Life Insurance Corporation Of ... vs Unknown
2023 Latest Caselaw 2323 j&K

       HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                       AT JAMMU

                                                OWP No.269/2005
                                                OWP No. 274/2005

                                            Reserved on 10.10.2023

OWP No.269/2005                             Pronounced on 17 .10.2023


Life Insurance Corporation of India th. Shri              ..... petitioners (s)
B.L.Bhat age 53 years, son of Sh. S.N.Bhat
R/O Nanak Nagar Jammu, Manager (L/HPF)
Life Insurance Corporation of India, Railhead
Complex, Jammu

                               Through :- Mr.C.S.Gupta Advocate

                         V/s

                                                          .....Respondent(s)


 1 State of Jammu and Kashmir through Commissioner/Secretary to
Government Food and Supplies and Consumer Affairs, Civil Secretariat
Jammu
2 State Commission constituted under Consumer Protection Act,Jammu and
Kashmir, Jammu
3.Divisional Forum, constituted under J&K Consumer Protection Act Jammu
and Kashmir Jammu
4 Smt. Suraj Kanta Wd/o late Sh. Dil Bagh Gupta resident of Ward No. 2 Near
Jhulla Bridge Rajouri.
                                    Through Mr. G.S.Thakur Advocate vice
                                              Mr. Sanjay Sharma Advocate


OWP No.274/2005

Life Insurance Corporation of India th.                   ..... petitioners (s)
Shri B.L.Bhat age 53 years, son of Sh.
S.N.Bhat R/O Nanak Nagar Jammu,
Manager (L/HPF) Life Insurance
Corporation of India, Railhead Complex,
Jammu

                               Through :- Mr.C.S.Gupta Advocate
                                     2




                        V/s

                                                           .....Respondent(s)

 1 State of Jammu and Kashmir through Commissioner/Secretary to
Government Food and Supplies and Consumer Affairs, Civil Secretariat
Jammu
2 State Commission constituted under Consumer Protection Act,Jammu
and Kashmir, Jammu
3.Divisional Forum, constituted under J&K Consumer Protection Act
Jammu and Kashmir Jammu
4 Sh. Navneet Gupta son of late Sh. Dil Bagh Gupta resident of Ward No. 2
Near Jhulla Bridge Rajouri

                              Through :- Mr. G.S.Thakur Advocate vice
                                         Mr. Sanjay Sharma Advocate

Coram: HON'BLE MR. JUSTICE SANJEEV KUMAR, JUDGE
        HON'BLE MR. JUSTICE MOHAN LAL, JUDGE

                               JUDGMENT

Sanjeev Kumar J.

1. These petitions are directed against a common judgment dated

06.12.2004 passed by the Jammu and Kashmir State Consumer Disputes

Redressal Commission ["the Commission"] in two appeals (appeal

No.2567/2003 and appeal No. 2568 titled „Life Insurance Corporation of India

vs Navneet Gupta‟ and „Life Insurance Corporation of India vs. Smt. Suraj

Kanta‟ whereby the Commission has dismissed the appeals of the petitioner

and upheld an order dated 14.08.2003 passed by the Divisional Forum, Jammu

["the Divisional Forum"].

3. Deceased Dilbag Raj Gupta obtained two different insurance

policies on different dates. Policy No. 140984457 was for a period of twelve

years commencing from 14.07.1999 which was obtained from Rajouri Branch

and Policy No. 141026308 which was for a period of 15 years commencing

from 20.07.1999 was obtained from Jammu Branch. The deceased died on

04.08.1999 due to heart attack suffered on 31.07.1999. The nominees of the

deceased-insured i.e respondent No.4 in both the policies made claims before

the Insurance Company. However, the Insurance Company repudiated both the

claims on the ground of concealment of material facts.

4 Aggrieved by the action of the petitioner herein, the nominees of

the deceased i.e respondent No.4 herein filed two complaints. The petitioner-

insurer filed its objections stating that the claims were repudiated on account of

suppression of material information by the deceased about his health and

regarding previous insurance policy.

5 The Divisional Forum, after considering the oral and documentary

evidence adduced by both parties, accepted both the complaints and directed

the petitioner-insurer to disburse the assured amount in favour of the

complainants respectively. The petitioner being aggrieved by the judgment of

the Divisional Forum preferred appeals No. 2567/2003 and 2568/2003

respectively before the Commission. The Commission after considering the

evidence available on record, the relevant provisions of the Act and the legal

position on the subject, concurred with the findings given by the Divisional

Forum and, accordingly, dismissed the appeals.

6 The petitioner being aggrieved by the judgments of the Divisional

Forum and the Commission has preferred these petitions challenging their

validity and legality.

7 Heard learned counsel for the parties and perused the material on

record.

8 It is well settled that a contract of insurance is contract uberrimae

fides and there must be complete good faith on the part of the insured. The

insured is, thus, under an obligation to make full disclosure of material facts

which may be relevant for the insurer to take into account while deciding

whether the proposal should be accepted or not. The burden of proving that the

insured had made false representations and suppressed material facts is

undoubtedly on the Corporation. There is no dispute about the power of the

Corporation to repudiate the claim in the event of sufficient proof that the

deceased policyholder had made a misstatement of facts regarding his health

condition.

9 In the present case, the petitioner-insurer has failed to prove the

charge of suppression of material facts regarding the disease of the deceased.

The Doctors on the penal of the Life Insurance Corporation had medically

examined the insured prior to the contract of insurance and reported that the

deceased was fit and healthy at the time of making the proposal. Simply

because the insured did not mention the particulars of his previous policy

would not by itself be sufficient to repudiate the genuine cases of respondent

No.4 in both the petitions as the proposal forms are usually filled in by the

concerned agents and whatever they advise, the policy holders follow their

instructions. It is otherwise the duty of the agents of the insurance company to

advise the insured properly prior to entering into the contract of insurance. In

the present case, the concerned agents have not filed any document to establish

that they had asked the insured with respect to previous policy and he replied in

the negative. The genuine claims of respondent No.4 in both the petitions ought

not to be repudiated on insignificant grounds.

10 The object of the Life Insurance Corporation is to help the victims

or their dependants in general through its various schemes on account of

sudden demise of the policyholders and it is not purely a commercial

organization meant for getting profits unmindful of the human problems and it

is not an organization without any human touch. The Corporation has got a

very wide network throughout the country through its agents and field officers

as its messengers to spread the information regarding the object of establishing

the Corporation and the schemes it is floating to bring as many people as

possible under the insurance cover. Many policyholders coming from villages

are illiterates with rural background and they are not so worldly wise to know

the consequences of the breach, if any, committed by them in keeping the

policies in force. The agents of the Corporation are the best persons who

generally hail from the places of the policyholders and they are the best

persons to gather the necessary information and pass on the same to the

Corporation to prevent issuing of policies or revival of such policies on the

basis of useful information instead of raising hue and cry sometime after

completing all the formalities that a particular policyholder mislead them or

resorted to give a mis-statement to have the benefit under the policy. Since all

the schemes are intended to help the policyholders or their dependents to the

extent possible, if there is any little doubt whether a statement made by a

particular policyholder is a misstatement or not the benefit shall go to the

policyholder or his dependants.

11 In the instant case, indisputably, the insured was got medically

examined by a Doctor on panel of Insurance Company. The Doctor declared

the insured fit and healthy. It is upon this satisfaction arrived at by the insurer,

the policy covers were issued. In such situation, it would be highly inequitable

to permit the insurer to get out of its liability on the ground that the insured

suppressed material information as to his health condition and, thus, breached

the trust foundational in the contract of insurance. The view we have taken

herein is fortified by the judgment of Supreme Court in Manmohan Nanda vs

United India Assurance Co. Ltd and another, (2022) 4 SCC 582. Para 52

whereof is set out below:

""(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.

(iv) If any query or column in a proposal form is left blank then the insurance company must ask the insured to fill it up. If in spite of any column being left blank, the insurance company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or nondisclosure of a material fact, and seek to repudiate the claim.

(v) The insurance company has the right to seek details regarding medical condition, if any, of the proposer by getting the proposer examined by one of its empanelled doctors. If, on the consideration of the medical report, the insurance company is satisfied about the medical condition of the proposer and that there is no risk of preexisting illness, and on such satisfaction it has issued the policy, it cannot thereafter, contend that there was a possible preexisting illness or sickness which has led to the claim being made by the insured and for that reason repudiate the claim.

(vi) The insurer must be able to assess the likely risks that may arise from the status of health and existing disease, if any, disclosed by the insured in the proposal form before issuing the

insurance policy. Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition which was disclosed by the insured in the proposal form, which condition has led to a particular risk in respect of which the claim has been made by the insured.

(vii) In other words, a prudent insurer has to gauge the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so. Such an exercise is dependant on the queries made in the proposal form and the answer to the said queries given by the proposer".

12 In view of the above, we hold that the Commission was right in

concurring with the findings given by the Divisional Forum. In the case on

hand, the petitioner-insurer has miserably failed to establish that the deceased

policyholder intentionally misled the Corporation by giving a misstatement of

facts regarding his health at the time of obtaining policies. Accordingly,

finding no perversity in the orders passed by the Commission as well as by the

Divisional Forum, both the petitions are dismissed and the order and judgment

of the Divisional Forum and the Commission are upheld.

                              (MOHAN LAL)                     (SANJEEV KUMAR)
                                   JUDGE                                JUDGE
Jammu
17 .10.2023
Sanjeev                    Whether order is reportable: Yes