Life Insurance Corporation of India vs MANIBEN MAGANBHAI MAKWANA

THIS appeal arises from order dated 7.1.2003 rendered by the learned Consumer Disputes Redressal Forum, Sabarkantha in Complaint No. 445 of 1999, directing the opponent Life Insurance Corporation of India (L.I.C. for short) to pay to the complainant Rs. 15,000/- being the policy amount with interest @ 9% p.a. from the date of complaint till payment and Rs. 2,500/- by way of compensation on the head of mental agony and hardship and Rs. 1,000/- by way of cost of the complaint. Impugned order went ex parte as, in spite of sufficient opportunity having been afforded to the opponent L.I.C., no reply was filed before the learned Forum, who held that there was no reason for not upholding the complainant''s case about deficiency in service on the part of the opponent L.I.C. of India in not making the payment of policy amount to the complainant being nominee and heir of deceased insured Maganbhai Madhabhai Makwana.

WE have heard the learned Advocates for the parties. WE have gone through the impugned order. In our considered opinion, this matter would fall into two parts and we accordingly consider the same. I It is not in dispute that the opponent L.I.C. was accorded sufficient opportunity to file its reply and produce evidence. However, no reply was filed. Hence, there was no material on record on the basis of which the learned Forum could have upheld repudiation of the claim by opponent L.I.C. of India and negatived the case of the complainant with regard to deficiency in service on the part of the opponent L.I.C. of India. On this ground only this appeal would merit dismissal. However, for the sake of completion of this order, we propose to take ourselves to the xerox copies of the documents proposed to be relied upon by the opponent L.I.C. of India at this appellate stage. II

The complainant is widow of deceased life assured Maganbhai Madhabhai Makwana who had taken life insurance policy in the sum of Rs. 15,000/- on 8.3.1990. Proposal was submitted on 11.2.1990 and the policy was issued on or around 8.3.1990. The policy stood in lapsed condition from or around September, 1991. For the revival of it, declaration was submitted on 21.7.1994. Opponent L.I.C. revived the policy on 15.10.1994. The life assured died after more than two years of revival, on 11.8.1997. Opponent L.I.C. repudiated the complainant''s claim by letter of repudiation dated 19.2.1999 on the ground that the policy was revived on 15.10.1994 for the full sum assured on the strength of Full Medical Report and ''Declaration of Good Health'', completed by the deceased insured answering the questions with regard to disease of lungs in the negative and answering the question with regard to health to be good. It has been submitted that the life assured was suffering from tuberculosis for which he took medical treatment in hospital prior to the date of revival and he was on medical leave for 83 days as per following details. In support of the aforesaid repudiation, the opponent L.I.C. of India proposes to place reliance upon a xerox copy of statement of health submitted by the life assured at the time of revival of the policy giving answers as aforesaid, xerox copies of certificates of employer and hospital treatment. First certificate by employer speaks about leave from 12.1.1994 to 5.2.1994 and in the column of nature of leave ''earned leave (EL)'' is written. In rest of three cases of leave from 7.8.1995 to 31.8.1995, 21.11.1995 to 26.6.1996 and 18.9.1996 to 11.8.1997 earned leave is shown to be commuted T.B. The learned Advocate for the opponent L.I.C. would submit that the first leave must also be treated to be as sick leave for T.B. However, the brackets made against rest of the three periods of leave indicate earned leave commuted T.B. whereas the first leave does not indicate leave on account of T.B. The ground on which the leave sought for also relates to bracketed portion and the submission contrary to that prima facie is not acceptable. This can be visualised from other certificates of leave which are for the years 1995, 1996 and 1997 and not for any prior period. That means that all the certificates which relate to sick leave for the ailment of T.B. are subsequent to the date of revival and, therefore, they are prima facie not available to opponent L.I.C. of India for disowning the claim. It was submitted that the certificate of hospital treatment recite the period of around three years and if it is calculated from the date of admission into the hospital, it might date back a month or two before the date of revival. However, such type of exercise is not permissible. We may hasten to add here that all the aforesaid xerox copies of the documents cannot be considered even in original proceedings without being supported by affidavit of the employer as well as the concerned doctors so as to prove the document. Even in this appeal no affidavit of the employer or doctor is proposed to be filed. Period of more than two years is between the date of revival and the date of death and for that matter the date of repudiation of claim, would assume a great deal of importance in applying the principle settled in Section 45 of the Insurance Act. Accordingly, the opponent L.I.C.''s burden of proof will not stand discharged merely by showing documents as aforesaid. It has to prove them.

ON behalf of the opponent, reference has been made to a decision rendered by the Honourable National Commission in the case of L.I.C. of India and Another v. Parveen Dhingra, II (2003) CPJ 70 (NC)=decided on 15.3.2002 in Revision Petition No. 897 of 2001. In that case the insurance policies were taken on 28.1.1980 and 27.8.1992 and they lapsed in the year 1992 and were got revived on 8.9.1993 and 9.3.1994. However, the life assured died on 9.10.1994 i.e., within two years from the date of revival. It is in that light that the Honourable National Commission had an occasion to consider the provisions of Section 45 of the Insurance Act and the principle attending the said provision. Reference has been made to a decision of the Apex Court in the case of Mithoolal Nayak v. Life Insurance Corporation of India, reported in AIR 1962 Supreme Court 814, but the Honourable National Commission held on account of the above facts of the case before it that the complaint was not covered by Section 45 of the Insurance Act. It, therefore, proceeded to uphold the repudiation of the claim on the basis of suppression of material facts on the basis of the deceased knowingly giving incorrect information on personal health in the statement given at the time of revival of lapsed policies. Next is a decision in the case of L.I.C. and Others v. Smt. Raksha Goyal, II (2002) CPJ 92 (NC)=decided on 3.10.2001 in Revision Petition No. 947 of 1997 reported in Legal Digest, April 2002. In that case before the Honourable National Commission also, the insured had taken a policy on 30.8.1989 and he had died on 30.12.1990 i.e., within two years of the date of the policy. It is on the basis of such facts that the National Commission has observed that the official record that the insured was on leave on medical grounds could not be disputed and that there were certificates of doctors which could be relied upon. Accordingly, the Honourable National Commission in this case also upheld the repudiation of the claim.

ON a reference being made to the aforesaid decision of the Apex Court in Mithoolal Nayak v. L.I.C. of India (supra), it might be noted that all the three conditions stated in Section 45 of the Insurance Act must be satisfied before the claim is rejected. It is settled that in such a case the burden of proof would be on the Insurance Company/insurer to prove the allegations of ''suggestio falsie'' or ''suppressio veri'' on the part of the proposer of insurance. In L.I.C. of India v. Mohinder Kaur, reported in II (2003) CPJ 30 (NC)=(2003) 4 CLD P. 317 (NCDRC), this is what the Honourable Commission has observed: "We heard the arguments and perused the material on record. There is no dispute that insurance policy was issued on 31.10.1995 effective 28.8.1995. Letter of repudiation was issued on 30.9.1997. Section 45 of the Insurance Act reads as follow: Policy not to be called in question on ground of mis-statement after two years-No policy of life insurance effected before the commencement of the Act shall, after the expiry of two years from the date of commencement 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 issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed fact 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."

We also see that Hon''ble Supreme Court in Mithoo Lal Nayak v. L.I.C. of India (supra), laid down following three conditions for second part of the applicability of Section 45 of Insurance Act. They were: ''(a) the statement must be on a material matter or must suppress facts which it was material to disclose; (b) the suppression must be fraudulently made by the policy holder; and (c) the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose'' In Lakshmi Insurance Co. Ltd. v. Bibi Padma Wati, AIR 1961 Punjab 253, it was laid down: "55. According to the provisions of Section 45, the insurance contract can be avoided on fraud, and a charge of fraud, naturally, requires a high degree of probability. It is well-known that fraud is odious and cannot be presumed... The Courts will not be satisfied with proof, which falls short of showing intentional misrepresentation was made with knowledge of perpetrating fraud."

The Honourable National Commission proceeded to observe that in order to avoid Section 45 of the Insurance Act, fraud had to be proved. Hence, the document signed by the doctor has to be proved by affidavit and if that has not been done it would leave the matter in the state of documents having not been proved. It was further observed that ''if fraud or deliberate withholding of information, which was within the knowledge of the insured, has to be made the ground of repudiation it has to be alleged and proved by the insurer''. In our considered opinion, therefore, the period between the date of policy/date of revival on the one hand and the date of death/date of repudiation would assume importance. If that period exceeds two years, the burden of proof is on the insurer and if it does not exceed two years and is within two years, the burden would shift upon the complainant to prove that what is stated in the respective certificates is not true or correct. In view of such settled legal position, we are clearly of the opinion that even at the stage of this appeal, the opponent L.I.C. of India has not been able to prove the allegations with regard to false statement of health made by the deceased insured at the time of proposal. In above view of the matter, we do not find any error in the impugned order. We, therefore, pass following order. ORDER This appeal is dismissed with no order as to costs. The opponent Life Insurance Corporation of India is stated to have deposited Rs. 10,000/- in this Commission. Office to verify the deposit and return the same with interest, if any, to the Life Insurance Corporation of India who will directly pay the ordered amount to the complainant within six weeks from today. Appeal dismissed.