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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION=there is adequate credible evidence on record that the Respondent’s husband was suffering from tuberculosis and that he had suppressed this material fact. This has been established by the medical certificate of the District Tuberculosis Officer which we note, was supplied by the Respondent herself to the Petitioner/Insurance Company. Further, it is also on record and not disputed that the insuree had taken medical leave for long periods for his treatment of tuberculosis. Since, an insurance is a contract entered between the parties in “utmost good faith”, suppression of any material facts by the insuree(as was done in this case), entitled the Petitioner/Insurance Company to repudiate the claim as per the terms and conditions of the policy.

Life Insurance Corporation of India

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NATIONAL CONSUMER DISPUTES REDRESSAL

COMMISSION

NEW DELHI

 

REVISION PETITION NO. 3050 of 2007

(Against order dated 07.05.2007 in Appeal No.295/2006

of the State Commission, H.P.)

LIC of India & Ors.                                                        ……..Petitioners  

Vs.

Smt.Shakuntala Devi & Anr.                                       …….. Respondents 

BEFORE:   

          HON’BLE MR. JUSTICE ASHOK BHAN, PRESIDENT

          HON’BLE MRS. VINEETA RAI, MEMBER

For the Petitioners                 :        Mr. Ashok Kashyap, Advocate

For the Respondents             :        NEMO.

Pronounced on 15th  November, 2011

ORDER

PER VINEETA RAI, MEMBER

          This revision petition has been filed by the Life Insurance Corporation of India Ltd. and others (hereinafter referred to as the ‘Petitioners’) being aggrieved by the order of the State Consumer Disputes Redressal Commission, Himachal Pradesh (hereinafter referred to as the ‘State Commission’) in Appeal No.295/2006 wherein Smt.ShakuntalaDevi and another were the Respondents.

          The facts leading to the filing of the complaint by the Respondent/Complainant before the District Forum was that the husband (insuree) of the Respondent had taken an insurance policy from the Petitioner/Insurance Company for Rs.50,000/- under the Plan and Term 75-20 commencing w.e.f. 26.03.1999 at a half yearly payable premium of Rs.1,744/- through an authorized agent (Respondent No.2 herein) of the Petitioner/Insurance Company.  Although, the insuree paid the premium amount regularly to Respondent No.2, the latter failed to deposit the same in the office of the Petitioner/Insurance Company and therefore, insuree was declared a defaulter for no fault of his and on his death on 26.11.2001 the claim filed by the Respondent was repudiated on flimsy grounds.  Aggrieved by this, Respondent filed a complaint before the District Forum on grounds of deficiency in service and requested that the Petitioner/Insurance Company be directed to award the claim of the full sum assured of Rs.50,000/- along with other bonuses as admissible as well as compensation of Rs.50,000/- on account of harassment etc. 

The above contentions were denied by the Petitioner/Insurance Company who stated that the policy of the life assured which had lapsed due to non-payment of premium for the period from 26.09.2000 to 25.09.2001, was revived at the request of the insuree on 22.11.2001.  At that time he suppressed the fact regarding his health status by not revealing that he had been taking treatment for Tuberculosis from 27.02.2000 in the OPD of the District Hospital and was subsequently admitted to the hospital on 16.11.2001 wherein he died 10 days later.  Therefore, in view of the suppression of these material facts, the claim was rightly repudiated. 

The District Forum after hearing both parties allowed the complaint by observing as follows:

“We have given our considered thought to the arguments addressed by the learned counsel appearing for the parties and are of the firm view that repudiation of the claim by the opposite parties is not justified. Shri Babu Ram at the time of proposal was young man of 40 years and he remained on medical leave for the period from 21.02.2000 to 27.02.2000 and 23.10.2001 to 26.11.2001 total 41 days, which shows that he was not having serious ailment.  As per opposite parties Shri Babu Ram was suffering from Tuberculosis, but there is nothing on record to prove that such disease was incurable, thus, the repudiation of claim of the complainant was groundless.”

The District Forum, therefore, directed the Petitioner/Insurance Company to pay the Respondent/complainant, Rs.50,000/- along with interest @ 9% from the date of filing the complaint till the date of realization and Rs.1,000/- as litigation cost.

Aggrieved by this order, Petitioners filed an appeal before the State Commission which dismissed the same on the grounds that the Petitioners had not been able to prove that there was suppression of any material facts done with fraudulent intentions and that the medical certificate of the District Tuberculosis Officer was not backed by his affidavit, nor was he cross-examined before the Fora below.  Further, as per Section 45 of the Insurance Act, 1938, the policy could not have been called in question on grounds of mis-statement after two years especially since no suppression of material facts nor fraud was established.  Therefore, while upholding the order of the District Forum, the State Commission increased the litigation cost of Rs.1,000/- to Rs.2,000/-.

Hence, the present revision petition.

Notice was issued to both parties.  Counsel for Petitioners was present.  None appeared on behalf of the Respondents.  However, since 30 days have elapsed from the date of issue of the notice, it is presumed that the service is complete and the case is being proceeded ex parte.

Counsel for Petitioner submitted that the Fora below erred in not appreciating the fact that there was adequate evidence on record that the insuree had deliberately concealed material facts regarding his health status while submitting the fresh declaration form when his policy was revived on 22.11.2001.  It was necessary for him to have done so since revival of the policy amounts to a new contract and this has been confirmed by various rulings of the National Commission.  Thus no benefit of Section 45 of the Insurance Act, 1938 would apply in this case to Respondent.  Further, since the facts pertaining to the disease from which the Respondent’s husband suffered and from which he subsequently died was provided by the Respondent to the doctor who had given the necessary certificate and therefore, the fact that it was not backed by any affidavit is not adequate reason to disbelieve the certificate.  The only reason why the affidavit was not taken or the doctor not examined was because he had been transferred to some other hospital and could not be contacted or summoned for want of correct address.   The State Commission also erred in not appreciating the fact that the insurance policy is a contract made in “utmost good faith” and as per the terms and conditions of the contract in case of its breach, the Petitioner/Insurance Company was fully justified in repudiating the claim.

We have heard learned Counsel for the Petitioner and have gone through the evidence on record.  The facts of the Respondent’s husband having taken the insurance policy from the Petitioner/Insurance Company and it having lapsed and subsequently revived are not in dispute.  We agree with the Counsel for Petitioner that it is well-established through various court rulings including of this Commission in R.P.No.50-51 of 2011 (decided on 04.04.2011), that the revival of a policy amounts to a new contract and therefore, a fresh declaration is taken at the time of revival of the policy and, therefore, no benefit can accrue to Respondent in this case by taking the shelter of Section 45 of the Insurance Act, 1938.   We also agree with Counsel for Petitioner that there is adequate credible evidence on record that the Respondent’s husband was suffering from tuberculosis and that he had suppressed this material fact.  This has been established by the medical certificate of the District Tuberculosis Officer which we note, was supplied by the Respondent herself to the Petitioner/Insurance Company.    Further, it is also on record and not disputed that the insureehad taken medical leave for long periods for his treatment of tuberculosis.   Since, an insurance is a contract entered between the parties in “utmost good faith”, suppression of any material facts by the insuree(as was done in this case), entitled the Petitioner/Insurance Company to repudiate the claim as per the terms and conditions of the policy. 

We, therefore, find merit in the revision petition and allow the same.  The orders of the Fora below are set aside and the complaint is dismissed.  No costs.

Sd/-

……………………………

(ASHOK BHAN  J.)

PRESIDENT

Sd/-

..………………………

(VINEETA RAI)

MEMBER

/sks/

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