SANDHYARANI DAS vs LIC of India

THIS appeal filed by the complainant of C. D. Case No. 263 of 2003 challenging the ex parte orders dated 16. 8. 2004 of dismissal of the C. D. case on merit by the District Forum, Cuttack.

THE facts of the case in brief out of which this appeal arises are that Surender Prasad Das by profession an Auto Rickshaw driver, had L. I. C. policy bearing No. 583225522 for a sum assured Rs. 1,00,000 (Rs. one lakh) with half-yearly premium on 31. 7. 1999. Proposal for policy was submitted by Surendra on 25. 7. 1999. Half-yearly premium Rs. 3,813 was deposited by Surendra on 31. 7. 1999. Sandhyarani Das, wife of Surendra is shown as nominee. Life assured Surendra as an out-patient, with complaint of abdomen swelling, loss of appetite since 1 months was treated at Acharya Harihar Regional Cancer Centre at Cuttack, in short, A. H. R. C. C. on 29. 7. 1999 and was admitted in said hospital on 30. 7. 1999 where diagnosis was done as Hepato Cellular Cancer and was discharged on condition viz. "relieved" on 7. 9. 1999 in view of the "certificate of Hospital treatment" as per proforma of the L. I. C. , Cuttack Division granted by the Assistant Professor and H. O. D. of said hospital (the original and xerox copy of which is filed by the opposite parties ). On 8. 9. 1999 in the native village Gud, District Balasore, Surendra died (xerox copy of death certificate Annexure-2 filed ). Then Sandhyarani Das -the complainant lodged death claim of Rs. 1,80,000 on account of sudden death due to heart attack at 8 a. m. on 8. 9. 1999, complaining heart burning before one day of his death as per death claim form (Annexure-4) dated 19. 1. 2000 (xerox copy ). But, the opposite parties repudiated the claim of the complainant on the ground of suppression of material fact of suffering from Hepato Cellular Cancer and was being treated at the Acharya Harihar Regional Cancer Centre, Cuttack before the life assured submitted proposal for the policy in question and died for the same disease. Repudiation of claim was communicated vide letter dated 11. 12. 2002 (Annexure-5 ). Complainant has stated through her complaint petition that the date of proposal is 25. 7. 1999 which was commenced on the same date and is also dated back to 28. 4. 1999. Life assured died on 8. 9. 1999 at his native village of Gud, District Balasore due to heart attack. In respect to his treatment as an indoor patient in the A. H. R. C. C. , complainant has clarified in paragraph 8 of the complaint petition that life assured "neither was an indoor patient nor attacked by Hepato Cellular Cancer and opposite parties are estopped to raise such question since disease of any kind is inherent in nature and one cannot predict and dictate the unforeseen disease. " According to the complaint, vide letter of repudiation, opposite party No. 1 intimated her to make representation for reconsideration of her claim after claim is repudiated, to their Zonal Office at Calcutta, in case she is not satisfied with their repudiation of claim. Therefore, vide letter (xerox copy Annexure-6) copy to opposite party No. l, she made representation to said Zonal Office which is acknowledged by the said office. The General Manager of said office vide letter dated 30. 1. 2003 (xerox copy Annexure-7) asked her to wait for further information as the matter for consideration being discussed by his office with Divisional Office, Cuttack. But no intimation in this respect was received. She has incurred loan with high rate of interest for the maintenance of herself and minor children who were supposed to remain under starvation had she not incurred loan, with a hope to repay after receipt of L. I. C. insurance claim amount. In spite of contacts so many times, she was not allowed the death claim. Therefore, she filed the C. D. case claiming policy amount of Rs. 1,00,000 with interest @ 18% per annum and for loss and compensation in total Rs. 2,14,000 as per paragraph 10 of the complaint. The opposite parties have filed joint written version justifying repudiation of claim filed by the complainant on the ground of suppression of material facts of suffering from Hepato Cellular Cancer by the life assured while entering into aforesaid policy and filing the proposal form as narrated above. They have also challenged the territorial jurisdiction of the District Forum, Cuttack in admitting the C. D. case.

Vide its order dated 16. 8. 2004, the District Forum dismissed the complaint on ex parte in absence of the complainant on the date fixed for hearing. District Forum disposed of the case on merit while making an observation that the complainant has failed to prove that opposite parties have caused deficiency in service to her whereas the opposite parties are justified in repudiating the claim on the ground of suppression of matrial facts for the reaosn stated in the letter of repudiation.

THE complainant filed this appeal challengihg the non-application of mind to her case and the legality of the order of the District Forum. We have heard the learned Counsel of both parties and perused the xerox copies of documents filed in the case.

IT was urged and contended on behalf of the complainant/appellant that she could not attend the District Forum for hearing of the case as she was detained for nourishment of her two minor children. In respect to allegation of deficiency in service by the opposite party Nos. 1 and 2, it was contended on her behalf that when life assured entered into policy and premium was accepted vide receipt (xerox copy Annexure-1), opposite parties were aware about the health condition of the life assured. The life assured was not suffering from Hepato Cellular Cancer and was not hospitalized at the time of policy and the physicians attending life assured before and after his death do not support the ground of repudiation of claim. Life assured died due to sudden heart attack. The ground of repudiation of claim viz. suppression of material facts with health hazard is a pre-plan planned by opposite parties not to release claim. On the other hand, it is contended on behalf of the opposite parties/respondents that Insurance contract is based upon the principle of "uberrimafides" i. e. utmost good faith, wherein the proposer is required to make a full and fair discloser of material fact in the proposal form and on presumption that the statements so made in the proposal form are true in all respect, LIC issues policy. But when it would be found out that the material facts have been fraudulently suppressed in the proposal form, LIC is to repudiate the claim in view of Section 45 of the Insurance Act, 1938. In the present case, had the proposer disclosed to the L. I. C. as per proposed form about his admission in the A. H. R. C. C. , Cuttack on 30. 7. 1999, the opposite parties would not have accepted the risk of the ailing person. Therefore, opposite parties have rightly repudiated the claim on the ground of fraudulent suppression of material fact viz. suffering from Hepato Cellular Cancer. In view of the contentions of the parties discussed above, the following questions arise for consideration by us in this appeal: (i) Whether insured - Surendra had suppressed material facts relating to suffering from Hepato Cellular Cancer fraudulently while submitting proposal and entering into L. I. C. policy in question? (ii) Whether District Forum had no territorial jurisdiction to entertain the C. D. case?

In respect to aforesaid first point for consideration, it may be stated that complainant has not adduced evidence or produced any material which would prove that insured died due to sudden heart attack. Respondents/ opposite parties do not dispute about the death of life assured on 8. 9. 1999 at 8 a. m. Though they dispute the cause of his death is due to sudden heart attack yet they do not plead or say the cause of his death. The claim has been repudiated on the ground of suppression/ non-disclosure of his serious illness viz. Hepato Cellular Cancer in the proposal fraudulently, by the life assured. Law is well settled that burden lies on the L. I. C. to prove the plea of defence that insured had made false representation and suppression or material from viz. suffering from Hepato Cellular Cancer. The authority in this respect is the decision reported in (1991) 1 SCC 357 in a case in between Life Insurance Corporation of India v. Smt. G. M. Chhanabasamma. Further, the opposite parties / respondents defend themselves taking recourse to the second part of Section 45 of the Insurance Act. The Hon''ble Supreme Court had an opportunity to interpret the second part of this Section 45 as follows in a case reported in AIR 1962 SC 814 in a case in between Mithoolal Naik v. Life Insurance Corporation of India, relied by the learned Counsel for the appellant: " (a) the statement must be on a material matter or must suppress facts which it was material to disclose; (b) the suppression must be fraudulent made by the policy holder; and (c) the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.

In this context, it has been held by the Apex Court in this decision that where policy has been initiated due to fraudulent suppression of material facts by the insured he has ceased right to get refund the money paid to the insurer and no Court shall entertain action for refund of money to the insured and action under Section 64 or under Section 65 of the Indian Contract Act.

BOTH parties have filed xerox copies of proposal form submitted by the insured and the xerox copy of the L. I. C. policy has been filed by the complainant. Undisputedly, the proposal was signed by the insured on 25. 7. 1999 and the insured and the examining doctor have signed on 30. 7. 1999 as against the declaration relating to health by the insured. Insured has stated before this examining doctor in respect to his good health condition denying suffering from any diseases and undergoing treatment for such ailment. The policy, undisputedly, was accepted on 31. 7. 1999 by the opposite parties and policy was dated back to 28. 4. 1999. The opposite parties have made reliance upon the "certificate of Hospital Treatment" dated 30. 4. 2002 in original issued by the Assistant Professor, A. H. R. C. C. , Cuttack with reference to ''records of hospital''. This certificate discloses that insured admitted to this hospital on 30. 7. 1999 and as has been recorded by Dr. A. Sasmal, insured admitted complaining abdomen swelling, loss of appetite, duration of suffering being 1 months. Time of admission in the hospital is not known. Therefore, it cannot be rulled out that after assured signed on 30. 7. 1999 as against the statement relating to his health condition in the presence of the examining doctor in the proposal form, he might have admitted into the A. H. R. C. C. This certificate of Hospital treatment discloses the diagnosis arrived at this hospital is "hepato Cellular Cancer". But this certificate does not disclose whether insured was ever treated before for this disease or not and by which doctor. This certificate also does not disclose as to when the aforesaid diagnosis was arrived at and by whom. Dr. A. Sasmal or the aforesaid Assistant Professor or the person who entered the facts as per this certificate in "records of hospital" are not examined to say that the information as per this certificate of Hospital Treatment relating to the patient / insured are true. Moreover, as per this certificate, the insured was "relieved" on 7. 9. 1999. The word "relieved" is not explained as to whether he was relieved after being completely cured or being not cured when in usual course of medical ethics, a patient unless is cured, is never discharged from the hospital. In this end of the view, it bites to conscience that the insured was suffering from a serious type of disease like Hepato Cellular Cancer which is heard not being curable in the Medical Science of today. However, assuming in the worst case that the insured was suffering from such a dangerous uncurable disease, the said certificate by Professor of A. H. R. C. C. does not establish that when the insured first came to said hospital as an outdoor patient on 29. 7. 1999 and then was admitted on 30. 7. 1999 he was aware about such a disease and that he was treated for this disease before 25. 7. 1999 and on or before 30. 7. 1999. This is the only document on which opposite parties have depended to prove that by fraudulent suppression of his suffering from this serious disease the insured has given false statement regarding his health condition in the proposal form and also remained silent till the policy was issued on 31. 3. 1999. But, no materials are forthcoming and aforesaid certificate of hospital treatment do not prove that by 31. 7. 1999 insured was aware about suffering from this disease. Therefore, insured has not knowingly and fraududulently suppressed material facts of suffering from a serious disease like Hepato Cellular Cancer when he submitted proposal form and the policy was issued in his favour by the opposite parties. In these end of the view, opposite parties have committed gross mistake in repudiating the claim of the complainant.

IN respect to the second point for consideration, we may say that the Divisional Manager (Claims) at Cuttack, opposite party No. 1 has repudiated the claim as per Annexure-5 and when complainant made representation to the Zonal Manager at Calcutta, it was done as per the advice under Annexure-5. Complainant has sent copy of such representation to opposite party No. 1. As no action was made by the Zonal Manager as well as opposite party No. 1 after she made representation, cause of action arose to file the C. D. case. Thus District Forum, Cuttack has territorial jurisdiction to entertain the C. D. case. The reason assigned by the complainant in respect to her absence before the District Forum at the time of hearing of the case stands unchallenged. In the circumstance, the complainant is entitled to get relief as per the consumer proceeding.

Accordingly, the appeal is allowed on contest with cost against the respondents. The respondents are directed to release the claim amount of Rs. 1,00,000 with interest @ 10% per annum from the date of repudiation of claim until the payment is made within thirty days from the date of receipt of the copy of this order, failing which the rate of interest on the claim amount would be calculated @ 12% per annum until actual payment. The opposite parties are further directed to pay compensation of Rs. 20,000 to the complainant/appellant for her mental agony suffered due to deprivation of claim amount being a poor lady who has the great burden of maintaining two minor children and to pay her cost of litigation Rs. 500 within a period of thirty days as aforesaid. Records received from the District Forum may be sent back forthwith. Appeal allowed.