This Revision Petition has been filed by the Petitioners/ Opposite Parties against Respondent / Complainant challenging the impugned order dated 04.03.2020 passed by the State Consumer Disputes Redressal Commission, Punjab, Chandigarh in First Appeal bearing No. 130 of 2020. Vide this order, the State Commission dismissed the Appeal while upholding the order dated 19.12.2019 passed by the District Consumer Disputes Redressal Forum, Ferozepur in Consumer Case No. 516/2019.

2.      The brief facts of the case are that the Complainant’s husband namely Lt. Sh. Jaswinder Singh had taken a Life Insurance Policy bearing no. 53164444 in March, 2018 from the Opposite Parties and had paid a premium of Rs.39,999.47/-. The deceased insured had nominated the Complainant/ his wife in the Insurance Policy and hence, the Complainant is a consumer of the Opposite Parties. It was submitted by the Complainant that the policy was named under the plan Reliance Life Long Savings having the policy term of 25 years with basic sum assured of Rs.16,94,504.00/-. It was further submitted that in case of death of the insured during the continuation of policy, the nominee would be entitled to an amount equal to the basic sum assured. It was also stated that the particulars of the insured were rightly mentioned as were asked and as per the instructions of the agent of the company and further the sole purpose of the insured to purchase the policy was to secure the future of his family in case of his untimely death. It was also averred that the policy holder met his untimely death on 20.07.2018 and the death claim was filed with the Opposite Parties by the Complainant. The information regarding death of the insured was given to the Opposite Parties through the Opposite Parties’ representatives who had visited the Complainant and the representatives had also taken all the documents presented by the Complainant with an assurance that the claim would be settled at the earliest and the documents would be returned. It was further submitted that the Opposite Parties intimated the Complainant that the death claim has been repudiated vide letter dated 20.04.2019. The Complainant on various occasions requested the officials of the Opposite Parties to settle the claim, however, the representatives of the Opposite Parties used vulgar and uncivilised language with the Complainant. Hence, the Complaint was filed before the District Forum by the Complainant being aggrieved by the acts of the Opposite Parties in non-settling of the claim, being unresponsive, the representatives of the Opposite Parties taking all the documents under the veil of settling the claim, withholding them, and then rejecting the claim and depriving the Complainant of her lawful claim.

3.      It was also submitted by the Complainant that an investigator who visited the Complainant after the claim was filed demanded her palm to be greased in order to help pass the claim. Therefore, the Complaint was filed before the District Forum seeking payment of insured amount of Rs.16,94,504/-, compensation of Rs.1,00,000/- and litigation expenses of Rs.15,000/- along with interest from the date of actual lodging of the claim. 

4.      The Opposite Parties appeared before the District Forum and resisted the Complaint and denied all the allegations thereby denying deficiency in service on their part. It was contended by the Opposite Parties that the policy was taken by the insured by suppressing material facts about his income and occupation. In the Proposal Form, the insured disclosed his annual income of Rs.4,00,000/- being a contractor of white-washing. However, the Income Tax Returns for the assessment years 2016-17 & 2017-18 was found invalid as per the information provided under RTI by Income Tax Department. It was further contended that the alleged Income Tax Returns were filed on 04.03.2018 and the policy was proposed on 05.03.2018. It was averred that the DLA neither had income of Rs.4,00,000/- nor he was the contractor of white-wash and the policy was taken on false mis-representation on the fact of his income and occupation. Reliance was placed on various decisions of the NCDRC in ‘Bharti & Others v. Bajaj Allianze Life Insurance Company Limited’ decided on 18.02.2014, in ‘PNB Metlife LIC Limited v. Mopidevi Lalitha’ 2017 (4) CPR 371 and ‘Rakesh Patel v. LIC of India and Another’ 2015 (1) CPJ 716.

5.      It was further the case of the Opposite Parties that the Ld. District Forum had no jurisdiction try the matter as the element of fraud was involved in the Complaint. The DLA was a resident of Ferozepur City whereas the policy in question was proposed at Panchkula (Haryana) and the DLA died within 4 months and 11 days from the taking of the insurance policy. It was also submitted that during that time, the Haryana Police Special Task Force unearthed a syndicated Insurance Fraud in which the insurance policies were taken in the name of cancer/critical illness patients and thereafter their death was shown as accident in connivance with Doctors and Police Officials, and the facts of this Complaint are similar to the modus operandi used by the said syndicate fraud. Hence, the matter required detailed investigation in order to unearth the scam involved in the present case which is not possible in a summary proceeding, and as such Civil Courts would have the jurisdiction to try and decide the present matter. It was also averred that the policy was taken on 09.03.2018 and the insured died on 20.07.2018 i.e., within 4 months & 11 days from taking the policy, and early death of insured clearly proves that the policy in question was taken by the Complainant with a malafide intention. Reliance was placed on ‘LIC of India & Anr. v. Balbir Kaur’ I (2009) 212 (NC). It was also contended that the insurance contracts are contracts based on ‘Utmost Good Faith’ and that the Life Assured being a party to the contract is bound to disclose all material facts known to him at the time of proposal. Reliance was also placed on various judgements of Hon’ble Supreme Court of India and National Commission. It was further averred that the Complainant is not a ‘Consumer’ as defined under section 2(d) of the Consumer Protection Act, 1986 and that the sum assured is strictly payable as per terms and conditions of the policy. It was further contended that the Opposite Party received the intimation regarding the death of DLA due to heart attack on 14.09.2018 and the policy was issued on 09.03.2018 and the DLA died on 22.07.2018. During investigation of the claim, it was found that the DLA had mentioned wrong facts about his income and occupation and submitted invalid Income Tax Returns in support of his income and consequently, the Opposite Party sought information under RTI Act from Income Tax Department. Subsequently, it was proved from the reply of the department that the ITR was not valid and hence, the claim was repudiated on 30.04.2019. Therefore, the Opposite Parties prayed for dismissal of the complaint with costs.

6.      The Ld. District Forum vide its order dated 19.12.2019 allowed the Complaint and observed inter alia:-

“7. It is the admitted case of the parties that deceased husband of the complainant purchased life insurance policy bearing after paying requisite premium for sum assured of Rs.16,94,504/-. It is also the admitted case of the parties that the complainant is nominee of the above said insurance policy. The reason for withholding the insured amount by the insurance company due to misrepresentation of the fact of income and occupation. The learned counsel for the opposite parties argued that during the investigation it was found that income tax returns for the years 2016-17 and 2017-18 was found invalid. As per information provided by the Income Tax Department, both were filed on 04.03.2018 and the policy was proposed on 03.05.2018. The DLA was not having income of Rs.4 Lac as disclosed in the proposal form. So the Opposite Parties rightly repudiated the claim of the complainant. On the other hand, the learned counsel for the complainant argued that DLA filed his income tax returns for the assessment years 2016-2017 and 2017-2018 on 04.03.2018, e-filing system of income tax department and as per procedure these income tax returns were to be verified by sending the hard copies of these returns to Income Tax Department after duly signed by the assesse within six months from e-filing of the returns. Before sending the hard copy of the income tax returns for verification within stipulated time of six months, the DLA died on 22.07.2018 as such these income returns were not verified by the Income Tax Department. There is no fault on the part of the DLA or complainant for not verification of these income tax returns as the DLA died much prior within stipulated time for verification of the income tax return. It is wrong that DLA made any misrepresentation regarding his income or occupation to opposite parties at the time of purchase of insurance policy. The Opposite Parties have not pleaded in what regard the deceased husband of the complainant has misrepresentation regarding the occupation or income. They have not produced on record any evidence or any documents in support of their allegation that husband of the complainant made any misrepresentation regarding his income and occupation. The opposite parties are wrongly and illegally retaining the amount on false ground. The opposite parties are guilty of rendering deficient services to the complainant. The opposite parties are also liable to pay litigation expenses to the complainant.”

7.      Hence the Opposite Parties were directed to pay Rs.16,94,504/- as insurance claim along with interest at the rate of 9% p.a. from date of filing of complaint till realization and Rs.5,000/- as consolidated compensation.    

8.      Aggrieved by the above order, First Appeal bearing No. 130 of 2020 was filed by Appellants/ Opposite Parties against the Respondent/ Complainant before the State Consumer Disputes Redressal Commission, Punjab, Chandigarh.

9.      The Ld. State Commission vide impugned order dated 04.03.2020 dismissed the Appeal in limine while upholding the order of Ld.  District Forum and observed that:

“12. In view of our above discussion, the opposite parties wrongly and arbitrarily repudiated the claim of the complainant and it amounts to deficiency in service on their part. We do not find any material irregularity in the order passed by the District Forum. There is no ground or justification for admitting the appeal and issuing notice to the respondent/complainant.

13. Accordingly, the appeal is dismissed in limine and the impugned order is upheld.

……”

10.    Hence, the present Revision Petition has been filed by the Petitioners/ Opposite Parties against the above mentioned impugned order of the Ld. State Commission on the grounds that:

1. The impugned order is arbitrary and contrary to the settled principles of law as laid down by Hon’ble Supreme Court and this Commission;
2. The Ld. State Commission ignored the fact that it is a settled principle of law that it is the duty of the insured person to provide true and correct information at the time of filing of the proposal as the Contracts of Insurance are governed by the principle of utmost good faith. And the order of State Commission and District Forum is contrary to the Doctrine of ‘Uberrimae Fidei’. Further, the proposer at the time of filling the form gave undertaking and declaration. Reliance has been placed on ‘Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathore’;
3. The orders passed by the Ld. State Commission and Ld. District Forum are contrary to the provisions of Insurance Act. The Petitioners were well within their right under section 45 of the Insurance Act to repudiate the claim;
4. The State Commission has wrongly upheld the order of District Forum by relying on the fact that non-verification of the Income tax Returns of the deceased cannot be said to be mis-declaration by the deceased. The State Commission failed to consider the Reply dated 22.04.2019 to the RTI filed by the Petitioners. The Reply proves the fact that the said income tax returns disclosed by the deceased in the proposal form were invalid;
5. The State Commission wrongly upheld the contention of the Respondent relied by the District Forum that the E-Income Tax Returns filed by the deceased on 04.03.2018 were to be verified with the Income Tax Department within six months therefrom and the deceased passed on 20.07.2018 before the expiry of six months. The Ld. State Commission failed to consider the document/ ITR-V already on record which clearly depicts that the Income Tax Return filed electronically has to be mandatorily verified within a period of 120 days from the date of electronic filing. As per record deceased passed on 02.07.2018 i.e. prior to expiry of period of 120 days. Further, no proof was ever placed on record by the Respondent to contradict the said period of 120 days and to substantiate the claim of six months period for verifying the E-returns;
6. The insurance policy was taken by the insured with the sole purpose of defrauding the Petitioners.

11.    Heard Ld. Counsel for the Petitioner.  Perused the material available on record.

12.    Perusal of the Proposal Form submitted by the deceased which is a part of the Annexure ‘E’ goes to show that he had claimed his actual income to be Rs.4 Lakhs from “Business”.  The Proposal Form was submitted on 05/03/2018.  The Income Tax Return of the deceased for the Assessment Years 2016-2017 and 2017-2018 (Annexure ‘F’ & ‘G’) go to show that in the first of those Assessment Years he had declared his Gross Total Income to be Rs.2,65,000/- which was enhanced to Rs.2,99,000/-  in the following Assessment Year.  Both the Returns were submitted online on 04/03/2018, which was just a day before he submitted his Insurance Proposal Form.  As such there was a manifest misrepresentation of material facts, since he had projected his Income to be much above his actual Income disclosed in his Returns submitted online just a day earlier.

13.    The Ld. State Commission did not find this to be of much consequence since it was of the view that the Insurance Company need not have accepted his Proposal Form without satisfying itself about the  correctness of its contents.  This is clearly an excessive and uncalled for indulgence in favour of the insured which is not in consonance with the settled law on the matter, which lays down that an Insurance Coverage is sought for and provided by scrupulously following the Principle of “Uberrimae Fidei”, and every material fact must have to be truthful otherwise there would be a good ground for Rescission of the Contract.  This Principle has been laid down by the Hon’ble Apex Court in various decisions such as “LIC Vs. G.M Channabasamma decided on 06/12/1990, (1991) 1 SCC 357”, “LIC Vs. Asha Goel & Anr. Appeal Civil 4186-87 of 1988, decided on 13/12/2000” and “Satwant Kaur Sandhu Vs. New India Assurance Co. Ltd., IV (2009) CPJ8 (SC)”.

14.    Further, the guidelines issued by the IRDA do not provide anywhere that any such verification must have to be necessarily done especially in those cases where the premium amount itself is below   Rs.1 Lakh per annum.

15.    For the aforesaid reasons, this Commission finds merit in the submission raised on behalf of the Petitioner’s Insurance Company and is therefore, of the view of that both the Ld. Fora acted with material irregularity  in allowing Insurance Claim of the Complainant without properly appreciating the defence of the Insurance Company, that it was justified in repudiating the claim on account of wilful misrepresentation of facts on the part of the Insured about his Income, on the basis of which he had obtained the coverage to the extent of the sum assured.

16.    Consequently, the Revision Petition is allowed after setting aside the decisions of both the Ld. Fora below.  The Complaint filed by the Respondent accordingly stands dismissed. 

17.    No Orders as to costs.

18.    Pending application(s), if any, also stand disposed off.