The complainant’s father late Sri Balaram, 47 years old man running a chicken centre by name Manju Chicken Center, Near Railway Station, Toranahagallu, Sandur taluk, Bellary District had obtained a policy provided by the respondent on 22-03-2013 for an assured sum of Rs.5,59,420/- on an annual premium of Rs.38,801/- with a premium period of 15 years.  The policy holder died on 10-12-2013, i.e., 8½ months later.  Claim made by the complainant for payment of sum assured under the above policy has been repudiated by the OP on 13-08-2014 as per Ex.A.1 stating that the liability is rejected on account of deceased having withheld material information regarding tuberculosis disease at the time of effecting the assurance as Mr.Balaram was found undergoing treatment for tuberculosis prior to date of application and this information was not disclosed in the said application and such non-disclosure makes the Contract Void Ab Initio initio and no claim is admitted against the company.  The complainant therefore, approached this Forum seeking for the direction for the payment of Rs.6,79,420/- on various counts.

            2.  The OP company defended the repudiation on all possible grounds running about 12 typed pages.

            3.  The affidavit evidence of the complainant filed on 07-02-2015 is repetition of the complaint averments.   He has not disputed the contents of repudiation letter Ex.A.1.  This fact is sufficient for us to conclude that what has been stated in the repudiation letter, after conducting the proper investigation must be true.

            4.  The complainant has furnished affidavit evidence of Dr.B.Gurumurthy, Rtd.Chief Medical Officer, who’s affidavit is filed in this Forum on 19-12-2014 wherein the Medical Officer stated that Mr.Balaram died at 11 AM on 10-12-2013 due to low BP, which is primary cause of death.  His certificate is marked as Ex.A.5. 

5.  The core question for consideration in this case is not the cause of death of the policy holder.  But, whether the fact that at the time of taking-out the life policy, the policy holder was suffering from tuberculosis illness was material fact and therefore, on account of non-disclosure or fact in the proposal form, the insurance company was justified in law in repudiating the claim for the sum assured.

            6.  The contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured.  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.

            7.  Reliance is placed upon the decision of the Supreme Court in Civil appeal No.2776/2002 in Satwant Kaur Sandhu V/s New India Assurance Company Ltd., - dated: 10-07-2009, wherein the Supreme Court observed as follows.

“13. In United India Insurance Co.Ltd., Vs. M.K.J. Corporations, this Court has observed that it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties.  Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his 1[1908] 2 K.B.863 2 (1996) 6 SCC 428 9 believing the contrary (Also see-Modern Insulators Ltd. Vs.Oriental Insurance Co.Ltd.,3).

14.  MacGillivray on Insurance Law (Tenth Edition) has summarised the assured’s duty to disclose as under “…the assured must disclose to the insurer all facts material to an insurer’s appraisal of the risk which are known or deemed to be known by the assured but neither known nor deemed to be known by the insurer.  Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms.”

15.  Over three centuries ago, in Carter Vs.Boehm4, Lord Mansfield had succinctly summarized the principles necessitating a duty of disclosure by the assured, in the following words –

“Insurance is a contract of speculation.  The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist.  The keeping back such circumstance is a fraud, and therefore the policy is void.  Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risqui run is really different from the risque understood and intended to be run at the time of the agreement… The policy 3 (2000) 2 SCC 734 4(1766) 3 Burr.1905 1 0 would be equally void against the underwriter if he concealed… Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary.”

16.  Having said so, as noted above, the next question for consideration would be as to whether factum of the said illness was a “material” fact for the purpose of a mediclaim policy and its non-disclosure was tantamount to suppression of material facts enabling the Insurance Company to repudiate its liability under the policy?

17.  The term “material fact” is not defined in the Act and, therefore, it has been understood and explained by the Courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk.  Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be “material”.

18.  As stated in Pollock and Mulla’s Indian Contract and Specific Relief Acts any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact.

19.  In this regard, it would be apposite to make a reference to Regulation 2(1)(d) of the Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002, which explains the meaning of term “material”.  The Regulation reads thus:

“2. Definitions – In these regulations, unless the context otherwise requires –

1.    Xxx        xxx      xxx
2.   Xxx         xxx      xxx     
3.    Xxx        xxx      xxx

(d) “Proposal Form” means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.

Explanation: “Material” for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer.” Thus, the Regulation also defines the word “material” to mean and include all “important”, “essential” and relevant” information in the context of guiding the insurer to decide whether to undertake the risk or not.

20.  The upshot of the entire discussion is that in a Contract of Insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a “material fact”.  If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form.  Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a Contract of Insurance.

            8.   Bearing in mind aforesaid legal position, we may now advert to the facts in hand.  Item No.46 in the Proposal Form, Ex.B3 relates to health details to the life to be insured.  The declaration No. 1 and 3 are important for consideration for us, which reads as under;

1. I have never had any signs or symptoms, or been told that I have any heart condition, hypertension, stroke, disability, paralysis, cancer, tumor or abnormal growth, diabetes kidney problem, liver disease, lung disease, gastrointestinal disease, mental illness, HIV infections or AIDS.
2. X x x x x x x
3. I have not undergone and am not awaiting to undergo any surgical procedure, any investigative or diagnostic tests or medical examinations (other than for routine health screen).

9.  On behalf of the Insurance Company, the affidavit evidence of Company Secretary Mr.Amit Raheja has been filed, which explains the stand taken on this aspect of the matter.  Paragraph 6 to 11 of the affidavit reads as follows –

“6. I further state on the receipt of the claim intimation and being a early claim, the Opposite party conducted the investigations and found that DLA was suffering from Tuberculosis since 2011 and he was taking treatment at VIMS Hospital, Bellary, much prior to the inception of the policy.  The said fact was corroborated with Medical documents procured (during the investigation) from District Health & F.W. Society, RNTCP, Bellary, wherein the clearly mentioned that DLA was taking treatment of T.B. since 2011.  The opposite party also carried out investigations from insured’s neighbours and relatives about health and occupation and received the information that insured was suffering from Tuberculosis since long time much before the issuance of the policy contract.  Thus, the policy was purchased keeping in view the bad intentions and to have the wrongful gain.  Hence, the claim of the complainant was repudiated and the same was conveyed to the complainant vide letter dated 13.08.2014.  Medical Documents District Health & F.W.Society, RNTCP, Bellary is annexed and marked herewith as Exhibit RW-1/4.

7.  I further state that the complainant has played fraud by not disclosing the medical information and the liability of the opposite party as an insurer is subject to the terms and conditions of the policy of insurance under which such non-disclosure makes the contract void ab-initio.

8.  I further state that it is also submitted that as the contract of insurance is a contract of uberime fide and as we have performed our part of the contract by providing our services from date of commencement of the policy and as such the Complainant is stopped from challenging the contract whereas the policy holder had not disclosed the material medical information.

9. I further state that policy holder withhold material information regarding disease Tuberculosis at the time of affecting the assurance with the opposite party and the father of the complainant was undergoing treatment for Tuberculosis disease prior to the date of application and this information was not discloses in the Application Form signed by the father of the complainant.  It is further stated that clause 46 of the Application Form, wherein there were health details of the life to be insured.  In that column, the insured ticked the column that he had never had any signs or symptom, or any disease including hypertension, disability, paralysis, cancer, turmor, abnormal growth, etc and being not receiving any treatment for any symptoms etc. (detailed para may be read in the application form attached as Annexure-R3).

10.  I further state that the opposite party as per its procedural investigation at local clinics and hospitals and met with medical officers who confirmed that insured was suffering from Tuberculosis since last four years and he was taking treatment at VIMS Hospital, Bellary.  The medical papers/reports of treatment of the insured regarding the disease Tuberculosis at District Health & F.W. Society-R.N.T.C.P.(D) Bellary and Vijayanagar Institute of Medical Sciences, Bellary, which are pre-policy treatment papers are exhibited as EX RW-1/5 (colly).

11.  I further state that the Opposite party also carried out investigation from Insured’s neighbours and relative about health and occupation and received the information that insured was suffering from Tuberculosis since long time much before the insurance of the policy contract.  Thus, the policy was purchased keeping in view the bad intentions of having unlawful gain by defrauding the opposite party.”

 10.  The evidence adduced on behalf of the Insurance Company is also supported by the case sheet, Ex.B.5 obtained from Vijayanagar Institute Medical Science, Bellar.  This document was furnished in this Forum on 07-02-2015.  Thereafter, the case has been posted for arguments to 20-02-2015, 28-02-2015, 07-03-2015, 15-03-2015.  So, if at all the complainant is disputing the genuineness of the case sheet, Ex.B.5, he should have adduced rebuttal evidence.  That has not been done.  These circumstances are sufficient for us in a summary proceedings before a Forum to arrive proper conclusion.  We do not insist for doctor’s evidence on behalf of OP also as there is no such statutory requirement for a doctor under Consumer Protection Regulations – 2005.  Regulation No.26 (1) of Consumer Protection Regulations – 2005 specifically states that – “ In all proceedings before the Consumer Forum, endeavour shall be made the parties and their counsel to avoid the use of provisions of Code of Civil Procedure, 1908 (5 of 1908).”

11. In T.G.Abraham v. M.D.Karala S.R.T.C., III (2004) CPJ, 6 it has been held that consumer Courts are not expected to go into technicalities of civil or criminal jurisprudence.  Evidence Act and criminal procedure Court are not applicable to proceedings before consumer Court.  Disputes are to be decded on yardstick of reasonableness and probabilities.  Principles of natural justice to apply in full force.

12.   The decisions of the Rajasthan State Consumer Disputes Redressal Commission, Jaipur in Mangej Kanwar V/s Life Insurance Corporation of India & Anr., - 2006 (2) CPR 195 is not applicable to the facts of the because the question decided therein is quite different one. 

11.  The statement of law laid-down by the Supreme Court in the Venkat Naidu V/s LIC of India and anr., IV (2011) CPJ 6 (SC) is not applicable to the facts of the case as order of the National Commission was set-aside by the Supreme Court on the ground that the National Commission had made wide guess work that the deceased had suppressed the facts relating to his illness.  In the case before us, there is sufficient evidence to show that the deceased was taken treatment in Vijayanagar Institute of Medical Science, Bellary prior to application/proposal for insurance.

12.  For the reasons stated above, the Insurance Company was justified in repudiating the claim.  Consequently, there is no deficiency in service on the part of the OP Company.  Resultantly, the complaint stands dismissed. 

// ANNEXURE //

List of Documents Exhibited for the Complainant.

Witnesses examined for the Complainant / Respondent.