CHOTI DEVI vs Life Insurance Corporation of India

THIS appeal has been filed by the complainant appellant against order dated 28.9.2006 passed by the District Forum, Jhunjhunu in Complaint No. 277/2005 by which the complaint of the appellant was dismissed against the respondents LIC.

IT arises in the following circumstances: That the complainant appellant had filed a complaint before the District Forum on 7.9.2005 inter alia stating that her husband Nathuram, now deceased was an employee in the RSEB, had taken a life insurance policy on 28.12.2000 from the respondents for a sum of Rs. 1 lac bearing policy No. 192571609. IT was further stated that on 10.10.2001 the deceased had died suddenly and information about the death of the deceased was given by the complainant to the respondents LIC and claim was preferred by the complainant appellant being the wife nominee of the deceased before the office of the respondents LIC but that claim was repudiated by the respondents through letter dated 31.3.2003 inter alia stating that they had the sufficient proof to prove the fact that prior to two years from the date of filling in up the proposal form on 28.12.2000, the deceased was suffering from the disease of Chronic Obstructive Pulmonary Disease (hereinafter referred to as ''COPD'') and since for that disease he had consulted medical man and had taken treatment and since these facts were not disclosed by the deceased in his declaration form dated 28.12.2000 and, therefore, deceased was guilty of suppression of material facts and he deliberately made misstatement and withheld material information. Thereafter, the present complaint was filed by the complainant appellant. A reply was filed by the respondents before the District Forum and they have taken the same pleas which were taken by them in the repudiation letter dated 31.3.2003 and it was further replied that from the documents it was well established that the deceased was a patient of COPD prior to filling in up the declaration form dated 28.12.2000 and thus he was guilty of suppression of material facts and he deliberately made misstatement and withheld material information and on the ground of suppression of material facts about ill-health, the claim was rightly repudiated by the respondents and the complaint deserves to be dismissed. After hearing the parties, the District Forum, Jhunjhunu through impugned order dated 28.9.2006 had dismissed the complaint inter alia holding that from record it was established that the deceased was a patient of COPD prior to filling in up the declaration form dated 28.12.2000, therefore, the present case was a case of suppression of material facts regarding his death on the part of the deceased. Aggrieved from that order of the District Forum, this appeal has been filed by the complainant appellant. In this appeal, the main contention of the learned Counsel for the appellant is that the claim of the complainant was wrongly repudiated by the respondents on the ground that prior to filling in up the declaration form the deceased was suffering from the disease of COPD and further that the findings recorded by the District Forum are erroneous one as there is nothing on record to show that the deceased was a patient of COPD prior to filling in up the declaration form and further the deceased had died suddenly and thus there was no nexus between the death of the deceased with the so called disease COPD and further the disease of COPD is a general disease and that could not have any bearing on the death of the deceased. Hence, the impugned order cannot be sustained and liable to be quashed and set aside and this appeal deserves to be allowed.

On the other hand the learned Counsel appearing for the respondents has supported the impugned order of the District Forum.

WE have heard the learned Counsel appearing for the parties and gone through the entire materials available on record. There is no dispute on the point that a policy bearing No. 192571609 for Rs. 1 lac was issued by the respondents in favour of the deceased.

THERE is also no dispute on the point that at the time of taking insurance policy, a declaration was made by the deceased on 28.12.2000 and in that declaration, he has not mentioned that he was suffering from any kind of disease. There is also no dispute on the point that the deceased had died on 10.10.2001. From the papers and documents produced by the parties, there is nothing on record to show that the deceased had ever taken treatment in any hospital for the disease known as COPD.

THERE is also no dispute on the point that the claim of the complainant appellant was repudiated by the respondents through letter dated 31.3.2003 on the ground that though deceased was suffering from the disease of COPD, but these facts were suppressed by him deliberately at the time of filling in up the declaration form on 28.12.2000 and, therefore, deceased was guilty of suppression of material facts regarding health.

THUS, in the facts and circumstances just narrated above, the question for consideration is whether repudiation of claim of complainant appellant by the respondents on ground of suppression of disease of COPD was justified or not or whether the findings of the District Forum rejecting the claim could be sustained or not. It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of the Insurance Company and its agents to disclose all materials facts in their knowledge since obligation of good faith applies to both equally and in this respect, the decision of the Hon''ble Supreme Court in M/s. Modern Insulators Ltd. v. Oriental Insurance Co. Ltd., I (2000) CPJ 1 (SC)=II (2000) SLT 323=AIR 2000 SC 1014, may be referred to.

The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. Furthermore, mere concealment of some facts will not amount to concealment of material facts.

SUPPRESSION of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose. In this respect, the latest judgment of the Hon''ble National Commission in National Insurance Co. Ltd. v. Bipul Kundu, II (2005) CPJ 12 (NC)=2005 CTJ 377 (CP) (NCDRC) may be referred to where it was held that for repudiating a claim of an insured, it is for the insurer to show that a statement on a fact, which was material for the policy, had been suppressed by the insured and that statement was fraudulently made by him/her with the knowledge of the falsity of that statement.

THE question is whether suppression of disease of COPD would amount to misrepresentation in real sense or not. The word ''COPD'' in Tabler''s Cyclopedic Medical Dictionary it was mentioned that for that disease see the word ''cold''. At page 412 the word ''cold'' has been defined as under and it pertains to disease of lungs. "A general term for coryza or inflammation of the respiratory mucous membranes known as the common cold . 2. Lacing heat or warmth; having a low temperature. Opposite of heat."

The test to determine materiality is whether the fact 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 immaterial.

IN our considered opinion, there are certain diseases such as kidney, heart and brain and they are connected with the life span of a person and if any misstatement is made in respect of such type of diseases by the person seeking insurance, in such case, it can be believed that knowingly the person taking out the insurance has made misstatement. But if any one suffers from temporary illness such as fever, cough, cold etc. and the same was not mentioned at the time of taking insurance, it cannot be stated in true sense that a misstatement in respect of the state of health has been made by the person seeking insurance.

THE disease of COPD cannot be treated as a disease in the same manner as the diseases such as kidney, heart and brain which directly affect the life span of a person. Since in this case there is nothing on record to show that the deceased had ever taken treatment of the disease of COPD prior to filling in up the declaration form on 28.12.2000, therefore, it could not be said that the present case was a case of suppression of material facts regarding his health. Not only this there is also nothing on record to prove the fact that the deceased had died because of the disease of COPD and thus it could not be said that the death of the deceased was connected with the so called disease of COPD.

The death of the deceased having not been connected with COPD, it cannot be considered to be material so far as death of the deceased is concerned. Consequently, it cannot be said that there was suppression of material facts and, therefore, liability of the Corporation arose under the policy. Whether a fact is material or not has to be decided in the light of and in the context of the cause of death. If the fact has bearing on the cause of death it would become material. Mere incorrect or wrong answer to questions which ultimately do not have any bearing or connection with the death of the insured would not absolve the Corporation from its liability under the policy. Therefore, even if the deceased was suffering from COPD as alleged by the Corporation, judging it from the point of view of the cause of his death, it was not material and the Corporation cannot escape its liability on the ground of suppression of material facts.

THUS, it is held that non-mentioning of the disease ''COPD'' in the declaration form dated 28.12.2000 by the deceased does not amount to suppression or concealment of material fact or misstatement in real sense and, therefore, the respondents were not justified in repudiating the claim of the complainant appellant on the ground of suppression of material facts and in view of this the findings of the District Forum by which the claim of the complainant was rejected are not based on correct appreciation of entire materials on record. For the reasons stated above, the District Forum has committed illegality or irregularity in rejecting the claim of the complainant appellant. The findings of the District Forum rejecting the claim are not based on correct appreciation of entire materials available on record and they suffer from basic infirmity, illegality and perversity and this appeal deserves to be allowed. Accordingly, the appeal filed by the complainant appellant is allowed and the impugned order dated 28.9.2006 passed by the District Forum, Jhunjhunu is quashed and set aside and the complaint of the complainant appellant is allowed in the manner that the complainant appellant is entitled to get from the respondents LIC an amount of Rs. 1 lac along with interest @ 9% p.a. from the date of filing of the complaint till the payment is made. Appeal allowed.