Life Insurance Corporation of India v. Indrawati & Anr.

CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MRS. JUSTICE SABINA Present: Mr. Baldev Raj Mahajan, Advocate, for the petitioner. M.M. KUMAR, J.

The Life Insurance Corporation of India (for brevity, ‘LIC’) has approached this Court by filing instant petition under Article 226 of the Constitution and has challenged order dated

16.1.2008 (P-17), passed by the Permanent Lok Adalat (Public Utility Services), Gurgaon (for brevity, ‘the Lok Adalat’), holding that the widow of insured-respondent No. 1 was entitled to an amount of Rs. 1,50,000/- and if the amount was not paid within 45 days from the date of order then it was to bear interest @ 12% from the date of order till the date of payment.

One Satbir Singh husband of respondent No. 1-applicant Indrawati had obtained life insurance policy for a sum of Rs. C.W.P. No. 11346 of 2008 2 1,00,000/- on 19.6.2004 and another policy on 28.10.2004 for a sum of Rs. 50,000/-. Both the policies were issued to him after thorough medical check up. However, he died on 21.9.2005 at AIIMS, Delhi, where he was being treated. Respondent No. 1-applicant being the nominee claimed payment under the policies, which was eventually rejected on 11.9.2007 on the ground that the insured Shri Satbir Singh was suffering from Tuberculoses and there was active concealment at the time of proposal. The petitioner-LIC claimed that the insured suppressed the material facts of his previous illness at the time of proposal and committed fraud in obtaining the policies. He had obtained treatment of Tuberculoses Pleural Effusion and Hepatitis from Sethi Hospital, Gurgaon, from 3.7.2003 to 10.8.2003 and remained admitted in the hospital.

The Lok Adalat noticed the statement of the doctor in claim form-B that the cause of death of Shri Satbir Singh was Septicaemia-chest-infection and the ailment was about 50 days old. He came to know about the ailment on 1.8.2005 and consulted the doctor on 3.8.2005. It has been concluded by the Lok Adalat that the cause of death was different. In so far as the disease of Tuberculoses is concerned, Shri Satbir Singh had moved a leave application and remainded in Sethi Hospital, Gurgaon for one night on 9.7.2003. He was advised rest from 3.7.2003 to 10.8.2003. The disease of Tuberculoses could be cured effectively and there were no chances or remote chances of any recurrence. The disease, which the husband of respondent No. 1-applicant was suffering in July/August 2003 i.e. Tuberculoses, had no nexus with his fatal ailment Septicaemia-chest- C.W.P. No. 11346 of 2008 3 infection which he suddenly suffered in August 2005 and resulted in his death on 21.9.2005. The Lok Adalat also placed reliance on a judgment of Hon’ble the Supreme Court in the case of L.I.C. v. Asha Goel, (2001) 2 SCC 160, where the claimant had denied any previous treatment or remaining absent from duty on the ground of health during the preceding five years of the proposal of insurance. He had declared that his state of health was good. However, it was proved that he had obtained some treatment preceding the five years of obtaining the policy which did not have any relationship to the heart ailment, which was cause of his death. In the aforementioned circumstances Hon’ble the Supreme Court laid down the following three conditions for invoking second part of Section 45 of the Insurance Act, 1938:-

12. …… (a) the statement must be on a material matter or must suppress facts which it was material to disclose; (b) the suppression must be fraudulently made by the policy-holder; and (c) the policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose. Mere inaccuracy or falsity in respect of some recitals or items in the proposal is not sufficient. ……

On the basis of the aforementioned principle the Lok Adalat concluded that the previous ailment of Tuberculoses was mild which needed over night admission in the hospital and was cured with a simple treatment of about a month for which the husband of C.W.P. No. 11346 of 2008 4 respondent No. 1-applicant had obtained leave for rest. He did not have any complaint of that ailment again from 11.8.2003 and was attending his duties. Therefore, non-disclosure of the aforementioned disease in June/October, 2004 was neither material nor fraudulent. We have heard learned counsel for the petitioner-LIC at some length and are of the view that the order passed by the Lok Adalat does not suffer from any legal infirmity warranting interference of this Court. The Lok Adalat has adopted the correct approach of distancing the disease of Tuberculoses suffered in 2003 from the policies undertaken on 19.6.2004 and 28.10.2004. Moreover, the insured was subjected to medical check up by the petitioner-LIC. The ailment of heart has no relationship with the earlier disease of Tuberculoses, which, in fact, is curable and there is no chance or remote chance of its recurrence. The reliance of the Lok Adalat on the judgment in Asha Goel’s case (supra) is also meritorious because it is only suppression of a material fact which would tilt in favour of recording a finding of fraud or active concealment. Therefore, there is no merit in the instant petition and the same is dismissed in limine. (M.M. KUMAR) JUDGE (SABINA) JUDGE July 4, 2008 Pkapoor