R.K. AGRAWAL, J., PRESIDENT

1.       The present Revision Petition has been filed by the Original Complainant under Section 21 of the Consumer Protection Act, 1986 against the Order dated 05.11.2009, passed by the Chhattisgarh State Consumer Disputes Redressal Commission, Pandri, Raipur, (hereinafter referred to as the State Commission) in Appeal No. 36/2009, preferred by Life Insurance Corporation of India, the Opposite Party/Respondent herein (hereinafter referred to as the Respondent/Insurance Company).  By the Impugned Order, the State Commission while reversing the Order dated 23.12.2008, passed by the District Consumer Disputes Redressal Commission, Durg (hereinafter referred to as the District Commission) in Complaint Case No. 251/2007, filed by the Complainant/Petitioner, has disposed of the Appeal filed by the Respondent/Insurance Company, with a direction to the Respondent/Insurance Company to pay a sum of Rs.25,000/- to the Complainant/Petitioner herein as compensation for the deficiency in service committed by it in not deciding the claim in time and thereby compelling the Complainant/Petitioner to re-approach the District Commission as also Rs.500/- as costs.  By its Order dated 23.12.2008, the District Commission had allowed the Complaint filed by the Complainant/Petitioner and directed the Respondent/Insurance Company to pay to the Complainant/Petitioner the amount of 13 policies in question along with interest @ 6% p.a. from the date of filing of the Complaint and also pay litigation costs of Rs.2000/-.

2.       The facts, in brief, as culled out from the Complaint are that one Sukhdev, the husband of the Complainant/Petitioner (hereinafter referred to as the Insured), while working in Bhilai Steel Plant, had taken 13 insurance policies in the total sum of Rs.13,40,000/-.  The details of the said policies have been given in Para-2 of the Complaint.  The premium of the said policies was being deducted from the monthly salary of the Insured and paid to the concerned Branch of the Respondent/Insurance Company. The Insured died on 15.11.2002 in the Jawaharlal Nehru Hospital, Bhilai Steel Plant, Bhilai, where-after the Complainant/Petitioner preferred claim under the policies in question.  When no amount was paid to her by the Respondent/Insurance Company, she sent a notice, dated 14.11.2004, to the Respondent/Insurance Company but neither there was any reply to the notice nor was any amount paid by the Respondent/Insurance Company.  Accordingly, the afore-noted Complaint came to be filed before the District Commission, praying for a direction to the Respondent/Insurance Company to pay the assured sum of Rs.13,40,000/- along with bonus as per Rules as also interest @ 12% from the date of the Complaint etc.

3.       Upon notice, the Respondent/Insurance Company filed its Reply before the District Commission.  While admitting about issuance of all the 13 policies in question, it was stated on behalf of the Respondent/Insurance Company that the Insured had taken the policies from different Branches.  The premium was being deducted from the salary of the Insured.  However, subsequently, the Insured requested his Employer not to deduct the premium, on account of which the Employer stopped sending the premium amount and, therefore, the policies were lapsed. The Employer Bhilai Steel Plant had not been made a party in the Complaint otherwise things would have been cleared.  As directed by the State Commission in the first round of litigation, the Complainant/Petitioner had not filed the claim forms properly and, therefore, the matter was not considered.  Further, it was stated by the Respondent/Insurance Company that under Bima Kiran Policy a person cannot be paid for more than Rs.3.00 Lakhs and the Insured had taken eight such policies in the total assured sum of Rs.10,50,000/-.  The list of the said eight policies has been depicted in Para-10 of the Written Version filed by the Respondent/Insurance Company.  In three policies, out of the said eight policies, a sum of Rs.3.00 Lakh had been paid to the Complainant/Petitioner.  The said three policies were included in those ten policies, for which the Complainant/Petitioner had earlier filed Complaint Case No. 181/2003 and had received a sum of Rs.6,52,825/-.  While the policies given at serial no. 4 to 8 in the aforesaid list of eight insurance policies were taken by the Insured between January 1997 and March 2000, the first three policies were taken between October 2000 and February 2001. The policies are maintained by the Respondent/Insurance Company as per their number and not on the basis of name of the Insured and, therefore, it is necessary for the Insured to give the details of pre-existing insurance policies.  Since in the initial Complaint the Complainant/Petitioner had claimed for the latter Bima Kiran policies and not for the earlier policies, this objection was not taken at that time.  However, at the time of taking the subsequent insurance policies, the Insured had not disclosed about the pre-existing insurance policies and the premium also had not been paid from August, 1997.  The salary of the Insured was not sufficient enough to deduct the premium amount of Rs.2700/-.  Since the Insured had stopped paying the premium amount and had taken the insurance policies without disclosing the pre-existing insurance policies, the Complainant/Petitioner was not entitled to claim amount and the Complaint was liable to be dismissed.

4.       On appreciation of the material placed on record and the evidence adduced by the Parties, the District Commission, inter alia, came to the conclusion that there was no default/lapse on the part of the Complainant/Petitioner in sending the claim forms to the Respondent Insurance Company.  Neither any document had been placed on record by the Respondent/Insurance Company to show that the Insured had requested his Employer not to deduct the premium amount nor any intimation/information had been sent by the Respondent/Insurance Company to the Insured or his Employer and, therefore, it cannot be inferred that the salary of the Insured was not sufficient enough to deduct the premium amount.  As regards the contention of the Respondent/Insurance Company that the record of the insurance policy is maintained by the Branch concerned and since the Insured had taken the insurance policies from different Branches, different insurance policies were issued to him, the District Commission observed that when after death of an Insured the relevant information can be collected by the Respondent/Insurance Company, why it cannot be done at the time of taking the insurance policy by the said Insured and, therefore, the Complainant/Petitioner cannot be made to suffer for the fault of the Respondent/Insurance Company.  There was deficiency in service on the part of the Respondent/Insurance Company in not settling the claim made by the Complainant/Petitioner after the order passed by the State Commission.  The Complainant/Petitioner had not requested for any relief for the three insurance policies, for which it was stated by the Respondent/Insurance Company that the claim amount had already been paid to the Complainant/Petitioner and, therefore, the said plea was not relevant.  Had the Complainant/Petitioner been praying for any relief in respect of said three insurance policies again, then the said plea might have been relevant.  The contention of the Respondent Insurance Company that the Insured knew about his illness and, therefore, had taken the insurance policies in question is also immaterial because from a perusal of the documents placed on record by the Respondent/Insurance Company, including the claim forms and medical certificate, it was evident that he had been admitted to the Hospital 2 days before his death and he came to know about his illness 2-3 days before.  The District Commission finally allowed the Complaint and directed the Respondent/Insurance Company to pay to the Complainant/Petitioner the assured sum of all the 13 insurance policies in question with interest @ 6% as also Rs.2000/- towards litigation costs and advocate fee.

5.       Feeling aggrieved with the Order passed by the District Commission, the Respondent/Insurance Company filed the afore-noted Appeal before the State Commission.  The State Commission was of the opinion that there was deliberate concealment of material facts relating to pre-existing insurance policies in the proposal forms submitted by the Insured and, therefore, the Respondent/Insurance Company was not liable to make any payment and there was no deficiency in service on its part in repudiating the claim of insurance made by the Complainant/Petitioner.  Further, the premium of most of the policies was not paid for a long time.  The salary slip of the deceased (Insured) showed that in the month of February 2000 there was deduction of Rs.1,110/- for insurance, whereas the total liability of the insurance premium for all the policies was of Rs.4,077/-, which might be on account of his own instructions.  However, there was deficiency in service on the part of the Respondent/Insurance Company in not deciding the claim made by the Complainant/Petitioner within 3 months, as directed by the State Commission in the Order dated 15.09.2006.  In this view of the matter, while holding that the sum assured, as directed by the District Commission, was not payable to the Complainant/Petitioner, on account of deliberate suppression of material information in the proposal forms, the Respondent/Insurance Company was directed to pay a sum of Rs.25,000/- to the Complainant/Petitioner as compensation for the deficiency in service in not deciding the claim in time and thereby compelling her to re-approach the District Commission and further sum of Rs.500/- as litigation costs.   

6.       Heard learned Counsel for the Parties and perused the material available on record.     

7.       The foremost question to be decided in this matter is as to whether there is suppression of material facts or not.  It is not in dispute that the Insured had taken 13 policies in question at different points of time.  The Respondent/Insurance Company had submitted before the State Commission copies of the proposal forms, which had been submitted by the Insured before it.  Upon perusal of the proposal forms, the State Commission observed that under the said proposal forms, the Proposer (Insured) was required to mention details of all his previous insurance policies, including the policies surrendered/lapsed during the last three years.  However, in the relevant column nothing was entered/written and by putting a diagonal line it was expressed that there was no pre-existing insurance policy and same was the position in almost all the proposal forms.  In some of the proposal forms either one or two such policies had been mentioned, but not the all, whereas the Insured was having 13 policies issued by the Respondent/ Insurance Company.  In the present Revision Petition also, which has been filed challenging the Order passed by the State Commission, wherein it has been held that the sum assured was not payable to the Complainant/Petitioner on account of deliberate suppression of material information in the proposal forms, nothing has been stated by the Complainant/Petitioner nor any document has been placed on record in order to rebut the stand taken by the State Commission while passing the Impugned Order.

8.       The Hon’ble Supreme Court in the case of Reliance Life Insurance Co. Ltd. & Anr. Vs. Rekhaben Nareshbhai Rathod [II (2019) CPJ 53 (SC)], has set aside the judgment of this Commission, whereby this Commission had held that the failure of the Insured to disclose a previous insurance policy, as required under the policy proposal form, would not influence the decision of a prudent insurer to issue the policy in question and, therefore, the Insurer was disentitled from repudiating its liability.  The Hon’ble Supreme Court while allowing the repudiation of the insurance claim, held:

“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 insurance". Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.”

9.       In this view of the matter, Section 45 of the Insurance Act, 1988 comes into play. The said Section provides as under:

“No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground 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, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.” 

10.     As held by the Hon’ble Supreme Court in the case of Mithoolal Nayak Vs. Life Insurance Corporation of India, AIR 1962 SC 814, the three conditions for the application of the second part of Section 45, which operates as a proviso, are that: (a) the statement must be on a material matter or must suppress facts which it was material to disclose;  (b) the suppression must be fraudulently made by the policy-holder; and (c) the policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.  In the present case, not giving the information relating to pre-existing insurance policies by the Insured at the time of taking the subsequent insurance policies was certainly material information, which had been fraudulently suppressed by him, knowing well that its disclosure may be detrimental to his intention of getting the subsequent insurance policies.  Had the said information been given by the Insured, the Insurer may have taken a decision whether the subsequent insurance policies should be issued or not and if the same are to be issued, what should be the altered terms and premium therefor.  However, in the present case, on account of suppression of material information by the Insured, the Respondent/Insurance Company has been deprived from taking an informed decision.

11.     In view of the aforesaid discussion and in the absence of any rebuttal by the Complainant/Petitioner to the stand taken by the State Commission, we are of the opinion that there is suppression of material facts by the Insured and, therefore, the State Commission, for the reasons recorded in the Impugned Order, is justified in holding that the Respondent/Insurance Company is not liable to pay the sum assured to the Complainant/Petitioner.

12.     Once we are of the opinion that there is suppression of material facts by the Insured and the sum assured is not payable to the Complainant/Petitioner, it is not necessary for us to dwell upon other issued involved in the matter.

13.     The Revision Petition is accordingly dismissed.