APPEAL NO: 1361/2006


1. LIC of India,Super Market,Bharatpur through Br.Manager.

2. Divisional Manager, LIC of India, Bhawani Singh Road,Jaipur through Manager, Legal, Jaipur.

Opposite parties-appellants


Vs.


Parmanand r/o Village Saithra Teh & Distt. Bharatpur

Complainant- respondent



Date of judgment 13.3.09


Before:


Mr.Justice Sunil Kumar Garg-President

Mrs.Vimla Sethia-Member


Mr.Ashok Chaturvedi counsel for the appellants

Mr.Asgar Khan counsel for the respondent


This appeal has been filed by the appellants LIC against order dated 24.6.06 passed by the District Forum, Bharatpur in complaint no. 233/04 by which the complaint of the complainant was allowed in the manner that the appellants were directed to pay a sum of Rs. 25,000/- , the amount of the LIC policy alongwith interest @ 9% p.a. from the date of filing of the complaint and further to pay a sum of Rs.500/- as amount of compensation for mental agony and Rs. 500/- as costs.


2. It arises in the following circumstances-

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That the complainant respondent had filed a complaint before the District Forum, Bharatpur on 19.5.04 inter alia stating that his wife Ram Kali, now deceased had taken a life insurance policy for a sum of Rs. 25,000/- from the appellants bearing policy no. 194181158 on 25.3.03 .It was further stated in the complaint that at the time of taking the policy she was got medically examined by the doctors of the appellants and her health was found O.K. It was further stated in the complaint that on 21.10.03 the condition of the deceased became deteriorated suddenly because of vomitting, diarrhoea and fever and when she was being taken to Bharatpur city for getting the treatment she had died in the village and after the death of the deceased claim was preferred by the complainant respondent being the husband and nominee of the deceased before the office of the appellants but that claim was repudiated by the appellants through letter dated 28.2.04 on the ground that before taking the policy in question the deceased had filled in up a declartion form regarding her health on 25.3.03 in which she had not mentioned that she was suffering from any kind of disease but they had the sufficient proof to prove the fact that prior to one year before the deceased was suffering from Tuberculosis and had consulted the medical man and had taken the treatment from him and since these facts were not disclosed by the deceased in her declaration form on 25.3.03 at the time of taking the policy, therefore, the deceased was guilty of suppression of material facts regarding her health. Thereafter the present complaint was filed.


A reply was filed by the appellants on 10.6.04 and

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they have taken the same pleas which were taken by them in the repudiation letter dated 28.2.04 . It was further stated in the reply that the District T.B. Officer, Bharatpur had issued a letter dated 21.2.04 Ex.D-5 stating that on the basis of X-ray a case of Pulmonary Tuberculosis was found and she had taken the treatment for the period 4.3.02 to 1.9.02 and since from that letter it is well proved that the deceased was a patient of TB and since she had not mentioned that fact in the declaration form regarding her health on 25.3.03 therefore, it was a case of suppression of material facts regarding health on the part of the deceased and it was prayed that claim was rightly repudiated by the appellants and complaint be dismissed.


After hearing the parties the District Forum, Bharatpur through impugned order dated 24.6.06 had allowed the complaint inter alia holding that -


(i) That since the record of TB Hospital where it was alleged that she had taken the treatment for the period 4.3.02 to 1.9.02 had not been produced, therefore, in absence of that the case of the appellants in respect of suppression of material facts is not found established.


(ii) That since the affidavit of the doctor who had issued the certificate had not been filed, therefore, in above circumstances the fact that the deceased had taken the treatment of TB was not found established 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.

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(iii) 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 24.6.06 passed by the District Forum, Bharatpur , 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 Tuberculosis for which she took medical treatment from the doctor and since these facts were not disclosed by the deceased deliberately in her declaration form on 25.3.03, therefore, she 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 28.2.04 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. 25,000/- from the appellants bearing policy no. 194181158 on 25.3.03 .


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 25.3.03 , she had not mentioned that she was suffering from any kind of disease or had taken any treatment from any hospital.


8. There is also no dispute on the point that deceased had died

on 21.10.03 meaning thereby within two years of issuance of the policy and the cause of death of the deceased which was mentioned by the complainant in his complaint was vomitting, diarrhoea and fever etc. etc.


9. There is no dispute on the point that the claim of the above mentioned policy was repudiated by the appellants through letter dated 28.2.04 on the grounds mentioned therein.


10. On file there is only evidence produced by the appellants is the certificate of District T.B.Officer,Bharatpur dated 21.2.04 which shows that the deceased had taken the treatment of TB for the period 4.3.02 to 1.9.02 and that certificate was issued not within the knowledge of the doctor issuing the certificate but on the basis of the record of Sub-Health Centre, Dhormuee and on the basis of the X-ray report.


11. Thus, in the facts and circumstances just narrated above, the question for consideration is whether the findings recorded by the District Forum could be sustained or not and whether the

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repudiation of the claim of the complainant respondent by the appellants was justified or not.


12. Before proceeding further, it may be stated here that it is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally and in this respect, the decision of the Hon'ble Supreme Court in M/s.Modern Insulators Ltd. Vs. Oriental Insurance Co. (AIR 2000 SC 1014) may be referred to.


13. The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. Furthermore, mere concealment of some facts will not amount to concealment of material facts.


14. Suppression of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose.


15. In this respect, the latest judgment of the Hon'ble National Commission in National Insurance Co. Ltd. Vs. Bipul Kunda (2005 CTJ 377 (CP) (NCDRC) may be referred to where it was held that for repudiating a claim of an insured, it is for the insurer to show that a statement on a fact, which was material for the policy, had been suppressed by the insured and that statement was fraudulently made by him/her with the knowledge of the falsity of that statement.


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16. As already stated above, the death of the deceased had taken place within two years of the issuance of the policy.


17. It may be stated here that where the insurer wishes to call in question a policy within two years of its being effected, it is enough if the insurer is in a position to show 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 is inaccurate or false.


18. It may further be stated here that even if the death takes place within two years, mis-representation, if any, that should be material in the sense of having some effect upon life expectation whether direct or indirect and if it is found material, that defence could be taken by the Insurance Company, not otherwise.


19. From perusing the certificate Ex.D-5 it could easily be said that the same was issued by the District TB Officer not within his personal knowledge but on the basis of some record of Sub-Health Centre,Dhormuee and no record of that centre had been produced by the appellants and further the period for which treatment for TB was taken by the deceased was from 4.3.02 to 1.9.02 and the declaration form regarding her health was filled in up by the deceased on 25.3.03.


20. It may further be stated here that in this case the cause of death of the deceased could not be attributed with the disease of TB as there is nothing on record to prove the fact that the deceased had died because of the disease of TB.


21. Apart from that since affidavit of the doctor who had

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issued the certificate Ex.D-5 had not been produced by the appellants and therefore, in absence of that the fact that the deceased was a patient of TB could not be found established and the appellants had failed to prove this fact by producing cogent and reliable evidence that at the time of filling in up the declaration form on 25.3.03 the deceased was suffering from the disease of TB.


22. It may further be stated here that in the present case since the declaration form regarding health was filled in up by the deceased on 25.3.03, therefore, there might be possibility that on that day she would have been fully cured from the disease of TB and that is why she had not mentioned in the declaration form regarding her health that she was a patient of TB.


23. The test to determine materiality is whether the fact has any bearing on the risk undertaken by the insurer. If the fact has any bearing on the risk, it is a material fact; if not, it is immaterial.


24. In our considered opinion, there are certain diseases such as kidney, heart and brain and they are connected with the life span of a person and if any misstatement is made in respect of such type

of diseases by the person seeking insurance, in such case, it can be believed that knowingly the person taking out the insurance has made misstatement. But if any one suffers from temporary illness such as fever, cough, cold etc., and the same was not mentioned at the time of taking insurance, it cannot be stated in true sense that a misstatement in respect of the state of health has been made by the person seeking insurance.


25. Apart from that if for the sake of argument the deceased

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might have some trouble of chest in past and since the immediate cause of death of the deceased was not the disease of TB, therefore, there is no nexus between the cause of death of the deceased and the so called disease of TB and thus, the immediate cause of death of the deceased could not be said to be chest disease and if that was not mentioned in the declaration from regarding her health on 25.3.03, that would not amount to suppression of material facts regarding health on the part of the deceased.


26. Further since the death of the deceased in the present case having not been connected with the disease of TB, it could not be considered to be material so far as the death of the deceased is concerned and consequently it could not be said that there was suppression of material facts regarding health on the part of the deceased. Further whether a fact is material or not has to be decided in the light on an in the context of the cause of death. If the fact has bearing on the cause of death it would become material, otherwise, it could not be said to be material.


27. Mere incorrect or wrong answer to questions which ultimately do not have any bearing or connection with the death of the insured would not absolve the LIC from its liability under the policy.


28. Apart from this, even for the sake of argument that deceased might have been suffering from the disease TB, now TB is 100% curable disease and patient of that disease can survive for a longer period and besides this, the immediate cause of death of deceased was other than TB and there is no nexus between the cause of death of deceased and TB. The death of the deceased having not

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been connected with the TB disease, it cannot be considered to be material so far as death of the deceased is concerned. Thus, it cannot be said that there was suppression of material facts by the deceased and if for the sake of argument the fact that she was a patient of TB that would have cured upto 1.9.02 and if that was not mentioned by the deceased in her declaration form regarding health on 25.3.03, it would not amount to suppression of material facts regarding health on the part of the deceased.


29. For the reasons stated above, the appellants were not justified in repudiating the claim of the complainant respondent on

the ground of suppression of material facts and the appellants had repudiated the claim of the complainant respondent without any basis and on wrong assumption and in an arbitrary manner and repudiation of claim amounted to deficiency in service on the part of the appellants and the District Forum has rightly held so. The findings of the District Forum decreeing the claim are based on correct appreciation of entire materials and evidence available on record and they do not suffer from any basic infirmity or illegality

or perversity. Hence, no interference is called for with the same and this appeal deserves to be dismissed.


Accordingly, this appeal filed by the appellants is dismissed.



Member President