KRISHNA DEVI KEDIA vs CHAIRMAN, L.I.C.OF INDIA

HAVING regard to the facts and circumstances set out in the application for condonation of delay for filing this appeal, we condone the delay in filing this appeal.

IN our opinion, Mr. N.S. Mathur, learned Advocate appearing on behalf of the appellant is well founded in his contention that having regard to the findings of fact entered by the State Commission and the conclusion reached by it that the appellant is entitled to receive the amounts payable under her husband''s policy of Life Insurance she is entitled to be paid not merely the amount assured under the policy and interest thereon but also the accrued bonus as per the scheme applicable to the Insurance Policy in question. Hence we direct that the first respondent herein shall pay to the appellant the bonus that has accrued on the policy in addition to the amount assured and the interest thereon, but we modify the direction given by the State Commission regarding payment of interest by holding that the interest shall be payable by the insurer only with effect from 24.12.1989 and not from the dale of the death of the deceased. Mr. Y. Krishan, Member"The Respondent"Life Insurance Corporation of India in this case has contested the appeal inter alia on the following two grounds: (1) The Life Insurance Policy was assigned by the; insured in favour of the New Bank of India, Asansol for valuable consideration. In consequence the insurer had transferred and assigned all his rights, title and interest in the policy and all money due thereunder to the said Bank. In the light of the provisions of the Insurance Act, 1938 this assignment operated so as to completely divest the assignor of any right under it. It also cancelled the nomination existing prior to the assignment. Sections 38 and 39 of the Insurance Act, 1938 refer. The fact that subsequently the assignee Bank re-assigned the policy in July, 1989, i.e., after the death of the assured in favour of the appellant complainant did not restore her position as a nominee under the policy. She only became an assignee of the Bank and could not claim any better right in the policy than what vested in the assignee Bank. (2) The second and important contention raised by the respondent Insurance Company is that the insured was suffering from certain disease-claudication pain in both the limbs for one to two years and that this fact had not been disclosed by the insured and that it is difficult for any Medical Examiner to detect such disease unless the patient himself discloses the same. He has further argued that there was suppression of material facts by the life assured regarding his ill-health at the time of obtaining revival of the insurance policy and therefore, their repudiation of the policy was bonafide and after due application of mind.

I find that on none of these issues, the State Commission has given any finding. It has merely observed that the appellant "Smt. Krishna Devi Kedia is the widow of Rameshwar Lal Kedia and as his widow, she has claim to his property and can claim the amount of Insurance. So the claim cannot be repudiated even though there was no proper re-assignment by the New Bank of India, Asansol in favour of Mr. Rameshwar Lai Kedia". The State Commission has ignored these specific provisions of the Insurance Act on this point.

AS regards the suppression of material facts regarding ill-health by the insured at the time of obtaining revival of the insurance policy, the State Commission emphasised that the Insured had been thoroughly and strictly checked up by the Doctors of the L.I.C. and observed that "the life assured died not on account of Claudication Pain" but because of "Vascular Peripheral Ischemia". Consequently, it held that there was no substance in the contention of the respondent Insurance Company that there was suppression of material facts justifying the repudiation of policy.

I am afraid the stand taken by the State Commission is not legally correct. A policy of Life Insurance is policy of utmost good faith and if there is any suppression of material facts regarding the health of the insured, the insurer is entitled to repudiate the policy. In any case, on the face of it, it cannot be maintained that the repudiation of the policy was without good and sufficient reasons and therefore, there was any deficiency in service on the part of the Insurance Company. I am, therefore, of the view that neither the appellant was entitled to the amount payable under the policy by virtue of the policy having been assigned to a Bank nor was there any deficiency in service on the part of the Insurance Company. There was, therefore, an improper exercise of jurisdiction by the State Commission resulting in material irregularity. The appeal is dismissed.

THE order of the State Commission is liable to be set aside. But I note that the Insurance Company has already complied with the order of the State Commission and there is no appeal by the Insurance Company against the order of the State Commission.