ASHOK KUMAR SETHIYA (Gupta) vs MANDAL PRABHANDHAK, Life Insurance Corporation of India

THIS is a complainant''s appeal under Section 15 of the Consumer Protection Act, 1986 (for short the ''Act'') against the order dated 16.9.1998 passed in Case No. 101/Forum/98 by the District Consumer Disputes Redressal Forum, Satna (for short the ''District Forum'').

LATE Smt. Sangeeta Gupta (Sethiya) wife of the complainant, an Upper Division Teacher aged about 31 years gave a proposal form No. 3872370 dated 13.2.1996 for assuring her life. The proposal was accepted by the Life Insurance Corporation (for short ''LIC'') and Policy No. 375069703 on 15.2.1996 was issued for a sum of Rs. 1 lac. The table and terms 111-20, of payment of yearly premium of Rs. 1,499/-, the maturity date of which was 15.2.2016. On 22.4.1996 the assured felt breathlessness and restlessness, while she was taken for medical help to the doctor, on way she died. A report was lodged and autopsy was performed. On post-mortem, the cause of death was shock due to Pulmonary Infarction. The complainant being the nominee of the deceased claimed the amount of the sum assured and other benefits arising out of the policy from the LIC. The claim was not settled for about one year and eight months. Ultimately, vide letter dated 24.12.1997 the claim was repudiated and the policy was called in the question as on investigation conducted it was found that the life assured had suffered from the disease of Bronchitis C Pneumonia for which she remained under treatment in between the period from 25.6.1995 to 6.7.1995. But, in the proposal form this fact was knowingly suppressed by giving false answer "no" to the queries in the proposal form of Clause (11) (Ka) (Gha) and (Jha), which we quote thus : "xxx xxx xxx xxx" The complainant challenged the repudiation as arbitrary and on unjustifiable grounds amounting to deficiency in service and claimed the amount of the sum assured Rs. 1 lac with interest thereon at the rate of 18% per annum from 22.4.1996 and Rs. 5,000/- for mental pain and sufferings. The complaint was resisted. The District Forum after appreciation of evidence on record dismissed the complaint holding that the life assured was suffering from bronchitis and pneumonia and remained on medical leave from 25.6.1995 to 6.7.1995 which was a material suppression of fact and was breach of the condition of the policy, hence, placing reliance on a decision of the National Commission in case of LIC v. Smt. Lili Rani Roy, I (1997) CPJ 46 (NC)=1997 CLC 161, held that the repudiation of the claim was bona fide.

It is well settled that when the policy is called in question on the ground of false and inaccuracy of the statement and the claim is repudiated, the burden is cast upon the insurer to show that the statement was on material matter which was inaccurate from the point of view from the policy and not at the point of view of the assured, whether it was relevant or material or not. While accepting the contract of insurance, the contract can be repudiated for non-disclosure of material facts. What are material facts that is every circumstance which could be relevant for a prudent insurer to fix premium or to decide whether he should take the risk. The text to determine materiality is, whether the facts has any bearing on the risk undertaken by the insurer. If the fact has any bearing on the risk it is a material fact, if not it is not material. See Mithoolal Nayak v. Life Insurance Corporation of India, AIR 1962 SC 814, and the recent decision of this Commission in Appeal No. 660/97, decided on 27.1.1999; Branch Manager, LIC of India & Anr. v. Bhagwati Prasad Tiwari, II (1999) CPJ 656, followed in Appeal No. 751/97 decided on 8.2.1999, LIC of India v. Smt. Lalita Tiwari.

HOWEVER, in Life Insurance Policies where acceptance or rejection of risk depends upon state of health, a distinction must be drawn between illness and a simple disorder. When a claim is repudiated by the LIC on the ground that suppression of ailment, LIC has also to establish that it was a serious ailment or remotely had nexus with the cause of death. In Butterworths Medical Dictionary, Second Edition at page 261 ''Bronchitis'' is defined as an inflammation of the mucous membrane of the larger and medium-sized bronchi. At page 1337, ''Pneumonia'' is defined as a general disease in which the essential lesion is an inflammation of the spongy tissue of the lung with consolidation of the alveolar exudate. At page 884 ''Infarction'' is defined as the process of formation of an infract. An infract, Cardiac infarction. The process of the formation of a cardiac infarct. Infarction of the lung. The condition resulting from occlusion of a branch of the pulmonary artery by the embolism or thrombosis. At page 1409 Pulmonary is defined as belonging to, connected with, or affecting the lungs (I. Pulmoneus relating to the lungs). The "Current Medical Diagnosis and Treatment" 38th International Edition 1999 edited by Lawrence M. Tierney Jr. Stephen, J. Mc. Phee and Maxine A. Papadakis, page 311 deals with ''Disorders of The Pulmonary Circulation relevant of which we extract Pulmonary Thromboembolism. Essentials of Diagnosis - - - - General Considerations Pulmonary emboli arise from thrombi in the venous circulation or right side of the heart (thromboembolism), from tumors that have invaded the venous circulation (tumor emboli), or from other sources (amniotic fluid, air, fat, bone marrow, and foreign intravenous material). Pulmonary ....... in diagnosis. "More than 90% of pulmonary emboli originate as clots in the deep veins of the lower extremities. Most deep venous thrombi originate in the calves, and some 80% of these spontaneously resolve without embolising. The remainder may propagate into the iliofemoral veins. Fracture of the propagating thrombus in these proximal veins allows a clot to migrate into the inferior vena cava and ultimately to the lungs. One-third to one-half of patients with deep venous thrombosis of the iliofemoral system have clinically significant pulmonary embolism."

Above description shows that Pulmonary Infarction can be caused by a travelling clot. The origin of this clot can be any wound or several other possible causes. However it is certain that Bronchitis C Pneumonia has no connection whatsoever with Pulmonary Infarction.

LIC has built its case for repudiation of the claim of the insured on the basis of alleged treatment of the insured by Dr. Rajan Saran during the period 21st June, 1995 to 6th July, 1995. It has further been contended by them that the insured knowingly suppressed this material fact while replying to specific queries in the proposal form and thus violated the conditions of contract of insurance. As discussed above Bronchitis C Pneumonia and Pulmonary Infarction are not related at all and have no nexus with each other. Thus, the very basis of repudiation is totally wrong and based on wrong assumption. It is also clear that assertion of LIC in the letter of repudiation of possessing irrefutable proof in their possession is also wrong. LIC took 20 months to repudiate the claim and yet has not led any expert evidence except a certificate of Dr. Rajan Saran in support of the allegation of suppressing material facts, which in our opinion does not support the defence. Great stress was laid on the fact that insured took 15 days medical leave. Even the affidavit of Dr. Rajan Saran says that insured was cured of Bronchitis C Pneumonia in three days but the life assured was advised 15 days leave because of the shock sustained by her due to death of her child. This explanation in reality was not an afterthought. In Government service an employee has to take leave. The life assured was employed in Education Department. After exhaustion of causal leave she took medical leave even for minor cough and cold as no other leave was due. Therefore, this 15 days leave was not of much significance as the LIC has not placed any material that incorrect answers in relation to the treatment of Bronchitis C Pneumonia was material for consideration of taking of the risk and if yes on charge of higher premium. Therefore, untrue answers in the fact of this case cannot be said to be material from the point of LIC so as to call in question the policy and for repudiation of the claim, as the life assured died due to shock or Pulmonary Infarction, which has no nexus with the discase of Bronchitis C Pneumonia. Therefore the repudiation of the claim was not on justifiable ground which amounts to deficiency in service under Sections 2(1)(g) and (o) of the Act. See, the decisions of the National Commission in case of Smt. Alia Begum v. LIC of India, III (1997) CPJ 106 (NC); and B. Chinnamma v. Divisional Officer, LIC of India, III (1996) CPJ 136 (NC), and the view of this Commission in Appeal No. 660/97 decided on 27.1.1999 and Appeal No. 751/97 decided on 8.2.1999 (supra). The decision of National Commission in LIC v. Smt. Lili Rani Roy (supra), relied by the learned Counsel for the respondent is distinguishable on facts and is of no help to the respondent.

IN view of the above, we direct the LIC to make the payment of Rs. 1 lac and other benefits with interest thereon at the rate of 12 percent per annum from the date of repudiation of the claim i.e. 24.12.1997 within a period of two months from the date of receipt of certified copy of this order, failing which the interest shall be payable at the rate of 15 percent per annum.

IN the result, the appeal is allowed, the order of the District Forum is set aside. The appellant shall be entitled to costs throughout which are quantified at Rs. 1,500/-. A copy of this order be conveyed to the parties and a copy be sent to the District Forum alongwith the record of the case. Appeal allowed.