Life Insurance Corporation of India vs PURNIMA ROY

-BEING aggrieved by the judgment and order dated 17. 3. 08 passed by the learned Uttar Dinajpur District Forum in its D. F. Case No. 56/06 directing the Appellants to pay the claim amount of Rs. 75,000 together with compensation of Rs. 10,000 and litigation cost of Rs. 2,500, the present Appeal has been preferred.

THE facts of the case briefly are that the late husband of the complainant, a policyholder in respect of Life Insurance Corporation of India policy No. 451212429 for an assured sum of Rs. 75,000, died on 1. 5. 2004. He took the policy on 27. 7. 01. When the claim was filed with the Appellant-Insurance Co. , the same was repudiated on the ground that her late husband did not disclose that he was holding two more policies, namely the Policy No. 452010095 for Rs. 2,00,000 and Policy No. 450799508 for Rs. 1,50,000. Following such repudiation the complaint was filed before the Forum below. This Appeal has been taken up and heard analogously with Appeal Nos. FA/08/175 and FA/08/176 as they have arisen out of the same judgment involving common questions of fact and law. The Appellants contended that had the husband of the Respondent disclosed the said facts, the insurer would have asked for medical examination of the insured and there could also be some variations in the premium amount. The present policy is a non-medical policy. The Appellants also contended that the learned Forum passed its order without having due consideration to the facts and circumstances of the case and directed the Appellants to make payment of the claim to the Respondent-Complainant. They further contended that the contention of the Respondent that the form was filled in by the agent of the company is not acceptable since as per settled principle of law the Insurance Co. is not liable for such vicarious deficiency on the part of Insurance Co. ''s agent.

The learned Forum in its judgment observed that though the role of the agent in case of all LIC policies are dual, i. e. he first acts on behalf of the proposer and then he acts as an agent of the insurer when such proposal along with payment is submitted to the Insurance Co. , the Appellants/ops cannot totally eschew their responsibility that it was not an act of its agent, particularly when the agent himself filled up the Proposal Form. The Forum, therefore, decided that there was palpable deficiency on the part of the Appellants/ops and accordingly passed its order.

WE have perused the Memo of Appeal and the impugned judgment passed by the Forum below. It is an admitted position that the husband of the Respondent took an insurance policy for Rs. 75,000. But in the Proposal Form he did not disclose that he was already holding two other policies for Rs. 2. 00 lacs and Rs. 1. 50 lacs respectively. In fact, against the relevant Clause No. 7 of the Proposal Form the reply "no" indicates that he did not have any other policy at the time of taking the present policy. This is apparently a case of suppression of information on the part of the deceased policy holder. However, we find that the Proposal Form had been filled in by the agent and not by the proposer himself. No doubt the proposer is an educated person and he should have gone through the entire Proposal Form before signing to see whether there was no anomaly in the answers given in each of the columns provided therein. But as it is usually known that the practice is to put signature on the dotted line when the Proposal Form is filled in by an agent. It happens quite often that even blank forms are signed by the proposers. Of course, we do not have any documentary evidence before us to conclude whether the present Proposal Form was signed by the deceased husband of the Respondent after the form was filled in by the agent or he signed a blank form. In terms of Section 45 of the Insurance Act, no policy can be repudiated after a period of two years. The present policy is more than two years old and as such it should not be ordinarily repudiated unless there is a palpable evidence that there is a wilful suppression by the insured with fraudulent intention. In the present case no evidence is adduced before us to establish that it was done fraudulently. But the fact remains that the existence of the earlier two policies had not been disclosed. There is also no allegation that the insured suffered from any disease from which he died because he had a natural death. In the circumstances, the fact of non-disclosure of the earlier two policies cannot be construed as a deliberate attempt to defraud the Appellant-Insurance Co. In AIR 1962 SC 814, Mithoolal Nayak v. LICI, the Hon''ble Apex Court held that before repudiation of an insurance claim the insurer must satisfy itself about the following three conditions: 1. The statement must be on a material matter or must suppress facts which it was material to disclose. 2. The suppression must be fraudulently made by the policy holder. 3. The policy holder must have known at the time of making the statement that it was false or that he had suppressed the facts which it was material to disclose.

The Hon''ble Apex Court also held, "mere inaccuracy of (or) falsity in respect of some recitals or items in the proposal is not sufficient. The burden of proof is on the insurer to establish these circumstances and unless the insurer is able to do so there is no question of the policy being avoided on ground of mis-statement of facts". Since no proof is available to us that he suppressed the information with fraudulent intention, it cannot be concluded that he did it purposely. Moreover, as already pointed out, the filling of Proposal Form by the LIC agent might have been done without taking his consent. As such the conditions as stipulated in the above decision for repudiation under Section 45 are not applicable to the present case. In II (2003) CPJ 30 (NC), L. I. C. of India v. Mohinder Kaur, it has been held that fraud/deliberate withholding of information within the knowledge of insured having not been proved, the insurance claim could not be repudiated. We are also inclined to refer to the decision in AIR 1961 Punj. 253, Laxmi Engineering Co. Ltd. v. Bibi Padmabati, wherein the Hon''ble High Court observed: "according to the provisions of Section 45 the insurance contract can be avoided on fraud and 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 the proof which falls short of showing that intentional misrepresentation was made with knowledge of perpetrating fraud. "

IN view of the above facts and circumstances we are of the view that the learned Forum passed a reasoned order which does not call for any interference by us excepting that the Appellants need not pay any interest on the claim amount and cost as ordered by the Forum below. It is, therefore, directed that the order of the Forum below dated 17. 3. 2001 be affirmed subject to the above modifications. The Appeal be allowed in part on contest without cost. The Appellants are directed to pay the decretal amounts to the Respondent within 45 (forty-five) days from the date of communication of this order, failing which the amounts will carry interest @ 12% (twelve per cent) per annum for the period of default. This judgment shall govern the Appeal Case Nos. FA/08/175 and FA/08/176. However, a separate order is passed in respect of each of the said Appeal cases. Appeal partly allowed.