Madras High Court
3 Life Insurance Corporation Of ... vs V.S.Senthilkumar on 8 March, 2021
A.S.No.107 of 2013
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE : 08.03.2021
CORAM:
THE HONOURABLE MR. JUSTICE T.RAJA
and
THE HONOURABLE MR. JUSTICE G.CHANDRASEKHARAN
A.S.No.107 of 2017
1 Life Insurance Corporation of India
represented by
Branch Manager
(Erode South),
Erode-638 154.
2 Life Insurance Corporation of India
represented by its
Divisional Manager (claims)
Trichy Road,
Coimbatore-641 018.
3 Life Insurance Corporation of India
represented by its
Zonal Manager (Marketing C.S/CRC) Department
South Zonal Office,
Chennai-600 002. ... Appellants
..vs..
V.S.Senthilkumar ... Respondent
1/23
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A.S.No.107 of 2013
This Appeal is filed under Section 96 of Code of Civil Procedure,
1908, against the judgment and decree dated 11.09.2015 made in
O.S.No.9 of 2012 on the file of the Principal District Judge, Erode.
For Appellants : Mr.M.B.Raghavan
For Respondent : Mr.G.Vivekanand
JUDGMENT
(Judgment of the Court was delivered by G.CHANDRASEKHARAN, J.,)
This Appeal is filed against the judgment and decree dated
11.09.2015 made in O.S.No.9 of 2012 on the file of the Principal District
Judge, Erode.
2. The respondent, as the plaintiff, filed a suit for recovery of a
sum of Rs.29,54,000/- with subsequent interest and costs from the
appellants/defendants.
3. The case of the respondent/plaintiff, in brief, is as follows:-
The respondent's father V.M.Shanmugam took two life insurance
polices for Rs.30,000/- in policy No.761799305 dated 15.11.1997 and for
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A.S.No.107 of 2013
Rs.5,70,000/- in policy No.761976635 dated 28.01.1998. He was paying
the premium till his death. The respondent is a nominee under both the
policies. The said V.M.Shanmugam died in a road accident on
28.08.1998. A case was registered and taken cognizance in S.T.C.No.
693/1998 against the driver of the vehicle and the driver was punished by
learned Judicial Magistrate, Kodumidi. As a nominee, the respondent is
entitled to receive double the amount of policy amounts. The respondent
raised claim for the said amounts and that was acknowledged by the
appellants through their acknowledgment dated 08.09.1998.
Subsequently, the appellants refused to settle the policy amounts on
untenable grounds like, variation in handwriting of V.M.Shanmugam,
over statement of income e.t.c. They sent a communication dated
18.10.2001 stating that the claim made by the respondent is rejected.
Respondent's father V.M.Shanmugam had disclosed all the necessary
material facts at the time of taking the LIC policies. The respondent sent
a letter dated 08.01.2003 through his Advocate to the second appellant
and that was replied by the second appellant on 13.01.2003 along with
the annexure letter dated 05.02.2002. Letter dated 05.02.2002 reads that
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Review Committee has rejected the respondent's claim. However, it is
stated in the letter dated 13.01.2003 that steps are being taken for placing
the respondent's claim before the Review Committee. The appellants
have taken contrary stand with regard to placing the matter before the
Review Committee. Finally, the respondent sent a letter to the third
appellant on 07.04.2003 with regard to his claim and that was not replied.
The respondent filed a petition before the District Consumer Forum,
Erode demanding damages for deficiency of service and that was
allowed. The appellants took the matter before the State Consumer
Forum in F.A.No.641 of 2006. The State Consumer Forum set aside the
order of District Consumer Forum with a liberty to respondent to agitate
the matter before the Civil Court. Thus, this case came to be filed.
4. The appellants resisted the claim of the respondent alleging
that the deceased V.M.Shanmugam was an Agriculturist, physically
cultivating a small piece of land. The appellants suspected genuineness
of the claims made by the respondent, because of the reason that
V.M.Shanmugam died within one year from the date of taking the
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policies. The investigation conducted by the appellants unearthed certain
facts which led to the repudiation of the complaint. During the course of
investigation, it was found that the signatures of V.M.Shanmugam found
in the proposals were forged. The appellants suspect the cause of death
of V.M.Shanmugam. The income declared by V.M.Shanmugam in the
policies and the income stated in the Motor Accident Claim Petition
contradict with each other. Fraud vitiates all acts and the Corporation
has been deceived by the fraudster. The Corporation denies that the
deceased took policies for himself. Therefore, appellants repudiated the
claim of the respondent on 18.10.2001.
5. On the basis of the pleadings, the trial Court framed the
following issues:-
1. Whether the plaintiff is entitled for recovery of amount as
prayed for ?
2. Whether the plaintiff is entitled to claim interest as prayed
for ?
3. Whether the repudiation of the claim by the defendants is
not proper ?
4. To what relief ?
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6. During the course of trial, PW.1 to PW.3 were examined on
the side of the respondent and Exs.A1 to A19 were marked and DW.1
was examined on the side of the appellants and Exs.B1 to B12 were
marked. On considering the oral and documentary evidence, the learned
trial Judge accepted the case of the respondent and decreed the suit.
Against the said judgment, the appellants filed this Appeal.
7. Learned counsel for the appellants submitted that the first
policy for Rs.30,000/- was taken on 15.11.1997 and the second policy for
Rs.5,70,000/- was taken on 28.01.1998 by the deceased
V.M.Shanmugam. He died within one year from the date of taking the
first policy under suspicious circumstance on 28.08.1998. Though the
cause of death is said to be a road accident, the appellants suspected the
alleged case of road accident. During the course of investigation, it was
further found that there is discrepancy in stating the annual income of the
deceased V.M.Shanmugam. He declared his annual income as
Rs.22,000/- when he took the first policy for Rs.30,000/- on 15.11.1997.
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When he took the second policy for Rs.5,70,000/- on 28.01.1998, he
declared his annual income as Rs.1,25,000/-. When the respondent filed
Motor Accident Claim Petition in MCOP No.1080 of 1998, the monthly
income of the deceased V.M.Shanmugam was shown as Rs.3,000/- per
month. Thus, it is clear that there is overstatement of annual income
when the deceased V.M.Shanmugam took the second policy. Further, it
is seen from the handwriting expert's report (Ex.B5) that the signatures of
V.M.Shanmugam found in his proposal forms differ from his admitted
signatures. Therefore, the suspicion that V.M.Shanmugam has not
submitted the proposal forms got strengthened. Overstatement of income
amounts to suppression of material facts. It can be presumed that the
difference between admitted and disputed signatures of V.M.Shanmugam
is nothing but forgery. Therefore, a fraudster cannot be permitted to
unrich himself. That apart, there is suspicion with regard to the cause of
death of V.M.Shanmugam. However, without considering these
important aspects, learned trial Judge has wrongly decreed the suit. So
saying, learned counsel for the appellants prayed for setting aside the
judgment of the trial Court and for the dismissal of the Appeal. In
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support of his argument that the appellants are entitled to repudiate claim
if there is suppression of material facts, he relied on the following
judgments:-
(i) (2009) 8 Supreme Court Cases 316 ( Satwant Kaur Sandhu
.v. New India Assurance Company Limited)
(ii) (2019) 18 Supreme Court Cases 209 (Oriental Insurance
Company Limited .v. Mahendra Construction);
(iii) (2019) 6 Supreme Court Cases 175 (Reliance Life
Insurance Company Limited and another ..vs.. Rekhaben Nareshbhai
Rathod);
(iv) 1986 ACJ 656 (A.P.Venkatachalam .vs. Life Insurance
Corporation of India by its Divisional Manager, Coimbatore); and
(v) (2008) 1 Supreme Court Cases 321 (P.C.Chacko and
another .v. Chairman, Life Insurance Corporation of India and others)
8. In response to the submissions made by learned counsel for
the appellants, learned counsel for the respondent submitted that the
allegations made by the appellants with regard to the cause of death of
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deceased V.M.Shanmugam is made only from air without any single
piece of evidence to subscribe or support this allegation. It is seen from
the evidence of PW.2 that he had personally saw the deceased
V.M.Shanmugam signing both proposal forms. When there is categorical
evidence with regard to V.M.Shanmugam signing the proposal forms and
on the basis of the proposal forms, policies had been issued, it cannot be
decided on the basis of handwriting expert's report that there is difference
between the admitted and disputed signatures of V.M.Shanmugam.
Moreover, the handwriting expert was not examined on the side of
appellants, denying an opportunity to the respondent to cross-examine
the expert and unearth the truth. Further, it is seen from the evidence of
PW.2 that necessary material particulars had been disclosed in the
proposal forms, especially, subscription to the first policy was
specifically mentioned in the proposal for second policy. Therefore, it
cannot be said that there was suppression of material facts by deceased
V.M.Shanmugam. The monthly income mentioned in MCOP.No. 1080 of
1998 was the information provided by the respondent. He may not have
known about the income of the deceased V.M.Shanmugam and the
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income details provided by him in the proposal forms. As per section 45
of Insurance Act, the Insurance Company can repudiate the claim only
within two years from the date of issuance of policy. But, in the case
before hand, Insurance Company has not repudiated the policies within
the period of two years of giving effect to the policies. Considering all
these aspects, learned trial Judge has rightly decreed the suit and
therefore, learned counsel for respondent prayed for the dismissal of this
appeal.
9. Points for consideration in this appeal are:-
1. Whether the finding of the trial Court that the appellants have
failed to prove the allegations made against the respondent and
therefore they cannot repudiate the claim, is correct ?
2. Whether the judgment and decree of the trial Court is liable to be
interfered ?
3. To what relief, the appellants are entitled ?
10. Point Nos. 1 to 3:-
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From the case set out by the parties, it is clear that the appellants
repudiated the claim on the basis that (1) there is suspicion with regard to
the cause of death of deceased V.M.Shanmugam (2) there is forgery of
the signature in the proposal forms submitted by the deceased
V.M.Shanmugam and (3) the deceased had overstated his income. With
regard to the suspicion surrounding the death of deceased
V.M.Shanmugam, it is the case of the respondent that he died in a road
accident. The death certificate and postmortem certificate have been
produced as Exs.A1 and A3 respectively. Admittedly, the respondent
filed MCOP No.1080 of 1998 for claiming compensation and was
awarded a sum of Rs.4,30,000/- as compensation. Though the appellants
claimed that the deceased V.M.Shanmugam did not die in road accident
and his death was under suspicious circumstance, there is no steps taken
by the appellants to unearth the truth with regard to the cause of death of
V.M.Shanmugam. The appellants have not filed any complaint before the
police seeking investigation with regard to the cause of death of
V.M.Shanmugam. Admittedly, there is no iota of any evidence to support
the case of appellants that there is a suspicious circumstance surrounding
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the death of V.M.Shanmugam. It is clear that V.M.Shanmugam died in a
road accident and a case was registered and taken cognizance in S.T.C
No.693 of 1998. The driver was found guilty under Section 279 and 304
(A) and 132(1)(a) IPC r/w.187 of Motor Vehicles Act and convicted and
sentenced to pay the fine as seen from Ex.A4-Judgment. Therefore, this
Court has to necessarily reject the claim of the appellants that the
deceased V.M.Shanmugam did not die in a road accident, but he died
under suspicious circumstance.
11. With regard to non-disclosure of material particulars, it is
seen from the evidence of PW.2, who was an insurance agent and through
whom, the deceased V.M.Shanmugam took two insurance policies for
Rs.30,000/- and Rs.5,70,000/- respectively. He deposed clearly and
candidly that he had personally seen the deceased V.M.Shanmugam
signing in Ex.B1 and B2 proposal forms. Not only that he stated that he
took the deceased V.M.Shanmugam to the doctor approved by Life
Insurance Corporation–Dr.S.Chandra Chettiar for his medical
examination. The medical examination certificate was produced as
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Ex.A16. When the second policy was taken, one Dr.Gurumurthy
conducted medical examination on deceased V.M.Shanmugam and gave
Ex.A17 certificate. It is his further evidence that both the policies had
been issued to the deceased V.M.Shanmugam accepting the income
stated in the proposal forms. The perusal of Ex.B2-proposal form shows
that the subscription to the earlier policy for Rs.30,000/- was mentioned.
Therefore, it is clear from the evidence of PW.2 and Exs.B1 and B2 that
the deceased V.M.Shanmugam alone had personally signed in these
proposal forms and mentioned his annual income. As rightly pointed out
by the learned counsel for the respondent, the handwriting expert who
gave Ex.B5 report was not examined by the appellants to prove the
report. Only if the handwriting expert is examined and the other side is
given an opportunity to cross examine the expert, the document can be
said to have been proved to the satisfaction of the Court. Especially
when PW.2 clearly gave evidence that he saw the deceased
V.M.Shanmugam signing in the proposal forms, the examination of
handwriting expert becomes all the more necessary. Unfortunately, the
handwriting expert was not examined. It has been held in the case
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reported in AIR 1985 All 133 (Balakrishna Das .v. Radha Devi) that an
expert has to state his opinion in the Court and his examination and cross
examination is necessary like any other witness. Therefore, no reliance
can be placed on Ex.B5 report. There is nothing to support the case of
the appellants that Ex.B1 and B2-proposal forms had not been submitted
by the deceased V.M.Shanmugam and they were forged documents and
this case of the appellants is rejected.
12. True it is that annual income of the deceased
V.M.Shanmugam was given as Rs.22,000/- in Ex.B1-proposal form and it
was given as Rs.1,25,000/- in Ex.B2-proposal form, within a period of
two months. However, what matters also is the some assured. In the first
proposal, the sum assured was Rs.30,000/- and in the second proposal,
the sum assured was Rs.5,70,000/-. In the first proposal,
V.M.Shanmugam's occupation was shown only as agriculture and in the
second proposal, his occupation was shown as agriculture, landlord and
money lender. The appellants claim that the deceased V.M.Shanmugam
owned only a plot of land. There is no material produced on either side
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with regard to his occupation and income. Admittedly, in the petition
filed for claiming compensation under Motor Vehicles Act, ie., in Ex.B8,
the monthly income of deceased V.M.Shanmugam was given as
Rs.3,000/- per month. However, this information was not provided by
V.M.Shanmugam, but was provided by the respondent. Therefore, the
income given in Ex.B8 cannot be taken for consideration to decide the
issue whether there is overstatement of income. In the absence of any
concrete materials with regard to the income of the deceased
V.M.Shanmugam, it cannot be decided with certainty whether there was
any overstatement or understatement of income by the deceased
V.M.Shanmugam.
13. Assuming that there is overstatement of income, the
question now arises for consideration is whether it amounts to
suppression of material fact, which entitles the Insurance Company to
repudiate the contract. When dealing with the definition of the term
“material fact” and the consequences of suppression of material facts, it
has been held in:-
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(1) (2009) 8 Supreme Court Cases 316 ( Satwant Kaur
Sandhu .v. New India Assurance Company Limited) that
“22. The term “material fact” is not defined in
the Act and, therefore, it has been understood and
explained by the courts in general terms to mean as any
fact which would influence the judgment of a prudent
insurer in fixing the premium or determining whether he
would like to accept the risk. Any fact which goes to the
root of the contract of insurance and has a bearing on
the risk involved would be 'material'. ”
(2) (2019) 18 Supreme Court Cases 209 (Oriental Insurance
Company Limited .v. Mahendra Construction), wherein it has been held
as follows:-
“ 12. In Satwant Kaur Sandhu v New India
Assurance Co. Ltd6, a two-judge Bench of this Court
held that under a contract of insurance, the insured is
under a “solemn obligation” to make a true and full
disclosure of information asked for in the proposal
form:
....
“25. The upshot of the entire discussion is
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that in a contract of insurance, any fact which
would influence the mind of a prudent insurer in
deciding whether to accept or not to accept the risk
is a “material fact”. If the proposer has knowledge
of such fact, he is obliged to disclose it particularly
while answering questions in the proposal form.
Needless to emphasise that any inaccurate answer
will entitle the insurer to repudiate his 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.”
(3) (2019) 6 Supreme Court Cases 175 (Reliance Life
Insurance Company Limited and another ..vs.. Rekhaben Nareshbhai
Rathod), wherein it has been held as follows:-
“25 The expression -material? in the context of an
insurance policy can be defined as any contingency or
event that may have an impact upon the risk appetite or
willingness of the insurer to provide insurance cover. In
MacGillivray on Insurance Law18 it is observed thus:
The opinion of the particular assured as to
the materiality of a fact will not as a rule be
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considered, because it follows from the accepted test
of materiality that the question is whether a prudent
insurer would have considered that any particular
circumstance was a material fact and not whether
the assured believed it so ...”
(4) 1986 ACJ 656 (A.P.Venkatachalam .vs. Life Insurance
Corporation of India by its Divisional Manager, Coimbatore), wherein
it has been held as follows:-
38. .... In the instant case before us,
even prior to the proposal, the deceased Nachiammal
was suffering from hypertension and renal failure.
She had not only undergone investigation, but, also
taken treatment as an in-patient in the hospital. As
pointed out already, these diseases would certainly
affect the longevity of the human life and would have a
material bearing on the insurability or otherwise of
the proposer and the suppression of the same must, in
the circumstances, be taken as fraudulent suppression
with full knowledge thereof. ..... ”
(5) (2008) 1 Supreme Court Cases 321 (P.C.Chacko and
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A.S.No.107 of 2013
another .v. Chairman, Life Insurance Corporation of India and
others), wherein it has been held as under:-
“The insured had undergone an operation for
adenoma thyroid. But, while filling up the application
form for obtaining the policy, he answered in the
negative the questions relating to his health. He stated
that he had never undergone any operation and that he
was in good state of health. The said incorrect answers
formed the basis of repudiation of the contract of
insurance.”
14. Admittedly, in Ex.B2-proposal form, the details of first
policy was given. The Insurance Company could have very well verified
the income stated in the first proposal form and second proposal form
and clarify the steep increase in the annual income given in the second
proposal form. Obviously that has not been done. Only after accepting
the income stated in both the proposal forms, the policies have been
issued.
15. As per Section 45 of Insurance Act, the repudiation of policy
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should take place within two years. Section 45 of Insurance Act, reads as
under:-
“45. Policy not to be called in question on
ground of mis-statement after two years.—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:
Provided that nothing in this section shall
prevent the insurer from calling for proof of age at
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any time if he is entitled to do so, and no policy shall
be deemed to be called in question merely because the
terms of the policy are adjusted on subsequent proof
that the age of the life insured was incorrectly stated
in the proposal.”
However, it is seen from Ex.A8 letter, the appellants repudiated the claim
only on 18.10.2001, i.e., more than two years after giving effect to the
policies, which is impermissible in law. The aforesaid judgments relied
on by learned counsel for the appellants mainly deal with the suppression
of material facts like failing to mention the previous policy, previous
illness, previous medical treatment e.t.c. That is not the case here.
Therefore, these judgments will not apply to the facts and circumstances
of this case.
16. Considering the totality of the facts and circumstances in
this case and the evidence adduced on both the sides, it is clear that the
deceased V.M.Shanmugam took two policies and after his death,
respondent's claim was unjustly denied by the appellants. Though the
appellants have set out suspicion with regard to the cause of death of
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deceased V.M.Shanmugam, forgery of proposal forms, overstatement of
income, none of these grounds have been satisfactorily proved before the
Court. Therefore, this Court concurs with the well reasoned judgment of
the learned trial Judge and hereby confirms the judgment and decree of
the learned trial Court in O.S.No.9 of 2012 dated 11.09.2015 and this
appeal is dismissed with costs of the respondent. The points are
answered as above.
(T.R.J.,) (G.C.S.J.,)
mra 08.03.2021
Internet: Yes
Index : Yes
Speaking/Non speaking order
To
1. The Principal District Judge, Erode.
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T.RAJA, J.,
and
G.CHANDRASEKHARAN, J.,
mra
A.S.No.107 of 2017
(1/2)
08.03.2021
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