NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
(From the order dated 13.1.95 in C.D. No.56/92 of the State Commission, Andhra Pradesh)
1. The Senior Divisional Manager,
Life Insurance Corporation of India &, Warangal,
2. The Zonal Manager,
Life Insurance Corporation of India, Hyderabad
3. The Chairman,
Life Insurance Corporation of India, Hyderabad .. Appellants
Smt. J. Vinaya Respondent
HONBLE MR. JUSTICE D.P. WADHWA,
HONBLE MR. JUSTICE J.K. MEHRA, MEMBER.
MRS. RAJYALAKSHMI RAO, MEMBER.
MR. B.K. TAIMNI, MEMBER.
Second part of Section 45 of the Insurance Act, 1938 - onus lies on the Insurance Company. Supreme Courts decision in the case of Mithoolal Nayak vs. Life Insurance Corporation of India - AIR 1962 SC 814 and Life Insurance Corporation of India Vs. Smt. G.M. Channabasamma - (1991) 1 SCC 357 referred to - on facts held LIC failed to prove that case fell under second part of Section 45 - Sections 64 and 65 of the Contract Act also not applicable.
For the appellant : Mr. Rajesh Mahendroo, Advocate
for Mr. S.K. Taneja, Advocate
For the Respondent : Mr. K. Maruti Rao, Advocate
for Mr. D. Prakash Reddy, Advocate
O R D E R
DATED THE 24h May, 2002.
JUSTICE D.P. WADHWA, J.(PRESIDENT).
This appeal is by the Senior Divisional Manager, Zonal Manager, the Chairman of the Life Insurance Corporation of India who were opposite parties before the State Commission. They are aggrieved by the order of the State Commission allowing the complaint of the respondent-complainant and directing the appellant to pay Rs.2.00 lakhs in respect of the policy on the life of her deceased husband with interest @ 18% per annum from three months after the claim was filed till payment. When this appeal was filed it was brought to the notice of this commission that the appellants had deposited the amount as awarded by the State Commission. This Commission directed that the appellants shall pay half of the amount awarded by the State Commission to the respondent within three weeks from the date of the order i.e. 26.9.95 and that the amount deposited with the State Commission was allowed to be withdrawn by the appellants.
Appellants had repudiated the policy on the ground that the assured had concealed material facts regarding his state of health as he was suffering from serious ailments. Stand of the appellants did not find favour with the State Commission and it directed payment of the amount of policy with interest.
J. Surendar Rao, husband of the respondent had taken three life insurance policies as under:
Sl.No. Policy No. Amount (Rs.) Date of commencement
---------- ----------------------- ------------------- ------------------------------
1. 60802165 1,00,000 May, 1984
2. 60802060 1,00,000 Sept, 1984
3. 680033428 2,00,000 28.3.1987
Rao died on 15.11.1989 due to cardiac arrest. Respondent lodged claim with respect of all these three polices by her letter dated 9.2.1990 and in support of her claim she submitted various documents. On 31.3.90 Appellants sent letter repudiating the claim under the policy for Rs.2.00 lakhs dated 28.3.1987. In this letter it was stated that appellants had decided to repudiate their liability under the policy on account of deceased having withheld the material information regarding his health at the time of effecting the insurance. Reference may be made to questions 12 and 18 of the proposal form and the answer thereto by the deceased assured which are as under and were the basis of repudiation:
12.a) What has been your usual state Good
18. Have you ever suffered from or
are you suffering from:
b) High or, low blood pressure, rheumatic fever,
pain chest, breathlessness, palpitation, infarction No
any disease of the heart or arteries?
The letter then proceeds to add:
We may, however, state that all these answers were false as we held indisputable proof to show that about two years before he proposed for the above policy he had suffered from chest pain for which he had taken treatment. He did not, however, disclose these facts in the proposal. Instead, he gave false answers therein as stated above.
It is, therefore evident that he had made deliberate mis-statements and withheld material information from us regarding his health at the time of effecting the assurance and hence in terms of the policy contract and Declaration contained in the forms of proposal for assurance, we hereby repudiate the claim and accordingly we are not liable for any payment under the above policy and all moneys that have been paid in consequence thereof belong to us.
This lead the respondent to file complaint before the State Commission alleging deficiency in service seeking not only the amount under the policy with interest but also Rs.1.00 lakhs towards mental agony, sufferings and other loss suffered on account of non-payment of the amount under the policy.
In the written version filed by the appellants they reiterated their stand as communicated to the respondent by their letter dated 31.3.90. The whole basis of the repudiation of the claim was hospital treatment certificate by the Madras Medical Misson Hospital which was filed by the respondent herself. Apart from this there was no other evidence which was produced by the appellants. In this document it was recorded that Rao, husband of the respondent was suffering from chest pain and symptoms of breathlessness three years prior to his admission in the Madras Medical Misson Hospital. State Commission did not attach any importance to such certificate as it was of the view that there was nothing to show as to who had given the information in the certificate that Rao was so suffering and who was the doctor who made the entry. There is also nothing to show as to who treated Rao during past three years prior to his death for the alleged ailment of chest pain and symptoms of breathlessness. On the other hand it was stated in the said certificate that Rao was admitted into the hospital on 3.9.1988 and discharged on 21.9.1988 and the patient was referred to by Dr. Dayasagar Rao. Moreover, this certificate of hospital treatment is on the form supplied by the Life Insurance Corporation of India. State Commission noticed that medical attendance certificate issued by Dr.K. Ramakrishna Rao showed that the deceased was suffering from cardiac disease and underwent CARG from June 1988. It was mentioned in the certificate that frequent belching and pain in chest was noticed around May and June, 1988 and that the deceased was referred to Cardiologist Dr. V. Dayasagar Rao. The certificate issued by Dr. Dayasagar Rao showed that he had examined the deceased in June 1988 when he found that he was suffering from angine of recent onsent for which relevant investigations including coronary angiography was prescribed. State Commission held that certificate issued by Dr. Dayasagar and Dr. Ramarkshna Rao clearly showed that the deceased complained of chest pain and belching, gases and occasional discomfort in chest in May/June, 1988 when he was advised coronary angiography. It was only subsequently that deceased was treated in Madras Medical Mission Hospital in 1988. From the certificate of Madras Medical Mission Hospital it could not be accepted that it was the deceased who complained of chest pain for the last three years prior to September, 1987. State Commission observed that though in the letter repudiating the claim of the respondent it was stated by the appellants that they had indisputable proof in their possession showing that three years prior to the proposal for Rs.2.00 lakhs the deceased had suffered from chest pain for which he had taken treatment but no such evidence was adduced either orally or documentary in support of such a stand. State Commission therefore, concluded, and in our view rightly, that in the absence of making any reasonable enquiry and in the absence of any evidence in their possession appellants were not correct in repudiating the claim under the policy. State Commission accordingly allowed the claim of the complainant under the policy for Rs.2.00 lakhs and also awarded interest @ 18% per annum on this amount from 1.5.90 and also awarded Rs.1000/- as cost. Claim for mental agony and suffering was disallowed.
During the pendency of the appeal, appellants on 3.5.2002 sought to bring on record photo copies of the record of the hospital - Madras Medical Mission of the deceased. At this late stage when the matter pertained to the year 1988 we cannot allow any further evidence which was not before the State Commission and would confine ourselves to the record which was before the State Commission. It has also been alleged before us that the deceased had withheld material information and he gave false and misleading information which misled the appellants to accept the proposal and issue the policy. It was submitted that in view of the condition 5 of the policy it became null and void as it was a case of non-disclosure of information deliberately giving incorrect facts which vitiated the contract of insurance. It was also submitted that condition 5 of the insurance policy did not prohibit the appellants from repudiating the policy. Appellants also challenged the award of interest by the State Commission but did not challenge the rate at which it had been awarded.
Appellants repudiated the policy after two years of its commencement. In this connection Section 45 of the Insurance Act reads 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 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 state in the proposal.
This Section was subject matter of interpretation by the Supreme Court in the case of Mithoolal Nayak v. Life Insurance Corporation of India - AIR 1962 SC 814 where the Court said that there were three conditions for the application of second part of Section 45 and these are:
(a) the statement must be on a material matter or must suppress facts which it was material to disclose,
(b) the suppression must be fraudulently 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.
Supreme Court in this judgment also held that where policy was vitiated by reason of a fraudulent suppression of material facts by the assured there was not right to refund the money paid by the assured to the insurance company and that the courts will not entertain an action for money had received and could not be entertained either under Section 64 or Section 65 of the Contract Act.
In Life Insurance Corporation of India Vs. Smt. G.M. Channabasamma - (1991) 1 SCC 357 Supreme Court was again examining the evidence in that case with reference to Section 45 of the Insurance Act. it observed that burden of proving that insured had made false representation and suppressed material facts was undoubtedly on the Life Insurance Corporation of India. It said that having gone through the entire evidence in the case it was not possible to take a view different from the High Court that the appellant LIC has failed to discharge the burden of proving the defence story about the serious illness of the insured at the time of taking out the insurance policies and knowingly suppressing the material information. In this case Supreme Court noticed that four policies had been taken- (i) Rs.20,000/- on 30.7.1959, (ii) Rs.20,000/- on 16.7.1960, (iii) Rs.10,000/- on 16.7.1960 and ((iv) Rs.25,000/- on 23.8.1961. The assured died on 14.10.1961 of tuberculoses. Supreme Court also noticed that there was evidence of the doctors of the LIC who had certified good health of the insured at the time of taking out the insurance policies and who had been examined as defence witnesses disproved the case of illness of the assured. Supreme Court noticed that it had not been suggested that these doctors were either won over by the insured or were negligent in performing their duty. They had submitted confidential reports about the health of the insured and were of the opinion tht he was in good health. In the case before the Supreme Court, L.I.C. had also examined doctors which evidence was relied upon by the Court.
Before us, apart from the certificate of hospital treatment dated 19.1.90 which we have referred to have there has not been any evidence led by the LIC to prove that the case fell with the second part of Section 45 of the Insurance Act. Doctors of the L.I.C. would have also examined the deceased before his proposal was accepted. Nothing has been alleged, as observed the Supreme Court in the case of Smt. G.M. Channabasamma, that those doctors were either an incompetent lot or were won over by the complainant.
We, therefore, find no merit in this appeal. It is dismissed with costs which we assess at Rs.5,000/-.