S.Vijaya vs MARKETING MANAGER, DIVISIONAL OFFICE, LIC OF INDIA

THIS appeal, by the complainant, is directed against the order dated 16.7.1992, passed by the District Forum, Bangalore, in Complaint No. 609/ 90 dismissing the complaint. The facts, briefly stated, are as follows : 1. The admitted facts of the case are that the husband of the complainant, the late Sri Vijay Kumar, had taken a life insurance policy No. 73783026 for a sum of Rs. 30,000/- for a term of 20 years commencing from 25.1.1985. The complainant, the wife of the policy holder was the nominee.

THE said policy lapsed for non-payment of premium due in the month of January 1989, The said policy was revived by the opposite party-Insurance Company, on 30.11.1989, on obtaining the arrears due till then from the insured as per Ex. R-12.

The husband of the complainant-the insured, expired on 6.12.1989. The complainant, the nominee made a claim with the opposite party as per Ex. R-5.

THE opposite party made payment of only the paid-up value till the date of the lapse of the policy in the month of Jan. 1989 in a sum of Rs. 6,000/- to the complainant but rejected the claim of the complainant for the full value of the policy, on the ground that the declaration given by the insured regarding his health at the time of revival of policy in the month of October 1989 was in accurate, as per Ex. C-1, the repudiation letter dated 13.8.90. The complainant claimed the payment of the balance amount of Rs. 24,000/- from the opposite party stating that repudiation of the claim mace by the opposite party was erroneous and it amounted to deficiency of service.,

THE opposite party filed its version and admitted all the material facts as referred above. The opposite party, further averred that the statement given by the late Vijay Kumar on 25.10.1989, at the time of revival of the policy, regarding his health was clearly inaccurate. The late Vijay Kumar did not disclose about his ill-health that he had suffered with jaundice and other ailments and so the revival of the said policy effected by the opposite party was null and void. The opposite party has, at paras 10,11 and 12 of its version, in this regard, averred thus : "10 It is therefore clear from the evidence disclosed to the opponent by the claimant herself that the life assured, i.e., her husband M. Vijayakumar was suffering from cirrhosis of liver, jaundice and other allied problems of health prior to the revival of the policy based on which was the declaration of good health and the personal statement dated 25.10.1989. 11 In view of the above, the revival of the said policy effected by the opponent prior to the death of the life assured was null and void in as much as the life assured had not disclosed to the opponent the real state of his health at the time of the revival of the policy but in fact had furnished false information as the state of his health, the claimant therefore cannot claim the benefits of the said revival, as the revival itself is voil abilities. 12 Based on the documentary evidence available with the opponent, it is established beyond doubt that the deceased policy holder M. Vijayakumar as a businessman for nearly over 10 years and was a knowledgeable person who could understand the implications of the answers/ representations given/made by him to the opponent both in the proposal for insurance and in the personal statement dated 25.10.89 made by him while seeking revival of the lapsed policy. Hence the provisions of Section 45 of the Insurance Act applied to the facts of the case and the revival of the policy was null and void and only the paid up value of Rs. 6,000/- was payable to the claimant/nominee in terms of the policy contract. The opponent has already honored its commitments under the contract by settling the paid up value in favour of the nominee against a full and final discharge dated 28.8.90 given by the claimant. As such, nothing more is due and payable under the policy to the nominee. The claim of the nominee is therefore unsustainable and is liable to be rejected."

The opposite party, on the basis of these averments, sought the complaint to be dismissed.

DURING enquiry, the complainant got Ex. C-1, the letter of repudiation, marked in evidence. The opposite party examined RW-1, Sri Subramaniam, Higher Grade Assistant, and got Exs. R-1 to R-14, marked in evidence.

THE District Forum, on consideration of this material placed on record, held that there was no deficiency in service rendered by the opposite party and opposite party was justified in repudiating the claim as the insurer had suppressed the ailments with which he had suffered at the time of his declaration given while claiming for the revival of the policy in the month of Oct. 19 We have called for the records and received. We have heard the learned Counsel for the parties and also perused the records.

Having regard to the pleadings of the parties and submissions made by the learned Counsel for the parties, the points that arise for our consideration are, as under : (a) Whether the services rendered by the opposite party were deficient in nature when it repudiated the claim even though the policy was revived in the month of November 1989? (b) Whether the opposite party was justified in repudiating the claim as the complainant had received the paid-up value of Rs. 6,000/- in full discharge of her claim?

REGARDING Point(a) : The late Vijaykumar obtained life insurance policy for a sum of Rs. 30,000/- for a term of 20 years, half-yearly premium payable at Rs. 775.80 Ps. which commenced from 25.1.1985. It is not disputed that the said policy lapsed for non-payment of premium due in the month of Jan. 1989. It is also not disputed that the said policy was revived on 30.11.1989 on making payment of all the arrears due till then. The insured Vijaykumar expired on 6.12.1989.

THE learned Counsel for the opposite party submitted that the late Vijaykumar had made mis-statement regarding his health in the month'' of October 1989 while seeking revival of the policy that had lapsed in the month of January 1989 and so the said revival had become ineffective and null and void under the provisions of Sec. 45 of the Insurance Act, 1938, hence the complainant had no right to claim the full value of the policy. The provisions of Sec. 45 of the Insurance Act, 1938, read 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 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 policy-holder knew at the time of making the statement was false (or that it suppressed facts which it was material to disclose) : (Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.)"

It cannot be disputed that when once the policy was renewed or revived, such a renewal or revival would relate back to the date of expiry or lapse of the policy.

THE Supreme Court in Mr. Mithoolal Naik v. LIC of India, reported in AIR 1962 SC page 814, while considering such an aspect of the matter at para 7, observed thus : "(7) We shall presently consider the evidence but it may be advantageous to read first S. 45 of the Insurance Act, 1938, as it stood at the relevant time. THE section, so far as it is relevant for our purpose, is in these terms. "No policy of life insurance effected before the commencement of the Act shall after the expiry of two years from the date the 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 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." It would be noticed that the operating part of Sec. 45 states in effect (so far as it is relevant for our purpose) that no policy of life insurance effected after the coming into force of the 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; the second part of the section is in the nature of a proviso which creates an exception. It says in effect that if 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 policyholder and that the policy-holder knew at the time of making it that the statement was false or that is. suppressed facts which it was material to disclose, then the insurer can call in question the policy effected as a result of such inaccurate or false statement. In the case before us the policy was issued on March 13,1945 and it was to come into effect from January 15, 1945. THE amount insured was payable after January 15,1968 or at the death of the insured, if earlier. THE respondent company repudiated the claim by its letter dated October 10,1947. Obviously, therefore, two years had expired from the date on which the policy was effected. We are clearly of the opinion that Sec. 45 of the Insurance Act applies in the present case in view of the clear terms in which the section is worded, though learned Counsel for the respondent company sought, at one stage, to argue that the revival of the policy some time in July, 1946 constituted in law a new contract between the parties and if two years were to be counted from July, 1946, then the period of two years had not expired from the date of the revival. Whether the revival of a lapsed policy constitutes a new con tract or not for other purposes, it is clear from the wording of the operative part of Sec. 45 that the period of two years for the purpose of the section has to be calculated from the date on which the policy was originally effected; in the present case this can only mean the date on which the policy (Ex. P- 2) was effected. From that date a period of two years had clearly expired when the respondent company repudiated the claim. As we think that Sec. 45 of the Insurance Act applies in the present case we are relieved of the task of examining the legal position that would follow as a result of inaccurate statements made by the insured in the proposal form or the personal statement etc. in case where Sec. 45 does not apply and where the averments made in the proposal form and in the personal statement are made the basis of the contract."

THE policy was originally effected as referred above on 25.1.1985. It lapsed only in the month of Jan. 1989 for non-payment of the premium due in the month of Jan. 1989. As per the provisions of Sec. 45 of the Insurance Act, 1938, the opposite party has no right to challenge the effect of the policy after the expiry of two years from the date on which it was effected. In the present case, the submission of the opposite party is that, the declaration given on 25.10.1989, seeking the revival of the policy is a mis-statement of fact regarding the health of the insured. The learned Counsel relied upon the medical certificate, as per Exs. R-6, R-7 and R-8 and also on the case summary, as per Exs. R-3 and R-4. The medical certificates show that the insured was suffering since two years prior to September 1989 with jaundice and other ailments and he had taken treatment in St. John''s Medical College Hospital in the month of May and Sept. 1989.

The provisions of Sec. 45 of the Act do not provide for any statement of the insured to be obtained at the time of revival of the policy. So the submission made by the opposite party has no substance. The District Forum, has also proceeded on this ground that the insured had given a mis-statement regarding his health at the time of seeking the revival of the policy. This reading of the provisions of Sec. 45 made by the District Forum, is erroneous and unsustainable.

THE Insurance Law is a social welfare legislation and in construing the provisions of the said law, the construction of the provisions has to be so adopted as would fulfill the policy of Legislation. That construction which would uphold the claim of the policy holder should be preferred as against the one which would deny his claim. Hence we hold and record that the repudiation of the claim on the ground that the insured had given a mis-statement regarding his condition of health at the time of revival of the policy is erroneous and so there was deficiency of service on the part of opposite party in repudiating claim on this ground and hence point (a) is answered in the affirmative in favour of the complainant.

REGARDING Point (b) : The learned Counsel for the opposite party submitted that the complainant had received the paid-up value of Rs. 6,000/- in full discharge of her claim and so the complainant is debarred from filing the complaint. The learned Counsel relied upon the following decisions, in support of this plea : (1) Jogendra Narayan Prasad v. The Divisional Manager, Oriental Life Insurance Co. Ltd., and Another reported in I (1991) CPJ page 236 (NC). (National Commission); (2) Harvinder Kaur v. Oriental Insurance Co. Ltd., reported in II (1991) CPJ page 183 (Delhi); (3) A.J. Coelho v. Canara Bank, reported in I (1992) CPJ page 264 (Karnataka). We have perused these decisions, referred above, we find that in all these decisions, the complainant had asserted that the opposite party had played fraud and had coerced in giving the receipt in full and final settlement of the claim. In the present case, that is not the averment made by the complainant. The complainant has stated that the opposite party was not justified in dis-allowing her claim; under the Insurance Policy obtained by her husband.

EX.R-2 is the discharge voucher taken from the complainant by the opposite party, it shows that sum assured was paid-up value of Rs. 6,000/- which was taken in full satisfaction and discharge of all claims under the above policy.

EX.R-1 is the letter sent by the opposite party to the complainant while sending cheque of Rs. 6,000/- wherein, it was stated that in full and final settlement of all claims under the policy for the paid-up value, a cheque for a sum of Rs. 6,000/- was sent. It shows that the claim of the complainant was not at all considered by the insurance company on the ground that the insured had given a mis-statement regarding his health at the time of reviving of the policy in the month of October 1989.

It is the opposite party which has asserted in its version that due to the mis-statement given by the insured at the time of the revival of the policy in the month of Oct. 1989, the revival of the said policy effected by it, had become null and void. In view of this assertion, it is for the opposite party to seek a necessary redressal in a competent Civil Court and not for the complainant.

THE opposite party was clearly negligent in repudiating the claim on this ground and in consequence of which the complainant did suffer loss and injury and, therefore, the complainant is necessarily be compensated for the same. Hence, we hold and record our finding on point (b) in favour of the complainant. ORDER In the result, therefore, this appeal is allowed. The order of the District Forum, Bangalore Urban District, Bangalore, recorded in Complaint No. 609/1990 is set aside. The complaint is allowed. The opposite party, the respondent herein, is directed to pay to the complainant a sum of Rs. 24,000/- with interest thereon at 18% p.a. from 6.12.1989 till the date of its payment to the complainant-appellant. The opposite party, the respondent, shall also pay a sum of Rs. 2,500/- towards the costs in this appeal to the complainant-appellant. The opposite party-the respondent shall pay the sums so awarded to the complainant within a period of two months from this day. Appeal allowed. _____________