APPEAL NO: 509/2005


Life Insurance Corporation of India

through Sr.Divisional Manager, Ajmer

through Manager (legal) Divisional Office,

Jaipur.


Opposite party-appellant


Vs.


Smt. Prem Lata,

C-56, Bal Nagar, Kartarpura,

Jaipur.


Complainant-respondent


Date of judgment 11.5.09


Before:


Mr.Justice Sunil Kumar Garg-President

Mr.Sikandar Punjabi- Member


Mr. Ashok Chaturvedi counsel for the appellants

Mr.Mahendra Sharma counsel for the respondent


BY THE STATE COMMISSION


This appeal has been filed by the appellants LIC against order dated 24.2.05 passed by the District Forum, Jaipur camp, Jaipur in complaint no. 671/2004 by which the complaint of the complainant was allowed in the manner that the appellants were

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directed to pay a sum of Rs. 50,000/- the amount of the LIC policy alongwith interest @ 9% p.a. from the date of filing of the claim and further to pay a sum of Rs. 2000/- as amount of compensation for mental agony and Rs. 1000/- as costs of litigation.


2. It arises in the following circumstances-

That the complainant respondent had filed a complaint before the District Forum,Jaipur IInd on 20.1.03 inter alia stating that her husband Ram Gopal, now deceased was UDC in the Deptt. of Information and Public Relation and during his life time he had taken a life insurance policy for a sum of Rs.50,000/- from the appellants bearing policy no. 192467364 on 30.3.96. It was further stated in the complaint that the deceased had died on 8.12.97 and after the death of the deceased claim was preferred by the complainant respondent being the wife and nominee of the deceased before the office of the appellants but that claim was repudiated by the appellants through letter dated 18.1.02 on the ground that before taking the policy in question the deceased had filled in up a declartion form regarding his health on 10.3.96 in which he had not mentioned that he was suffering from any kind of disease but they had the sufficient proof to prove the fact that prior to that about one year and fine months before the deceased was suffering from Diabetis Mallitus, PUO, Diarrahea, H.T. Backache etc. for which he had consulted the medical man and had taken the treatment from the doctor and further he had remained on medical leave for the period 15.4.93 to 21.4.93, 3.6.93 to 5.6.93, 27.12.93 to 31.12.93, 10.1.94 to

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15.1.94, 13.7.94 to 16.7.94, 9.8.94 to 12.8.94, 25.8.94 to 27.8.94, 2.9.94 to 8.9.94, 13.9.94 to 19.9.94, 20.9.94 to 24.9.94 etc. etc. and he had also drawn various medical reimbursement bills and since these facts were not disclosed by the deceased in his declaration form on 10.3.96 at the time of taking the policy, therefore, the deceased was guilty of suppression of material facts regarding his health. Thereafter the present complaint was filed.


A reply was filed by the appellants in the shape of affidavit on 9.3.04 and they have taken the same pleas which were taken by them in the repudiation letter dated 18.1.02 and it was prayed that claim was rightly repudiated by the appellants and complaint be dismissed.


After hearing the parties the District Forum,Jaipur camp, Jaipur through impugned order dated 24.2.05 had allowed the complaint inter alia holding that -


(i) That no doubt the deceased had taken medical leave for the period 14.10.95 to 25.10.95, 16.1.95 to 28.1.95, 7.2.95 to 16.2.95, 17.2.95 to 25.2.95 and 11.7.95 to 24.7.95 but the deceased had taken the treatment for such type of diseases which could not be said to be serious diseases and thus it could not be said that it was a case of suppression of material facts regarding health on the part of the deceased.


(ii) That the appellants were not justified in repudiating the claim of the complainant respondent and it had 4


amounted to deficiency in service on the part of the appellants.


Aggrieved from that order dated 24.2.05 passed by the District Forum,Jaipur camp Jaipur , this appeal has been filed by the appellants.


3. In this appeal the main contention of the learned counsel for the appellants is that before issuance of policy in question, the deceased was suffering from the disease of Diabetis Mallitus, PUO, Diarrahea, H.T. Backache etc. for which he took medical treatment from the doctor and he had also remained on medical leave for so many times and also drawn various medical reimbursement bills and since these facts were not disclosed by the deceased deliberately in his declaration form on 10.3.96 , therefore, he was guilty of suppression of material facts regarding health and thus on that ground the claim of the complainant respondent was rightly repudiated by the appellants through letter dated 18.1.02 and the District Forum had committed serious error and illegality in decreeing the claim of the complainant respondent. Hence the impugned order could not be sustained and liable to be quashed and set aside and this appeal deserves to be allowed.


4. On the other hand, the learned counsel appearing for the respondent has supported the impugned order of the District Forum .


5. We have heard the learned counsel for the appellants as well as for the respondent and gone through the entire materials available on record.

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6. There is no dispute on the point that the deceased had taken a life insurance policy for a sum of Rs.50,000/- from the appellants bearing policy no. 192467364 on 30.3.96.


7. There is also no dispute on the point that at the time of taking insurance policy , a declaration was made by the deceased and in that declaration on 10.3.96 , he had not mentioned that he was suffering from any kind of disease or had taken any treatment from any hospital thouh specific question was put whether he was a patient of blood pressure or diabities or not.


8. There is also no dispute on the point that deceased had died on 8.12.97 meaning thereby within two years of issuance of the policy.


9. There is no dispute on the point that the claim of the above mentioned policy was repudiated by the appellants through letter dated 18.1.02 on the grounds mentioned therein.


10. On file there is a sickness certificate dated 21.4.93 (Anx. D-4/1 ) which shows that the deceased had taken the treatment for the period 15.4.93 to 21.4.93 for the diseases known as DM i.e. Diabetics Mellitus and PUO.


11. On file there is another certificate Anx. D-4/3 which shows that the deceased had taken medical leave for the period 3.6.93 to 5.6.93.


12. From the record it is also established from Anx. D-4/17 that the deceased had taken medical leave for the period 13.9.94 to 19.9.94 and the APD/ HT diseases were mentioned.

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13. Further on file there is another certificate Anx. D-4/21 which shows that the deceased had taken medical leave for the period 14.10.94 to 25.10.94 for 12 days and the diseases PYO and HT were mentioned.


14. There is another certificate anx. D-4/23 which shows that the deceased had taken medical leave for the period 23.11.94 to 29.11.94 and the disease which was mentioned in the certificate was HT.


15. On file there is another certificate Anx. D-4/29 which shows that the deceased had taken medical leave for the period 11.7.95 to 24.7.95 and the disease of HT was mentioned.


16. On file there are other documents which shows that the deceased had taken medical leave prior to giving the declaration regarding his health on 10.3.96 on so many occasions which are more than twenty in numbers.


Note- It may be stated here that all the documents pertain to the period prior to taking the policy in question by the deceased and thus from these documents it is very much clear that though the deceased had given the declaration regarding his health on 10.3.96 but from the above record the fact that he had taken the treatment for so many days and had remained on medical leave and he was suffering from many kind of diseases including Diabities and hypertension and these facts were not disclosed by the deceased in his declaration form regarding his health on 10.3.96.


17. On file there is a certificate given by the doctor on 13.4.2000 in which it was stated that immediate cause of death of

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the deceased was Diabities and the deceased was a patient of Diabities and hypertension since 1987.


18. Further from Anx. D-8 it is also clear that the deceased had taken the treatment from Dr. N.K.Katta on 17.10.97 and the disease which was mentioned in that prescription was D.M.


19. Thus, in the facts and circumstances just narrated above, the question for consideration is whether the repudiation of the claim by the appellants could be justified or not or whether the findings of the District Forum by which the claim of the complainant was decreed could be sustained or not.


20. It may be stated here that in the present case there is cogent and reliable evidence on the part of the appellants to show that prior to filling in up the declaration form on 10.3.96 the deceased was aware of the fact that he was a patient of Diabities and hypertension and since being aware he had not mentioned these facts in his declartion form regarding health dated 10.3.96 which clearly goes to prove the fact that the deceased had knowingly, fraudulently and intentionally suppressed the disease of Diabities and hypertension and had taken the policy in question by suppressing material facts and further the deceased had died because of the disease of Diabities and therefore, it would amount to suppression of material facts regarding health on the part of the deceased in real sense.


21. It may further be stated here that the well settled law in the field of insurance is that contracts of insurance including the contracts of lifte assurance are contracts uberrima fides and every fact of materiality must be disclosed otherwise there is good

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ground for rescission. And this duty to disclose continues upto the conclusion of the contract and covers any material alteration in the character of the risk which may take place between the proposal and acceptance.


22. Taking into consideration that aspect also when the answer was given in negative and when there is ample evidence to prove the fact that the deceased had taken the treatment of Diabities and hypertension prior to filling in up the declaration form dated 10.3.96 regarding his health, therefore, from every point of view the present case would be a case of suppression of material facts regarding health on the part of the deceased.


23. For the reasons stated above, it is held that repudiation of claim of complainant respondent by the appellants through letter dated 18.1.02 on ground of suppression of material facts regarding health by the deceased was justified and no illegality or irregularity has been committed by the appellants in repudiating the claim of complainant respondent and in view of this, the findings of the District Forum decreeing the claim of the complainant respondent could not be sustained and the same are liable to quashed and set aside as they are wholly illegal, erroneous and perverse one and the appeal deserves to be allowed.

24. During the course of arguments the learned counsel for the respondent has stated that in case the appeal of the appellants is going to be allowed, in such circumstances some amount of compensation as ex-gratia be allowed to the complainant respondent who is an illiterate widow and poor lady.


On ex-gratia payment

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25. Ex-gratia payments are made as an act of grace, if the damage caused is outside the scope of the policy terms, or the liability under the policy is doubtful. In such cases the payment is made as an act of grace on humanitarian grounds. As a matter of fact, the loss or damage is outside the terms of the policy but the insurer takes a lenient view on humanitarian grounds. In such cases, full amount to indemnify the damages is not made. Such payments do not place the insurer under an obligation to make such payments in similar circumstances in future.


26. Further ex-gratia payment of claim would arise where there was no legal liability on the Life Insurance Corporation to make payment as in the case of repudiated claim or unconcluded contract. Such claims are paid to mitigate hardship to the claimants by way of equitable relief. The analysis, particularly of a repudiated claim for consideration of an ex-gratia payment, would be a skilful exercise on the part of the concerned officers of the opponent Life Insurance Corporation of India. Ex-gratia payment cannot be claimed as a matter of right. For that the law laid down by the Hon'ble National Commission in the case of LIC Vs. Shashi Gupta ( 1994) 2 CPR 622 (NC) ) may be referred to.


27. Further the word 'ex-gratia' payment itself means a payment which is voluntarily and charitable in nature and since the C.P.Act,1986 is based on the principle of equity, therefore, hypertechnicalities could be ignored and equitable consideration should be kept in mind while deciding the matter.


28. However, looking to the entire facts and circumstances of the case and looking to the fact the LIC policy was for a sum of Rs.50,000/- and on humanitarian consideration, this Commission

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thinks it just and proper to award ex-gratia amount of Rs.20,000/- in lumpsum to the complainant respondent.


29. It is further made clear that ex-gratia payment to the tune of Rs.20,000/- in lumpsum is being given to the complainant respondent who is a widow, not as a matter of right but taken into consideration the facts and circumstances that the condition of a widow in India is not good and in the present case the complainant respondent is a widow lady.


30. In view of the discussions made above, this appeal filed by the appellants is allowed and the impugned order dated 24.2.05 passed by the District Forum, Jaipur camp Jaipur is quashed and set aside and the complaint of the complainant respondent is dismissed. However, the appellants LIC would pay a sum of Rs.20,000/- in lumpsum as ex-gratia payment to the complainant respondent. It may be stated here that since while preferring this appeal the appellants had deposited a sum of Rs. 25,000/- with the District Forum,Jaipur camp, Jaipur and therefore, the District Forum, Jaipur camp Jaipur is directed to make payment for a sum of Rs.20,000/- to the complainant respondent out of the deposited amount and rest amount be returned to the appellants.



Member President