B.CHINNAMMA vs DIVISIONAL OFFICER, L.I.C.OF INDIA

MS . Kiran Kalra, Advocate appeared as amicus curiae on behalf of the Revision Petitioner in deference to our request and presented the case for the Petitioner with her usual ability. We have also heard Mr. Mohinder Singh, Advocate appearing on behalf of Life Insurance Corporation of India (Respondent) and he placed before us in detail the documentary evidence that had been relied on by the LIC before the District Forum and the State Commission.

AFTER considering the entire evidence adduced in the case the District Forum has clearly come to the conclusion that the reasons stated by the Life Insurance Corporation for repudiating liability in the case were not correct or sound and that it was clear that there was no due or proper application of mind by the LIC to the material facts and circumstances of the case before it proceeded to repudiate the claim. On the basis of the said conclusion of fact the District Forum proceeded to pass an order in favour of the Complainant, who is the widow of the deceased policy holder, directing the LIC to pay to the Complainant the amount covered by the insurance policy, namely Rs. 50,000/- together with interest. On the matter having been taken up in the appeal before the State Commission by the LIC, the State Commission adverted in detail to the evidence produced in the case and expressed its inclination to concur with the finding of the District Forum that the grounds mentioned in the letter of repudiation were not correct or tenable. However, the State Commission proceeded to state : "the grounds stated in the letter of repudiation may not be legally or factually correct but that is a matter for determination by the Civil Court and not by the Consumer Forum when ex-facie there is nothing to show that the grounds are wholly untenable". In support of the said view the State Commission has purported to rely on certain observations contained in the order passed by this Commission in Divisional Manager, LIC of India v. Smt. Alapathivasantha Kumari (Revision Petition No. 435/94 dated 16.2.1995). Unfortunately the State Commission has omitted to note that the scope of the said ruling has been subsequently explained in a number of subsequent orders passed by this Commission where it has been clearly laid down that the mere fact that there has been a repudiation of liability by the insurer will not by itself constitute a bar against the maintainability of a claim of the insured before the Consumer Forum provided the insured is able to establish before the Consumer Forum that there had not been due application of the mind of the insurer to all the relevant facts and circumstances of the case in good faith before the decision to repudiate was taken by it. In the present case we are inclined to agree with the District Forum that in view of the aspects pointed out in its order it is not possible to regard the decision taken by the Insurer to repudiate the claim as one arrived at in good faith after due application of the mind of the insurer to all the relevant facts and circumstances of the case. Even if the case put forward by the insurer that the deceased had undergone for treatment for peptic ulcer in a hospital for the period mentioned in the certificate Annexure-C is to be examined closely, it will be found that the period during which such treatment was undergone by the deceased consisted only of six days and hence it cannot be said that the reply furnished by the insured in the proposal form that he had not undergone treatment in any hospital for a period of 7 days or more cannot be said to be incorrect or untrue. It may also be said that the so-called ailment for which the deceased was treated in the hospital during the said period, namely, peptic ulcer had no nexus whatever with the cause of his death which is stated in the death certificate to have been heart stroke. In these circumstances we consider that the finding of the District Forum that the repudiation made by the insurer was arbitrary and that it was not based on a proper application of mind to the facts and circumstances of the case, has to be upheld. We are unable to agree with the view taken by the State Commission that Consumer Forum cannot scrutinise the validity of the repudiation made by the insurer at least for the limited purpose for finding out whether the repudiation has been made in good faith after considering all the relevant facts and circumstances of the case. The said view is not correct or sound in law. We have, therefore, no hesitation to set aside the order of the State Commission and restore the order passed in favour of the Complainant by the District Forum. The revision petition is allowed as above. The parties will bear their respective costs.

BEFORE we part with this case we place on record our appreciation of the valuable assistance rendered to this Commission by Ms. Kiran Kalra.

WE expect that the Insurance Company will make payment to the complainant within a period not exceeding one month from today.