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A contract of insurance involves utmost good faith. Since the insured had concealed material facts, LIC’s appeal upheld and the death claim disallowed.

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI

REVISION PETITION NOs. 1949 – 1952 OF 2018
(Against the Order dated 13/03/2018 in Appeal No. 900 - 903/2017 of the State Commission, Chhattisgarh)

LIFE INSURANCE CORPORATION OF INDIA
THROUGH ITS ADDITIONAL SECRETARY(LEGAL) CENTRAL OFFICE H-39, FIRST FLOOR, NEW ASIATIC BUILDING CONNAUGHT CIRCUS,
NEW DELHI-110001 ...........Petitioner(s)
Versus
RAJ VILAS DONGRE & ANR.
S/O. SH. BABU RAO DONGRE, R/O. HOUSE NO. 396, WARD NO. 08, KALKA PARA, DONGARGARH,
DISTRICT-RAJNANDGAON
CHHATTISGARH ...........Respondent(s)

BEFORE:
HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER

Dated : 03 Mar 2020

ORDER

Late Smt. Usha Dongre wife of the complainant took as many as four insurance policies from the petitioner LIC of India submitting four different proposals one of them being dated 25.04.2014 and the remaining three being dated 18.04.2014. She having died on 21.06.2014 within about two months of submitting the proposals, claims in terms of the insurance policies taken by her were lodged by the complainant. The claims were repudiated vide letter dated 03.11.2015.which to the extent it is relevant, reads as under:-

"We have to inform you regarding your death claim with respect to the above issued policies of deceased Late Usha Dongre that the deceased during the time of taking the policy from us has concealed the material fact regarding her health and has decided to deny our all liabilities under the above policies. In this regard we have to inform you that the deceased insured has given the following reply to the question mentioned in duly signed personal history to the proposal form dated 25.04.2014, 18.04.2014, 18.04.2014 and 18.04.2014 for insurance purpose. “

Question Answer
11-A During the last five years did you ever consult a medical practitioner for any ailment requiring treatment for more than a week? NO
11-B Have you ever been admitted to any hospital or Nursing Home for general check-up, observation, treatment or operation? NO
11-C   Have you ever remained absent from place of work on grounds of health during the last 5 years? NO
11-D Are you suffering from or have you ever suffered from ailments pertaining to Liver, Stomach, Heart, Lungs, Kidney, Brain or nervous system? NO
11-E Are you suffering from or have you ever suffered from diabetes, tuberculosis, high blood pressure, low blood pressure, cancer, epilepsy, hernia, hydrocele, leprosy or any other disease? NO
11-F Do you have any bodily defect or deformity? NO
11-G Did you ever bave any accident or injury? NO
11-H Do you consume or have you ever consumed?
1. Alcoholic Drinks-NO
2. Narcotics - NO
3. Any other drugs-NO
4. Tobacco in any form-NO
11-J What has been your usual state of health? GOOD
11-I Have you ever required or at present availing/undergoing undergoing medical advice, treatment or test in connection with hepatitis 8 or AIDS related condition? NO

Yet we have to state that the above facts were false,because we have undisputed documents to prove that prior to the submission of the proposal form for the abovepolicies, on 25/02/2014 deceased Insured received head injury, therefore on 28.02.2014 the deceased got admitted in Dr. Panna Lal Bapna and on 01.03.2014 discharged from the hospital. Deceased due to Head injury do irrelevant Talk and due to misbehaviour duringthe proposal stage was under suspension. But the deceased has not mentioned the said facts in her life proposal form / personal history. In its place given the false reply which is mentioned above.

Therefore, it is proved that she during taking the policies intentionally given the false statement regarding her health and concealed the true facts and therefore as per the terms & conditions of the policy and the declaration made in the insurance proposal form we reject the insurance claim and accordingly under the above policies not liable and bound for making payment and consequently all the amount which has been paid, not payable to you. Yet as per new provision of Section-45 the premium paid would be refunded as per rules, kindly in this regard contact our Branch Office, Rajnand Gaon.

2.      Being aggrieved from the repudiation of the claim the complainant approached the concerned District Forum by way of separate consumer complaints.

3.      The complaints were resisted by the petitioner Corporation primarily on the grounds on which the claim had been repudiated.

4.      The District Forum having dismissed the consumer complaints, the complainant/R-1 approached the concerned State Commission by way of separate appeals. Vide impugned orders dated 26.12.2017 the State Commission allowed the appeals and directed the petitioner Corporation to pay the sum assured to the complainant along with interest and compensation. Being aggrieved from the order passed by the State Commission the petitioner corporation is before this Commission.

5.      The proposals as noted earlier were submitted by the deceased insured in April 2014. A perusal of the proposals would show that while answering the questions contained in the proposal, she clearly stated that in the last 5 years she had not taken treatment for any ailment for a period of more than one week. She also stated that she had not been admitted in any hospital for any kind of treatment investigation etc. She maintained that she had never suffered nor was she suffering from any ailment relating inter alia to brain. She also stated that she had never met with an accident and had not suffered injury.

6.      The petitioner Corporation has placed on record the prescription purporting to be issued by Bafna Hospital Dangargarh to Smt. Usha Dongre which shows that she had fallen at her house and had head injuries as a result of which she was talking irrelevant. The petitioner Corporation has also placed on record a certificate of the treatment of Smt. Usha Dongre at Bafna Hospital Dangargarh purporting to be signed and stamped by Dr. Pannalal Bafna of the said Hospital. In the above-referred certificate it is stated that Smt. Usha Dongre was admitted in the hospital on 28.02.2014 and early she had been treated by a doctor. It was also stated in the said certificate that she was talking irrelevant things on account of the head injury suffered by her and the duration of the complaint as reported by her was one month.

7.      It is evident from the certificate issued by Bafna hospital and the prescription issued by Pannalal Bafna of the said hospital that Smt. Usha Dongre sustained injuries on head when she had an accidental fall at her residence and treatment for the injury so suffered by her had lasted one month. Therefore, going by the above-referred certificate and prescription issued by Bafna hospital she had made false statements in the proposal submitted by her when she stated that she had not consulted a medical practitioner for any ailment requiring treatment for more than a week. She also gave wrong answers to the question which required her to disclose any accident and injury suffered by her.

8.      The submission of the counsel for the complainant/R-1 is that the above-referred record of Bafna hospital was not proved by the petitioner Corporation and since no doctor from the said hospital was examined nor was the affidavit of anyone from the said hospital filed to prove the aforesaid record. As noted earlier, the repudiation letters issued by the petitioner Corporation on 03.11.2015 clearly and very specifically referred to the treatment of Smt. Usha Dongre in Bafna Hospital. It was specifically stated that she was admitted in the hospital by Dr. Pannalal Bafna on 28.02.2014. It was also stated therein that she had suffered head injuries prior to 25.02.2014. The complainant/R-1, however, did not even allege in the consumer complaint filed before the District Forum that late Smt. Usha Dangal had not suffered an accidental injury at her home. It was not even claimed in the consumer complaint that Smt. Usha Dongri was not admitted in Bafna Hospital and had not been treated by Pannalal Bafna. In my opinion, since the accidental injury, alleged to have been suffered by Smt. Usha Dongre and her admission and treatment in Bafna hospital was the sole ground of repudiation of the claims it was imperative for the complainant to at least plead in the consumer complaints that the deceased had not suffered head injury as was claimed in the repudiation letter and had not been admitted and treated in Bafna Hospital.

9.      The petitioner Corporation filed written version specifically taking the ground on which the claim had been repudiated. The head injury suffered by deceased and treatment taken by her at Bafna Hospital was specifically referred in the written version filed by the Corporation. No rejoinder to the written version was filed. The complainant had filed an affidavit by way of evidence before the concerned District Forum. Even in the affidavit filed by the complainant it was nowhere claimed that late Smt. Usha Dongre had not suffered a head injury and had not been admitted and treated in Bafna Hospital. In these circumstances the petitioner Corporation, in my opinion, was not required to examine a doctor from Bafna Hospital or to file his affidavit to prove the record pertaining to the admission and treatment of Smt. Usha dogre in the said Hospital.

10.    The question involved in these revision petitions recently came up for consideration of the Hon’ble Supreme Court in 9.   In LIC of India Vs. Manish Gupta – Civil Apeal No.3944 of 2019, decided on 15.04.2019, the proposal form required a disclosure as to whether the proposer had suffered from Cardiovascular disease, he responded in negative to the said question. The complainant underwent a surgery, submitted a claim        which was repudiated on the ground that he was suffering from a pre-existing illness. Upholding the repudiation of the claim, the Hon’ble Supreme Court interalia held as under:-

“A contract of insurance involves utmost good faith. In Satwant Kaur Sandhu Vs. New India Assurance Company Ltd., this Court has held thus:
“...Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment.”

……….The documentary material indicates that there was a clear failure on the part of the respondent to disclose that he had suffered from rheumatic heart disease since childhood. The ground for repudiation was in terms of the exclusions contained in the policy. The failure of the insured to disclose the past history of cardiovascular disease was a valid ground for repudiation.”

In Reliance Life Insurance Co. Ltd. & Anr. Vs. Rekhaben Nareshbhai Rathod – Civil Appeal No.4261 of 2019, decided on 24.4.2019, the Hon’ble Supreme Court interalia observed as under:-

“26.    …………..It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.

The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) “there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurane”. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.

29.     We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form. …………..”

11.    The learned counsel for the complainant submits that late Smt. Usha Dongre was duly examined by the panel doctor of LIC of India and the policy was issued to her only after she was examined and found fit by the said doctor. In my opinion the examination by the doctor on the panel of the petitioner Corporation would be of no help, since a contract of insurance being based on utmost good faith it was absolutely essential for the deceased to declare the true state of affairs and give a truthful answer to all the questions contained in the proposals submitted by her.

12.    The learned counsel for the complainant relied upon the decision of this commission in Ravinder Singh. In my opinion, no reliance on the aforesaid decision can be placed in view of the authoritative pronouncement of the Hon’ble Supreme Court noted hereinabove.

13.    For the reasons stated hereinabove, the impugned order cannot be sustained at the same is hereby set aside. The revision   petitions are allowed and consumer complaints are hereby dismissed with no order as to cost.

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