JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL)

          Late Shri Umashankar Tyagi, husband of the complainant obtained an insurance policy from the respondent LIC of India, for a sum assured of Rs.2 lacs on 26.12.2013.  Late Sh. Umashankar Tyagi having died on 17.02.2015, within two years of taking the insurance policy, a claim for payment in terms of the insurance policy was submitted by the complainant with the respondent.  The claim however, was repudiated on the ground that the insured had concealed a material fact while obtaining the insurance policy.  It was pointed out in the written version filed by the respondent that the deceased was suffering from Fracture Hip, Hip Pus, T.B., Pott’s Spine (T.B. Spine) even before taking the policy and treatment had also been taken by him for the said disease.  He had also availed unpaid medical leave from 01.02.2011 to 01.08.2011 for his treatment.  The claim was therefore, rejected on account of the aforesaid concealment. 

2.      The District Forum having allowed the complaint, the respondent LIC of India approached the concerned State Commission by way of an appeal.  Vide impugned order date 04.12.2018, the State Commission allowed the appeal and dismissed the consumer complaint noticing that the deceased was suffering from Tuberculosis at the time the proposal was submitted by him on 24.12.2013.  The discharge ticket issued by SMS Medical College and Hospital which was Annexure R-4 before the District Forum, also shows that the diseased was suffering from Pott’s Spine and ATT for last three years. 

3.      It is submitted by the learned counsel for the petitioner that a blank form was signed by the insured and given to the agent who had filled up the said form.  However, the agent was not impleaded as a party to the consumer complaint to confirm the aforesaid averment.  Moreover, the insured having signed the proposal form, he was bound by the information contained therein.  The insured was not an illiterate person, he being an employee of Rajasthan State Road Transport Corporation.  Therefore, he was not likely to sign a blank proposal form.  In any case, if wrong information in the proposal form signed by the insured was filled up by the agent, it is the insured who has to take the responsibility for the said incorrect information being provided to the insurer since the decision of the insurer on whether to accept the proposal or not was based upon the information given in the proposal. Had correct information been disclosed in the proposal, the insurer might have either rejected the proposal or would have required the insured to submit additional documents including the record of his previous treatment and could also have asked him to undergo extensive medical examination. 

4.      The learned counsel for the petitioner submits that the previous ailments were disclosed by the insured to the doctor who had examined him before issuance of the policy.  However, no such averment was made in the consumer complaint and the doctor was not impleaded as a party.  Therefore, the plea taken in this regard seems to be only an after-thought. 

5.     In LIC of India Vs. Manish Gupta – Civil Apeal No.3944 of 2019, decided on 15.04.2019, the proposal form required a disclosure as to whether the proposer had suffered from Cardiovascular disease, he responded in negative to the said question. The complainant underwent a surgery, submitted a claim        which was repudiated on the ground that he was suffering from a pre-existing illness. Upholding the repudiation of the claim, the Hon’ble Supreme Court interalia held as under:-

“Moreover, non-disclosure of any health event is specifically set out as a ground for excluding the liability of the insurer.”

“A contract of insurance involves utmost good faith. In Satwant Kaur Sandhu Vs. New India Assurance Company Ltd., this Court has held thus:

“...Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment.”

……….The documentary material indicates that there was a clear failure on the part of the respondent to disclose that he had suffered from rheumatic heart disease since childhood. The ground for repudiation was in terms of the exclusions contained in the policy. The failure of the insured to disclose the past history of cardiovascular disease was a valid ground for repudiation.”

In Reliance Life Insurance Co. Ltd. & Anr. Vs. Rekhaben Nareshbhai Rathod – Civil Appeal No.4261 of 2019, decided on 24.4.2019, the Hon’ble Supreme Court interalia observed as under:-

“26.    …………..It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.

The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur (supra) “there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurane”. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.

29.     We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form.  …………..”

6.      For the reasons stated hereinabove, the order passed by the State Commission does not call for any interference by this Commission in exercise of its revisional jurisdiction.  The Revision Petition is therefore, dismissed with no order as to costs.