BEFORE:

HON’BLE MR. SUBHASH CHANDRA, PRESIDING MEMBER

HON’BLE AVM J RAJENDRA, AVSM VSM (Retd.),  MEMBER

For the Petitioner         Mr Santosh Kumar, Advocate               

For the Respondent      Mr Surya Prakash Gandhi, Advocate (VC)         

ORDER

PER SUBHASH CHANDRA

1.      This Revision Petition has been filed under Section 21(b) of the Consumer Protection Act, 1986 (in short, “the Act”) in challenge to order dated 15.11.2016 in Appeal No. 683 of 2012 of the Rajasthan State Consumer Disputes Redressal Commission, Jaipur (in short, “State Commission”) allowing the appeal.

2.      We have heard the learned counsel for both the parties and given careful consideration to the material on record.

3.      The relevant facts of this case, in brief, are that the respondent had obtained two life insurance policies on 06.02.2009 and 08.05.2009 for assured sums of Rs 2,10,000/- and Rs 7,50,000/- respectively. The life assured expired after being admitted to hospital on 14.12.2009 on 19.12.2009 during treatment due to Septicaemia shock with Acute Respiratory Distress Syndrome (ARDS) and Multiple Organ Dysfunction Syndrome (MODS) in MG Hospital, Jodhpur. A claim filed by the present respondent, who is the mother of the deceased life assured (DLA), was repudiated by the appellant insurance company on the ground that the DLA had suppressed material information in both the insurance proposal forms pertaining to past illnesses and given incorrect information about her source of income. This order was challenged before the District Consumer Forum (“District Forum”) in Complaint no. 192 of 2011 and was disallowed on the ground that an insurance policy was a contract of utmost good faith between the parties and in view of the full and correct disclosure not having been made by the insured, the contract was correctly repudiated by it. This order was challenged by way of appeal before the State Commission which set aside the order of the District Forum and held that it was the duty of the insurance company to prove that the DLA was suffering from any disease prior to the taking of the policy which was knowingly suppressed in the proposal form. It also held that the cause of death of the DLA had no direct nexus with her previous surgery and therefore the claim was held to have been denied on technical grounds. Accordingly the order of the District Forum, Ajmer was set aside and the appellant insurance company directed to pay the sum assured under both the policies with interest at 9% from 17.06.2011, the date of filing of the complaint, along with Rs 20,000/- towards mental agony and cost of litigation. This order is impugned before us.

4.      It is the case of the complainant that the impugned order of the State Commission is erroneous since the parents of the DLA had told attending doctors at MG Hospital, Jodhpur that she had undergone two surgeries, for splenectomy or surgical removal of spleen in 1994 and aspiration of parietal abscess or surgical draining of pus from an abscess in the brain caused by bacterial infection in 2000. It had also been disclosed that the deceased suffered from carotid artery aneurysm or swelling of arteries in the neck for which she received anti tubercular treatment for tuberculosis. Appellant had brought a copy of the medical records of the treating doctor at MG Hospital, Jodhpur on the record. The respondent, vide letter dated 27.12.2010, had admitted that the DLA had been operated for splenectomy in 1990 and aspiration of parietal lobe abscess in 2000. Respondent had also stated that the records for the said medical treatment were not traceable as the same were very old. Appellant also contended that its investigations had revealed that the declaration of the DLA that she was employed as a teacher in Bright Star Children Academy, Ajmer was false since the said school had, vide letter dated 10.02.2011, stated that the DLA was never in their employ. As per the policy of the appellant, insurance cover is not allowed for single women who do not have any income as per policy dated 01.03.2005 relating to “Insurance On Female Lives” and hence the repudiation was correct and the order of the District Forum, Ajmer in order. Reliance was placed on Section 45 of the Insurance Act, 1938 as per which

“…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 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.”

5.      It was contended it was for the insurance company and not the insured to judge what was material or otherwise and that as per the judgment of the Hon’ble Supreme Court in Satwant Kaur Vs. New India Assurance Co., (2009) 8 SCC 316it had been held that:

Nonetheless it is a contract of insurance falling in the category of contract 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 …. Needless to emphasize that any inaccurate answer will entitle the insurer to repudiate his liability because 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.

6.      It was argued that the State Commission also erred in not appreciating that the determination of whether any material fact had been suppressed or was necessary to examine information which is in the exclusive knowledge of the person intending to take the policy was that of the insurer as held by the Hon’ble Supreme Court in LIC and others Vs. Smt. Asha Goyal & Anr., (2001) 2 SCC 160. The appellant also argued that the respondent was estopped from pleading that the previous surgeries were not material facts in light of the Hon’ble Supreme Court's judgment in PC Chacko & Anr. Vs. Chairman, LIC, AIR 2008 SC 424 wherein it had been held that if a person makes a wrong statement with knowledge of consequence, he would ordinarily be estopped from pleading that even if such a fact had been disclosed it would not have made any material change.

7.      It was also argued that the State Commission erred in shifting the burden of proof onto the petitioner instead of the respondent since on admission that the deceased had undergone surgeries that were not disclosed in the proposal form, the onus to explain that there was no nexus between the previous surgeries and the cause of death lay on the respondent which had not been discharged. Reliance was also placed on the Hon’ble Supreme Court's judgment in United India Insurance Co. Ltd. Vs. Sameer Chandra Chaudhary, (2000) 5 SCC 784 which held that “admission is the best piece of evidence against the persons making admission”  and to contend that the effect of admission is that it shifts the onus on the person admitting the fact on the principle that what a party himself admits to be true may reasonably be presumed to be so and until presumption is rebutted, the fact admitted must be taken to be established.

8.      It was also submitted that the State Commission erred in not appreciating that the deceased had provided false information about her occupation while applying for Policy no. 186276156 in stating that she had been working as a teacher at the Bright Star Children Academy School, Ajmer for the past two years which had been denied by the said school. Therefore, the DLA was excluded under the appellant's guidelines for policies for single women with no income between the ages of 25 and 50 years. Appellant relied upon the Supreme Court's judgment in Mithoolal Nayak Vs. Life Insurance Corporation of India, AIR 1962 SC 814 which held that mere suppression and inaccuracy of facts stated in the proposal form, whether or not having nexus with the cause of death, are enough to vitiate the entire contract of insurance. Thus, the appellant averred that the State Commission failed to appreciate that a contract of insurance was one of uberimma fide and the DLA was under legal obligation to act with utmost good faith and make a full disclosure of facts exclusively within her knowledge and withholding of information pertaining to past medical history and incorrect information about her occupation was sufficient in the present case to vitiate the contract. The contention of the appellant is also that a proposal form filled by an insurance agent cannot be held to be done by the insurance company since it has been held by the by this Commission in LIC of India Vs. Shobha Rani Shah & Anr., (I) 2011 CPJ 166 (NC) that at the time of filling up of the form, agents act on behalf of the proposer and not the insurance company. The revision petition is therefore prayed to be allowed.

9.      Per contra, it was contended by the respondent that there had been no suppression of material facts at the time of obtaining of the said policies since the complainant's daughter, the DLA, had been completely cured at the time of obtaining of the policy policies. The spleen had to be removed in 1990 due to malaria and thereafter no further treatment was taken and the abscess in the upper portion of the head had been removed in 2000 and was drained at SMS Hospital, Jaipur. It was denied that the DLA ever suffered from tuberculosis. The presumption of suppression of the fact of her illness could not be assumed as it was not possible for her to recall her illness which occurred at a young age. The surgery for drainage of pus for the abscess was stated to be a minor operation and that these were not material facts on the basis of which the claim could be repudiated. It was contended that the cause of death of the insured was stated to be Hepatitis B and the appellant had not produced any document to establish that the DLA was suffering from Hepatitis B prior to the taking of the insurance policies to establish any nexus between the cause of death and previous illness. It was also submitted that the DLA had been working as a temporary teacher in the Bright Star Children Academy, Ajmer and that the school had issued a false certificate regarding her employment. It was therefore contended that the claims be allowed and the order of the State Commission be upheld.

10.    From the fore going it is evident that the policies in question were repudiated on the ground that the DLA had incorrectly disclosed her employment as a teacher and that she had not been suffering from any illness prior to the obtaining of the policy. The repudiation had held her declaration of good health to be false in view of the splenectomy operation in 1990 and operation for left parietal abscess in 2000. The respondent has admitted the fact of the splenectomy and the removal of the abscess from the brain. In view of this admission and the fact that the DLA was not in regular employment with the school in Ajmer since by her own admission, she was only in temporary employment (although no document has been produced to this effect), appellant’s action of repudiating the policies cannot be held to be arbitrary or perverse.

11.    In view of the settled position of law under the Insurance Act and the law laid down by the Apex Court in Satwant Kaur (supra) and PC Chacko (supra), the State Commission’s order setting aside the order of the District Forum dismissing the claims of the respondent and upholding the respondent’s appeal directing payment of the sum assured under both the policies with compensation is based on an incorrect appreciation of facts and law. It has also erred in placing the burden of proof on the appellant. On the contrary the appellant has produced documentary evidence from the school which indicates clearly that the DLA was not in their employment and is not denied by the respondent. As per Section 45 of the Insurance Act, 1938 a policy can be called in question even after the initial period in case it is found to be based on fraudulent declarations. The repudiation of the claim cannot, therefore, be considered to be incorrect. The State Commission has clearly fallen in error in reaching its findings since there is manifest suppression of material facts on part of the DLA. The State Commission has clearly fallen into error in arriving at its findings in setting aside the order of the District Forum which is based on the position of law and therefore warrants interference.

12.    In view of the fore going discussion and the facts and circumstances of this case, the Revision Petition is found to have merit since it is clear that there is a material irregularity in the order of the State Commission in not appreciating the position under law. It is accordingly allowed and the order of the State Commission in Appeal no. 683 of 2012 is set aside. In the circumstances of the case, there shall be no order as to costs. Pending IAs, if any, stand disposed of with this order.