DIVISIONAL MANAGER, LIFE INSURANCE CORPORATION OF INDIA CUTTACK vs BILASINI CHAMPATI

THE Life Insurance Corporation of India, through its officers who were opposite parties in C.D. Case No. 95 of 1994 before the District Forum, Puri-Nayagarh are the appellants challenging the final order passed by the District Forum. THE complainant''s husband had obtained an L.I.C. policy for an assured sum of Rs. 50,000/-. THE policy commenced with effect from 28.2.91 and the complainant was described as a nominee in the said policy. Unfortunately, the policy-holder died on 15.4.91 due to cardio respiratory failure (diarrhea) and after his death the complainant made a claim before the Life Insurance Corporation for payment of the benefits under the policy. No specific date has been given as to when the claim was made. It is contended by the learned Counsel appearing for the respondent that the claim was made around three months after the death of the policy-holder. But the Insurance Corporation repudiated the claim on the ground that the policy-holder had suppressed material facts in the proposal form and the insurance policy being a matter of good faith, no benefits are available to the nominee under the policy. THE repudiation having been made on 11.5.93, the complainant filed this complaint petition on 26.9.94 for appropriate redressal.

THE present appellants as opposite parties filed their separate versions. THEir common stand was that the complainant''s husband had suppressed all the material facts necessary in Question Nos. 17, 18, 20 and 22 for which the policy stands vitiated. THEir case is that had the facts been disclosed by the proposer, the policy would not have been accepted by the Corporation. According to the present appellants the policy-holder was hospitalised in Puri District Head-quarters Hospital from 20.1.91 to 29.1.91 and during his hospitalisation it was found that he was suffering from jaundice. After being discharged from the hospital, he submitted the proposal a month after, that is on 28.2.91 and his proposal was accepted by the Corporation on 28.3.91. In essence, his death was only 18 days after the acceptance of the proposal and, therefore, it is stated that no benefit is available under the said policy. The District Forum having examined all the aspects urged before it by the parties, held that the repudiation was improper and the complainant was entitled to the entire assured amount of Rs. 50,000/-. The District Forum also allowed a compensation of Rs. 5000/- and directed that the assured amount of Rs. 50,000/- will carry interest at the rate of 12% per annum from 28.2.91 upto the date of its payments. Hence this appeal.

Mr. Barik, the learned Counsel appearing for the appellants strenuously argued that the policy stands vitiated on account of suppression of material facts. According to him, if the Bed Head Ticket produced by the Insurance Corporation is accepted as correct, then there is no escape from the conclusion that the complainant''s husband was hospitalised from 20.1.91 to 29.1.91 and that he was suffering from jaundice during that period. He referred to Question Nos. 18(c), 20 and 22(c) of the proposal form to prove that the answers given by the complainant''s husband were false which amounts to material suppression of facts. In the complaint petition, the complainant stated that the grounds of repudiation are incorrect inasmuch as her deceased husband had never suffered from jaundice as alleged nor he was ever admitted in the hospital or consulted any doctor for treatment of jaundice. The xerox copy of the Bed Head Ticket no doubt mentions the name of the complainant''s husband, but the writings therein are not clear enough to indicate the disease from which he was suffering. The learned Counsel appearing for the appellants invited our attention to a slip of paper attached to the Bed Head Ticket purporting to be the urine examination report of the patient which at one stage records that there was no biles pigment present, whereas a note has been made purporting to be dated 28.1.91 in the said piece of paper saying that bile pigment is present. It has been well settled in law that mere omission does not amount to suppression of facts. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose. We have seen a copy of the proposal form which is on record. The proposal form does not contain the declaration that the questions sought to be answered in the said form and the answers recorded therein were explained to the proposer in the vernacular language which he understands. Admittedly, the proposer was a rural cultivator who has put in his signature in Oriya and does not appear to be acquainted with English language. It was, therefore, necessary that a certificate should have been appended that the proposer has given the answers fully understanding the purport of the questions in vernacular in which he understands. That apart a proposal for Life Insurance is not accepted as a matter of routine. It requires to be examined by the acceptor. As is usually done, the Life Insurance Corporation before acceptance of the proposal, gets the proposer medically examined by medical expert of their choice for which the proposer is required to pay. In the present case, the report of medical examination conducted by the Life Insurance Corporation has neither been produced nor anything has been stated about it. In the aforesaid circumstances, we are unable to hold that the complainant suppressed material facts for which reason it is claimed by the appellants that the policy stood vitiated.

MR. Barik, the learned Counsel appearing for the appellants next contended that there appears to be no deficiency in service and therefore the award of compensation of Rs. 5000/- cannot be supported. It was pointed out that for the delay in payment of the benefits of the policy, the complainant has been awarded interest by the District Forum. He, therefore, contends that the award of compensation in the facts and circumstances of the case was unwarranted. As already stated, the claim pertaining to the policy of the deceased husband of the complainant is said to have been submitted about three months after his death. It is necessary for the Insurance Corporation to make investigations thereafter as to the validity and legality of the claim on account of the death of a policy-holder. Giving reasonable time for consideration of the playability of the claim, we consider it appropriate to hold that the repudiation was delayed. Whether the claim is accepted or repudiated, it should have been intimated to the complainant latest by the end of 1991. The repudiation in the facts and circumstances as narrated earlier in our opinion was without due application of mind and the complainant becomes entitled to the benefits of the policy for the reason that the grounds of repudiation were irrelevant and without any basis. We, therefore, hold that the complainant would be entitled to interest not from the date of proposal as stated by the District Forum, but after giving a reasonable time for consideration of the claim which we have already said to be the end of 1991. The complainant would, therefore, be entitled to interest on the assured amount with effect from 1.1.92 till the date of payment at the rate of 12% per annum. It has been stated in the complaint petition that the complainant has got six children and all are school-going and she does not possess sufficient landed property and means to meet the expenses for running the family. In her interest and in the interest of her children, we would direct that the interest portion payable to the complainant be paid to her in cash by the Life Insurance Corporation of India and the assured amount of Rs. 50,000/- be deposited in her name in a Fixed Deposit Account of Nationalised Scheduled Bank for a term of five years with instructions to the Bank that the monthly interest out of the said deposit should be made available to the complainant every month. The District Forum will take care to see that the aforesaid directions are implemented. The award of compensation is hereby quashed, as the interest takes care of the loss sustained by the complainant. It may, however, be noted that in the event of any emergency, the District Forum may be approached for release of lump-sum amount for which the District Forum after due enquiry in its discretion pass appropriate orders. The appeal is modified to the extent indicated above. Appeal modified.