LIFE INSURANCE CORPORATION OF INDIA vs Mora Rajeswari

AGGRIEVED by the order in C.D. No. 233/1998 on the file of District Forum, Karimnagar, opposite parties preferred this appeal.

THE brief facts as set out in the complaint are that the complainant is the wife of M. Satyanarayana, who had taken a policy from the opposite parties for a sum of Rs. 50,000 on 28.9.1994. He did not pay the premium due on 28.6.1996 but subsequently paid the same on 26.8.1996. Thereafter his insurance policy was revived and he paid the subsequent premiums regularly till his death on 15.3.1997, due to cancer. The complainant submitted a claim form on 10.9.1997 which was repudiated on the ground that her husband was suffering from Herpetic Neuralgia prior to the date of revival and he did not disclose the said fact in his personal statement. The complainant further submits that the insured was suffering from cancer two months prior to the death and the said fact was mentioned in the Medical Attendance Certificate. Prior to that he did not undergo any medical examination and he was hale and hearty till he was diagnosed to be having cancer two months prior to the date of death. In spite of repeated requests, the opposite parties did not settle the claim. Hence the complaint. Opposite parties 1 to 3 filed counter stating that on the strength of the personal statement regarding his health made by the deceased on 26.8.1996 the policy was revived. They contend that the life assured suppressed that he was suffering from Herpetic Neuralgia from

5.1994 ONWARDS and if they were in the knowledge of his disease, they would not have revived the policy and, therefore, justified their repudiation. 4. Based on the evidence adduced i.e., Exs. A1 to A4 and Ex. B1 and the pleadings put forward, the District Forum allowed the complaint directing opposite parties to pay the policy amount of Rs. 50,000 with interest at 12% p.a. from May, 1997 till the date of realisation together with costs of Rs. 1,000.

AGGRIEVED by the said order, opposite parties preferred this appeal. The learned Counsel for the appellants submitted in his grounds of appeal that insurance contracts are contracts of good faith and that the respondent/complainant did not disclose the information with respect of his health prior to revival and, therefore, repudiation of the claim is justified and does not constitute deficiency of service.

ON perusal of the material on record, we observe that the appellants/opposite parties filed Ex. B1, pertaining to the life assured treated at Madhavi Nursing Home in which the doctor has neither given the case history of the patient nor prognosis of the disease. Except for this document, the appellants have not filed any record of treatment undergone by the life assured or the affidavit of the doctor stating that the patient suffered from Herpetic Neuralgia. In the absence of such material, we cannot conclude that the respondent/complainant was in the knowledge of the disease and wilfully suppressed this fact. The Apex Court held in LIC of India v. Smt. Asha Goel, (2001) 2 SCC 160, that Section 45 of the Insurance Act is restrictive in nature and depends upon the conditions. It lays down that the suppressed material must be of such material which ought to have been disclosed and that the insured might have played fraud. The burden of proving false representation and suppression of material facts lies on the Insurance Company. However, we find that the interest awarded at 12% p.a. is excessive and we reduce it to 9% p.a. while confirming the other aspects of the order of the District Forum.

IN the result, the appeal is partly allowed reducing the interest from 12% p.a. to 9% p.a. while confirming the other aspects of the order of the District Forum. Time for compliance six weeks. Appeal partly allowed. -