Haryana

StateCommission

A/36/2017

CANARA HSBC ORIENTAL BANK OF COMMERCE LIFE INSURANCE CO.LTD. - Complainant(s)

Versus

SURESH KUMAR ARORA - Opp.Party(s)

VAIBHAV JAIN

28 Aug 2018

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

         

                                       

First Appeal No  :       36 of 2017

Date of Institution:      10.01.2017

Date of Decision :      28.08.2018

 

1.      Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited, Unitech Trade Centre, 2^nd Floor, C-Block, Sushant Lok, Phase I, Sector 43, Gurgaon-122009 through Shri Prashant Saini, Senior Manager, Legal.

 

2.      Relationship Manager, Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited, above Oriental Bank of Commerce (main branch), SCF 7-8, First Floor, Red Square Market, Railway Road, Hisar through Mr. Prashant Saini, Senior Manager, Legal.  

                             Appellants-Opposite Parties

 

Versus

Suresh Kumar Arora son of late Mr. Ishwar Dutt Arora, resident of House No.486, Sector 15A, Hisar.

Respondent-Complainant

 

 

CORAM:             Hon’ble Mr. Justice Nawab Singh, President.

                             Shri Balbir Singh, Judicial Member.

 

                                                                                               

Present:               Shri Vaibhav Jain, Advocate for appellants.

                             Shri Hitender Kansal, Advocate for respondent-complainant.

 

                                                   O R D E R

 

 

NAWAB SINGH J.(ORAL)

 

Challenge is to the order dated October 14^th, 2016 passed by District Consumer Disputes Redressal Forum, Hisar (for short ‘District Forum’), whereby complaint filed by Suresh Kumar Arora-complainant was allowed directing the Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited-opposite parties (for short ‘Insurance Company’) to pay Rs.10,00,000/-, that is, sum assured to Suresh Kumar Arora on account of death of his wife Sushma Arora-person insured. 

2.      Sushma Arora (since deceased) purchased Canara HSBC Oriental Bank of Commerce Life Insurance Insure Smart Plan from the Insurance Company.  The date of commencement was May 28^th, 2013.  The policy term was 10 years. The maturity date was May 28^th, 2023.  The sum assured was Rs.10,00,000/-.  The person insured died on August 13^th, 2013.  The complainant filed claim with the Insurance Company but the same was repudiated on the ground that the person assured was a patient of Coronary Artery Disease, Diabetes Mellitus and Hypertension as per the discharge card (Exhibit A-2) issued by Jindal Institute of Medical Sciences, Hisar.

3.      After hearing learned counsel for the parties and perusing the record over the file, the only question for consideration is as to whether the person assured was a patient of Coronary Artery Disease, Diabetes Mellitus and Hypertension prior to the purchase of the insurance policy or not?

4.      The discharge card (Exhibit A-2) issued by Jindal Institute of Medical Sciences, Hisar shows that the person insured admitted on March 15^th, 2013 and discharged on March 19^th, 2013.  She was a known case of Coronary Artery Disease, Diabetes Mellitus and Hypertension.  From this discharge card, it is clear that the person insured was a patient of Coronary Artery Disease, Diabetes Mellitus and Hypertension, which she did not disclose at the time of filling of the proposal form.

5.      It is a well settled proposition of law that a contract of insurance is based on the principle of utmost good faith – uberrimae fidei, applicable to both the parties.  The rule of non-disclosure of material facts vitiating a policy still holds the field.  The bargaining position of the parties in a contract of insurance is unequal. The insured knows all the facts, the insurer is unaware of anything which may be material to the risk. Very often, it is the insured who is the sole person who has this knowledge.  The insurer may not even have the means to find out facts which would materially affect the risk.  The law, therefore, enjoins on the insured an absolute duty to disclose correctly all material facts which are within his personal knowledge or which he ought to have known had he made reasonable inquiries.  A contract of insurance, therefore, can be repudiated for non-disclosure of “material facts.” 

6.      In Mithoo Lal V. Life Insurance Corporation of India , AIR 1962 Supreme Court 814, Hon’ble Apex Court held as under:-

“Contract of life insurance entered into as a result of fraudulent suppression of material facts by policy holder- Policy is vitiated and person holding assignment of policy cannot claim benefit of contract………….”

7.      Hon’ble Apex Court in Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. – (2000) 2 SCC 734 held as under:-

“It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and the good faith forbids either party from non-disclosure of the facts which the parties know.  ………..”

8.      In Revision Petition No.967 of 2008, Life Insurance Corporation of India versus Smt. Neelam Sharma, decided on September 30^th, 2014, Hon’ble National Commission observed as under:-

“8.       In Satwant Kaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, it has been observed by the Supreme Court that the expression “material fact” is to be understood in general terms to mean as any fact which would influence the judgment of a prudent Insurer, in deciding whether to accept the risk or not.  If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form.  Any inaccurate answer will entitle the Insurer to repudiate their 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, which is based on the principle of utmost faith –uberrima fides.  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 believing the contrary. (See: United India Insurance Co. Ltd. Vs. M.K.J. Corporation [(1996) 6 SCC 428].  It has also been emphasized that 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.”

“11.     Having given our anxious consideration to the material on record, we are of the opinion that the answers given by the Insured in the proposal form were untrue to his knowledge. There was clear suppression of “material facts” in regard to the health of the Insured.  It was not for the Insured to determine whether the information sought for in the aforesaid questionnaire was material for the purpose of the two policies…..”  

9.            On the aforesaid facts and law enunciated above, the right to claim insurance benefits by the complainant does not survive having reference to discharge card (Exhibit A-2) issued by Jindal Institute of Medical Sciences, Hisar. Thus, it stands established that the life insured was suffering from Coronary Artery Disease, Diabetes Mellitus and Hypertension, prior to the purchase of the insurance policy and he suppressed this fact. Thus, the District Forum fell in error in allowing the complaint and as such the impugned order cannot be allowed to sustain. The appeal is accepted, the impugned order is set aside and the complaint is dismissed.

10.    The statutory amount of Rs.25,000/- deposited at the time of filing the appeal be refunded to the appellants against proper receipt and identification in accordance with rules, after the expiry of period of appeal/revision, if any.

 

Pronounced 28.08.2018

(Balbir Singh) Judicial Member

(Nawab Singh) President

UK