Life Insurance Corporation of India vs HANSRAJI YADAV

WITHIN one month of obtaining an LIC policy, the respondent fell ill and died after about six months due to carcinoma of gall bladders, bronchial asthma and since his claim was repudiated by the appellant, the respondent filed a complaint before the District Forum. Vide impugned order dated 17.2.2003, the District Forum directed the appellant to pay the insured amount of Rs. 1,00,000 along with accrued benefits it any, together with interest @ 9% and a sum of Rs. 5,000 as cost and damages. Feeling aggrieved the appellant has directed this appeal.

RELEVANT facts in brief for our purpose are as under: Late husband of the respondent had obtained an LIC policy of Rs. 1,00,000 by submitting the proposal form on 31.3.1999 and the first premium receipt was issued by appellant on 9.4.99 and policy was issued on 28.4.99. The deceased insured fell ill suddenly on 27.4.99 late evening and died on 4.10.99 Intimation and claim was lodged with appellant on 18.10.99 and the queries were sought from the respondent on 1.2.2000 which were duly replied but claim was repudiated on 31.3.2000 by invoking exclusion clause that the insured had concealed the factum of pre-existing disease due to which his death took place. Letter of repudiation was allegedly sent in April but actually received by the respondent on 26.7.2000. As is apparent, the main contention of the appellant is that the intimation of the illness was not communicated to the appellant and non-communication leads to suppression of material facts and, therefore, the claim was rightly repudiated as he was suffering from the same illness prior to taking of the policy and that non-disclosure of material facts in the proposal form vitiates the contract entered in between the deceased insured and appellant and there was no deficiency in repudiating the claim.

The information provided by the respondent at the time of obtaining the policy was as under: (i) Has been hospitalized? No (ii) Was involved in accident? No (iii) Has undergone any radiological, cardio-logical, pathological or any other test? No (iv) Is currently under treatment? No

OBVIOUSLY, the contention of the Counsel for the appellant in supporting repudiation of the claim is that the disease in question cannot develop in one day and therefore the insured had been suffering from the disease for sufficiently long period prior to obtaining the policy and therefore concealed the material fact that he was suffering from this disease for long and disentitled himself for the claim against the policy. We have perused the documents, the medical record and above-referred information sought by appellant and provided by the insured and find that the respondent was never admitted or hospitalized in the near proximity of the date of obtaining the insurance policy or few months before obtaining the said policy and therefore to expect a layman to know as to the nomenclature of the disease of the kind one in question is too much. If a consumer or the insured does not disclose a fact about his having been hospitalized or operated upon for a particular disease or having been remained in the hospital a year or two before obtaining of the policy, the contention of the Counsel for the appellant can hold water. Otherwise not.

THE pith and substance of the contract was that the insurance policy against life if the insured dies, the insurer cannot absolve from its liability to indemnify the insurance amount against life insurance policy. In view of the foregoing reasons we do not find any infirmity in the order and direct the appellant to pay the insured along with accrued benefits but waive off the interest as there was no such term of contract between the parties and in terms of Section 14 of the Consumer Protection Act, the respondent is entitled to an amount of compensation as to loss or injury suffered by a consumer due to the negligence of the opposite party and by way of allowing the appeal partly we modify the order as to the rate of interest and cost and damages awarded by the District Forum by way of awarding lump sum compensation of Rs. 10,000 over and above the insured amount of Rs. 1,00,000 along with accrued benefits. The payment shall be made within one month. The Bank guarantee/FDR, if any deposited by the appellant be returned forthwith after completing necessary formalities.

A copy of this order as per statutory requirements be forwarded to the parties free of costs and also the concerned District Forum and thereafter the file be consigned to Record Room. Appeal partly allowed.