MONICA JAIN vs LIFE INSURANCE CO.OF INDIA

This First Appeal, under Section 19 of the Consumer Protection Act, 1986 (for short "the Act"), has been filed by the Complainant, against the order, dated 08.02.2008, passed by the Delhi State Consumer Disputes Redressal Commission (for short "the State Commission") in Complaint No. 245 of 2001. By the impugned order, while accepting the stand of the Life Insurance Corporation of India (for short "the Insurance Company") to the effect that there was suppression of material information on the part of the deceased Insured at the time of taking Life Insurance policy in question, the State Commission has dismissed the Complaint.

Succinctly put, the material facts, giving rise to the present Appeal, are: On 28.01.1998, the Complainant''s husband, namely, Rajesh Jain, had taken a life insurance policy from Insurance Company, the Respondent herein, in the sum of 10,00,000/-. The policy was to mature on 28.01.2023. The Complainant was the nominee. Unfortunately, after illness, on 12.01.2000, the Insured passed away, at the All India Institute of Medical Sciences, New Delhi. (for short the "AIIMS").

On the death of her husband, being the nominee under the said policy, the Complainant preferred claim with the Insurance Company. However, by letter, dated 31.03.2001, the claim was repudiated on the ground that the deceased Insured had withheld information regarding his health at the time of effecting assurance with the Insurance Company. For the sake of ready reference, the relevant portion of the said letter is extracted below:- " In this connection we have to inform you that in the Proposal Form for Assurance dated 26 January 1998 signed by the deceased Assured at the time th of his medical examination, he had answered the following questions as under noted:-

Q. No. Question Ans.

11( ) What has been your usual state of health? GOOD

We may, however, state that the above answer was false, as we hold indisputable proof to show that before he proposed for the above policy, he had suffered from Obesity since childhood and alarmingly for last ten years weight ranging from 200 kgs. to 167 kgs. and girth of abdomen 65" for which he had consulted number of Medical practitioners and taken treatment from them in different hospitals. He did not, however, disclose this fact in the proposal form. Instead he gave false answer therein as stated above and most importantly, he did not produce himself before the Medical Examiner for Medical examination to avoid detection of excessive obesity.

It is therefore evident that he had made deliberate misstatements and withheld material information from us regarding his health and abnormal obesity prior to effecting the Assurance and most importantly he deceived the corporation by not producing himself before the Medical Examiner for medical examination, hence in terms of Policy contract and Declaration contained in the form of Proposal for Assurance, we hereby repudiate the claim and accordingly we are not liable for any payment under the above policy and all moneys that have been paid in consequence thereof belongs to us."

Aggrieved by the repudiation of her claim and having failed in all her attempts to convince the Insurance Company about the genuineness of the claim, the Complainant filed the Complaint before the State Commission. It was stressed that at the time of taking the policy, her husband was in "good" health and was not suffering from morbid obesity or any other ailment as alleged and therefore, he could not be accused of suppressing any vital information relating to his health. It was pleaded that the alleged disease was detected about five months before his demise. As regards the stand of the Insurance Company that the Insured had not produced himself for medical examination, before obtaining the policy in question, it was stated that it is a well-known fact that

no Insurance Company issues a life insurance policy unless the proposer is medically examined by a team of doctors authorized by the Insurance Company and in the present case also there was no departure or exception from the said procedure. It was also alleged that the Insurance Company was adopting double standards by refusing to settle the claim under the subject policy, inasmuch as another claim preferred by the nominee, namely his brother, in respect of an earlier insurance policy taken by the Insured on 20.06.1991, which, after it had lapsed in the year 1994, was revived on 28.02.1998, after re-examination of the Insured in February 1998, was duly paid on his death. Alleging deficiency in service on the part of the Insurance Company, the Complainant prayed for directions to it to pay to her the following amounts:- (i) 10,00,000/- being the sum assured with bonus etc.;

(ii) interest at the rate of 18% per annum on the said sum w.e.f. 01.04.2000;

(iii) 50,000/- for causing mental agony and harassment; and

(iv) 25,000/- as litigation costs.

Upon consideration of the evidence, adduced by the parties before it, including the medical records of the deceased Insured, for his treatment at Indraprastha Apollo Hospital from 11.11.1999 to 07.12.1999 and at AIIMS, Delhi, from 08.12.1999 till the date of his death on 12.01.2000, and keeping in view the provisions contained in Section 45 of the Insurance Act, 1938, the State Commission has held that since her husband did not furnish exact details of his health, as well as various treatments taken by him, prior to obtaining the policy in question, the Complainant was not entitled to any relief, observing thus:- " As is apparent from the discharge summary of the Indraprastha Apollo Hospital the complainant had concealed factum of his having been admitted there on 11-11-1999 in emergency with severe backache and morbid obesity. He had a weight of 167 kg and abdominal girth was 65". He was not able to stand because of severe pain in back. He had gone through number of investigations. Although his weight and girth of abdomen was hindrance in getting CT or MRI of spine. There was history of weight loss of 40 kg in the past few months.

We have taken a view that whenever any consumer obtains a fresh policy he has to disclose each and every aspect of his health particularly if his admission in the hospital or his hospitalization or undergone any operation in the near proximity of obtaining the policy. But in the instant case since June 1995 he was having huge problem of obesity and was under treatment of various hospitals. Merely the agent of the doctor of the OP concealed this fact while giving the report cannot be used as a circumstance by the complainant for getting the benefit against insurance policy. The cumulative effect of both the reports, one of the Indraprastha Apollo Hospital and the another of AIIMS leave no manner of doubt that complainant did not furnish exact details of his health as well as various treatments having been received at various stages and even prior to the obtaining of the policy in question and since the insurance is a contract of good faith, the complainant is not entitled for any claim against the insurance policy of her husband. It is a not a case of cardiac arrest but it is a case of death due to the problems of obesity." (Emphasis Supplied).

Hence the present Appeal.

We have heard Mr. Rakesh Kumar and Mr. Mohinder Singh, Learned Advocates on behalf of the Appellant and the Insurance Company respectively. Written submissions have also been filed on behalf of the parties. In deference to our orders, the Indraprastha Apollo Hospital has filed scanned record of the deceased insured. AIIMS expressed its inability to produce Insured''s Indoor treatment record, as it was stated that being more than 10 years old, it had been weeded out. However, an extract of death Register has been furnished. We have re-appraised the entire record.

The main thrust of the argument of Ld. Counsel, appearing for the Appellant, was that the finding of the State Commission to the effect that the cause of death was not cardiac arrest but due to problem of obesity is perverse, inasmuch as, the death certificate, dated 12.01.2000, issued by AIIMS clearly shows the cause of death of the insured as Massive Pulmonary Thrombo Embolism, Tuberculosis and cardiac arrest. It also mentions the approximate interval between the onset of the disease and death as 9 months which, according to the Ld. Counsel, endorses the stand of the Appellant that the insured did not have any symptoms of the disease, which was the ultimate cause of his death, at the time of taking the policy on 28.01.1998. It was asserted that even the prescription/treatment documents, which are being relied upon by the Insurance Company, do not show that the Insured had the problem of morbid obesity at the time of taking the policy on 28.01.1998. At best, AIIMS documents refer to the fact that the Insured had taken general treatment in AIIMS till June, 1999 for Hypothyroid and it does not prove that the insured was suffering from morbid obesity at the relevant date. It was argued that under the second part of Section 45 of the Insurance Act, 1938, burden to prove that there was fraudulent suppression of a material fact by the insured at the time of taking the policy, lies on the Insurance Company, which they have failed to discharge. To buttress the argument, Ld. Counsel placed reliance on the decision of the Hon''ble Supreme Court in Life Insurance Corporation of India Vs. Smt. G.M. Channabasamma (1991) 1 SCC 357. A point was also raised that being on the letter head of the Insurance Company, the clinical notes of the record maintained by AIIMS, stated to have been taken by an official of the Insurance Company, cannot be relied upon, more so, when these are not certified by AIIMS. Last but not the least, it was urged that in the proposal form, the weight of the Insured was mentioned as 102 Kgs. and yet having issued the policy, the Insurance Company is estopped from pleading that because of heavy weight, the condition of the insured was not "good", as mentioned in the proposal form.

Per contra, Ld. Counsel for the Insurance Company contended that when it is evident from the documents on record that the insured was obese since childhood and alarmingly for the last 10 years, his weight ranged between 200 Kgs. to 167 Kgs., with abdominal girth size of 65 inches, he had deliberately withheld the "material fact" from the Insurance Company regarding his health and abnormal obesity, when in Column 11 of the Proposal Form, the condition of his health was stated to be "Good". It was urged that since in the statement of claim, filed by the Appellant, neither the cause of death, nor duration of illness, nor the description of the life assured had been stated and the Insured having died within two years from the date of obtaining the policy, the Insurance Company got the matter investigated, which revealed that the signatures of the Insured were different on the proposal form when compared with the signature on the Medical Examiner''s Confidential Report, which showed that the Medical Report was procured by getting some other

person examined; the difference in the two signatures was certified by a hand-writing expert and that the insured was suffering from morbid obesity since childhood. As regards the allegation of double standards being adopted by the Insurance Company, while dealing with two policies taken on the life of the same person, it was pointed out that the said policy for an assured sum of 50,000/- was taken by the Insured from a Branch of the Insurance Company, situated at State Bank of India Building, Chandni Chowk by giving his business address, whereas the policy in question, for an assured sum of 10,00,000/- was taken from Insurance Company''s Branch at Faridabad, by giving his residential address, with the result that the two policies could not be co-related. More so, when the details of the earlier policy taken by the Insured on 20.06.1991 were not disclosed while answering paragraph 9 of the Proposal Forum, which obligates furnishing of details of proposer''s previous insurance. It was submitted that non-disclosure of these particulars also amounts to suppression of material facts by the Insured. It was thus asserted that non-disclosure of correct state of health, medical treatments and particulars of the earlier policy, which infact was lying lapsed at the time of taking the policy in question, was deliberate suppression of material facts by the Insured and, therefore, the Insurance Company was fully justified in repudiating the claim.

The question for consideration is as to whether the deceased Insured had failed to disclose full information about the state of his health and earlier policy at the time of obtaining the Life Policy in question, amounting to suppression of "material fact", entitling the Insurance Company to repudiate the claim made in respect of the said policy?

Before adverting to the facts of the case, it would be profitable to take note of the precedents on the point. In Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, the Hon''ble Supreme Court has observed that in a contract of insurance, the expression "material fact" is to be understood in general terms, to mean as any fact which would influence the mind of a prudent Insurer, in deciding whether to accept the risk or not. If the proposer has knowledge of such fact, he is obliged to disclose it, particularly while answering questions in the proposal form. Any inaccurate answer will entitle the Insurer to repudiate its liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance, which is based on the principle of utmost faith - uberrima fides . Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. It has also been emphasized that it is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not.

Bearing in the mind, the abovestated legal principle, we are of the opinion that in the present case, the insured had failed to disclose fully and truly all "material facts" relating to his health condition as also information about his previous policy at the time of obtaining the policy in question, and, therefore, the Insurance Company was justified in repudiating the claim, preferred by the Complainant.

Obesity is a condition in which a person has a high body mass Index (BMI), or too much body fat for the person''s height. Obesity is not the same as being overweight, which is when the person''s weight is higher than what is healthy for his height. In persons, who are overweight, the excess weight may be caused by high bone density, body structure or even an inherited characteristic. Morbid (severe) obesity conditions are associated with life threatening complications, such as hypertension, coronary artery diseases, osteoarthritis, stroke diabetes, sleep apprea, etc.

In the instant case in the discharge certificate, medical history at the time of admission of the deceased insured in Apollo Hospital on 11.11.1999, was recorded as follows:- " Mr. Rajesh Jain was admitted on 11 November, 1999 in emergency with th severe backache and morbid obesity. (His present weight is 167 Kg. abdominal girth is 65"). He has not been able to lie on bed for last 6 months. He is not able to stand because of severe pain in back. He has gone through number of investigations. Although his weight and girth of abdomen is a hindrance in getting CT or MRI of spine.

A working diagnosis of Pott''s spine D10-11 was made on the basis of clinical findings, available investigations (ESR is raised - 55 mm 1 hour), history of st weight loss. (He has lost 40 kg. weight in last few months), tenderness at D10-11 with marked Kyphosis of dorsal spine and radiological findings. Possibility of osteoporotic fracture and collapse was ruled out after a Bone Densitometry test. Endocrinologist (Dr. Bajaj) has suspected an associated hypothyroidism. "

In one of the case notes, it was noted that he was treated at AIIMS by Dr. Aroop Misra, for Hypothyroidism and was put on Tab. Eltroxin (1OD), which was stopped on his advise in June, 1999. However, from the material on record, it is not possible to ascertain as to when this treatment was started at AIIMS, as an outdoor or Indoor patient. Similarly, as per one of the case sheets of AIIMS, when the deceased was referred from Ortho department to endocrinology department on 08.12.1999, it is recorded as under :- " Overweight since childhood.

June 96 - 145 Kg.

June 99 - 200 Kg.

- Pain back since Jan. 99

- April 99 - Unable to walk

Unable to lie

1986 - 130 Kg.

3-6 months-Excessive/diet 99 Kg.

1-2 years

Back to out weight

Virtually no outings

For - 10 years." (Emphasis supplied)

Although, from the Medical record of the insured, briefly referred to above, it is not possible to say with exactitude as to when the life threatening complications, associated with morbid obesity, started with the Insured, but what clearly emerges therefrom, in particular the fact that he had virtually no outings for over 10 years before his death, is that, by no standards, his "usual state of health" could be said to be "Good" as stated by him while answering Question Number 11 in the proposal form, signed by him on 28.01.1998. Additionally, he had also failed to furnish the details of his previous policy in Column No.9 of the proposal form. We are convinced that the Insured had suppressed "material facts" from the Insurance Company, which were within his knowledge. In light of the said finding, the provisions of the first part of Section 45 of the Insurance Act, 1938 would not be attracted, as pleaded by Ld. Counsel for the Appellant.

For the aforegoing reasons, we are in complete agreement with the State Commission that the insured had suppressed material facts relating to his health condition as well as various treatments taken by him and, therefore, the Insurance Company was justified in repudiating the claim. Resultantly, the Appeal fails and is dismissed accordingly, but with no order as to costs.