RAMA DEVI vs LIFE INSURANCE CORPORATION

WHETHER the actual production, or the proof of the contents of the proposal form, is a prerequisite for a valid repudiation of the insured''s claim by the insurers on the alleged grounds of fraud, non-disclosures and suppressions therein? WHETHER the onus of establishing the justifiability of such repudiation rests on the insurers or on the insured? These have come to be the two significant questions in this appeal.

THE widowed appellant Smt. Rama Devi in her complaint had alleged that her husband Shri Pit Ram deceased had taken out three Life Insurance Policies dated the 21st of February, 1972, 5th of November, 1983 and 28th of February, 1990. THE primal dispute was with regard to Life Insurance Policy No. 170215954 dated 28th of February, 1990 for a sum of Rupees one lac. It was the case that the insured died on the 22nd of January, 1991 due to fever at the age of 38 only. Inevitably the appellant-widow lodged a claim with the insurers. It was her case that the respondent-Life Insurance Corporation made a thorough enquiry and recommended the case for payment of all the three policies. But since no implementation was done till mid August, 1991 she complained to the Central Office of the respondents at Bombay and also to the Finance Minister at New Delhi for unreasonably withholding of her claim. Nearly one year after the death of the insured the respondents vide their letter dated 14th of January, 1992 informed her shomewhat cryptically that her claim with respect to the policy of Rupees one lac had been repudiated on account of the deceased having withheld correct information regarding his illhealth at the time of effecting the assurance. It was reiterated in the complaint that before the issuance of the policy Shri Pit Ram deceased was fully examined by the respondent insurers own appointed Doctor Shri C.K. Mittal and on the basis of the same the policy was later duly executed. In terms the plea was that the repudiation of the claim was patently arbitrary and unlawful and the respondents were guilty of a grave deficiency in the insurance services. Relief in the pecuniary terms of Rs. 99,950/-against the policy was consequently claimed. In contesting the complaint the respondent-insurers raised preliminary objections to which reference is unnecessary because these were not at all pressed before us. On merits, the broad factual matrix that the appellant''s husband having taken out the three Life Insurance Polices after the completion of due formalities was admitted. It was conceded that there was no dispute whatsoever as regards the other two policies which apparently had been cleared and paid. The primal defence plea was that while submitting the proposal form of the policy the deceased had deliberately concealed the fact that he was earlier suffering from Hodgkins disease and there was fraud and deliberate concealment in order to cheat the respondent-insurers and, therefore, the policy in question became void abinitio and the claim was repudiated on the said ground. It was alleged that on enquiries being made and the second investigation being conducted, it was found that the deceased suffered from the aforesaid disease and had earlier taken treatment from Dr. M.K. Datta of Ambala Cantt. and was also examined in the Post Grad uate Medical Institution at Chandigarh where he was diagnosed to be suffering from Hodgkins disease. In terms the plea was that the deceased deliberately suppressed these facts about his disease in the proposal form. It was also pleaded that these facts were deliberately concealed from Dr. C.K. Mittal and the bald assertion was that in fact Shri Pit Ram had died of cancer. The claim was stated to be rejected expressly on the ground of deliberate suppression in the proposal form.

Perhaps at this very stage it deserves highlighting that in the very detailed and comprehensive written statement running into seven closely typed pages it was not stated or even hinted at that the proposal form in which was the alleged suppression and non-disclosure, had been destroyed or copies thereof were unavailable, despite repeated references thereto in the defence plea.

IN support of her case the complainant stepped into the witness box as PW 1 and supported her stand by the testimony of Shri Manoj Kumar PW 2. This was apart from the documentary evidence the authenticity whereof was not challenged on behalf of the respondent-insurers. Somewhat curiously the respondents neither placed on the record the original proposal form nor any secondary evidence thereof which was the very sheet-anchor of their defence. Nor did they choose to examine Dr. C.K. Mittal who was their appointed person for examining the deceased and had rendered the medical report (which also was not produced) which formed the foundational base of the insurance policy. Instead the evidence of RW1 Dr. Kusam Joshi, RW-2 Dr. M.K. Datta and Shri Jagmohan Sharma, Senior Branch Manager of the Life Insurance Corporation was adduced on the record alongwith ancillary documentary testimony.

THE District Forum in its own words noticed the real issue at stake in the following terms:- "Now the sole question for consideration before us is as to whether the insured concealed from the insurer in his proposal form for obtaining Insurance Policy regarding his alleged disease deliberately and intentionally."

It also noticed that the Counsel for the complainant had strenuously objected to the non-examination of Dr. C.K. Mittal, the respondent''s own Medical Expert, who had examined the deceased and also to the deliberate withholding or the non-production of the crucial proposal form. However, the District Forum accepted the mere Ipsi-dixit of Shri Jagmohan Sharma, Senior Branch Manager of the respondents in his cross-examination that the record of this case alongwith all others was destroyed in a fire during the anit-Reservation Agitation on the 21st of September, 1990. On that somewhat tenuous ground the District Forum absolved the respondents from even producing any secondary evidence of the vital proposal form or even the non-examination of Dr. C.K. Mittal and the non-production of his medical report which he had duly rendered. Apparently holding that the production of the proposal form or even its secondary evidence was not necessary and equally that the burden of establishing that there was no concealment or suppression in the proposal form virtually lay upon the appellant, the District Forum held that since there was evidence of the fact that the insured had suffered from Hodgkins disease the same was sufficient to hold that there was no deficiency in service in the repudiation of the claim. He consequently relegated the helpless widow to the tortuous process of the Civil Court. Mr. A.S. Virk, the learned Counsel for the appellant had taken the candid plea that the deceased-insured had suffered from Hodgkins disease but there was not a tittle of evidence that he had deliberately suppressed or concealed the same whilst executing the proposal form or from Dr. C.K. Mittal who had medically examined him at the behest of the respondent-Corporation. The firm stand taken was that unless the proposal form was produced or its contents established, the defence plea that there was suppression or non-disclosure therein would be an absurdity in terms. It was argued in the alternative that even assuming that the record of the case was damaged (which was not even pleaded in the written statement and about which no firm evidence was led on behalf of the respondents), it was the duty of the respondent-Corporation to prove by secondary evidence the contents thereof and in any case adduce the oral testimony of any person who had either been party to it and read the relevant document. It was also highlighted that Dr. C.K. Mittal, who was admittedly alive and available for proof at Ambala City itself as also the report rendered by him were withheld by the respondent-insurers. The alternative submission was that the respondent-Corporation having rested itself on the alleged suppression and non-disclosure in the proposal form the burden lay heavily upon them to prove such a suppression and to justify the arbitrary repudiation of the insurance claim. The core of the argument was that the very foundational base of the proposal form which allegedly contained the suppression and non-disclosure having not even remotely been proved the respondent''s case was one of no evidence whatsoever at all. On the other hand Shri Brij Jit Singh the learned Counsel for the respondents attempted to take the somewhat curious stand that the burden lay upon the appellant to establish that the deceased had in fact disclosed in the proposal form (which on their own showing was wholly unavailable) that he was earlier suffering from Hodgkins disease. It was sought to be argued that the respondent-Corporation was entitled to presume that this might not have been done or disclosed and therefore, to assume or inter that a fraudulent suppression had taken place, which if proved, would have vitiated the contract of insurance. Reliance was sought to be placed on I (1993) CPJ 109, Sneh Lata Aggarwal v. Life Insurance Corporation of India.

TO appraise the rival stand in true prospective, one must come to the very kernel of the consumer dispute betwix the parties. It appears to us that the District Forum even having noticed the real issue, nevertheless diffused and clouded the same in its order under appeal. Herein the core question is not that the deceased-insured had in fact suffered from Hodgkins disease. This was fairly not disputed even by the learned Counsel for the appellant. The sole and the foundational question is whether the deceased had made a conscious and deliberate suppression thereof in the primal document of the proposal form or alternatively to the examining physician Dr. C.K. Mittal. TO repeat the root of the question is the alleged suppressio-veri specifically in the document of the proposal form. Equally the allied ancillary issue is, upon whom lay the burden of proof of establishing such non-disclosure or deliberate concealment, if any.

ERE one comes to grips with the aforesaid significant issue, it is perhaps apt to dispose of the ancillary medical aspect of the case. It is undoubtedly true that Hodgkins disease is a serious malady. However modern medicines seems to have blunted its edge and it is now authoritatively settled that the same is cureable, if properly treated and particularly so in its earlier and middle stages. It is not the province of this order to exhaustively opine on the medical aspect and it sufficies to refer to the authoritative treatise of Balck''s Medical disputes and we would be the last to wish to fetter this expeditious and summary jurisdiction with the technical shackels thereof from which the Parliament has deliberately freed the same. Nevertheless the larger principles under-lying the law are not to be scorned and can provide a sound touchstone to test the question. It is well settled that a document when firmly relied upon has to be produced for the inspection of the Court or the Tribunal and only when a sound case for its non-production is made out, can secondary evidence thereof is allowed to be adduced. We would refrain from adverting to the narrow confines as to which secondary evidence has been circumscribed by Section 65 of the Indian Evidence Act and equally of the hallowed rule that parole evidence of a document is to be strictly excluded and only in the most circumspect of cases is oral evidence permissible and that also only by a person who has either executed the same or seen it so executed. In the consumer jurisdiction it would be in apt to further evelucidate the matter. It suffices to mention that the question of repudiation of an insurance claim by the insurers is now a matter of frequent occurrence before the redressal agencies and the significance of the question is not in doubt. Before an insurer repudiates an insurance claim on the ground of non-disclosure or deliberate concealment in a proposal form, it seems elementary that it should have the same before it, for alleging that it is contrary what has been found in the investigation of the claim. Not having the said, document in its possession and then taking up the plea that there might will have been mis-statement therein would in a way be the proverbial case of putting the cart before the horse.

We may not be misunderstood to say that the destruction of the proposal form would necessarily be fatal. However, whether the same is established to be so beyond doubt, at least authentic proof of the contents thereof is inevitably necessary & a pre-requisite for resting a defence of suppression and deliberate concealment therein. The mode or manner in which the proof of such contents is to be established in the consumer jurisdiction need not be shackeled with any pre-conceived technicaloties. However the larger principle of ensuring that the secondary evidence thereof is above reapproach must necessarily be kept in mind.

IN the light of the aforesaid discussion the answer to the first question posed at the outset is rendered in the affirmative. It is held that the actual production or the proof of the contents of the proposal form is a necessary prerequisite for a valid repudiation of the insured''s claim by the insurers on the alleged grounds of fraud, non-disclosures and suppressions therein. Once the aforesaid conclusion has been arrived at, it is obvious that the appellant herein must succeed on this score alone. What is significant herein is the fact that even in the detailed pleadings in the written statement, the respondent-insurers did not even remotely allege or plead that the origianl proposal form had been destroyed or was unavailable. What is even more, no positive evidence whatsoever was led on their behalf in the course of the proceedings to establish what was fundamental to their case that neither the original nor the secondary proof of the proposal form was available. Significantly RW 3 Shri Jagmohan Sharma, Senior Branch Manager of the respondent-Corporation, who stepped into the witness box did not even whisper that the proposal form had been destroyed and was wholly unavailable in his examination-in-Chief. It was only at the fag end of the case when the said witness was cornered in cross-examination for not producing the vital documents that he volunteered that the medical report was destroyed in Anti-reservation. Agitation in a fire on the 21st of September, 1990. Significantly even then he made no mention of the particular proposal form at all or any secondary evidence or copy thereof.

IT is a hallowed rule of prudence that evidence beyond the pleadings is not to be easily entertained. Consequently the respondents infracted the said rule flagrantly by neither pleading the destructions of the proposal form, nor leading any positive evidence with regard thereto In such situation, therefore, it can hardly be countenanced. However apart from technicalities it had to be conceded on behalf of the respondents that there was not a title of evidence with regard to the proposal form in the original or by way of any secondary evidence of the document or even any oral testimony of the contents thereof. We are of the opinion that the stand sought to be taken by the respondent-insurers herein indeed boom-rangs and is almost fatal to their case. If as now alleged there was no trace of the proposal form, how the officials of the respondent-Corporation came to the mature conclusion that there was suppression and nondisclosure by the deceased therein. In fact in repudiating the claim of the unfortunate widow the respondent-Corporation''s officials were merely conjecturing or surmising as to what might or might not have been disclosed or misstated in the proposal form, which on their own showing was unavailable. Indeed the Corporation''s officials chose to take an unfair advantage of the loss of their own record (if at all it was so) and arbitrarily rejected the respondent''s claim on a purely conjectural ground that had the proposal form been available there must be some suppression or mis-statement therein. Viewing the matter from another angle also the same would go entirely in favour of the appellant. Placing the respondent-insurer''s case at the highest one may assume in their favour that the relevant record was destroyed or untraceable due to the rioting in the Ante-Mandal-Agitation. On whom is the axe to fall for this unfortunate loss or failure to reconstruct the record, if at all it was so. Would the helpless widow suffer, thereof or would it be the Corporation on whom the lay duty in such a situation to reconstruct the record or adduce secondary evidence thereof from their Regional or Zonal Office. To our mind the answer is plain. The alleged destruction of the respondent''s branch record can not possibly be made a justification for repudiation to the grave prejudice or loss to the insured''s nominee.

MR. Brij Jit Singh the learned Counsel for the respondents had attempted to argue that in the said fire thousands of the Insurance Policy records of the area were destroyed and on that facile ground the repudiation was sought to be justified. The argument has only to be noticed and rejected. If that was so it would give the handle to the insurers to repudiate the claims of numerous consumer-insureds on the ground that the record was lost and were they to be traceable there might well be some mis-statement by the insurers in the proposal document. We are in no manner of doubt that however unfortunate and inevitable there may have been the loss of the respondent''s record in the Anti-Mandal Agitation the helpless insured-consumers can not be made scape goats thereof or that the same should operate to their prejudice or loss. Inevitably the adverse consequences of not reconstructing the records or not originally guarding them adequately have to fall on the shoulders of the Corporation and not their clients.

IN the light of the aforesaid discussion, it necessarily follows that the repudiation of the appellants insurance claim in the total absence of the proposal form by the respondent-Corporation''s officials was totally arbitrary and devoid of any factual foundation. This would manifestly be a patent deficiency in service for which the appellant is surely entitled to redress within the consumer jurisdiction alone. The appellant must, therefore, succeed on this ground alone. Now apart from the above the appellant is equally entitled to succeed on the basis of the second question posed at the outset. It appears to us that the District Forum seems to have reversed the role and misplaced the onus of burden of proof. The significant question is as to who has to bear the burden of proof in the fact situation where an insurance claim is repudiated on the ground (as in the present case) of the alleged non-disclosure of suppressions, or for that matter any other case, where the coverage of risk is not in dispute. It is somewhat elementary that the facts and material on which such repudiation has to be reasonably based would be in the hands of the insurers alone. If once the execution of the policy and the assumption of risk is admitted it is the insurers who assert and allege that certain facts exist which justify the repudiation of an insured''s claim, which was otherwise admittedly covered by the policy. On whom would the burden of proof for the existence of such facts lie? It is somewhat obvious that on the mere rules of logic and simple rationale it would lie on a person who asserts and alleges the existance of matters and facts which clearly merit repudiation of the concluded contract. In the somewhat not unusual situation before the consumer redressal agencies in this context. It is the insurers who wish them to believe in the existance of such factors which justify repudiation and inevitably the burden of proof must necessarily lie upon them. Indeed some times these facts may be of such a nature that they are in the special knowledge of the insurers alone whilst the insured or their nominees may be totally ignorant of the same. It is settled law that when any fact is specifically within the knowledge of any person the burden of proving that fact is upon him. Section 106 of the Indian Evidence Act, 1872 is only an enunciation of the otherwise logical principle.

Yet again in this context one has to recall the hallowed rule that the litigant is not to be burdened with the impossible onus of establishing the negative. As in the present case the insurers have taken the plea and have necessarily to establish the allegedly positive fact that there was a suppressio-veri in the proposal form contrary to the facts garnered by them in the investigation of the claim. Consequently the burden of establishing the foundational factual base for repudiating a claim with regard to an admitted coverage of risk lies positively on the insurers. It is not for the insured-consumer to prove negatively that no possible occasion or reason arises for the repudiation of his claim.

THOUGH what has been said above in the context of the onus of proof is otherwise rested on sound logic or rationale, one might well take support from the enunciated principles underlying the burden of proof well incorporated in Chapter 7 Part (III) of the Indian Evidence Act. It must be repeated that stricto-sensu the Evidence Act is not atracted to the consumer jurisdiction nor are the somewhat intricate procedural provisions thereof be brought in this field. However the principles under-lying the same, which were otherwise the ground work of the law of evidence before it was modified have necessarily to be emulated and applied in the consumer arena. Therefore, reference in this connection to Sections 101 to 103 of the Indian Evidence Act is primarily by way of anology as has, already been made to Section 106 that when a fact is specially within the knowledge of a person the burden of proving that must necessarily rest upon him. We refrain from burdening this order any further by way of elaboration. It necessarily follows that the answer to the second question posed at the outset has to be rendered in the terms that the onus of establishing the justifiability of the repudiation of an insurance claim rests squarely upon the insurers and not upon the insured.

IN the light of the above conclusion the appellant must again succeed on this alternative ground as well. Herein what meets the eye is the total absence of either primary, secondary or even oral testimony of the crucial document of the proposal form relied upon by the respondents. Assuming at the highest in the respondent''s favour the same was not available even an attempt of producing any secondary evidence thereof was not made. It may be noticed that on behalf of the appellant it was argued that enough duplicate records are available with the Regional and Zonal Offices of the Corporation. Not the least attempt was made on their behalf to bring them on the record. Assuming that even this was not so, no oral testimony with regard to either execution of the said proposal form or its contents by anyone who was a party thereto or even seen or read the document was adduced. Once that is so, it would inevitably follow that the respondents had miserably failed to discharge the burden of proof which lay upon them. Before parting with this aspect one may equally highlight the fact that Dr. C.K. Mittal, was the Physician on the panel of the respondent-insurers had examined the deceased and rendered his report. It is well established that he was alive and continues to be on the panel of Doctors of the Corporation and was otherwise available at Ambala. Not the least attempt was made on behalf of the insurers to either examine Dr. C.K. Mittal or to place on the record the original or a copy of his report on the basis of which the insurance policy was executed. RW 3 Shri Jagmohan Sharma, the Corporation''s own employee conceded in his cross-examination that Dr. C.K. Mittal is the Corporation''s registered Medical Doctor and further that other Doctors used to keep the medical report confidential before sending the same to the office. He further made the significant confession that the Corporation had never contacted Dr. C.K. Mittal to know whether he was keeping the medical report of the deceased. To sum up on this respect the conclusion is obvious that the respondents have miserably failed to discharge the onus of proof that lay upon them on the crucial and there is indeed no evidence worth the name in support of their plea that there was any deliberate concealment or suppression in the absence of the proposal form, or the primary or the secondary evidence thereof and equally in the medical report of the deceased. The appellant must, therefore, succeed also on this second ground as well.

BEFORE parting with the case we must in all fairness notice the persistent reliance of Mr. Brij Jit Singh on I (1993) CPJ 109 Sneh Lata Aggarwal v. Life Insurance Corporation of India. However we fail to see how that case in any way advances the respondent''s stand in the present one. Therein the ratio was that Section 45 of the Insurance Act is applicable only when the policy continues to remain in force for the duration of two years. Further in that case the proposal form far from being destroyed was part of the record and the ancillary documents of the Life Insurance Corporation Annexures OP 1 /9 to OP 1 /9 stood admitted on the record both as regards their execution and authenticity. In our view the said case is entirely wide of the mark.

ON the other hand the appellant''s reliance on 1993 CPC 249, Postmaster General, Haryana Circle, Ambala v. Smt. Bhateri Widow of Mohinder Singh and Others is well merited. That also was a case where the proposal form which was alleged to contain mis-statement and suppression was withheld by the insurers. ON that primal score the case had turned against them, and what is more evidence at the appellate stage with regard thereto was dis-allowed. The present case is equally one of the non-production of the proposal form. To finally conclude it is somewhat obvious that herein the rejection of the appellant''s claim was arbitrary and unjustifiable in the absence of the proposal form or any evidence with regard thereto. Equally the respondents miserably failed to discharge the burden of proof which clearly lay upon them to establish the same. There is thus a patent deficiency in service crying out for redress within the consumer jurisdiction itself. The quantum of the policy, or its execution is not in doubt Inevitably the appellant would thus be entitled to her claim of Rs.99,950/- alongwith interest thereon at the rate of 18% with effect from the arising of the cause of action on the 22nd of January, 1991 till the date of realisation. The appellant is also entitled to her costs which are assessed at a sum of Rs. 500/- only. The said sums shall be tendered to her within one month, failing which compliance would be enforced under-Section 27 of the Act by the District Forum, Ambala. The appeal is allowed in the terms aforesaid. Pronounced in open Court. Appeal allowed with costs.