-appellant under Section 12 of the Act of 1986 was dismissed.

THE necessary facts giving rise to this appeal are as follows: On 1.5.1999, the complainant-appellant had filed a complaint under Section 12 of the Act of 1986 before the District Forum, Jaipur-II, Jaipur stating inter alia that on 15.2.1996 her husband Kailash Singh Tanwar (hereinafter referred to as "the deceased") had taken insurance policy bearing No. 190859251 for Rs. 75,000 from the respondents and that policy came into force with effect from 15.4.1995. It was further stated in the complaint that premium of the said policy was being paid by deceased regularly, but unfortunately, deceased had died on 11.12.1996 due to heart attack. THEreafter, the appellant-complainant preferred a claim before the respondents, but that claim was repudiated by the respondents through letter dated 7.11.1997 stating inter alia that the deceased was suffering from T.B. of both lungs and availed sick leave from 10.5.1993 to 11.7.1993, but these facts were not disclosed by the deceased at the time of filling in up the declaration form and, thus, deceased had given false statement and on the ground of withholding correct information, the claim of the complainant-appellant was repudiated. THEreafter, the present complaint was filed by the complainant-appellant. A reply was filed by the respondents and they have taken the same stand that was taken by them in the repudiation letter dated 7.11.1997 and it was further submitted by the respondents that since the deceased had concealed and suppressed material facts about health, therefore, no illegality or irregularity has been committed by the respondents in repudiating the claim of the complainant-appellant through letter dated 7.11.1997 and, thus, the present complaint deserves to be dismissed. After hearing both the parties, the learned District Forum, Jaipur-II, Jaipur through impugned order dated 6.1.2003 dismissed the complaint of the complainant-appellant holding inter alia: (i) That at the time of filling in up the declaration form for insurance policy, the deceased suppressed material facts about health and in the proposal form, answers were given in negative by the deceased. (ii) That as per Ex. A/4, it is evident that deceased had remained on leave for 85 days including PL and medical leave and, therefore, this fact shows that deceased was suffering from disease. (iii) That no illegality or irregularity has been committed by the respondents in repudiating the claim of the appellant-complainant on ground of suppression of material facts about health by deceased. Aggrieved from the said order dated 6.1.2003 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 appellant-complainant is that repudiation of claim of the complainant-appellant by the respondents on the ground of suppression of disease ''TB'' cannot be justified as there is nothing on record to show that at the time of filling in up the declaration form, the deceased was suffering from the disease ''TB'' and apart from this, the cause of death of deceased was heart attack and not TB and there is no nexus with the cause of death of deceased and TB and hence, repudiation of claim of appellant-complainant by the respondents was wholly illegal and arbitrary and in view of this, the findings of the learned District Forum rejecting the claim of the appellant complainant, cannot be sustained as they suffer from basic infirmity, illegality and perversity.

On the other hand, the learned Counsel appearing for the respondents has supported the impugned order of the learned District Forum.

WE have heard the learned Counsel appearing for the appellant and the learned Counsel appearing for the respondents and gone through the entire materials available on record. There is no dispute on the point that deceased had taken insurance policy from the respondents on 15.2.1996 and that policy came into force with effect from 15.4.1995 and death of the deceased had taken place on 11.12.1996 meaning thereby within two years of issuance of policy.

THERE is also no dispute on the point that cause of death of the deceased as mentioned in the death certificate was heart block. From Ex. A/4 and impugned order, it is clear that from April, 1992 to April, 1995, deceased had remained on leave for 85 days which includes PL as well as medical leave. From certificate Ex. A/6, where the deceased was declared fit to resume his duties on 1.8.1993, it appears that the deceased was having chest trouble.

THERE is also no dispute on the point that in the declaration or proposal form, the deceased had given the answers in negative.

THERE is also no dispute on the point that the claim of the complainant-appellant was repudiated by the respondents on the ground of suppression of disease "TB" by the deceased while filling in up the declaration form. From perusing the record of this case, it appears that there is no evidence or material to suggest that deceased was suffering from the disease "TB" at the time of filling in up the declaration form. However, from certificate Ex. A/6, it appears that the deceased was having chest problem meaning thereby the possibility that deceased might have been suffering from chest disease could not be ruled out.

Thus, in the facts and circumstances just narrated above, the question for consideration is whether repudiation of claim of complainant-appellant by the respondents on ground of suppression of disease TB was justified 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 since obligation of good faith applies to both equally and in this respect, the decision of the Hon''ble Supreme Court in M/s. 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.

SUPPRESSION of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose. The Hon''ble 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. In this case, from certificate Ex. A/6, it appears that the deceased was having chest problem, but in that certificate Ex. A/6, it was not specifically mentioned that deceased was suffering from TB and thus, deceased might have been patient of chest disease, but not chronic patient of TB and when this being the position, repudiation of claim of the complainant appellant by the respondents on the ground of suppression of disease TB by the deceased, could not be justified as the respondents have miserably failed to prove by producing cogent and reliable evidence that at the time of filling in up the declaration form the deceased was suffering from disease TB.

No doubt the deceased was suffering from the chest disease, but the question is whether the suppression of that chest disease would amount to concealment or suppression of material matter or misrepresentation 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 chest disease 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. Chest disease is not a permanent disease, but it is a recurring disease and a person suffering from chest disease can survive for a longer period. Chest disease can never be the cause of death itself. Apart from this, the immediate cause of death of deceased was heart attack and there is no nexus between the cause of death of deceased and chest disease. THE immediate cause of death of deceased could not be said to be chest disease, which was suppressed by the deceased. Thus, chest disease 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. Furthermore, even if the deceased was suffering from chest disease at the time when he made the proposal, chest disease 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 chest disease 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 chest disease, 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, it is held that non-mentioning of the disease "chest" in the declaration form by the deceased does not amount to suppression or concealment of material fact or mis-statement in real sense. Apart from this, even for the sake of argument that deceased might have been suffering from the disease TB, now TB is 100% curable disease and patient of that disease can survive for a longer period and besides this, the immediate cause of death of deceased was heart attack and not TB and there is no nexus between the cause of death of deceased and TB. The death of the deceased having not been connected with the TB disease, it cannot be considered to be material so far as death of the deceased is concerned. Thus, it cannot be said that there was suppression of material facts by the deceased.

For the reasons stated above, the respondents were not justified in repudiating the claim of the complainant-appellant on the ground of suppression of material facts and the respondents have repudiated the claim of the complainant-appellant without any basis and on wrong assumption and in an arbitrary manner and in view of this, the findings of the learned District Forum rejecting the claim of the complainant-appellant cannot be sustained as they suffer from basic infirmity, illegality and perversity. Hence, this appeal deserves to be allowed and the impugned order is liable to be quashed and set aside and the appellant-complainant is entitled to get claim amount of Rs. 75,000 under the policy in question of deceased along with interest @ 9% p.a. with effect from 7.11.1997 when the claim of the appellant-complainant was repudiated by the respondents. Accordingly, this appeal filed by the appellant-complainant is allowed and the impugned order dated 6.1.2003 passed by the learned District Forum, Jaipur-II, Jaipur is quashed and set aside and the complaint of the appellant-complainant stands allowed in the manner that the respondents are directed to pay to the complainant-appellant a sum of Rs. 75,000 (Rs. seventy-five thousand only) as claim amount under the policy in question of deceased along with interest @ 9% p.a. with effect from 7.11.1997, within a period of two months from today. Appeal allowed.