TEJ KAUR vs Senior Divisional Manager, Life Insurance Corporation of India

THE complainant Tej Kaur has challenged order of District Forum, Mansa dated August 28, 1998 in this appeal. Her complaint before the District Forum was dismissed. Her husband Hakam Singh had taken a life insurance policy from Life Insurance Corporation in the sum of Rs. 1 lac on March 27, 1991 representing his age to be 45 years. THE policy was taken against a proposal submitted on March 27, 1991 and was effective w.e.f. December 28, 1990. Hakam Singh died on May 30, 1993 and Tej Kaur lodged a claim with the Corporation for the insured amount. THE claim having been repudiated by the Corporation, she approached the District Forum. THE Corporation while contesting the complaint, inter alia, asserted that the age of Hakam Singh at the time of taking the policy was about 57 years and he wrongly represented himself to be aged about 45 years. THE matter was investigated after his death and after collection of material evidence, it was so found that Hakam Singh had himself represented about his actual age and thus repudiation of the claim was bona fide made on the material collected. A rejoinder was filed by the complainant reiterating the stand as taken up in the complaint. Both the parties led their evidence on affidavits and documents on the basis of which the impugned order was passed.

LEARNED Counsel for the complainant/ appellant has argued that the repudiation of the claim was arbitrarily made and the so-called evidence collected was not conclusive evidence on proof of age. It is in this context, he has further argued and had submitted a chart as to how premium was charged from the deceased at the time of issuing of the policy and that extra premium for non-standard age proof to the tune of Rs. 2.50 lac was taken into consideration and half-yearly instalment was, thus, fixed at Rs. 4,588.80. The matter can be examined from different angles. Section 45 of the Insurance Company provides as under : "45. Policy not to be called in question on ground of mis-statement after two years.-No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement (was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made) by the policy-holder and that the policy holder knew at the time of making it that the statement was false (or that it suppressed facts which it was material to disclose). (Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time, if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal)."

The object of making the aforesaid provision is to rule out any intentional fraud being committed on the Insurance Corporation in the matter of securing insurance policies. A reasonable time of two years is fixed therein, it is considered bona fide of the insured in the matter of taking the policies if he continues making payment of the premiums due under the policy for such period. The only exception made to the general rule as above is that before any such statement made in the proposal for the insurance policy is considered to be inaccurate it should be on the material matter and that the same was fraudulently made by the policy holder. It is further clarified that such mis-statement should be such that the policy holder knew at the time of making the statement to be false. Another proviso is added as reproduced above that Insurance Corporation could call for proof of age and on getting such proof, the policies are adjusted. The later proviso as referred to above is not attracted to the case in hand as at no stage, the Corporation adjusted the policy after coming to know of inaccuracy of age mentioned in the proposal form. The only question for consideration is as to whether at the time of submission of the proposal for taking the policy, Hakam Singh had defrauded the Corporation either by stating wrong age or that he knew that his age was wrongly given. Before referring to the evidence collected by the Corporation after the death of Hakam Singh, reference be made to the proposal form (Ex. OP-14) wherein date of birth was stated as January 15, 1946. There is an endorsement of the Divisional Officer of the Life Insurance Corporation that he was satisfied that Hakam Singh could not submit a standard proof of age; the reason given being that Hakam Singh was illiterate. He further certified that apparently he was aged about 45 years. Similar information was given in the proposal form (Ex. OP-15) by the deceased. He had thumb-marked the proposal form. He was also medically examined before issuance of the policy. Such a medical certificate is attached to the proposal form and is at page 69 of the District Forum record. The declaration of age by Hakam Singh is Ex. OP-13 which was supported by another declaration made by Secretary of the Panchayat as well as by the Medical Doctor. Prima facie, in view of the evidence aforesaid, it could hardly be stated that Hakam Singh had concealed his actual age or that he knew that the age given by him was inaccurate or that he ever intended to defraud the Corporation.

As to whether repudiation of the claim was based on such evidence which otherwise could conclusively prove the actual age of Hakam Singh is for consideration. Such a decision was taken by the Corporation on the following documents : (1) Rashan Card (copy Ex. OP-7) describing the age of Hakam Singh as 50 years. At this stage, it may be observed that the Corporation had taken up the stand that even 50 years as mentioned in the Rashan Card was subsequently substituted in place of 60 years. (2) Voter List (Ex. OP-10) giving the age of Hakam Singh at Sr. No. 328 as 60 years. (3) Two affidavits collected by the Life Insurance Corporation of the co-villagers, namely Bawa Singh son of Jangir Singh, and Teja Singh son of Maskan Singh. Bawa Singh in his affidavit stated that Hakam Singh was born in October, 1943 and Teja Singh stated that Hakam Singh was aged about 4 years at the time of partition and that he was born in 1943.

AT the outset it may be stated that the estimations regarding age given by villagers can hardly be treated as cogent evidence of proof of actual date of birth. On the same ground, it is mentioned that either the applications for obtaining Rashan Cards or in that sense the Rashan Card or the Voters List cannot be treated as a conclusive proof of actual age mentioned therein of the persons. The purpose of referring the age in these documents is only to find out if the persons are majors or not and the object is not to determine the actual date of birth. The Corporation on such evidence could not come to the conclusion that the actual age of Hakam Singh at the time of taking the policy was incorrectly stated to be 45 years. There is another aspect of the matter which deserves to be noticed. It was open to the Corporation to accept the stand of the life insured and to issue the policy tentatively and to keep the matter of determination of actual date of proposer to be made on the evidence to be led to. That was not done in the present case rather the age as given by Hakam Singh was specifically admitted. Reference be made to Ex. OP-3 wherein the factum of admission of age by the Corporation stands mentioned. Similar is the fact noticed on Ex. OP-4. When the factum of age as given in the proposal form is accepted either at the time of issuing the policy or thereafter, the Corporation cannot subsequently confront the same and that too after the death of the insured to repudiate the claim. The repudiation of the claim in the present case was arbitrary and not based on reliable material. This amounted to deficiency in rendering service on the part of the Corporation in not settling the claim. Thus, we hold that the Corporation was liable to pay the insured amoun to Tej Kaur, the widow and to pay compensation as she was unnecessarily harassed.

FOR the reasons recorded above, this appeal is accepted. The order of the District FORum is set aside. The complaint is allowed. A direction is given to the Life Insurance Corporation to pay the insured amount of Rs. 1 lac along with compensation in the form of interest @ 18% p.a. from a date three months after lodging of the claim/death of Hakam Singh, i.e. September 1, 1993 till payment along with cost of litigation which are assessed at Rs. 5,000/-. Let these directions be complied within a period of one month from receipt of copy of this order. Appeal allowed.