Dinesh Soni vs Branch Manager, State Bank Of India & 2 Ors

V.K.Jain, J

Late Shri Banshi Lal father of the petitioner obtained an insurance policy from the respondent - SBI Life Insurance Co. Ltd. in respect of a loan which he had taken from State Bank of India. In the proposal submitted by him, he was interalia required to disclose whether he was suffering from Diabetes. The said question was a part of the good health declaration contained in the proposal form. Mr. Banshi Lal signed the declaration to the effect that he was not suffering from the ailments specified therein, including Diabetes. The declaration was also signed by the complainant/petitioner Mr. Dinesh Soni who signed the said document in English. Shri Banshi Lal having died on 14.7.2011 a few months after obtaining the insurance policy, a claim in terms of the insurance policy was lodged by the complainant/petitioner with the respondent SBI Life Insurance Co. Ltd. The claim was rejected vide letter dated 29.12.2011 which to the extent it is relevant, reads as under:-

"Late Banshi Lal Soni, while applying for enrollment under the SB] Dhanraksha Plus LPPT Personal Loan scheme had signed 'Declaration of Good Health', which mentions that he was of sound health and was not suffering or had never suffered from any Critical illness or any condition requiring medical treatment for Illness, as on date of enrollment.

As per the records available with us, Late Banshi Lal Soni was suffering from and under treatment for Diabetes Mellitus Type II prior to the date of enrollment of policy.

As the deceased Life Assured had given a false Good Health Declaration and had not disclosed material fact at the time of entry into the scheme, the claim has been repudiated."

Being aggrieved from the rejection of the claim, the complainant approached the concerned District Forum by way of a consumer complaint. The complaint was resisted by the respondent primarily on the ground on which the claim had been repudiated.

The District Forum having dismissed the complaint, the petitioner approached the concerned State Commission by way of an appeal. The said appeal also having been dismissed vide impugned order dated 9.2.2018, the petitioner is before this Commission.

It is submitted by the learned counsel for the petitioner that late Shri Banshi Lal was an illiterate person and in any case he had disclosed to the doctor who had examined him that he was suffering from Diabetes. Thus, it is not in dispute that the deceased insured was suffering from Diabetes at the time the proposal was submitted by him. The learned counsel for the petitioner also submits that the proposal was filled up by the agent and not by Mr. Banshi Lal himself. Neither the agent who allegedly filled up the proposal nor the doctor who examined the insured was impleaded as a party to the consumer complaint. Consequently, it was not possible to verify as to whether the proposal was filled up by the agent or by the insured himself and in case it was filled up by the agent whether he did so strictly in terms of the instructions received from the insured or not. The insured having signed the proposal form he was bound by the answers and the declaration contained therein

As noted earlier, the proposal was also witnessed by none other than the petitioner/complainant himself who does not claim to be an illiterate person. Had the agent filled up the declaration contrary to the instructions given to him by the insured, the petitioner, he being the son of the insured would certainly have objected to it and would have insisted upon a correct answer being incorporated in the proposal before it was signed by his father. Therefore, I am satisfied that the proposal was filled up as per the instructions of the insured himself.

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:-

"Moreover, non-disclosure of any health event is specifically set out as a ground for excluding the liability of the insurer."

"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.

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. .............."

Since the insurance cover was obtained by concealment of a material fact with respect to an ailment from which the insured was suffering at the time the proposal was submitted and the insurance cover was obtained, the repudiation of the claim on account of the aforesaid material concealment was justified. The view taken by the Fora below, therefore, does not call any interference by this Commission in exercise of its revisional jurisdiction. The revision petition is, therefore, dismissed with no order as to costs.