State Consumer Disputes Redressal Commission

West Bengal

BHABANI BHAVAN (GROUND FLOOR)

31, BELVEDERE ROAD, ALIPORE

KOLKATA – 700 027


S.C. CASE NO-FA/09/129



DATE OF FILING : 23.3.09 DATE OF FINAL ORDER: 28.07.09



APPELLANTS/COMPLAINANTS :



1. The Chairman , LICI

Yogakshema,

Central Office, Jeevan Bima Marg,

Mumbai 400 021.



2. The Managing Director,

LICI, Yogakshema, Mumbai,



3. The Sr. Divisional Manager,

LICI, CSDO, Jeevan Prabha,

DD-5, Sector-I, Salt Lake City

Kolkata- 700 064.



4. The Manager,

Claims, LICI,

CSDO, Jeevan Prabha,

DD-5, Sector-1 , Salt Lake City,

Kolkata-700 064.







RESPONDENTS/O.P.S : :



1. Bipratik Bose,

15, Park Road, P.O- Talpukur,

P.S. Barrackpore,

District 24 Parganas (North).

…….. Respondent.

2. The Secretary,

Insurance Ombudsman,

LICI, 29, Netaji Subhas Road,

3rd . Floor, Kolkata- 700 001,





3. Insurance Regulatory Development Authority,

Parishrama Bhavakam, Bashirbagh, Hydrabad- 500 004.



….. Proforma Respondents.



.







BEFORE : HON’BLE JUSTICE : Mr.A.Chakrabarti,PRESIDENT.

HON’BLE MEMBER : Shri A.K. Ray.

HON’BLE MEMBER : Smt. Silpi Majumder.



FOR THE PETITIONER : Shri T.K. Mahanti . Advocate.

Smt. S. Roy Chowdhury. Advocate.

FOR THE RESPONDENT : Shri S. P. Ghosh. Advocate.

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Sri. A.K. Ray. Hon’ble Member







One Smt Monika Bose Mother of Sri Bipratik Bose, Complainant /Respondent –1 took several LICI policies before her death. After her death, LICI settled claims in respect of all the policies excepting policy no 422987331 as the claim in respect of this policy was repudiated by the Appellant for suppression of material information regarding health status of the deceased insured at the time of inception of the policy. Complainant / Respondent –1 was the nominee. Not being satisfied with the decision about repudiation the Complainant filed a case before the Forum below contending that his mother did not make any false statement in the proposal form as she had never undergone any treatment under any doctor respecting any disease. The OPs/ Appellants herein contested the case by filing written objection denying all the allegations made in the complaint. The subject policy No. (422987331) for the sum assured Rs. 5 lakh commenced on 28.1.02 and the assured died on 19.8.03. The policy was in force for 19 months. The primary cause of death was cerebro vascular accident and the secondary cause was hypertension. The insurer relying on documentary evidence repudiated the claim. The Forum below without considering the materials on record allowed the complaint without assigning any cogent reasons.



2. Being aggrieved by the impugned order dated 17.2.09 passed by the Dist Forum, North 24 Pargans in case no.242/2006 the Appellants have preferred the instant appeal for setting aside the same on the grounds that the Forum erred in not considering that the claim under the subject policy was an early death claim as the policy was in force for one year and seven months. The Forum did not consider the grounds for repudiation; the assured was under treatment for hypertension but it was not disclosed in the proposal form. Claim forms B &Bi were the documents of the Respondent No –1 and the LICI relying on the same documents repudiated the claim. The assured deliberately withheld the fact that she was suffering from hypertension for a long period and was on medication. In terms of section 45 of the Insurance Act, 1938. a claim can be repudiated on the grounds of falsity if it arises within 2 years from the date of commencement of the risk. The Forum failed to consider the claim form B & Bi which were submitted by the Respondent no –1 as his document and the medical case sheet of the deceased assured issued by the military commend hospital. The Forum also acted with gross irregularity in awarding interest @ 12 % p.a against the IRDA rules. The rate of interest was highly excessive and without basis.



3. In his examination-in-chief supported by an affidavit the Complainant / Respondent –1 stated inter alia that his mother, Monika Bose since deceased, opened several policies during her life time and submitted declaration along with the proposal for insurance. After death of his mother he submitted application for settlement of the amount in respect of the policy in question (No 422987331) but the said claim was repudiated on the grounds that the deceased had withheld material information regarding her health status at the time of taking the assurance with the LICI. The Complainant further stated on oath that his mother, since deceased, never made any false statement & the OP would be failing to substantive their unfounded allegations having no substance in the eye of law that his mother had been suffering from hypertension for about 10 years. She never suffered from any kind of ailment or illness and had never been under treatment of any doctor or had never been treated for the alleged hypertension. She never disclosed any false answers while submitting the proposal for assurance as alleged in the letter-dated 31.03.04. She did not make any incorrect statement or withheld correct information from the LICI or furnished any wrong information regarding her health at the time of effecting the assurance. There was no violation or infringement of the terms of the policy contract. The decision was taken by the OP No-4 in a blind folded manner and the documents annexed to the claim submitted by the Complainant was not considered by the OP in gross violation of the policy arbitrarily and capriciously. He further stated on oath that his diseased mother did not consult any medical practitioner for any ailment which required treatment for more than a week and she never suffered from Diabetes, TB, High Blood Pressure, Low BP, Cancer, Epilepsy or any other diseases. She never concealed nor made any false statement before taking the subject policy. She never gave any false answer in the proposal for assurance submitted on 30.01.02.

4. The claim of the Complainant was repudiated by the OP Insurance Company on the alleged grounds of suppression of material fact regarding health status of the assured. It was alleged by the Insurance Company that the insured suffered from hypertension prior to taking the policy in question. They relied on the medical attendance certificate and the certificate of hospital treatment both signed by the medical attendant of the command hospital on 30.8.03. In the death certificate secondary cause of death was stated to be primary hypertension. Cause of death was inferred by the medical officer from symptoms and investigation. It was stated in the said report that the deceased was suffering from hypertension for 3 days prior to her death. According to the Complainant/ Respondent No-1 his mother, the policy holder, had never been a patient of hypertension. The OPs referred to clause 6 of the certificate of hospital treatment recorded on the basis of report of husband of the deceased. But according to the treating doctor the duration of ailment before death was only 3 days. Obviously this statement of the doctor weighs more than the reported statement at clause 6 of the aforesaid certificate. Moreover, the medical officer of the command hospital who treated the diseased was never examined by the OPs to ascertain the exact duration of the ailment. It is therefore difficult for us to accede to the contention of the OP/Appellants that the deceased was suffering from hypertension for a pretty long time prior to filing her proposal form.

5. In AIR 1962 SC 814 (Mithoolal Nayak-vs-LICI) the Hon’ble Apex Court held that before repudiation of Insurance claim the insurer must satisfy itself about the following 3 conditions:

1. The statement must be on a material matter or must suppress facts which were material to disclose.

2. The suppression must be fraudulently made by the policyholder.

3. The policyholder must have known at the time of making the statement that it was false or that he had suppressed facts, which were material to disclose.

In view of the fact that the OP Insurance Company could not prove their allegations of suppression of material facts in the proposal form through convincing evidence, we are not in a position to interfere with the impugned order of the Forum below. We are also inclined to rely on a decision of the National Commission reported in (2008) 2 WBLR (CPNC) 767 wherein it was held that casual observation by a doctor is not enough .Prior knowledge about ailment needs to be proved by evidence. No affidavit of the doctor nor any other evidence was adduced to show that the insured had prior knowledge about his ailment which he had suppressed. In absence of such evidence the claim could not be repudiated by the OP. In another case the Hon’ble National Commission observed in II (2005) CPJ 78 in the case of LICI –vs- Joginder Kaur & ors that the allegation of concealment of material facts is not acceptable in the absence of any evidence in support thereof. The unproved case history recorded by some person on the date of admission of the deceased would not be cogent & convincing evidence to repudiate the claim unless it was coupled with medical report for the treatment prior to submission of the proposal form.



6. Several other judgements have been referred to in connection with this matter and in our opinion those also require consideration. Such cases are The Branch Manager, Life Insurance Corporationof India-Vs-Mrs. Purnima Roy reported in 2009(1) WBLR(CPSC) 1090 decided by this State Commission, The Divisional Manager, The New India Assurance Co. Ltd.-vs-Mr. Chabbildas D. Kamdar reported in 2008(3) WBLR (CPSC) 459, Life Insurance Corporation of India-vs-Smt. G.M. Channabasemma reported in AIR 1991 (SC) 392, Saurabh Basu-vs- Union of India reported in AIR 2008(NOC) 1823(ALL.), M/s. Orient Treasures Pvt. Ltd. –Vs- United India Insurance Co. Ltd. reported in AIR 2007 (NOC) 2506, Purnima Prasad-Vs-Oriental Insurance Co. Ltd. reported in AIR 2006 Patna 158, The Branch Manager, Life Insurance Corporation of India-Vs-Nilkanta Mondal reported in AIR 2007 Calcutta 74, Life Insurance Corporation of India/Vs-Smt. Asha Goel reported in AIR 2001 SC 549, Smt. Saraswati Devi-Vs-Life Insurance Corporation of India reported in AIR 1996 Delhi 68 and S. Kaushnuma Begum-Vs-The New India Assurance Co. Ltd. reported in AIR 2001 SC 485.

The Case of Purnima Roy (Supra) records that the burden of proof is on the insurer to establish circumstances which justify repudiation. Judgement in the case of Mr. Chabbildas D. Kamdar (Supra) also reiterates onus of proving pre-existing disease on the insurer. In the case of G.M.Channabasemma ( Supra) also it was held by the Apex Court that the burden of proving that the insured had made false representation and suppressed material facts is on the Life Insurance Corporation. The judgements in the cases of Saurabh Basu and Orient Treasures Pvt. Ltd. having been reported in notes of cases, the full text of the judgements have not been made available. In the case of Purnima Prasad (Supra) the Ld. Single Judge of Patna High Court discussed the law relating to interpretation of a Clause in the policy when it is ambiguous. The case of Nilkanata Mondal does not appear to be applicable in the present case. The Apex Court discussed the law in the case of Asha Goel (Supra) holding that matter of repudiation of policy should not be dealt with in a mechanical and routine manner but should be one of extreme care and caution. The cases of Smt. Saraswati Devi (Supra) and S. Kaushnuma do not appear to be relevant in the present facts.



7. In view of the above discussions we find the order passed by the Dist Forum below to be justified and proper. The appeal therefore fails to succeed. The impugned order of the Forum below be affirmed.

The order in question of the Forum below is to be complied with within 30 days from the date of communication of this order.





Member Member President.





S.Majumder.Member



I beg to differ with the judgement written by the Ld. Member, Sri. A.K. Ray and the Hon’ble President agreed to the same. I differ only in respect to the quantum of interest. The Forum below has directed the OPs to pay the assured amount to the Complainant along with interest @ 12% p.a. The majority judgement passed by this Commission has affirmed the quantum of interest as awarded by the Ld. Forum below.

During hearing the Ld. Counsel for the Appellant has submitted that the Forum below has acted with gross irregularity in awarding interest @ 12% p.a as the rate of interest was highly excessive and without any basis and she has prayed for reduction of the quantum of interest and contended that the interest should be awarded as per the prevailing Bank interest. In this respect the said Counsel has referred to the judgement passed by the Hon’ble Supreme Court, reported in AIR 2001 SC 485, in a case between S.Kaushnuma Begum & Others vs. The New India Assurance Company Limited & Others (Civil Appeal No- 06/2001), where Their Lordships have held that ‘with a change in economy and the policy of the Reserve Bank of India the interest rate has been lowered. The Nationalised Banks are now granting interest at the rate of 9% on the fixed deposits for one year’. In the said case the Hon’ble Supreme Court directed to pay interest @9% p.a. Another ruling may be referred passed by the Hon’ble Supreme Court, reported in 2008 CTJ 920 (Supreme Court) (CP), in a case between H.U.D.A vs. Raj Singh Rana decided on 16.07.2008, where Their Lordships have held that ‘ the rate of interest should be imposed on the basis of the prevailing current rate of interest, not in an unreasonable manner and it has to be keeping with the provisions of Section 3 of the Interest Act, 1978.’ In another judgement passed by the Hon’ble Supreme Court, reported in 1(2008) CPJ 42 (SC) in a case between H.U.D.A. Vs. Prem Kumar Agarwal, Their Lordships have held the above-mentioned observation. Moreover this Commission has passed a judgement on 07.07.2008 in a Complaint Case bearing no-12/O/2006, where this Commission has awarded interest @9% p.a and this judgement has been affirmed by the Hon’ble National Commission in the First Appeal no- 409/2008, passed on 08.07.2009. Similarly on 26.02.2009 in the Revision Petition no-3367/2008 the Hon’ble National Commission has affirmed the judgement passed by this Commission on 28.03.2008 in the case no- 353/A/2007 , where this Commission has awarded interest @8% p.a.

Going by the foregoing discussion and having regard to the above-mentioned judgement I am of the opinion that it will meet justice if I reduce the rate of interest from 12% to 9%. Therefore, in my opinion the appeal be allowed in part on contest and the Forum’s judgment be modified to the above extent. The office is directed to send down this copy of the judgement along with the copy of the majority judgement to the Forum below and issue the same upon the recorded Advocates/ parties free of cost forthwith.



(S. Majumder)

Member