Life Insurance Corporation of India vs Sarla Sharma

LIFE Insurance Corporation of India (L.I.C.) has filed this appeal under Section 15 of the Consumer Protection Act, 1986 (for short the ''Act'') against the order dated 24.2.1996 passed in Complaint Case No. 782/95 by the District Consumer Disputes Redressal Forum, Raipur (for short the ''District Forum'').

THE complainant''s husband late Pawan Kumar Sharma got his life assured by taking a New Money Back Policy with profits (with Accident Benefits) No. 381231310 for the assured sum of Rs. 25,000/- commencing from 28.3.93 of the table 75-20. Mode of payment of premium was quarterly of Rs. 446/-. THE life assured died on 24.10.1993. THE complainant the nominee of the assured claimed the amount under policy. After investigation and examination of merits of the claim, the claim was repudiated and the policy was called in question vide letter dated 30.3.1995 on the ground that the life assured in the proposal form suppressed the fact of suffering from Traumatic Osteoarthritis. THE complainant filed a complaint under Section 12 of the Act alleging deficiency in service. THE L.I.C. resisted the complaint on various grounds. THE District Forum after appreciation of evidence held that the L.I.C. has failed to establish that the life assured prior to taking of the policy remained under treatment for Traumatic Osteoarthritis for a continuous period of more than one week in the last 5 years. Evidence adduced of taking of treatment i.e. from 17.10.1993 to 20.10.1993 is subsequent to taking of the policy. THE repudiation of the claim was unjustified and amounted to deficiency in service hence, ordered for payment of Rs. 25,000/-with interest at the rate of 15% p.a. from 25.10.1993, cost of Rs. 300/- was also awarded. Mr. Deepesh Joshi, learned Counsel for the appellant contended that the life assured remained on earned leave from 12.5.1992 to 17.5.1992 for taking treatment of Traumatic Osteoarthritis at D.K. Hospital, Raipur. It was a material fact, of which in personal history, the life assured gave false answers to querry Nos. 11(a), (b), (d), and (i). If the fact of Traumatic Osteoarthritis would have been disclosed, the L.I.C. according to the guidelines would not have accepted the proposal before expiry of period of 12 months from the date of recovery of the disease. The untrue statement was on a material matter, the claim was rightly repudiated and the policy was rightly called in question in view of Section 45 of the Insurance Act, 1938 (for short ''Insurance Act''). Counsel cited decisions of the National Commission in Ajay Prakash Mittal v. L.I.C. of India, I (1998) CPJ 2 (NC)=1998 NCJ (NC) 477, and Divisional Manager, L.I.C. of India & Ors. v. Smt. Sunita Sharma, I (1994) CPJ 3 (NC)=1986-96 National Commission and Supreme Court on Consumer Cases Part-II 3056 (NS). A decision of this Commission in Appeal No. 169/ 95 decided on 16.8.1995, Smt. Saraswati Devengan v. Divisional Manager, Jeevan Bima Nigam, was also pressed into service.

Mr. Vivek Agrawal, learned Counsel for the respondent supported the order of the District Forum and relying on the decision of the National Commission in Smt. Aliya Begum v. Life Insurance Corporation of India, III (1997) CPJ 106 (NC), submitted that onus provender in case of fraudulent suppression of material facts rests heavily on the party alleges. In the present case, the District Forum has recorded a positive finding that the deceased did not suppress any material fact which had bearing on covering of the risk, therefore, rightly held that the repudiation of the claim was not in good faith and was on unjustifiable grounds.

IN the present case, the claim was repudiated and the policy was called in question under Section 45 of the INsurance Act on the ground that the assured gave incorrect answer in relation to his ailment of Traumatic Osteoarthritis. Section 45 of the INsurance Act does not confer any right on the insurer to repudiate a policy which has been enforced for less than two years on the ground of falsehood or inaccuracy of a statement, irrespective of its materiality and if the insurer wants to repudiate the liability under such a policy, he has to satisfy the requirements of the general law of insurance. The burden is cast on the insurer to show that the statement was on a material matter was inaccurate from the point of view of the L.I.C. Whether it was relevant or material or not from the point of view of the assured was not material while accepting the contract of insurance, the contract can be repudiated from non-disclosure of material facts. What are material facts that is every circumstance which could be relevant for a prudent insurer to fix premium or to decide whether he should take the risk. The text to determine materiality is; whether the facts has any bearing on the risk undertaken by the insurer. If the fact has any bearing on the risk, it is a material fact, if not it is not material. This is the view this Commission has taken in Appeal No. 660/97 decided on 27.1.1999, Branch Manager, Life INsurance Corporation of INdia & Ors. v. Bhagwati Prasad Tiwari; Appeal No. 495/94 decided on 8.2.1999, Life INsurance Corporation of INdia v. Tulsidas Dubey; and in Appeal No. 751/97 decided on 8.2.1999, Life INsurance Corporation of INdia v. Smt. Lalita Tiwari, following the decisions of Manoharlal v. Life INsurance Corporation of INdia v. Shakuntala Bai, AIR 1975 Andhra Pradesh 68; Rohini Nandan v. Ocean Accident and Guarantee Corporation Limited, AIR 1960 Calcutta 696; Life INsurance Corporation of INdia v. Smt. Sosamma Punnam, AIR 1991 Kerala 230. From the facts which have come on record, it is evident that the deceased met with an accident in the year 1992 wherein he received injury in the left leg which developed into Traumatic Osteoarthritis. In Stedman''s Medical Dictionary, 26th Edition at page 1842 meaning of ''Trauma'' is given as : An injury physical or mental. On the same page meaning of ''Traumatic'' is given as : Relating to or caused by trauma. The meaning of ''Arthritis'' at page 149 is : Inflammation of a joint or a state characterised by inflammation of joints. At page 1267 ''Osteo'' means bone. In Mosby''s Medical, Nursing and Allied Health Dictionary, Fourth Edition at page 1581 meaning of ''Trauma'' is given as : 1. physical injury caused by violent or disruptive action, or by the introduction into the body of a toxic substance. 2. psychic injury resulting from a severe emotional shock. ''Traumatic'' means : pertaining to an injury, usually a serious and unexpected injury. ''Osteo'' at page 1124 is a prefix meaning ''of or pertaining to bone''. Meaning of ''Arthritis'' at page 124 is : any inflammatory condition of the joints characterised by pain and swelling. At page 1124 meaning of ''Osteoarthritis'' is : a form of arthritis which one or many joints undergo degenerative changes, including subchondral bony sclerosis, loss of articular cartilage, and proliferation of bone and cartilage in the joint, forming osteophytes. Inflammation of the synovial membrane of the joint is common lat in the disease...."

OSTEOARTHRITIS is mostly found in elderly persons due to aging process. The life assured suffered from Traumatic OSTEOARTHRITIS due to injury caused in the left leg in an accident. He did not have its attacks nor he suffered from OSTEOARTHRITIS or Arthritis. Annexure-6 produced before us by Mr. Deepesh Joshi, learned Counsel for appellant contains guidelines which speaks of waiting period for considering the proposal if the proposer suffers from any of the disease mentioned therein. One of them is Gathia xxxx (Arthritis) xxxxx. It is not the case of the L.I.C. that the life assured suffered more than one attack of Arthritis. If the attack of the disease would have been more than once then certainly proposal could not have been accepted before expiry of period of 12 months from its complete recovery. The deceased was not in know of the resultant disease due to injury caused in the accident. He did not remain under treatment for more than a week. He also did not suffer attack of the said disease more than once. Therefore, the clause of waiting period would not apply. On the other hand, we find that the deceased was fair enough, who gave answer to querry No. 11(h) that he takes 1-2 pegs of the drink daily. Knowing fully well of this fact, the proposal was accepted and the policy covering the risk was issued. The Traumatic Osteoarthritis was not the cause of the death of the deceased even remotely. Therefore, it had no nexus, either with the longevity of the life or cause of the death of the life assured who is said to have died due to Liver Cirrhosis. Therefore, the repudiation of the claim in the facts of this case was unjustified without application of proper mind. To say so, we rely on Aliya Begum v. Life Insurance Corporation of India (supra), and the decisions of this Commission : Appeal No. 660/97 decided on 27.1.1999, Branch Manager, Life Insurance Corporation of India & Ors. v. Bhagwati Prasead Tiwari. Appeal No. 495/94 decided on 8.2.1999, Life Insurance Corporation of India v. Tulsidas Dubey, and Appeal No. 751/97 decided on 8.2.1999, Life Insurance Corporation of India v. Smt. Lalita Tiwari.. The decisions relied by the learned Counsel for the appellant are distinguishable on facts and are of no help to appellant.

IN view of the above, the appeal has to be dismissed as devoid of merit with the direction to the appellant to pay amount to the respondent as ordered by the District Forum within a period of 6 weeks from the date of receipt of the copy of this order, failing which the interest shall be payable at the rate of 18% per annum instead of 15%.

IN the result, appeal fails and is dismissed with costs of Rs. 1,000/-. A copy of this order be conveyed to the parties and a copy be sent to the District Forum alongwith the record of the case. Appeal dismissed with costs. ________________