Life Insurance Corp. of India v. State of J&K

02. The brief facts of the case may be stated as follows. The present respondent no.4 is the wife of one Sh. Kuldeep Gandotra, who was insured under the Term Plan 106/15(12) offered by the LIC for a sum of ₹ 65,000/- with effect from 28.04.1997. The said insured- Kuldeep Gandotra died of A C Fulminant Hepatitis on 1st April 1998. Upon -2- his death, the claimant- Smt.Rani Gandotra, the nominee of the said insured, respondent no.4 made a claim which was repudiated by the LIC on the ground that the insured had been suffering from certain diseases at the time of entering into contract of insurance with the LIC which he had concealed at the relevant time, as such the insurance policy would be void and LIC would have no liability to pay the sum of insurance.

03. Upon the claim being repudiated, respondent no.4 approached the Division Consumer Forum, Jammu, by filing a complaint under Case File No. 22 on 5th May 2000 alleging deficiency in service by the LIC and for payment of the insured amount which of course was contested by the LIC.

04. Respective parties, before the Forum led their evidence and filed necessary documents. The Consumer Forum Jammu in the aforesaid case allowed the said claim and directed the LIC to pay a sum of ₹ 1000/- as costs of litigation and the said amount was to be paid within six weeks failing which penal interest @ 12% per annum would be levied.

05. While allowing the claim, the Consumer Forum considered the pleas taken by the LIC in denying the claim. The first plea was that the insured had availed sixty five days of Commuted Leave with effect from 23.02.1995 which clearly indicated that he was suffering from certain ailments. Secondly, it is on record that the insured had been suffering from the diseases namely, Pyrexia, Renal Colic disease, Amebic Colics, Gastroentities for which he was taking medicines and was undergoing treatment but did not disclose these ailments at the time of purchasing the Policy. Petitioner –LIC took the plea that in the relevant column of the proposal form filled up by the deceased, he had mentioned „NO‟ while replying to the query as to whether -3- he had been suffering from any disease for the last five years for which he may have consulted medical practitioner or remained absent from service on account of ill health. Thus, by not mentioning these diseases from which the insured was suffering in the requisite form, the insured had suppressed material information and, as such, the claim so made was liable to be dismissed.

06. The Divisional Forum, however, held that the said stand taken by the LIC that the insured concealed facts must relate to some aspect which was material to be disclosed. Further, it was held that it was required to be shown by the LIC that at the time when the policy holder made such statement, the policy holder knew that it was false and that he suppressed these facts which were material to be disclosed. The Forum took the view that mere inadequacy in mentioning of some items in the proposal form is not sufficient.

07. The Divisional Forum also took the view that the burden of proof is on the insurer to establish these circumstances and unless the insurer is able to do so, there is no question of Policy being avoided on the ground of misleading of facts.

08. The Divisional Forum also noted that the cause of death, i.e., “A C Fulminant Hepatitis” had not been shown to have any nexus with the disease which the insured was alleged to have concealed. The Forum also observed that it was neither stated anywhere nor established by any medical evidence or by the medical books brought to the notice of the Forum that the diseases which the insured was suffering from and alleged to have concealed, had any nexus with the cause of death, so as to hold that the concealment of the information of the aforesaid diseases from which the insured was suffering -4- could be the basis for repudiating the contract. The Forum also found that there is no evidence to show that the insured had suppressed information that he was suffering from the disease of “A C Fulminant Hepatitis” and, as such, the Divisional Forum declined to accept the stand taken by the LIC and held that denial of the claim amounted to deficiency in service, and, accordingly, directed the insurer to indemnify the complainant by making payment of insured amount within six weeks with 9% interest with effect from the date of repudiation, i.e., 15.11.1999. The Insurance Company was also saddled with ₹ 5000/- as costs to be paid to the complainant on account of mental agony, distress and harassment suffered by her in order to pursue her case.

09. While allowing the claim, the Divisional Forum also observed that there is no report of the Doctor concerned, on the basis of which the Insurance Company repudiated the claim. Referring to the certificate issued by Dr. K. L. Bhardwaj, the Divisional Forum observed that what can be seen from the certificate is that the insured was fit for resuming Government duties which does not by itself indicate that insured was suffering from any disease at the time of making the proposal of Insurance policy, which ultimately caused his death.

10. Being aggrieved by the aforesaid decision of the Divisional Forum, the LIC preferred an appeal before the State Consumer Commission which was dismissed by the State Commission against which the present petition has been filed.

11. On perusal of the order passed by the Commission what we have noted is that the Commission had recorded that the appellant LIC had failed to -5- prove that material facts had been suppressed by the insured at the time of filling of the proposal form. The Commission also noted that the only material produced by the LIC is certain photocopy of the official report which was neither certified nor signed by any person which merely shows that the deceased had gone on medical leave before and after filling up of the proposal form. The Commission gave the findings based on records which were produced before the Commission. The Commission observed that even the records of the medical leave would show that the deceased had availed medical leave intermittently for two days, four days and eight days etc. which do not necessarily indicate that he was suffering from any vital disease and if he had been hospitalized, he would have taken longer medical leave rather than taking a few days of intermittent medical leaves. The Commission also considered the fitness certificate issued by Dr. K. L Bhardwaj, which was also referred to by the Divisional Forum. The Commission noted that the fitness certificate issued by the said Doctor shows that the deceased was suffering from the disease of Amberic Colics. However, no witness was examined by the LIC to show from which disease the insured was suffering, and as to whether such disease was serious and was having any medical bearing for repudiating the claim. The Commission also noted that it is an admitted position that the insured had not died of any of the disease which he has alleged to have not disclosed at the time of filling the proposal form.

12. While discussing about the cause of death i.e., “A C Fulminant Hepatitis”, the Commission noted that it is a dangerous disease which has no calendar for the death of the person who suffers from it and this disease can end the life of a patient within the shortest possible time. The -6- Commission also took the view on the basis of the decision cited before it that if a disease has no nexus with the cause of death, concealment of such a disease cannot be said to be the concealment of material fact. It has been held by the Commission that even if the insured was suffering from Gastro- entites, it could not have been the cause of death, neither had it any nexus with the cause of death since the insured had died due to “A C Fluminant Hepatities”. The Commission also referred to Section 45 of the Insurance Act, 1938, under which it was required to be proved that the insured had made a false information and that the insured knew at the time of making the statement that it was false and that he suppressed facts which were material to be disclosed. The Commission did not find that any such material fact was concealed which had nexus with the cause of death and, accordingly, dismissed the appeal preferred by the LIC.

13. We have heard learned counsel for the petitioner-Life Insurance Corporation. None had appeared for the respondent.

14. Mr. C S Gupta, learned counsel for the petitioner has urged this Court to go through the records of the case which would show that there were material evidences to indicate that the insured had concealed material facts which would disentitle him to enforce the contract/Insurance Policy. Learned counsel has relied on the decisions rendered by the Supreme Court in „Mithoolal Nayak versus Life Insurance Corporation of India’, 1962 AIR(SC) 814 and „Manmohan Nanda versus United India Assurance Co. Ltd. & Anr.’ 2022 (4) SCC 582. In Manmohan Nanda (Supra), it has been held that -7- “52. On a consideration of the aforesaid judgments, the following principles would emerge: (i) There is a duty or obligation of disclosure by the insured regarding any material fact at the time of making the proposal. What constitutes a material fact would depend upon the nature of the insurance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form. (ii) What may be a material fact in a case would also depend upon the health and medical condition of the proposer. (iii) If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound by the duty to disclose all material facts ……. …….. ……. .”.

15. We have perused the pleadings, judgments relied on by the learned counsel for the petitioner and considered the grounds of challenge put forth before the two Fora below by the LIC petitioner.

16. A perusal of the decision rendered by the Division Forum as well as the State Commission would clearly indicate that there is a concurrent finding of fact on the following aspects: a) Though it is an admitted position that the deceased had died due to “A C Fulminant Hepatitis”, the deceased did not mention that he was suffering from the disease. b) It is also on record that the insured was suffering from certain diseases like Pyrexia, Renal Colic disease, Amebic Colics, Gastro entities. c) However, it has also come on record that except for producing certain documents, there was no proper evidence led by the LIC to show that the insured had suppressed material facts fraudulently. -8- d) LIC had primarily relied on the certificate issued by one Dr. K. L Bhardwaj, and also on certain documents showing availing of medical leave by the insured. As regards the evidentiary value of these materials placed on record, these were discussed minutely by the Consumer Forum as well as by the State Commission and these Fora came to the conclusion that merely because the insured had taken intermittent medical leave does not indicate that he was suffering from certain vital diseases. e) It has also come on record that these diseases from which the insured was suffering, which the insured did not disclose did not have any nexus with the actual cause of death.

17. From the above, what emerges is that there are certain concurrent findings of facts which we are not inclined to reexamine, as we are exercising the power of judicial review under Article 226 of the Constitution of India. We may not disturb the concurrent finding of facts unless such findings of facts are absurd and irrational which we do not find to be so.

18. The matter would have been otherwise, if the petitioner could establish that the actual cause of death i.e., “A C Fluminant Hepatitis”, had some nexus or connection with any of the diseases which the insured had allegedly not disclosed.

19. In this connection, we refer to the decision cited by the petitioner in Manmohan Nanda (supra) in which following principles have also been reiterated by the Supreme Court: -9- (i) There is a duty or obligation of disclosure by the insured regarding any material fact at the time of making the proposal. What constitutes a material fact would depend upon the nature of the insurance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form. (iii) (ii) What may be a material fact in a case would also depend upon the health and medical condition of the proposer. If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound by the duty to disclose all material facts. (emphasis added)

20. From the perusal of the above principles, it would appear that it is the non- disclosure of the material facts which are relevant, not of any fact which are not material in issue, which may vitiate the Policy. In the present case, as observed by the Divisional Forum as well as by the Commission, it has been clearly held that the diseases which the insured was suffering from, which were not disclosed, were not at all material vis-z-viz the cause of his death.

21. We may also observe that as regards the actual cause of death, i.e., A C Flumnant Hepatitis, it appears that it is a disease which can be contracted by infection also. Therefore, if a person contracts Hepatitis by infection even after the insurance was taken, which could lead to death very soon, unless it is proved by cogent evidence that the insured was already suffering from such disease before entering into a contract with the Insurance Company, it would be unfair to deny or repudiate the claim by the Insurance Company. It was for the LIC to prove that the insured was suffering from the said diseases when the Policy was purchased. By making this observation in the peculiar facts of the case, we are not trying to re-appreciate evidence, inasmuch, as we are not sitting as a Court of Appeal to reappreciate the evidence, which have -10- been already examined by the two Fora below as discussed above with concurrent findings of facts.

22. Under these circumstances and for the reasons discussed above, we are not inclined to interfere with the conclusions arrived at by the State Consumer Commission and the Division Consumer Forum.

23. The present petition is, accordingly, dismissed and stands closed. Resultantly, directions issued by the State Commission are to be complied forthwith by the petitioner. (WASIM SADIQ NARGAL) (N. KOTISWAR SINGH) JUDGE CHIEF JUSTICE JAMMU 25.07.2023 SUNITA/PS Whether the order is speaking. Whether the order is reportable. Yes Yes