Sudha Verma vs Life Insurance Corporation of India

THIS appeal is directed against the order dated 17.11.1999 passed in Case No. 11/1999 by the District Consumer Disputes Redressal Forum, Dewas (for short the ''District Forum'').

FACTS giving rise to this appeal are thus : The complainant''s husband, life assured deceased Rajesh Verma was employed in Dewas-Shajapur Regional Rural Bank as a Branch Manager in Branch Sandalpur. He submitted a proposal on 28.3.1997 for obtaining Bima Sandesh Policy Without Profits (With Accident Benefit) No. 341572917 of the sum assured of Rs. 2,00,000/- of Table and Term 94-25 of the payable premium of Rs. 268/- per month, proposal was accepted on 31.3.1997 and policy was issued on 18.6.1997 backdating the same covering the risk from 28.3.1997. The Twenty Five Year Jeevan Surabhi Policy With Profits (With Accident Benefit) No. 341565685 of the sum assured of Rs. 50,000/- of Table and Term 108-25-18 mode of premium of Rs. 1,196/- quarterly proposal dated 28.3.1997 of which proposal was accepted on 31.3.1997 and policy was issued on 18.6.1997 backdating the commencement of risk from 15.3.1997. The Life Assured committed suicide on 4.4.1998, the appellant as a nominee claimed the amount of the two policies. The Life Insurance Corporation of India (for short the ''LIC'') after due application of mind repudiated the claim vide letter dated 1.2.1999 stating therein that the life assured committed suicide within a period of one year from the date of the policy and that the life assured suppressed the material fact in relation to his ailment of Bleeding Piles Hemorrhide for which he remained on medical leave for 26 days from 23.10.1996 to 17.11.1996 and remained as indoor patient in the Gurjar Hospital, Indore from 25.10.1996 to 30.10.1996. The appellant filed the complaint which was resisted. The District Forum dismissed the complaint holding that the claim of benefits under the policies were not payable as life assured committed suicide within a period of one year from the date of issue of policies and that the life assured suppressed the material fact of his ailment of Bleeding Piles Hemorrhide and remained on medical leave from 23.10.1996 to 17.11.1996 for 26 days, therefore, repudiation of the claim was on justifiable grounds. Learned Counsel for the appellant submitted that the risk was covered from 28.3.1997 and 15.3.1997 respectively. It is evident that the proposals were accepted on 31.3.1997, therefore, the issuance of policies was only mechanical, hence, as the life assured died after a period of one year, the appellant was entitled to benefits and the claim could not have been repudiated on that ground. Non-disclosure of ailment of Bleeding Piles Hemorrhide had no nexus with the cause of death. Counsel cited decisions of National Commission in Life Insurance Corporation of India v. Mrs. V. Jeeva, III (1995) Consumer Protection Judgments 1 (NC)=1995 (1) CPR 838; Smt. B. Chinnama v. Divisional Officer, LIC of India & Anr., III (1996) Consumer Protection Judgments 136 (NC)=1996 (3) CPR 229, and decision of State Commission M.P. in LIC of India v. Smt. Sheela Pandey, III (1999) Consumer Protection Judgments 453=1999 (3) CPR 230, decision of State Commission Punjab Chandigarh in Life Insurance Corporation of India v. Smt. Usha Rani Bansal, II (1999) Consumer Protection Judgments 27=1998 (3) CPR 521, decision of State Commission Karnataka, Bangalore in The Senior Divisional Manager, Life Insurance Corporation of India & Ors. v. Smt. M. Rajalakshmi, 1999 (3) CPR 33, decision of State Commission Gujarat in Pravinchandra Shantilal Piyara v. Life Insurance Corporation of India & Anr., 1993 (1) CPR 333, and a decision of State Commission Tamilnadu, Madras in Branch Manager, LIC of India & Anr. v. V. Ramayya & Anr., 1993 (2) CPR 22.

Mr. Deepesh Joshi, learned Counsel for the respondent submitted that the relevant date for counting one year is from the date of issuance of policy as provided in Condition No. 8 and not from the date of backdating for the purpose of commencement of the risk. The mere receipt and retention of premium until after the death of the life assured or mere preparation of policy document is not acceptance, acceptance must be signified by the act. Suppression of material fact of the ailment and remaining on sick leave was material, from the point of view of LIC and not with the point of view of life assured. The contract of insurance, including the contract of life insurance are uberrimaefide. They are founded upon utmost good faith. If one party fails to observe this utmost good faith, the contract may be avoided by the other. Therefore, the obligation is cast upon both the parties to deal fairly and honestly on equal degree. In these contracts, the contracting parties are placed under a special duty towards each other not merely to refrain from the active mis-representation, but to make full disclosure of all material facts within their knowledge. If the fact of his ailment would have been disclosed, certainly the LIC would have taken a decision to take the risk or not of if the risk is to be taken to what premium should be fixed. Counsel cited the decisions of Supreme Court in Life Insurance Corporation of India & Anr. v. Dharam Vir Anand, III (1998) CPJ 3 (SC), and in case of Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba & Ors., AIR 1984 SC 1014.

AFTER hearing learned Counsel for the parties and on reappraisal of evidence on record, it is not necessary for us to go into the question of suppression of material fact about the ailment of Bleeding Piles Hemorrhide and taking of sick leave from 23.10.1996 to 17.11.1996 by the life assured as the life assured committed suicide within a period of one year from the date of issuance of policy, therefore, the benefits under the policies were not payable. The condition of suicide in Policy No. 341572917 and 341565685 is the same which reads thus : Suicide : This policy shall be void if the Life Assured commits suicide (whether sane or insane at the time) at any time on or after the date on which the risk under the policy has commenced but before the expiry of one year from the date of this policy and the Corporation will not entertain any claim by virtue of this policy except to the extent of a third party''s bona fide beneficial interest acquired in the policy for valuable consideration of which notice has been writing to the office to which premiums under this policy were paid last, at least one calender month prior to death. The question was considered by the Supreme Court in Dharam Vir Anand''s case (supra), wherein Clause 4-B of the policy on pasi material to the condition of suicide on the policies in question dealt with the suicide and the date on which risk under the policy is covered and the date of policy was considered wherein in para 7 was observed thus : "7. Having examined the rival submission and having examined the policy of insurance which is nothing but a contract between the parties and having considered the expressions used in Clause 4-B of the terms of the policy we are persuaded to accept the submissions made by Mr. Salve, the learned Senior Counsel appearing for the appellant. In construing a particular clause of the contract it is only reasonable to construe that the words and the terms used therein must be given effect to. In other words one part of the contract cannot be made otiose by giving a meaning to the policy of the contract. Then again when the same clause of a contract uses two different expressions, ordinarily those different expressions convey different meaning and both the expressions cannot be held to be conveying one and the same meaning. Bearing in mind the aforesaid principle of construction, if Clause 4-B of the terms of policy is scrutinized, it becomes crystal clear that the date on which the risk under the policy has commenced is different from the date of the policy. In the case in hand undoubtedly the date on which the risk under the policy has commenced is 10.5.1989 but the date of the policy is 31st of March, 1990 on which date the policy had been issued. Even though the insurer had given the option to the insured to indicate as to whether the policy as to be dated back and the insured indicated that the policy should be dated back to 10.5.1989 and did pay the premium for that period, thereby the risk under the policy can be said to have commenced with effect from 10.5.1989 but the date of the policy still remains the date on which the policy was issued i.e. 31st of March, 1990, the death of the life assured having occurred as a result of suicide committed by the assured before the expiry of three years from the date of the policy, the terms contained in Clause 4-B of the policy would be attracted and, therefore, the liability of the Corporation would be limited to the sum equal to the total amount of premium paid under the policy without interest and not the entire sum for which the life had been insured. The Forums under the Consumer Protection Act committed gross error in construing Clause 4-B of the policy and giving the same meaning to the two expressions in the aforesaid Clause 4-B namely "the date on which the risk under the policy has commenced" and "the date of the policy". The construction given by us to the provisions contained in Clause 4-B get support, if the proviso to Clause 4-B is looked into. Under the proviso if the life assured commits suicide before expiry of one year reckoned from the date of the policy then the provisions of the clause under the heading "suicide" printed on the back of the policy would apply. In a case, therefore, a policy is dated back for one year prior to the date of the issue of the policy the proviso contained in Clause 4-B cannot be operated at all. When parties had agreed to the terms of the contract it is impermissible to hold that a particular term was never intended to be acted upon. The proviso to Clause 4-B will have its full play if the expression "the date of the policy" is interpreted to mean the date on which the policy was issued and not the date on which the risk under the policy has commenced. In the aforesaid premises we are of the considered opinion that under Clause 4-B of the policy that date of the policy is the date on which the policy had been issued and not the date on which the risk under the policy had commenced by way of allowing dated back......"

IN view of the law declared by the Supreme Court the submission of the learned Counsel for the appellant that the date of policy had no relevance as proposal was accepted and the policy issued for covering the risk backdated cannot be accepted. Therefore, even assuming for arguments sake that the incorrect answers in relation to query remaining on medical leave which allegedly had no nexus with the death, as the life assured committed suicide within a period of one year from the date of issuance of policy i.e. 18.6.1997 the LIC bonafidely and on justifiable grounds did not make the payment of claim of benefits under the two policies. However, considering the circumstances, it is expected from the LIC to consider sympathetically the prayer for exgratia payment, if representation is made to that effect by the appellant. In the result, appeal fails and is dismissed with no order as to costs. A copy of this order be conveyed to the parties and a copy be sent to the District Forum along with the record of the case. Appeal dismissed.