Gurpreet Kaur vs Life Insurance Corporation

In this revision petition, the order dated 14th March 2016 passed by the State Consumer Disputes Redressal Commission, Punjab, (in short 'the State Commission') in FA No. 1430 of 2014 has been challenged by the petitioner complainant Gurpreet Kaur.

Brief facts of the case are that the husband of the petitioner Rupinder Singh (since deceased) had taken a policy bearing No. 472819994 from the respondent Insurance Company on 26th July 2010 for a sum of Rs.10 lakhs for a period of 16 years. During the currency of the policy, the insured died of cardiac arrest on 29th June 2012. The claim was submitted by the complainant to the Insurance Company which was repudiated by the respondent company vide their letter dated 19th October 2013. The claim was repudiated on the ground that the Deceased Life Assured (DLA) had suppressed the material information in respect of his ill-health and the earlier policy obtained by him in the proposal form. It was mentioned that the DLA had earlier obtained another life insurance policy No. 302-160-300 from branch office Ludhiana on 28th March 2010 for another sum assured of Rs.10 lakhs. The DLA was also suffering from epilepsy and bronchial asthma for the last 20 years as revealed from the treatment record of Amrit hospital where he was being treated. Aggrieved with the repudiation of the claim, the complainant filed a consumer complaint before the District Forum being complaint case No. 84 of 2014 and the District Forum vide its order dated 28th of July 2014 allowed the complaint and directed the Insurance Company to pay the insurance claim. The insurance company preferred an appeal before the State Commission being appeal No. 1430 of 2014. The State Commission however allowed the appeal and set aside the order of the District Forum.

Hence the present revision petition.

Heard the learned counsel for the petitioner and perused the written arguments filed by the learned counsel for the respondent Insurance Company as he was not present on the day of argument.

The learned counsel for the petitioner stated that the earlier policy was issued only 4 months back and the present policy was obtained in lieu of the earlier policy as the branch manager of the respondent Insurance Company informed that the present policy has many benefits. The DLA did not pursue the earlier policy. Thus, it was not necessary to give the details of the earlier policy. Moreover, non-furnishing of this information should not affect the claim under the current policy as this information may not have given any additional input to the insurance company for deciding the insurability of the DLA. To support his contention the learned counsel referred to the judgment of this Commission in Revision Petition No. 1117 of 2014, The C.E.O & Director, Sahara India Life Insurance Company Ltd. & anr. Vs. Rayani Ramanjaneyulu, decided on 01.8.2014.

On the other hand, the learned counsel for the respondent Insurance Company in the written arguments has stated that at the time of the proposal of the policy in question, the DLA concealed the information in respect of his earlier policy which was issued by branch office Ludhiana and that policy was also for Rs.10 lakhs. Had the DLA informed about the earlier policy, the medical norms for approving the policy would have been changed and the DLA would have been required to undergo further stringent medical tests such as ECG etc. To avoid the stringent medical examination, the DLA concealed the information in respect of the earlier policy which is a clear violation of the terms and conditions of the policy.

It has further been argued by the learned counsel for the respondent Insurance Company that the DLA was also suffering from the disease of epilepsy and bronchial asthma for the past 20 years as revealed from the treatment papers of the DLA from Amrit hospital. The argument of the learned counsel for the petitioner that the report of the Amrit hospital has not been proved has no meaning as the documents have been given by the treating hospital and are signed by the competent authority of the hospital. These facts are also concealed by the DLA in the proposal form and the condition of ill health of the DLA was not informed to the Insurance Company in the proposal form. Concealment of both these material facts render the policy ab initio void and therefore there should be no question of making any payment to the nominee of the DLA. In support of these arguments, the learned counsel has referred to the judgment of the Hon'ble Supreme Court in Satwant Kaur Sandhu Vs. New India Assurance Company Ltd. MANU/SC/1164/2009, wherein the following has been observed:-

The core question for consideration is whether the fact that at the time of taking out the mediclaim policy, the policy holder was suffering from chronic Diabetes and Renal failure was a material fact and, therefore, on account of non-disclosure of this fact in the proposal form, the respondent - Insurance Company was justified in law in repudiating the claim of the appellant?"

I have carefully considered the rival contentions. The question of suppression of fact in respect of the disease of epilepsy on the part of the DLA has been dealt by the fora below and they have given a finding that the same cannot be a cause for repudiation of the claim as the report of the hospital has not been proved. As against this concurrent finding, I would not like to re-examine this issue in the light of the decision of the Hon'ble Supreme Court in Mrs. Rubi (Chandra) Dutta vs. United India Insurance Company, 2011 (3) Scale 654.

However in respect of the concealment of the earlier policy, it has been claimed by the complainant that the DLA had taken the current policy in lieu of the earlier policy, however, no documentary proof has been filed in this regard. Even if this was a fact, the DLA was duty bound to reflect this policy in the proposal form when a specific question was asked. Apart from the judgment of the Hon'ble Supreme Court in Satwant Kaur Sandhu Vs. New India Assurance Company Ltd. (supra), the Hon'ble Supreme Court has particularly considered the question of suppression of information in respect of the earlier policies in Reliance Life Insurance Co. Ltd. and anr. Vs. Rekhaben Nareshbhai Rathod, II (2019) CPJ 53 and has held the following:-

In the present case, the insurer had sought information with respect to previous insurance policies obtained by the assured. The duty of full disclosure required that no information of substance or of interest to the insurer be omitted or concealed. Whether or not the insurer would have issued a life insurance cover despite the earlier cover of insurance is a decision which was required to be taken by the insurer after duly considering all relevant facts and circumstances. The disclosure of the earlier cover was material to an assessment of the risk which was being undertaken by the insurer. Prior to undertaking the risk, this information could potentially allow the insurer to question as to why the insured had in such a short span of time obtained two different life insurance policies. Such a fact is sufficient to put the insurer to enquiry.

Learned counsel appearing on behalf of the insurer submitted that where a warranty has been furnished by the proposer in terms of a declaration in the proposal form, the requirement of the information being material should not be insisted upon and the insurer would be at liberty to avoid its liability irrespective of whether the information which is sought is material or otherwise. For the purposes of the present case, it is sufficient for this Court to hold in the present facts that the information which was sought by the insurer was indeed material to its decision as to whether or not to undertake a risk. The proposer was aware of the fact, while making a declaration, that if any statements were untrue or inaccurate or if any matter material to the proposal was not disclosed, the insurer may cancel the contract and forfeit the premium. MacGillivray on Insurance Law[Twelfth Edition, Sweet and Maxwell (2012). See Pg. 257 for cases relied upon] formulates the principle thus:

"......In more recent cases it has been held that all-important element in such a declaration is the phrase which makes the declaration the "basis of contract". These words alone show that the proposer is warranting the truth of his statements, so that in the event of a breach this warranty, the insurer can repudiate the liability on the policy irrespective of issuers of materiality"

"29. 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. Barely two months before the contract of insurance was entered into with the appellant, the insured had obtained another insurance cover for his life in the sum of Rs.11 lakh. We are of the view that the failure of the insured to disclose the policy of insurance obtained earlier in the proposal form entitled the insurer to repudiate the claim under the policy."

From the above observations of the Hon'ble Supreme Court, it is clear that the concealment of earlier policies is an important material fact and if this information is not provided in the proposal form, the Insurance Company would be justified in repudiating the claim. Thus, relying on the judgment of the Hon'ble Supreme Court in Reliance Life Insurance Co. Ltd. and anr. Vs. Rekhaben Nareshbhai Rathod (supra), I do not find any opportunity to interfere with the order passed by the State Commission. Consequently the revision petition No. 1797 of 2016 is dismissed.