DIVISIONAL MANAGER LIC OF INDIA vs T Venkateshwarlu

ONE T. Sailaja Rani wife of the complainant in O.P. 351/95 District Forum, Nizamabad took an "Ashadeep Policy" from the opposite party Insurance Company for Rs. 1 lakh on 13.11.93 and paid two half -yearly premiums and died on 22.4.1994 due to heart attack at Hyderabad. The complainant who is a nominee and husband preferred a claim. But the opposite party repudiated its liability. Questioning that the repudiation is illegal and arbitrary, the above complaint was filed to direct the opposite parties to pay the amount covered by the policy with interest etc.

THE opposite party Insurance Company admitted the issuance of the policy. According to them as the death occurred within six months from (he date of commencement of the policy, the case was investigated and the investigation revealed that the assured suffered from abdominal T.B. from 1.4.1991 to 31.5.1991 and suppressed the same in the proposal submitted on 13.11.1993. Hence the repudiation is valid and the complaint is liable to be dismissed. On behalf of the complainant PWs 1 to 6 were examined and Exs. A -l to A -18 were marked. The opposite parties did not adduce any oral evidence but Exs. B -l to B -3 were marked.

THE District Forum after referring to the evidence of PWs. 3, 5 and 6 i.e. doctors who stated that the heart attack on account of which the assured died is not related to abdominal T.B. and backpain held that as the death cannot be said to have been caused due to any ailment said to have been suppressed by the assured and there is no nexus or causal relationship between two i.e. T.B. and heart attack the repudiation is bad and therefore directed the opposite parties to pay the insured sum within one month alongwith bonus and interest and costs of Rs. 500/ -.

QUESTIONING the said order, this appeal is preferred by the opposite party Insurance Company. It is submitted by the learned Counsel for the appellants that according to Sec. 45 of the Insurance Act, 1938 any suppression of material facts by the assured vitiates the policy, and therefore even if there is no relationship or nexus between the ailment not disclosed in the proposal form and the actual death, since there is suppression of material fact, the policy is vitiated and the Insurance Company is not liable to pay any amount under the policy.

IN order to appreciate the aforesaid contention, it is necessary to refer to the relevant evidence on record. PW 1 admitted in his evidence that the assured took leave on medical grounds from 1.4.1991 to 31.5.1991 and from 1.6.91 to 30.6.91 and a certificate dt. 2.7.1991 was issued by the Assistant Surgeon, District T.B. Centre which shows that she suffered from T.B. It is also clear that she again applied for leave from 5.11.1992 to 25.11.1992. PW 2 the LIC agent stated that the assured answered the questions in his presence and the panel doctor examined her physically and certified her health condition. PW 3 Dr. D. Narayan Rao who conducted appendicitis operation on the assured issued a certificate Ex. A -15 dt. 11.11.1992 stated that he came to know that the assured died due to Miocarditis, that the appendicitis is not in any way related to the cause of death of the patient. PW 4 Dr. Chandramal issued a certificate Ex. A -18 and PW 5 Dr. G. Kaulaiah issued a certificate Ex. A -14 dated 23.1.1995 stating that he treated the assured for backpain. It is in no way related to Miocarditis and the heart attack is not related to appendisectomy, tuberculosis and backpain. PW 6 working in T.B. centre who treated the assured stated that the patient was treated for abdominal T.B. for about 3 months as evidenced by Ex. B -2 fitness certificate, Ex. B -3 Medical certificate and that T.B. does not in any way cause or relate to death of the patient i.e. Miocarditis and pulmonary embolism, and there is no scope for reoccurrence of the said T.B. The District Forum therefore relying on the aforesaid evidence rightly held that the heart attack that is cause of death has nothing to do with the appendicitis and abdominal TB or backpain.

BUT this takes us to the next question whether there need not be any nexus whatsoever between the ailment for which the deceased was treated in the hospital before the proposal and the cause of the patient''s death. The learned Counsel for the appellants relied on Section 45 of the Insurance Act and held that if there is a fraudulent suppression of material fact in the proposal, the policy is vitiated. Reliance is placed on the decision of the Supreme Court of India in Mithoolal Nayak v. LIC of India, AIR 1962 SC 814. It was held by their Lordships of the Supreme Court of India that the averments made as to the state of health of the assured in the proposal form and the personal statement was the basis of the contract between the parties and the circumstances that the policy holder had taken pains to falsify or conceal that he had been treated for a serious ailment by a physician only few months before the policy was taken showed that the falsification or concealment had an important bearing in obtaining the other party''s consent..... and that if the policy was vitiated by reason of a fraudulent suppression of material facts by the assured and the contract is bad on the ground of fraud, or a person who claims under him cannot ask for a refund of the money paid and if the policy is vitiated, the person holding assignment of policy cannot claim benefit of contract i.e. policy.

BUT the question whether in cases where there is no nexus or connection or relation between the suppression of ailment for which the assured underwent treatment and the actual cause of death will enable the Insurance Company to repudiate its liability and whether or not such repudiation will amount to deficiency in service was not raised before their Lordships of the Supreme Court of India and therefore it was not considered.

THE National Commission in Smt. B. Chinnamma v. Divisional Officer, LIC of India, III (1996) CPJ 136 (NC)=1996 (3) CPR 229 had the occasion to consider whether the LIC was justified in repudiating the liability on the policy when the assured underwent treatment for peptic ulcer and died of heart attack which has no nexus with the peptic ulcer. In the said case, the assured has undergone treatment for peptic ulcer in a hospital. Although in the said case it was found that the deceased was treated for peptic ulcer in hospital for six days, it was held that the reply furnished by the insured in the proposal form that he had not undergone treatment in any hospital for a period of six days or more cannot be said to be incorrect or untrue... The District Forum held that the repudiation made by the insurer was arbitrary. But the State Commission reversed the said finding and allowed the appeal. The National Commission. confirmed the order of the District Forum. It held that "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 therefore not based on proper application of mind, to the facts and circumstances of the case has to be upheld. In view of the aforesaid decision which directly considered the question sought for consideration in this appeal, we are constrained to dismiss the appeal. We hold that the repudiation made by the insurer was arbitrary and not based on proper application of mind to the facts and circumstances of the case. In the result, the appeal is dismissed. There shall be no order as to costs in this appeal. Appeal dismissed.