RATHI RAMESH SARMA vs Chairman, Life Insurance Corporation of India

THIS is a complaint filed under Section 12 read with Section 17 of the Consumer Protection Act, 1986, by Smt. Rathi Ramesh Sarma, w/o Sri K.S. Ramesh Sarma, alleging deficiency of service on the part of the opposite party-L.I.C. The facts of the case, in brief, are as follows : Sri Ramesh Sarma, a qualified Cost Accountant and a Chartered Accountant had taken up an assignment in the Sultanate of Oman and in that connection had undergone complete medical examination before his employment was confirmed. Earlier to this, he had taken an LIC policy bearing No. 610616798 on 25.3.1989 for an assured sum of Rs. 1 lakh which was to mature on 25.3.2014. The yearly premium towards this payment was regularly paid by the insured from 1989 till March, 1993.

IN November, 1993, when the insured returned from Muscat, Sultanate of Oman, on privilage leave, he wrote a letter dated 27.11.1993 to the opposite party, enclosing a D.D. dated 30.11.1993 drawn on INdian Bank, Chembur, Mumbai for Rs. 4,200/- towards the arrears of premium, since the policy had lapsed in the meantime on account of non-payment of premium beyond March, 1993. At about the same time, as the insured had mild fever and cough, he got himself examined by a local doctor on 28.11.1993 and as the ailment persisted, he consulted one Dr. D. Anand, who was a Consultant Physician with a Clinic at Matunga, Mumbai. Dr. Anand prescribed certain tests including widal test, X-ray and a blood-count test which was completed and reports were obtained on 1.12.1993. The report of the completed test revealed deficiency in Haemoglobin and the X-ray disclosed an elevation of the dome of right diaphragm, enlargement of the liver etc. Dr. Anand, it is stated, prescribed certain medicines in view of what was disclosed in the reports. Simultaneously, Dr. Anand also referred the insured to one Dr. M.B. Agarwal, a Haematologist, who ruled out any possibility of other infections. However, Dr. Agarwal prescribed a Bonemarrow examination and the report was made available to the insured on 10.12.1993 which revealed that the insured was suffering from Accute Monomye-loblastic Luekaemia (AML - FAB - M4). The insured was, therefore, admitted immediately to Bombay Hospital Trust, Bombay, on 11.12.1993 and after a number of further tests, it was decided by Dr. Agarwal to put the patient on aggressive Chemotheraphy Protocol at Bombay Hospital to achieve remission. During the second cycle of treatment, the insured developed infection and expired on 12.2.1994, at the young age of 36 years. It is the case of the complainant that after the demise of her husband, she wrote to the opposite party on 17.3.1994 and 31.5.1994 asking them to pay the policy amount. Necessary documents like the claim form, the original policy and the copy of the death certificate were also produced. Other necessary enclosures like medical attendance certificate, certificate of hospital treatment, certificates of identity and burial and certificate by the employer etc., were also sent alongwith and all the formalities were completed by the complainant. It is stated that the complainant received a communication dated 26.8.1995 from the opposite party stating that they are forfeiting the amount paid towards revival of the policy and that the claim can be paid-up only to the value of Rs. 16,000/- as secured by the policy on the date of lapse. Aggrieved by this communication, the complainant sent a representation on 12.9.1995 which was negatived by the opposite party on 29.8.1996. A further communication dated 29.8.1996 did not vouchsafe any reply from the opposite party and, therefore, aggrieved with the attitude of the opposite party, the complainant approached this Commission for the redressal of her grievance. This is the sum and substance of the case as set-out in the complaint.

The opposite party has, however, contended that the insured had suppressed material facts while seeking revival of his lapsed policy, since investigation has revealed that the insured had knowledge of his ailment which he had sought to suppress with an ulterior motive. It was denied that the first medical consultation of the insured took place on 28.11.1993 as averred in para 12 of the complaint, which, according to the opposite party, is a conveniently chosen date to give credibility to the facts suppressed in the revival proposal. Such manipulation, according to the opposite party, is also discernible from the fact that the insured had dated the revival proposal as 27.11.1993, while in the Personal Statement of Health it has been mentioned that the demand draft for Rs. 4,200/- which was enclosed to the revival proposal towards arrears of premium was dated 30.11.1993. He contended that when the D.D. was obtained on 30.11.1993, it cannot, by any stretch of imagination, be construed as being sent to the opposite party on 27.11.1993 alongwith the revival proposal. It is also pointed out that even though the complaint reveals that the insured had undergone numerous medical tests and despite the fact that the reports on such tests were available as early as 1.12.1993, the details of such reports were not disclosed in the Personal Statement of Health. One more point which has been particularly stressed in relation to the tests conducted on the insured was a reference made by Dr. Balasubramanian in his report dated 1.12.1993 about an X-ray of the insured taken on an earlier occasion on 27.10.1993 which was compared by Dr. Balasubramanian with an X-ray taken on 1.12.1993. The opposite party claims that from the X-ray taken on 27.10.1993, the insured knew that he had an elevated right done on the diaphragm. Further, it was alleged that at the time of admission to the hospital on 11.12.1993, the insured had disclosed that he was suffering from cough and fever for one month, which amounted to persistent illness; but the insured had deliberately suppressed this fact in the Personal Statement of Health submitted by him. Therefore, it is contended, the insured had definite knowledge of his illness while seeking revival of the policy and, therefore, the opposite party is fully justified in repudiating the claim after due application of mind to the facts of the case. For these and other reasons set out in the statement of objections, the opposite party has prayed for the dismissal of the complaint as not maintainable.

BOTH the parties have filed their affidavit-evidence, but no one has been called to the witness box. BOTH the parties have been represented by their respective Counsels. We have heard Mrs. Gayatri Balu, learned Counsel for the complainant and Mr. R. Rajagopalan, learned Counsel for the opposite party-LIC. We have also gone through the records in minute detail, particularly the reports of the various medical authorities, vis-a-vis the rival contentions reflected in the complaint and the version.

THERE is no dispute that a Life Insurance Policy bearing No. 610616798 for an assured sum of Rs. 1,00,000/- commencing from 25.3.1989 was issued to the insured for a term of 25 years, with premiums payable yearly. THERE is also no dispute that the insured died untimely on 12.2.1994. All other facts of the case set out in the complaint have however come in for vehement denial by the opposite party. In the context of such denial, the following points come in for determination in the light of the material placed on record. (1) Is the opposite party justified in repudiating the claim of the complainant ? (2) If not, what is the relief the complainant is entitled to ? (3) What order ? Point No. 1 :

The learned Counsel for the opposite party contended vehemently that the material facts in this case relating to the type of ailment with which the insured suffered at the time of seeking revival of the policy had been suppressed cleverly by the complainant and the very fact that death occurred within a period of about 2 months would only indicate that the insured was ailing much earlier to the date of revival proposal and he knew about it. However, he did not disclose this all important information on the apprehension that his policy will not be revived. The learned Counsel pointed out that even if the insured had come to know about it after submitting the revival proposal, he was duty-bound to inform the same to the insurer so long as he has not received information regarding acceptance of the revival proposal. He also pointed out the lacuna in dating the revival proposal which, according to him, is a calculated move to convince this Commission that the insured came to know about his ailment much later, thereby avoiding the stigma of suppression of material facts. The learned Counsel pointed out that the complainant is only venturing to make a gain out of an unfortunate incident, which has no support under the policy conditions. In the context of such a submission, it is relevant to examine what was the effective date of application for revival of the policy and whether any material is placed on record by the opposite party to evidence that as on that date the insured had definite knowledge that he was suffering from certain ailments which he was bound to disclose in the Personal Statement of Health. According to the complainant, the insured got himself examined by a local doctor on 28.11.1993 for a mild fever and cough. Since the fever did not subside, he consulted one Dr. Anand, a Consultant Physician and according to the medical records of Dr. Anand (a photocopy of which has been placed on record as Documents 10 and 11) such consultation took place on 1.12.1993. The opposite party has claimed that there is evidence to show that the insured suffered from fever and bleeding since one month before the revival proposal was submitted by him and that this information has been conveniently suppressed. The complainant has countered this contention on the strength of a medical fitness certificate the insured had produced to the opposite party which did not disclose any such ailment. When the contention of the opposite party is effectively countered by the complainant, it was upto the opposite party to produce additional evidence to sustain its case, which it has not done. As apparent from the material placed on record, this aspect which has an important bearing on the case has not been sought to be established by the opposite party by acceptable evidence.

IN the affidavit evidence, the opposite party has averred that in Ex. R-1 which is a letter addressed to the Chairman of LIC by the complainant on 18/27.1.1997, there is a clear admission that the life assured was not enjoying sound health at the time of revival of the policy. The relevant portion of the said letter reads as follows : "Before returning to Muscat, Ramesh went for a routine check up to Dr. Anand who also happened to be a family friend. He found Ramesh to be anaemic and asked Ramesh to undergo a series of tests suspecting malaria and amoeba. As Ramesh was in a hurry to return to Oman the tests were done one after the other immediately."

IT is evident from the averment of the opposite party that it has no material to contend that the insured had approached any medical authority in connection with some ailment prior to the date on which the insured approached Dr. Anand. As already and alluded to earlier in para 10, the insured approached Dr. Anand on 1.12.1993 for the first time and this fact has not been contested by the opposite party. Therefore, the stand taken by the opposite party that the insured had knowledge that he was ailing relates to a period subsequent to 1.12.1993 and not earlier to this period, though, at para 4 of its version, it has denied that the insured has consulted a local doctor on 28.11.1993, stating that the insured was suffering from fever and bleeding from a much earlier date. IT is interesting to note that nowhere in the medical evidence produced in this case there is a reference to bleeding. The opposite party''s own affidavit also does not make a mention about it. IT is also interested to note that the opposite party has made much of a date of X-ray purported to have been taken on 27.10.1993 as mentioned in the report of Dr. Balasubramanian, but according to the certificate issued by the employer, the insured was in the Sultanate of Oman at that time. IT is not the case of the opposite party that the X-ray in question was the one taken at Muscat. There is also no material placed on record by the opposite party to show that the insured suffered from anything other than mild fever and cough prior to 1.12.1993. Therefore, taking an overall view of the rival contentions and after separating the wheat from the chaff, we come to the conclusion that the opposite party has failed to prove that the insured was suffering from persistent fever and bleeding prior to the date on which he consulted Dr. Anand. In the view that we have taken above, it is relevant to determine as to when the insured was effectively diagnosed as suffering from ailments which he was duty-bound to reveal in the Personal Statement of Health. Before doing so, however, it is necessary to determine what is the effective date on which the complainant sought for the revival of the lapsed policy. The contention of the opposite party is that the proposal was not sent on 27.11.1993 as the date in the proposal indicated, but it was sent on a date subsequent to obtaining a demand draft for Rs. 4,200/- towards arrears of premium. Since the insured himself has mentioned in the Personal Statement of Health that the demand draft is dated 30.11.1993, we are inclined to accept the contention of the opposite party that the proposal was not sent on 27.11.1993. We are also inclined to believe that since the insured was supposed to meet Dr. Anand on 1.12.1993, the proposal was sent to the opposite party on 30.11.1993 or at best on 1.12.1993. The fact that the opposite party has not placed any material on record to prove that the proposal was in fact sent at a later date, moreover tends to strengthen our inference that the proposal was actually sent on either of these two dates. If that be so, it is to be held that the opposite party has failed to establish any ailment in the insured till 30.11.1993 which he was bound to disclose in the Personal Statement of Health.

The next point in sequence which requires to be established is the date on which the insured came to know for definite that he was in fact suffering from some disease other than casual fever and cough. According to the report of Dr. Anand, produced as documents 10 and 11, the insured approached him on 1.12.1993 and on that date the insured was advised to obtain a blood count test and a widal test, which he in fact obtained the same day. Since both the tests had come negative, Dr. Anand has made a note of it in documents 10 and 11. It is also on record that on the same day Dr. Anand had also referred the insured to one Dr. D. Balasubramanian, a Consultant Radiologist for a report on chest and USG Abdomen, which was also obtained the very same day, but this report contained some important medical observations of the following nature : (1) There was a definite elevation of the right dome of diaphragm. (2) Liver was enlarged. (3) There was evidence of minimal splenomagaly. (4) There was definite hepatomegaly.

IN documents 10 and 11, Dr. Anand has drawn a diagram indicating the elevation in the right dome of diaphragm and has advised the insured to get admitted in Ameeta Nursing Home, presumably in view of the report of Dr. Balasubramanian. It can only be a guess-work if it is presumed that Dr. Anand explained the implication of the report to the insured on that day. But it is on record that Dr. Anand prescribed him certain medicines on the same day, i.e. on 1.12.1993, from which date there is a gap in the medical history of the patient which neither the complainant nor the opposite party has tried to fill in with relevant material. Even at the Bar, the learned Counsels on either side have not explained as to what transpired between 2.12.1993 and 7.12.1993. There is however, an entry in documents 10 and 11 made by Dr. Anand on 8.12.1993, which indicates that he had prescribed some other drugs to the patient. The drugs prescribed on 1.12.1993 and 8.12.1993 are mainly for amaobic disorder about which Dr. Anand is stated to have had suspicion from the very beginning. Document 21 is a report dated 9.12.1993 by one Dr. M.B. Agarwal, Haematologist and Haemato-Oncologist on the bone-marrow examination conducted by him, on a reference made by Dr. Anand. This report contains the final word of diagnosis that the patient was suffering from acute monomyeloblastic laukaemia. There is no material on record to indicate whether the patient was made known about his condition on the same day by Dr. Agarwal or by Dr. Anand or on a subsequent day. As pointed out by the Hon''ble Supreme Court in Bibi Padmavathi''s case, many a time patients suffering from diseases are told nothing about it by doctors. However, in the instant case, taking into account the succession of events, and taking the best view from the point of view of the opposite party, it is liable to be presumed that the patient came to know the real truth about his ailment on 9.12.1993, the day on which Dr. Agarwal wrote his report. If that be so, there is no reason to believe that prior to 9.12.1993, the insured knew that he was ailing. We have already alluded to the fact that the opposite party has failed to produce any material to cause even as much as a doubt that some diagnosis has been made about the condition of the insured during the period from 2.12.1993 to 7.12.1993, which in an important gap for the opposite party to keep unfilled. In the context of such failure by the opposite party to fill in this gap, we are constrained to hold that the opposite party has failed in establishing that till 9.12.1993 the insured had any knowledge that he was suffering from an ailment which he was bound to disclose.

IT is relevant at this juncture to take a look at the letter of repudiation (document 15) which is dated 4/26.8.1995. Para 2 of the letter reads as follows : "We hold indisputable evidence to show that the life assured had suffered from fever and bleeding since one month before he submitted the declaration of good health dated 30.11.1993 for which he had consulted a Radiologist and on submission of declaration of good health but before the date of revival, he was to have been suffering from Acute Mono-myeloblastic Leukaemia. Had he disclosed, we would not have considered the revival on existing terms."

Despite the claim that the opposite party has "indisputable" evidence, we fail to see any such evidence placed on record by the opposite party. We have already alluded to the fact that the opposite party has failed to mention anything about the bleeding in its affidavit, which only goes to show that it has sought to buttress its stand with hollow props, not susceptible of being proved by acceptable evidence, it was upto the opposite party to place the Radiologist''s report on record in support of its contention which it has not done. Therefore, we are constrained to believe that the opposite party has not come up with such a contention in good faith. With regard to the other contention that before the date of revival, the insured knew that he was suffering from Acute Monomyeloblastic Leukaemia, it is relevant to juxtapose the date on which the patient came to know that he was suffering from Acute Monomyeloblastic Leukaemia with the date on which the letter relating to the revival of the policy was signed. These are dates of closest proximity, involving probabilities of overlapping of events. It might be that the decision to revive the policy was taken earlier to 10.12.1993; or more probably, even if the insured recovers from the shock and takes steps to inform the opposite party on 9.12.1993 itself that he has been diagnosed as suffering from AML, by the time the intimation reaches the opposite party, the communication regarding revival of the policy would have been in the hands of the insured or taking a pessimistic view of the matter, would have been in transit. We do not find any clause in the policy enabling the opposite party to rescind the contract under such circumstances. When such is the implication of the proximity of events in this case, we are indeed not in a position to come to a conclusion that the insured had failed to reveal material information on 9.12.1993 that he was suffering from AML. In the circumstances, we are also not able to reconcile to the contention of the opposite party that in between the date of declaration and the date of revival of policy, the insured had definite knowledge about the adverse circumstances of his health, which he failed to communicate to the opposite party as undertaken by him in the declaration portion of the Personal Statement of Health.

IN this view of the matter, we hold that there is deficiency of service on the part of the opposite party in repudiating the claim preferred by the complainant. We also hold that no fraudulent intention is discernible in the conduct of the insured in the entire transaction and, therefore, no element of good faith can be attributed to the opposite party in the process of repudiating the claim of the complainant. Mr. Rajagopalan, learned Counsel for the opposite party has invited our attention to a decision of the Karnataka High Court in LIC of INdia & Ors. v. Ajit Gangadhar Shanbhag & Ors., 1998 ACJ 373, in which the claim was repudiated on the grounds of fraudulent misrepresentation and suppression of material facts in the proposal regarding health of the deceased. It was held that proper remedy is a civil suit. The facts of the instant case are not such as could be construed as involving fraudulent misrepresentation and, therefore, the ratio of the said decision is not in any way helpful to the opposite party. The learned Counsel also invited our attention to a decision of the National Commission in Appeal No. 153/91, holding that once it is found that the insurer had duly considered all relevant facts and circumstances and taken a decision in good faith as to whether the claim should be allowed to any extent, it cannot be said that there has been any deficiency in service on the part of the insurer. The learned Counsel has further invited our attention to a decision of the National Commission in L.I.C. of INdia v. Mrs. Lily Rani Roy, I (1997) CPJ 46 (NC), that where a decision of repudiation is taken in good faith, there is no deficiency of service. IN the instant case, since we have taken a view that the repudiation of the claim is not based on good faith, the opposite party cannot be the beneficiary of the two decisions of the National Commission cited by the learned Counsel.

BESIDES, the learned Counsel has also relied on two decisions of this Commission, reported in III (1996) CPJ 55, and I (1997) CPJ 131. In the first case cited, investigation revealed that material information was suppressed in the proposal for insurance while in the latter case, the claim was repudiated by a speaking order, after due application of mind, taking all relevant factors into account. In the instant case, what we fail to see is not so much the application of mind while repudiating the claim, as the element of good faith in the course of taking the decision. In fact, in our decision in Appeal No. 286/1995 decided on 24.12.1999 we have touched upon the aspect of good faith in greater detail, relying upon Lily Rani Roy''s case, which has equal relevance in this case also. Moreover, in the context of visualising the type of diseases which ought to go on record in the Personal Statement of Health of an insured for revival of the policy, the following observations of the Hon''ble Supreme Court in LIC of India v. Bibi Padmawati, 2 1997 Comp. LJ 292, requires to be reproduced : "When the revival form speaks of ''sickness, ailment or injury'' these words must be interpreted to include only more serious disorders leaving a permanent mark upon the insured''s health; passing ailments or disorders are not considered by the Court to be material to the risk. Unless, therefore, it could be proved that Diwan Balkishan was afflicted with a serious ailment or disease during the period after the insurance policies had been issued and before the revival applications were made, the mere fact that he did not mention any passing ailment or disorder which might have necessitated his going to the hospital twice for short periods would not show that his statement in the revival applications was false to the extent of making the revival void."

In the light of these observations and for the reasons stated in the foregoing paras, we answer point 1 in the negative. Point 2 :

IN the view that we have taken, the opposite party is liable to pay the full benefits to the nominee under the policy including the benefit arising out of the death of the insured. It is relevant in this context to advert to the prayer of the complainant for awarding compensation towards the mental agony and reimbursement of the cost incurred towards medical treatment. Para 33 of the complaint reads as follows : "Complainant has spent more than Rs. 6.00 lakhs for the treatment of her deceased husband. She has to educate her two minor daughters, get them married and to look-after herself. She has undergone great mental torture because of the unjust rejection of the claim by the respondents. The petitioner is entitled to a sum of Rs. 2,81,658.83. The mental agony cannot be quantified in terms of money. However, complainant is claiming a sum of Rs. 4,00,000/- towards damages for the mental agony and the deprivation, she and her children suffered because of the rejection of the claim by the respondents."

There is no denying the fact that in a case of this nature, the impact of distress leading to anxiety and anguish are of high voltage, particularly in the wake of the shock of untimely death of a person who was the fountain of hope for the young wife and the two kids. However, there is no scope for compassion to get into the scheme of justice while deciding upon the quantum of compensation to be awarded. What is rightly deserving in the circumstances of the case also cannot be reckoned on the basis of the actual expenditure incurred on treatment, since the benefit under the policy takes care of that aspect. Therefore, taking an overall view of the matter, we consider that it would be just and proper to award a compensation of Rs. 30,000/- to the complainant towards mental agony arising out of an unjustifiable repudiation of the claim by the opposite party. While deciding upon this quantum, we have taken into accounts all the facts brought to our notice in para 33 of the complaint reproduced above.

IN the result, we make the following : Order The opposite party-L.I.C. is directed to pay the full benefit under the policy, including the benefit arising out of the death of the insured, to the complainant, who is the nominee under the policy. The opposite party is also directed to pay a sum of Rs. 30,000/- (Rs. thirty thousand only) to the nominee towards mental agony and a further sum of Rs. 5,000/- (Rs. five thousand only) towards costs in these proceedings. The entire payment shall be made within 6 weeks of this order, failing which, the total amount shall attract interest @ 12% per annum till payment. Complaint allowed with costs.