NARANGI DEVI SHARMA vs Divisional Manager, Life Insurance Corporation of India

THIS is a complainant''s appeal under Section 15 of the Consumer Protection Act, 1986 (for short ''Act'') against the order dated 30.4.1997 passed in Case No. 332/1995 by the District Consumer Disputes Redressal Forum, Jabalpur (for short the ''District Forum'').

FACTS giving rise to this appeal are thus that the complainant is a widow of the deceased Hukum Singh Sharma, who got his life assured by a "Money Back Policy" No. 370319305 dated 28.3.1991, maturity date of which was 28.3.2011. After payment of two quarterly premiums of Rs. 952.50 paise the assured died of cardiac arrest on 29.7.1991. The complainant as nominee claimed the amount of Rs. 50,000/- with its benefits. The opposite party made certain enquiries and asked for documentary proof of the age of the deceased. The complainant sent the documents and the certificate of the Principal of J.K. School, Lodhai (U.P.) wherein in the school admission register in the year 1945 at admission No. 170 the age of the deceased was recorded as 30th June, 1938. On receipt of the age certificate the opposite party decided to repudiate all liabilities under policy on account of the deceased having withheld material information regarding his age at the time of effecting the insurance, as in the proposal in answer to querry No. 3 requiring the assured to give his age and date of birth, he gave the age as 45 years and date of birth as 12.11.1945. The age and date of birth so declared by the deceased was false. There was a difference of the age of 8 years, the deceased at the time of filing of the proposal form was 54 years while he stated his age as 45 years so as to induce the opposite party to obtain the money back policy on the false statement given by him. A letter dated 28.3.1992 repudiating the liability was sent to the complainant. On this complainant wrote a letter dated 25.6.1993 asking for the reason of repudiation of the claim. The opposite party vide letter dated 11.10.1993 restated the reason of repudiating the liability. The complainant on 5.10.1995 filed the complaint under Section 12 of the Act. The complaint was resisted by the opposite party as the complaint was barred by time. On merits it was stated that the assured declared his date of birth as 12.11.1945, therefore, the policy was issued on the declaration so given by the deceased in good faith. However, information so given was found to be false. Actually the deceased was overage at the time of taking of the policy he was of 53 years. He was not competent to get the money back policy as the maximum permissible maturity age is 65 years and maximum permissible age at entry is 45 years, hence the plan for less term than 20 years could not have been granted. The assured obtained the policy by misrepresentation of his age. The opposite party is not liable of any payment under the policy and all the moneys that has been paid in consequence thereof stand forfeited. In the circumstances, there was no deficiency in service rendered by the opposite party. The District Forum after considering the material on record held that the complaint was barred by time as the cause of action arose on receipt of the letter dated 28.3.1992 and the complaint was filed after three and half years i.e. on 5.10.1995. On merits, the District Forum held that the deceased has suppressed the material information about his age and date of birth. If that information would have been correctly disclosed, the deceased could not have obtained the money back policy. Therefore, the repudiation of all liabilities under the policy was on justifiable grounds, hence dismissed the complaint.

Having heard learned Counsel for the parties and on going through the record we are of the opinion that this appeal is devoid of any merit. Section 24-A of the Act prescribes the limitation of two years for filing the complaint from the date of cause of action has arisen. The cause of action in the present case arose on receipt of the letter dated 28.3.1992. The letter dated 11.10.1993 would not give fresh cause as it restated the reason in reply to the complainant''s letter. The complainant has not placed any material to satisfy the District Forum or this Commission that the complainant had sufficient cause for not filing the complaint within the period prescribed.

THE contention that the letter dated 11.10.1993 was an acknowledgement under Section 18 of the Limitation Act cannot be accepted, as the letter dated 11.10.1993 sent by LIC was not an acknowledgement of liability before the expiration of the prescribed period for presenting the complaint, nor it was an acknowledgement of liability in respect of claims under the policy due to the death of assured. On merits, a contract of insurance is the utmost good faith "uberrimae fidei", because the insurer accepts the risk on the faith of full disclosure of all material facts by the insured. A false answer or non-disclosure or concealment of material fact though not fraudulent but innocent will avoid the policy. This contention ignores the fact that the principle of "uberrimae fidei" gets attracted only where some material fact has been suppressed by one party to the contract and by reason of such suppression the other party has been induced to enter into the contract which he might not have done had the correct facts been made known to him. It is of the essence that by the process of suppression of some material facts the person indulging in such suppression must have gained an advantage which he was not otherwise entitled to, namely to induce the opposite party to enter into the contract. The broad principle underlying the doctrine is that no one will be allowed to take advantage of his own wrong especially while entering into a contract must act in utmost good faith.

IN the present case, the assured deceased has obtained the policy by inducing the opposite party to get the advantage of the money back policy which could not have been issued if the correct information about his age and date of birth would have been given. The repudiation of the claim or all liabilities under the policy in the circumstances, cannot be said to be arbitrary or whimsical nor such rejection of the insured claim would amount to deficiency in service. The contention of the learned Counsel that if the assured did not give the correct age and date of birth, as per Condition No. 1 which relates to the proof of age the premium would have been charged accordingly with its interest cannot be accepted. Condition No. 1 reads thus : 1. Proof of Age : The premium having been calculated on the age of the Life Assured as declared in the Proposal in case the age is found higher than such age, without prejudice to the Corporation''s other rights and remedies, including those under the Insurance Act, 1938, the premium shall be payable in such case at the rate calculated on the sum assured for the correct age at entry, and the assured shall pay to the Corporation the accumulated difference between the premium for the correct age and the original premium, from the commencement of the policy up to the date of such payment with interest as such rate as may be prevailing at the time of payment but not exceeding 9% p.a. compounding half yearly, provided, however, that in case the assured continues to pay the premiums at the rate shown herein and also does not pay the above mentioned accumulated debt the accumulated difference between the premium for the correct age and the original premium from the commencement of this policy up to the date on which the policy becomes a claim with interest on each instalment of such difference at such rate as may be prevailing at the time of claim but not exceeding 9% p.a. compounding half, yearly shall accrue and be treated as a debt due by the assured against the said policy and will be deducted from the policy moneys payable on the policy becoming a claim. Provided further that if the assured''s correct age at entry is such as would have made him uninsurable under the class or terms of assurance specified in the said Schedule hereto, the class or terms shall stand altered to such as granted by the Corporation according to the practice in force at the commencement of this assurance. From a bare reading of condition, it is clear that this condition applies during the life-time of the assured, but, that is not the case. Besides, the money back policy even after charging the difference of the premium and interest could not have been issued as for that policy the deceased was average at the time of taking of the policy, as maximum permissible maturity age for such policy is 65 years and maximum permissible age at the entry is 45 years, hence, the plan for less than 20 years could not have been granted. The decision of the National Commission in case of Life Insurance Corporation of India v. Consumer Education & Research Society & Anr., I (1994) CPJ 95 (NC) relied by learned Counsel for the complainant is of no help as in that case the claim under LIC was not allowed on the ground that there was suppression of material fact that the insured has independent income not covered by Clause 4B.

THE decision of the U.P. State Consumer Disputes Redressal Commission in Sohdra Gupta v. LIC, I (1994) CPJ 495 is also of no help as in that case the ground on which the claim was repudiated was that information sought from the deceased about the nature of business was found to be incorrect, which had no relevance to the cause of death.

THE contention based on Section 39 of the Indian Contract Act, that LIC wrongfully rescinded the contract which does not come to an end, as the other party to the contract that is assured and after his death nominee has not accepted the renunciation by keeping the contract open, has no application in the facts of this case. In the result, the appeal fails and is dismissed with no order as to costs. A copy of this order be conveyed to parties and a copy of the order be sent to District Forum with the record of the case. Appeal dismissed.