APPEAL NO: 1394/2005


1. Regional Manager,

Life Insurance Corporation Ltd.

New Delhi.

2. Divisional Manager,

Life Insurance Corporation Ltd.,

Patel circle, Udaipur.

3. Br.Manager,

Life Insurance Corporation Ltd.

Rajnagar, Rajsamand.


Opposite parties-appellants


Vs.


Smt. Bhagwati Devi,

r/o Lave Bardargarh, Tehsil Amct,

Distt. Rajsamand (Raj.)


Complainant- respondent


23.4.09


Before:


Mr.Justice Sunil Kumar Garg-President

Mrs.Vimla Sethia-Member


Mr.M.L.Vyas counsel for the appellants

Mr.D.M.Mathur counsel for the respondent


This appeal has been filed by the appellants LIC against

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order dated 28.6.05 passed by the District Forum, Rajsamand in complaint no. 200/2004 by which the complaint of the complainant respondent was allowed in the manner that the appellants were directed to pay a sum of Rs. 25,000/- , the amount of the LIC policy within one month and further to pay interest @ 12% p.a. w.e.f. 14.12.04 and further to pay a sum of Rs.2500/- as costs.


2. It arises in the following circumstances-


That the complainant respondent had filed a complaint against the appellants before the District Forum, Rajsamand on 14.12.04 inter alia stating that her husband Dal Chand, now deceased had taken a life insurance policy for a sum of Rs. 25,000/- from the appellants bearing policy no. 181786592 on 28.8.96. It was further stated in the complaint that due to some reason some instalments were not deposited by the deceased in his life time and the policy had become lapsed one but thereafter the policy was revived on 1.11.99. It was further stated in the complaint that the deceased had died on 8.7.2000 in normal circumstances and after the death of the deceased the complainant respondent being the wife and nominee of the deceased had preferred the claim before the office of the appellants but the claim of the complainant respondent was repudiated by the appellants through letter dated 10.4.02 on the ground that before revival of the policy in question the deceased had filled in up a fresh declartion form regarding his health on 28.10.99 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 , the

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deceased was suffering from Ulcer and Pain in Molar teeth and he had remained admitted in the Govt. Hospital, Udaipur for the period 4.4.99 to 6.4.99 and had taken the treatment from the doctors and since these facts were not disclosed by the deceased in his fresh declaration form on 28.10.99 at the time of revival of the policy, therefore, the deceased was guilty of suppression of material facts regarding his health. Thereafter, the present complaint was filed by the complainant.


A reply was filed by the appellants on 1.2.05 and in the reply they have taken the same pleas which were taken by them in the repudiation letter dated 10.4.02 and it was prayed that claim was rightly repudiated by the appellants and complaint be dismissed.


After hearing the parties, the District Forum,Rajsamand through impugned order dated 28.6.05 had allowed the complaint of the complainant inter alia holding -


(i) That since the policy in question was taken by the deceased on 28.8.96 and the policy was revived on 28.10.99 and further if the deceased had remained admitted in the Govt. Hospital, Udaipur for the short period i.e. from 4.4.99 to 6.4.99 and in support of that the appellants had not produced any document, and if the deceased had not mentioned that fact in the fresh declaration form that he was not suffering from any kind of disease, therefore, it was not a case of

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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

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


Aggrieved from that order dated 28.6.05 passed by the District Forum, Rajsamand , 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 revival of the policy in question, the deceased was suffering from the disease of Ulcer and pain in Molar teeth for which he took medical treatment from the doctor and had remained admitted in the hospital for the period 4.4.99 to 6.4.99 and since these facts were not disclosed by the deceased deliberately in his fresh declaration form on 28.10.99 , 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 10.4.02 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 .


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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.


6. There is no dispute on the point that the deceased had taken a life insurance policy for a sum of Rs. 25,000/- from the appellants bearing policy no. 181786592 on 28.8.96 and the same was revived on 1.11.99 and that revival amounts to fresh contract and that is why in the present case at the time of revival of the policy the deceased had given a fresh declaration on 28.10.99 regarding his health in which he had not mentioned that he was suffering from any kind of disease or had taken any treatment from any hospital.


7. There is also no dispute on the point that deceased had died on 8.7.2000 meaning thereby within two years of the revival of the policy.


8. There is no dispute on the point that the claim of the above mentioned policy was repudiated by the appellants through letter dated 10.4.02 on the grounds mentioned therein.


9. On file there is a bed head ticket of the Govt. Hospital, Udaipur which shows that the deceased was admitted in the hospital on 4.4.99 and was discharged from the hospital on 6.4.99 though the declaration form regarding health was filled in up by the deceased at the time of revival of the policy on 28.10.99.


10. A bare perusal of the bed head ticket of the hospital reveals that biopsy of the deceased was done at the time when the deceased was got admitted in the hospital and it was found by the

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doctor that he was having difficulty in opening the mouth and temporary diagnosis which was made by the doctors was Cancer and after receiving the report of biopsy, the disease of cancer in mouth was found as is evident from the endorsement in the certificate dated 30.7.99 given by Dr.A.K.Gupta.


11. Thus, from the above medical record, the fact that the disease of Cancer in mouth was diagnosed on 4.4.99 is well established though the fresh declaration form regarding health was filled in up by the deceased at the time of revival of the policy on 28.10.99 and since the deceased had not mentioned in the fresh declaration form that he was admitted in the hospital for the period 4.4.99 to 6.4.99 and disease of cancer in mouth was found, therefore, deceased had knowingly, fraudulently and intentionally suppressed the above mentioned disease and had revived the policy in question by suppressing material facts and therefore, it would amount to suppression of material facts regarding health on the part of the deceased in real sense.


12. For the reasons stated above, it is held that repudiation of claim of complainant respondent by the appellants through letter dated 10.4.02 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.


13. During the course of arguments the learned counsel for the

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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 and further the deceased had made payment of the premium during his life time.


On ex-gratia payment


14. 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.


15. 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.

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16. 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.


17. 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.25,000/- and on humanitarian consideration, this Commission

thinks it just and proper to award ex-gratia amount of Rs.10,000/- in lumpsum to the complainant respondent.


18. It is further made clear that ex-gratia payment to the tune of Rs.10,000/- 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.


19. In view of the discussions made above, this appeal filed by the appellants is allowed and the impugned order dated 28.6.05 passed by the District Forum, Rajsamand is quashed and set aside and the complaint of the complainant respondent is dismissed. It may be stated here that while preferring this appeal, the appellants had deposited a sum of Rs.17,592/- on 6.8.05 with the District Forum,Rajsamand and, therefore, the District Forum is directed to make payment of Rs.10,000/- to the complainant respondent as ex-gratia amount and rest amount be returned to the appellants.



Member President