Life Insurance Corporation Of India And Anr. vs Sunita Hemnani

IN this case the husband of the respondent -Smt. Sunita Hemnani - late Mr. Ashok Hemnani was insured by the LIC for a sum of Rs. 1.00 lakh on 20.3.2001. On 3.10.2001, the policy holder died due to brain haemorrhage at Jawaharlal Nehru Hospital, Ajmer. LIC repudiated the claim on the grounds that even prior to the issuance of the policy, the insured was suffering from Pyrexia F/C A/C Cirrhosis Liver and portal hypertension and he was treated for the same and for which he had availed medical leave. It was the contention of the complainant that the cause of death had no nexus to the ailment allegedly suppressed

ACCORDINGL Y , she filed a complaint before the District Forum claiming the insured amount of Rs. 1.00 lakh along with interest and Rs. 10,000 for mental agony and Rs. 2,500 towards litigation expenses. It was contested by the LIC that the policy -holder was on medical leave for 45 days from 3.1.2000 to 17.1.2000 and earned leave from 18.1.2000 because of jaundice and malaria. The policy -holder had spent more than Rs. 2,000 towards medical bills in the year 1999. These facts were suppessed by the insured. The District Forum held that LIC is not responsible for the deficiency in service by repudiating the applicant''s claim and accordingly the complaint was dismissed.

AGGRIEVED by the order of the District Forum the complainant had filed an appeal before the State Commission. The State Commission held that, though the deceased had availed medical leave during the year 2000 on account of portal hypertension and there were no two opinions that the death of the insured occurred due to brain haemorrhage. As such, the complainant was suffering from the disease, which had no nexus to the cause of death. Therefore, the State Commission directed the LIC to pay the insured amount along with interest @ 9% per annum from the date of the complaint (12.8.2002) till its realization. Dissatisfied by the order of the State Commission, the LIC has filed this revision petition before us.

IN this case, it is clear that the deceased died within eight months of the issuance of the LIC policy under Section 45 of the Insurance Act. Section 45 of the Insurance Act reads as under: "45. Policy not to be called in question on ground of misstatement after two years. -No policy of life insurance effected before the commencement of this Act shall, after the expiry of two years from the date of commencmeent of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurrate or false, unless the insurer shows that such statement was on a material matter of suppressed facts which it was material to disclose and that it was fraudulently made by the policy -holder and that the policy -holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose. Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal."

IN the proposal form the following questions were answerd in the negative: whether you have taken treatment for more than a week for any dissease during the past five years? Whether you have been admitted for any check -up or treatment in any hospital/nursing home? Whether you have taken any leave on medical grounds during the last five years? Whether you have suffered from any disease relating to stomach, heart, brain, nervous system, etc.? As against this, it can be seen from the records that the insured has taken medical leave on 3.11.2000 to 17.1.2000 and 8.2.2000 to 16.2.2000 and he has also taken reimbursement of his medical bills during the year 1999 - 2000. The Health Department of Rajasthan has given a certificate regarding absence from work due to Pyrexia, Cirrhosis of liver with Portal Hypertension from 3.1.2000 to 17.1.2000. It was incumbent on him to have revealed these diseases before obtaining the policy.

IN P.C. Chacko and Anr. v. Chairman, LIC of India and Ors., III (2008) CPJ 78 (SC)=IX (2007) SLT 533=IV (2007) ACC 773 (SC)=IV (2007) CLT 229 (SC)=(2008) 1 SCC 321, the Hon''ble Apex Court held as follows: "17. The purpose for taking a policy of insurance is not in our opinion, very material. It may serve the purpose of social security but then the same should not be obtained with a fraudulent act by the insured. Proposal can be repudiated if a fraudulent act is discoverd. The proposer must show that his intention was bona fide. It must apepar from the face of the record. In a case of this nature it was not necessary for the insurer to establish that the suppression was fraudulently made by the policy -holder or that he must have been aware at the time of making the statement that the same was false or that the fact was suppressed which was material to disclose. A deliberate wrong answer which has a great bearing on the contract of insurance, if discovered may lead to the policy being vitiated in law."

AS the insurance policy is issued on the basis of principle of uberrima fides (most abundant faith) on either side and as the ratio of the judgment of the Hon''ble Apex Court quoted (supra) is squarely applicable to the case on hand, we are persuaded to allow this revision petition. Accordingly, this Revision Petition is allowed and order of the State Commission is set aside. There shall be no order as to cost. R.P. allowed.