SULOCHANA DEVI vs LIC of India and Ors.

CHALLENGE in this Revision Petition, under Section 21(b) of the Consumer Protection Act, 1986 (for short "the Act"), against LIC of India and Ors., is to order dated 21.08.2009 passed by State Consumer Disputes Redressal Commission, Jharkhand, Ranchi in First Appeal No. 182 of 2006. By its impugned order, the State Commission has allowed the Appeal filed by the Insurance Company and set aside the order of the District Consumer Disputes Redressal Forum, Lohardagga, Jharkhand.

THE brief facts as set out in the complaint are that the Complainant''s husband, late Shri Arun Kumar Gopilal Poddar had taken Jeewan Shree Policy in Mumbai, on 10.5.1999, covering the period from 15.12.1998 to 15.12.2023, for an assured sum of 10,00,000/ -. The life insured had submitted his proposal in Mumbai on 20.11.1998 and the same was cleared by the panel of doctors on 8.1.1999. In March 2000, the insured requested for transfer of the Policy from Mumbai to Gumla Branch of the Insurance Corporation. While so, on 5.6.2001 the insured suddenly died at Sadar Hospital, Lohardaga. The doctor had conducted the post mortem examination and sent the viscera for chemical analysis to ascertain the cause of death. On 19.6.2001, when the Complainant made a claim, the Respondent -Insurance Company repudiated the claim vide their letter dated 30.3.2002 on the ground that the insured suppressed material facts by filling up columns 7 and 8(a) of the proposal form incorrectly. The Complainant filed a representation on 1.6.2002 before the Executive Director, (Marketing) LIC of India, Central Office, Mumbai, but this was also rejected vide their letter dated 25.11.2002. Hence, the complaint seeking direction to the Opposite Party to pay the assured amount with interest, compensation and costs.

THE Opposite Party -Insurance Company filed their written version stating that the Complainant''s husband had made an application/proposal bearing No. 247155 E in the year 1996 for a sum assured of 2,00,000/ - at Gumla Branch of Life Insurance Corporation of India and deposited a sum of 4,012/ - on 18.6.1996 for consideration of his proposal. However, considering his past medical history, the Central Office of the Corporation decided to defer the acceptance of the proposal for a period of six months with the condition not to give table 94 which has been applied for and the same was conveyed to him vide letter dated 19.4.1997. The proposer did not accept this condition and the money deposited by him was refunded. Once again the Complainant''s husband submitted a proposal bearing No. 801355E for a sum assured of 1,00,000/ - and the acceptance of the proposal was again deferred. On 20.11.1998, the insured made another proposal at Mumbai Division of the Corporation for obtaining a policy namely ''Jeevan Shree'' without profit (without accident benefit). The Opposite Party averred that though the Complainant and her husband were not residents of Mumbai, the proposal form was submitted at Mumbai Division only to avoid any objection on grounds of health condition.

IT was pleaded by the Opposite Party/Insurance Company that in the ''Proposal Form'' while answering specific questions No. 7, 8(a), 11(a), (b), (d) and (i), the Complainant''s husband fraudulently suppressed material facts regarding the deferment/withdrawal of the two proposals on his life earlier at Gumla and also withheld information regarding his health condition. The question as to whether a proposal on his life was made to any office of the Corporation had ever been withdrawn, deferred, dropped or declined? He answered ''No'', wilfully suppressing the deferment of his earlier proposals.

THE proposal was examined by Dr. Harish Goel, panel doctor on 21.11.1998. The Opposite Party pleaded that the life assured disclosed only certain facts of his past treatment but did not disclose his continuous treatment under Dr. S.P. Kar and Dr. N. Goyal. The proposer was treated in the year 1996 at Medical Diagnostic and Imaging Centre (known as "Tribeni") at Kolkata. Dr. Naresh Goyal has certified that late Arun Kumar Poddar had come to him with a complaint of low back pain and dry urea and that he was thoroughly investigated and found to be normal. The Opposite Party pleaded that the life assured did not submit all details of his treatment under Dr. N. Goel and that he was treated at several places, by Dr. Raj Vajpai of Kolkata on 7.7.1996; in AIIMS during September, 1996 and by Dr. Arvind Aggarwal on 10.8.1996. These facts were not disclosed in the proposal form by the life assured, while answering questions relating to his health. They also averred that the Medical attendant''s Certificate reported that Cardio respiratory failure was the primary cause of death and ''Total Peripheral Collapse due to Hypovoleamic Shock'' was the secondary cause of death. As the life assured had suppressed the deferment of the earlier policies and suppressed the treatment rendered by several doctors; the claim was repudiated.

THE District Forum based on the evidence adduced, allowed the complaint directing the Opposite Parties -Insurance Company to pay the total amount claimed under the policy i.e. 19,85,500/ - within one month from the date of receipt of the order.

AGGRIEVED by this order, the Insurance Company preferred an Appeal before the State Commission.

THE State Commission observed that the insured was bound to disclose all the relevant information which is material to disclose for acceptance of the proposal. The policy holder must have known in November 1998 while filling up the proposal form that the answers in columns 7 and 8(a) were false. The State Commission held that there was active concealment of material fact by the insured and allowed the Appeal and set aside the order of the District Forum.

AGGRIEVED by this order, the Complainant preferred this Revision Petition.

THE brief point that falls for consideration in this Revision Petition is whether the life assured suppressed any facts material to be disclosed, prior to the issuance of the Policy?

IT is an admitted fact that the Petitioner/Complainant''s husband, late Arun Kumar Gopilal Poddar had taken Jeewan Shree Policy covering the period from 15.12.1998 to 15.12.2023 for an amount of 10,00,000/ -. It is not in dispute that the proposal for insurance was made at Mumbai Division of the Respondent Corporation on 20.11.1998 and that the policy was issued on the same day. It is an admitted fact that the insured died on 5.6.2001, at about 3.00 AM, at Datika Savitry Hospital, Lohardagga. It is the Petitioner''s case that the insured had suffered from Diarrhoea since mid -night of 5.6.2001 and the death had occurred within one hour of admission in the aforesaid hospital. A post -mortem examination was done and the viscera was sent for chemical analysis, but the cause of death has not yet been ascertained. The Appellant made a claim with the Respondent -Insurance Company which was repudiated on 30.3.2002 on the following grounds: "Re: Death claim under Policy No. 901339817 on the life of Arun Kumar Gopilal Poddar (dead).

With reference to your claim under above policy on the life of your deceased husband we have to inform you that we have decided to repudiate all liabilities under the policy on account of the deceased having withheld correct information regarding his health at the time of effecting the assurance with us.

In this connection we have to inform you that in the Proposal for Assurance dated 20.11.1998 he had answered the following questions as under noted.

We may, however, state that all those answers were false as we held indisputable proof to show that before he proposed for the above policy he had been suffering from Cystitis, Abdominal pain and structure of glandule.......(illegible) for which he had consulted a medical man and had taken treatment from him. He did not however, disclose these illnesses in the Proposal instead he gave false answers herein as stated above.

It is therefore, evident that he had made incorrect statements and withheld correct information from us regarding his health at the time of effecting the assurance and hence in terms of the policy contract and the declaration contained in the form of Proposal for Assurance we hereby repudiate the claim. Accordingly, we are not liable for any payment under the above policy and all policy moneys that have been paid in consequence thereof belongs to us.

In case you are not satisfied with the above decision and feel that we have not considered any particular fact and circumstances in support of your claim, you may send your representation within a month for re -consideration of your claim to our Central Office at the following address:

The Executive Director (Marketing),LIC of India,Central office,Mktg./CS/CRC Deptt.Yogakshema,Mumbai -400021

Yours faithfully,Sd/ -Sr. Divisional Manager"

AS against the Respondent''s contention that the insured suppressed his health condition prior to the issuance of the policy, the learned counsel for the Petitioner submitted that her husband, late Shri Arun Kumar Gopilal Poddar, had disclosed all the material facts regarding his health and that the Insurance Agent, Mr. S.K. Chaumal, had also noted all the information correctly in the Proposal form. It is also submitted that the life assured had undergone all the necessary medical check -ups conducted by the panel doctors of the first Respondent and no abnormality was detected either in the Electrocardiography or in the Pathological reports. The learned counsel for the Petitioner submitted that the agent had noted the information in the proposal form as follows: "i. Appendicitis operated at the age of 11 years in 1967 at Nagarmal Modi Seva Sadan, Ranchi, Bihar by Dr. Rambali Chaudhary.

ii. Salivery Gland operation done on 28.8.1991 by Dr. R.C. Decca at A.I.I.M.S., New Delhi.

iii. Left direct Inguinal Hernia operation done on 6.8.1997 by Dr. V. Sitaram at Christian Medical College and Hospital, Vellore.

"Hernia questionnaire" form was also completed on 8.1.1999 by the panel doctor of L.I.C (Respondent No. 1) at Mumbai after accepting the proposal".

THE death certificate issued on 14.6.2001 by the Deputy Superintendent, Sadar Hospital, Lohardga states that the cause of death will be ascertained only after chemical analysis of viscera report is available. The learned counsel for the Petitioner argued that there was no material suppression or fraud played by the life assured.

WE observe from the record that the Medical Test Report dated 21.11.1998 of the investigation conducted in Mumbai show that CBC, ESR, BST, SMA -12 were normal. The life assured declared that he had undergone his Hernia operation on 6.8.1997 at CMC Vellore but had concealed various test reports i.e. his medical treatment under Dr. S.P. Kar and Dr. R.K. Dutta Roy of ECO Diagnostic Centre and Dr. Goyal of Medical Diagnostic and Imaging Centre, Kolkata (known as "Tribeni") at Kolkata and Dr. Aggarwal of Ranchi in July -August, 1996 and also his treatment at AIIMS Hospital, New Delhi. The Respondent/Insurance Company had addressed a letter on 3.1.2002 and also on 24.1.2002 requesting the Petitioner herein to send the treatment record of Dr. R.K. Datta Rao, Dr. Goyal, Dr. S.P. Kar of Kolkata and Dr. Aggarwal of Ranchi together with the post -mortem report but the Complainant did not choose to furnish all the relevant treatment records. The afore -mentioned treatment undertaken by the insured shows that he had given false and inaccurate statements in the Proposal Form.

KEEPING in view that the Respondent/Complainant had not filed all the treatment records and also that he had fraudulently suppressed condition with respect to his health, we are of the considered view that the Insurance Company had rightly stated in their repudiation letter that the insured had partially disclosed his treatment prior to the issuance of the Policy.

THE second contention of the Respondent -Insurance Company is that the insured had suppressed the deferment of the earlier proposals prior to the issuance of the Policy. The Insurance Company clearly stated in their reply before the District Forum that the insured had filled up the proposal form bearing No. 247155 E in the year 1996 for a sum assured of 2,00,000/ - under Table 94 at Gumla Branch of Life Insurance Corporation of India and deposited a sum of 4,012/ - on 18.6.1996 for consideration of his proposal. The Corporation decided to defer the acceptance of the proposal for a period of six months, which was conveyed to the Petitioner''s husband on 19.4.1997. The proposer did not accept this condition and the money deposited was refunded. It is the further case of the Respondent -Insurance Company that the proposer gave another proposal bearing No. 801355E for a sum assured of 1,00,000/ -, which was considered, but acceptance was again deferred. Once again the proposer withdrew the amount deposited by him. The Petitioner admits that these two proposals were filled by her late husband but contends that it was only because of the decision of the Corporation to defer the acceptance of the proposals for a period of six months that her husband had opted to withdraw the deposited amounts. It is the contention of the Petitioner that this information was not fraudulently suppressed by them.

THE life assured answered questions 7 and 8(a) as follows:

THE learned counsel for the Petitioner relied on Section 45 of the Insurance Act, 1938, which reads as follows: "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 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, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy -holder and that the policyholder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose".

THE learned counsel for the Petitioner contended that as stipulated in this Section, the Policy is not to be called in question on ground of the statement after two years, unless the insurer shows that such statement was fraudulently made by the policy holder and that in this case, the policy holder has not wilfully suppressed any facts which were material to disclose.

THE second part of Section 45 is in the nature of a provision which creates an exception. It says in effect that the insurer can call in question the policy effected even after two years if there is any fraudulent suppression. In the instant case, the life assured had suppressed that his policies were deferred twice prior to the issuance of the existing policy. This is clearly reflected in his answer ''No'' to question Nos. 7 and 8(a) of the proposal form. The policy holder knew at the time of making such a statement that it was a false and an inaccurate statement which suppressed facts which were '' material to disclose''. There are also no substantial reasons given as to why the life assured had taken the subject policy in Mumbai when he does not reside there and later requested for transfer of the policy from Mumbai to Gumla Branch. It was not for him to determine whether the information sought for in the proposed form was ''material'' for the purpose of the policy in question. We find force in the contention of the learned counsel for the Petitioner that in view of this fraudulent suppression, the Insurance Company, had lost the opportunity of exercising its choice whether the Policy issued or not for 10,00,000/ -, when it had earlier deferred both the proposals of the policy holder for much lesser amounts of 2,00,000/ -. In light of the factual scenario, noted above, we are convinced that the Insurance Company was justified in repudiating the claim of the Complainant.

FOR the afore -mentioned reasons, we do not see any jurisdictional error or infirmity in the order of the State Commission and hence, this Revision Petition must fail. It is dismissed accordingly. No order as to costs.