G. Eswaraiah Vs. the Branch Manager, Lic of India and Another - Court Judgment

Excerpt:
insurance act - section 45 -oral order: (r. lakshminarsimha rao, member) 1. the unsuccessful complainant is the appellant. he filed the complaint claiming the sum assured of rs.1,00,000/- under jeevan anand life insurance policy and rs.2,00,000/- under money plus life insurance policy along with benefits and rs.50,000/- towards compensation for mental agony with interest @ 24% per annum and rs.5,000/- towards costs. 2. the appellants father during his life time obtained jeevan anand policy bearing no.654236783 for rs.1,00,000/- in the year 2006 on payment of premium of rs.8,715/- per annum for a period of 16 years and another life insurance policy under money plus scheme bearing no.6544629254 in the year 2007 for the sum of rs.2,00,000/- lakh on payment of yearly premium of rs.20,000/- for a period of 10 years. the appellant is the nominee for the two life insurance policies. on 14.2.2010 the insured died due to chemotherapy and as his claim was not settled by the respondent insurance corporation, the appellant got issued notice on 23.3.2011. the respondent repudiated the claim on the premise that the insured concealed material facts regarding his health condition at the time of revival of two insurance policies. 3. the respondent insurance corporation resisted the claim on the premise that the complaint is not maintainable. the respondent submitted that at the time of taking the second insurance policy, the insured mentioned his age as below 50 years though he crossed 50 years and suppressed the fact of existing life insurance policy bearing no.654236783. the respondent submitted that both policies were lapsed and they were revived on 8.12.2009 on payment of arrears of premium with interest and on submission declaration of good health by the insured. the respondent got the claim investigated which disclosed that the insured was not in good health at the time of revival of the policies and he was under chemotherapy for treatment carcinoma lungs from 27.10.2009 to 28.10.2009 and as such both the insurance policies were revived basing on false declaration submitted by the insured and both the policies were cancelled. the respondent submitted that there was no deficiency in service on its part and prayed for dismissal of the complaint. 4. the appellant filed his affidavit and the documents, exs.a1 to a10. on behalf of the respondent insurance corporation, the respondent no.2 filed his affidavit and the documents, exs.b1 to b11. 5. the district forum allowed the complaint on the premise that the appellant is entitled to the paid up value and not the sum assured under the two life insurance policies. 6. feeling dissatisfied by the order of the district forum, the complainant has filed appeal contending that the district forum failed to see that dr.kantha reddy who is the managing director of the hospital was not the doctor who actually treated the insured while she was in the hospital. it is contended that dr.y.venkatarami reddy treated the insured and not dr.kantha reddy. it is further contended that the respondent had not filed affidavit of the doctor who diagnosed and treated the patient prior to revival of two insurance policies. it is further contended that the district forum had placed reliance on the citations which are not applicable to the facts of the case and erred in overlooking the applicability of sec.45 of insurance act. 7. both counsel filed written arguments. 8. the point for consideration is whether the order of the district forum suffers from misappreciation of facts or law? 9. the facts which have been admitted and which do not require much discussion are that on 31.03.2007 the respondent insurance company had issued life insurance policy bearing number 654236783 for a sum assured of rs.1,00,000/- and the life insurance policy bearing number 6544629254 for a sum assured of rs.2,00,000/- in favour of the appellants father and the insured died on 2.04.2008. after the death of his father, the appellant had lodged claim for payment of the sum assured under the policy. 10. the respondent -insurance company repudiated the claim on the premise that the insured suppressed the fact that he was suffering from carcinoma of lungs. the appellants father submitted proposal on 31.03.2007 that he was not suffering from any disease. the contention of the appellant is that his father was hale and healthy at the time of taking the insurance policies. 11. the respondent insurance corporation contended that the appellants father did not disclose his correct age and suppressed the existence of the insurance policy bearing number 654236783 at the time of submitting proposal for taking the insurance policy bearing number 6544629254 and both insurance policies were lapsed due to non-payment of premium and the good health declaration form submitted for revival of the two life insurance policies do not contain correct information as to the health condition of the insured. however, the concealment of his age by the insured and that of the life insurance policy are not the grounds on which the repudiation of the claim is made. 12. the appellant submitted that the respondent failed to prove suppression of material fact as regards to the health condition of the insured and the doctor examined by the insurance company is not the doctor who treated the insured. it is contended that the life insurance policies were obtained on 28.06.2006 and 31.03.2007 and section 45 of the insurance act prohibits repudiation of life insurance policy on the ground that the statement made in the proposal or in any report of the medical officer or referee is inaccurate or false. 13. the medical record of the vishwa bharathi hospital, karnul would establish the insured suffering from carcinoma of lungs and he was undergoing chemotherapy from 17.10.2009 to 28.10.2009. the employer certificate issued by vbc industries, kurnool shows that the deceased had undergone treatment from 22.10.2009 to 22.1.2010 at esi hospital kurnool. the insured got revived the two insurance policies on 8.12.2009 on the premise that he was not suffering from any illness and the statement of health declaration form submitted for revival of the insurance policies is proved to be false in the backdrop of the claim forms issued by viswabharathi hospital kurnool. 14. the question to be addressed is whether repudiation of claim can be held good on the premise of concealment of ill-health by the insured at the time of revival of the insurance policy with reference to applicability of sec.45 of the insurance act. 15. the learned counsel for the appellant relied upon the following decisions: 1. kommana veera raju and others vs lic of india and others reported in iv (2007) cpj 163 2. lic of india vs kulwant kumari reported in ii (2009) cpj 317 (nc) 3. mithoolal nayak vs lic of india, air 1962 sc 814 16. in kommana veera raju decision, this commission dealt with the circumstances where the insurance company filed the affidavit of the doctor who treated the insured. in the present case also the respondent insurance company had not filed the affidavit of the doctor. 17. in kulwant kumaris case, the insured was suffering from diabetes mellitus before revival of the insurance policy. the doctor who treated the insured was not qualified in giving treatment of allopathic medicine and his certificate, as such was not considered by the honble national commission. the national commission applied the ratio laid in mithoolal nayak (supra) and held that period of two years for applicability of second part of sec.45 of the insurance act has to be counted from the date on which the insurance policy is originally effected and not from the date of revival of the policy. the national commission referred to the supreme courts decision in paragraph 6 of the order as under: it is not disputed before us that the policy was not repudiated on the ground that at the time when initial policy was taken, there was any misrepresentation or intentional concealment of facts by the deceased-insured. in the present case, two years have elapsed after the issuance of the policy and the burden to prove that the deceased had concealed the facts was on the insurance company in terms of section 45 of the life insurance act, 1938. it was then submitted by shri kashyap that revival of the policy constituted a new contract between the parties and two years have to be counted from the date of revival of policy. this submission cannot be accepted in view of the judgment of the honble supreme court of india in mithoolal nayak v. life insurance corporation of india reported in [air 1962 supreme court 814] in which the honble supreme court of india has clearly held that for the purposes of section 45 of the life insurance act, 1938, the period of two years has to be counted from the date on which the policy was originally effected and not from the date of the revival of the policy. in para 7 of the mithoolal nayaks case (supra), honble supreme court of india, observed as under:- “7. we shall presently consider the evidence, but it may be advantageous to read first s. 45of the insurance act, 1938, as it stood at the relevant time. the section, so far as it is relevant for our purpose, is in these terms: "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.” it would be noticed that the operating part of s.45 states in effect (so far as it is relevant for our purpose) that no policy of life insurance effected after the coming into force of the act shall, after the expiry of two years from the date on which it was effected, be called i 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; the second part of the section is in the nature of a proviso which creates an exception. it says in effect that if 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, then the insurer can call in question the policy effected as a result of such inaccurate or false statement. in the case before us the policy was issued on march 18, 1945 and it was to come into effect from january 15, 1945. the amount insured was payable after january 15, 1968 or at the death of the insured, if earlier. the respondent company repudiated the claim by its letter dated october 10, 1947. obviously, therefore, two years had expired from the date on which the policy was effected. we are clearly of the opinion that s.45 of the insurance act applies in the present case in view of the clear terms in which the section is worded, though learned counsel for the respondent company sought, at one stage, to argue that the revival of the policy some time in july, 1946 constituted in law a new contract between the parties and if two years were to be counted from july, 1946, then the period of two years had not expired from the date of the revival. whether the revival of a lapsed policy constitutes a new contract or not for other purposes, it is clear from the wording of the operative part of s. 45 that the period of two years for the purpose of the section has to be calculated from the date on which the policy was originally effected; in the present case, this can only mean the date on which the policy (ex.p-2) was effected. from that date a period of two years had clearly expired when the respondent company repudiated the claim. as we thin that s. 45 of the insurance act applies in the present case, we are relieved of the task of examining the legal position that would follow as a result of inaccurate statements made by the insured in the proposal form or the personal statement etc. in a case where s. 45 does not apply and where the averments made in the proposal form and in the personal statement are made the basis of the contract.” (emphasis supplied) 18. thus, the honble national commission held that any concealment of material fact regarding health condition of the insured two years after the issuance of insurance policy cannot be made basis for repudiation of the claim as revival of the lapsed life insurance policy does not constitute a new contract and the period of two years for the purpose of section 45 of the insurance act has to be calculated from the date on which the policy was originally effect. 19. such being the legal position the decision of the national commission in lic of india vs gurubalappa mallikarjun umraniin r.p.no.2065 of 2009 decided on 16.8.2012 has no application to the facts of the case particularly in that case repudiation of the claim in regard to concealment of material fact at the time of revival of the insurance policy was not the subject matter. the applicability of sec.45 of insurance act was not considered as the repudiation of the claim was made on the premise of concealment of fact at the time of obtaining the life insurance policy and the insurance policy was not lapsed nor was there any occasion to revive it. 20. in the result the appeal is allowed modifying the order of the district forum. the respondents/opposite parties no.1 and 2 are directed to pay the sum assured rs.1,00,000/- under policy bearing no.654236783 and an amount of rs.2,00,000/- under the life insurance policy bearing no.654629254 together with costs of rs.5,000/-. time for compliance four weeks.