Telangana High Court

Dhfl Pramerica Life Insurance Company ... vs The Union Of India on 3 June, 2024

Author: Surepalli Nanda

Bench: Surepalli Nanda

   IN THE HIGH COURT OF TELANGANA AT HYDERABAD

                   W.P.No.47102 OF 2018

Between:

DHFL Pramerica Life Insurance Company Ltd.,

                                          ...       Petitioner
And

The Union of India & others

                                              ...   Respondents


        JUDGMENT PRONOUNCED ON: 03.06.2024


      THE HON'BLE MRS JUSTICE SUREPALLI NANDA


1. Whether Reporters of Local newspapers             :   Yes
   may be allowed to see the Judgment?

2. Whether the copies of judgment may be            :     Yes
   marked to Law Reporters/Journals?

3. Whether Their Lordships wish to                   :   Yes
   see the fair copy of the Judgment?


                                   ______________________
                                    SUREPALLI NANDA, J
                                  2
                                                           WP_47102_2018
                                                                    SN,J




          THE HON'BLE MRS. JUSTICE SUREPALLI NANDA

                     W.P.No.47102 OF 2018


%     03.06.2024

Between:



# DHFL Pramerica Life Insurance Company Ltd.,

                                             ...    Petitioner
And


$ The Union of India & others

                                                   ... Respondents

< Gist:
> Head Note:
! Counsel for the Petitioner: Sri Salloori Ramesh


^ Counsel for Respondents: Dy. Solicitor General of India for R1
                             Sri B.Shanker for R3.


? Cases Referred:
    (1)     (2019) 6 Supreme Court Cases 175

    (2)     (2021) 13 Supreme Court Cases 561
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                                                             WP_47102_2018
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         HON'BLE MRS JUSTICE SUREPALLI NANDA

             WRIT PETITION No.47102 OF 2018

ORDER:

Heard Sri Salloori Ramesh, the learned counsel

appearing on behalf of the Petitioner, Learned Deputy

Solicitor General of India, appearing on behalf of

respondent No.1 and Sri B.Shanker, the learned counsel

appearing on behalf of Respondent No.3

2. The petitioner approached the Court seeking prayer

as under:

" to issue a Writ, Order or direction particularly one in the nature of Writ of Certiorari:-

(a) calling for the records relating to the Impugned Award bearing No.IO/HYD/A/LI/0110/2018-19 in Complaint Reference No.HYD-L-013-1718-0474, dated 4.10.2018 passed by the Respondent No. 2, viz., The Insurance Ombudsman for the States of AP, Telangana and Yanam, # 6-2-46, First Floor, Moin Court, A.C.Guards, Lakdi-ka-Pool, Hyderabad-500004, wherein, the petitioner has been directed to settle the claim; and

(b) quash the same by holding without any jurisdiction and pass such other order or orders....."

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3. PERUSED THE RECORD :

A) The counter affidavit filed by the 3rd respondent and in

particular, paragraph 6, 7, 8, 9 and 13 read as under:-

6) That as on the date of Insurance, the age of the deceased was about 54 years. This itself is clear that, the Insurance Company shall take utmost care and caution, while insuring the person of above 30 years. It is the duty of the Insurance Company to go for the Medical Checkup of the person who seeks the Insurance by itself and proceed to Insure, based upon the Medical Report. That the said medical checkup by the Petitioner has not taken place.

7) The Insurance Policy is not processed through any qualified Agent of Insurance Company, the policy is processed through Branch Manager Sri. Raju Gollapally of M/s. Dewan Housing Finance Corporation Ltd., It is pertinent to note that the onetime premium policy has been obtained by the M/s. Dewan Housing Finance Corporation Ltd., and the premium has been paid by the M/s. Dewan Housing Finance Corporation Ltd.,

8) That as per regulations of 2017 Rule 6 (4) which is as follows: "Where for any reason, the proposal and other connected papers are not filled in by the prospect, the insurer or the distribution channel shall explain the contents of the form, and a certificate shall be incorporated at the end of the proposal form from the prospect that the contents of the proposal form

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and connected documents have been fully explained to him and he has fully understood the significance of the proposed contract." That in regard to the deceased Policy, the deceased is illiterate and the deceased put his signature in Telugu i.e., in vernacular language as such the deceased has not filled the prospects/application and in the said application there is no certificate "That the contents of the proposal form and connected documents have been fully explained to him and he has fully understood the significance of the proposed contract."

9) That as per Regulation 2017 Rule 6 (5) which is follows:

"The Insurers shall ensure, that a sale executed over distance-marketing modes such as Internet, SMS, Tele marketing, interactive electronic medium etc., shall be undertaken by authorized and qualified sales persons who are specified in this behalf by the Authority. It is mandatory that the consent of the prospect be obtained before canvassing. Care should be exercised to ensure that the prospect contacted has clarity as to identity of the insurer, the distribution channel, the product, benefits and conditions of offer etc. The canvassing so made shall not involve compulsion, inconvenience or nuisance of any kind to the prospect." It is submitted that the Petitioner and Dewan Housing Finance Company Ltd., are sister concerns and a specific Policy by name DHFL Pramerica Group Credit Life + is created between the

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Petitioner and M/s. Dewan Housing Finance Corporation Ltd., and those who take the finance from M/s.Dewan Housing Finance Corporation Ltd., must compulsorily take the Life Insurance from Petitioner to an extent of loans sanctioned. Hence the Policy is violation of Regulation 2017 Rule 6 (5).

13) It is submitted that, in regard to the document submitted in Page-73 of the Writ Petition, this Respondent denies that the discharge certificate pertains to deceased Pentaiah. The age in the said certificate is 65 years, whereas the deceased Pentaiah died at the age of 54 years, further the address shown in the discharge summary does not pertain to the deceased Pentaiah. It is pertinent to submit, even if we take the said discharge summary as true, it is clear that there is no serious decease suffered in the discharge summary. That it is common to majority of the citizens having diabetes and hypertension.

B) The interim order of this Court, dated 28.12.2018

passed in Writ Petition No.47102 of 2018 in I.A.No.01 of

2018 reads as under:-

"There shall be interim suspension as prayed for subject to the petitioner depositing half of the amount payable in terms of the impugned award, with the second respondent within a period of eight weeks from today."

4. The case of the petitioner as per the averments

made by the petitioner in the affidavit filed by the

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petitioner in support of the present Writ Petition, in brief,

is as follows:

a) The Petitioner is a Public Limited Company incorporated

under the provisions of Companies Act, having its registered

office at Gurugram, Haryana, having one of its offices at

Somajiguda Hyderabad, is engaged, inter alia in the business of

Life Insurance.

b) The 3rd respondent's late husband has obtained a housing

loan of Rs. 15,39,863/- from M/s. Dewan Housing Finance

Corporation Limited (DHFCL), with Policy bearing No.

GC000006B063200 for a sum assured of Rs. 15,39,863/- being

Insured/Policy Holder, issued by the petitioner herein in order to

insure the said housing loan amount. After the demise of the

Insured/ Policy Holder on 09.08.2017, the 3rd respondent herein

has submitted the claim Forms on 10.10.2017 to the petitioner

preferring the death claim as per the terms and conditions of the

said policy.

c) However, the Petitioner herein i.e., the Insurer repudiated

the contract of insurance i.e., the Group Insurance Policy in

question on 06.12.2017 and the death claim was rejected for the

bonafide reasons of suppression/non-disclosure of material

information by the Assured i.e.,assured/Policy Holder having not

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disclosed the past history of Type-II diabetes mellitus,

Hypertension and Nephrotic Range Proteinuria disease before

taking the Group Insurance, more particularly, in the Proposal

form dated 24.09.2015 submitted by the insured.

d) Being aggrieved by the said rejection, the 3rd respondent

herein has appealed to the Grievance Redressal Officer of the

Petitioner Insurer requesting for reconsideration and the same

was rejected by the Insurer. Thereafter, the 3rd respondent

appeared before the 2nd Respondent by filing the complaint dated

16.03.2018 for settling the death claim.

e) Subsequently, the 2nd respondent after conducting the

purported enquiry wherein no reasonable opportunity was

provided to the Petitioner herein to substantiate its case, passed

the Impugned Award dated 04.10.2018 allowing the complaint of

the 3rd Respondent holding that the rejection of the death claim

was unjustified and directed the petitioner to settle the insurance

claim amount.

f) Alongside, the 2nd respondent failed to appreciate that the

Petitioner company in order to prove the intentional non-

disclosure of the material facts in the proposal form at the time

of taking the policy, has placed on record the crucial

documentary evidence i.e., Discharge Summary dated 29.1.2015

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issued by the Department of Nephrology, Care Hospital, Banjara

Hills, Hyderabad. The material information of which, the

deceased insured/Policy holder had deliberately suppressed and

not disclosed at the time of obtaining the policy in question.

g) Furthermore, the petitioner has refunded the premium

amount of Rs.1,00,968/- excluding the taxes, to the Banker, who

granted the Housing Loan i.e., M/s. Dewan Housing Finance

Corporation Ltd., towards the full and final settlement under the

subject policy which was invalid, void ab-initio and unenforceable

in law having obtained fraudulently, dishonestly and by

misrepresentation.

h) Therefore, being aggrieved by the impugned Award dated

04.10.2018, which is illegal disclosing the errors apparent on the

face of the record and soaked with perversity inasmuch as the

same ignores the crucial evidence available on record and runs

contrary to the settled principles of law evolved by the Apex

Court, the present Writ Petition is filed.

DISCUSSION AND CONCLUSION

5. A bare perusal of the record indicates that the main

contentions put forth by the petitioner is that the

petitioner was not provided a reasonable opportunity to

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put forth the petitioner's case and substantiate the same

and the 3rd respondent suppressed material facts and the

said fraudulent suppression of material facts vitiates

claim under the policy. Another contention put forth by

the petitioner is that the 2nd respondent proceeded

contrary to the provisions of Rule 16 of the Insurance

Ombudsman Rules, 2017, in as much as, the 2nd

respondent has chosen to pass the same invoking the

powers under Rule 17, without complying the provisions

of Rule 16(1) & (2) &(3) making any recommendation

settling the complaint through mediation within one

month of the date of receipt of mutual written consent for

such mediation. The third contention put forth by the

petitioner is that the impugned award is totally perverse

in as much as the 2nd respondent ignored the clinching

evidence available on record in support of the action of

the insurer justifying the reasons for repudiation of the

contract of insurance for suppression of material

facts/crucial information that the policy holder in the form

of medical report evidencing and establishing, the

dishonest and fraudulent act and misrepresentation.

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6. It is a specific plea of the 3rd respondent referring to

Regulations of 2017, Rule 6(4), which clearly indicate that

the contents of the proposal form and connected

documents should be explained to the 3rd respondent so

that the 3rd respondent fully understands the significance

of the proposed contract submits that in the present case

the Regulations of 2017, Rule 6(4) had not been followed

and the 3rd respondent being an illiterate put his signature

in Telugu, and in the said application, there is no

certificate as provided for under Regulations of 2017, Rule

6(4) which reads as under:-

"Where for any reason, the proposal and other connected papers are not filled in by the prospect, the insurer, the insurer or the distribution channel shall explain the contents of the form, and a certificate shall be incorporated at the end of the proposal form from the prospect that the contents of the proposal form and connected documents have been fully explained to him and he has fully understood the significance of the proposed contract."

7. It is specifically averred by the 3rd respondent at

paragraph '9' of the counter affidavit that the policy is in

violation of Regulations, 2017, Rule 6(5), and the same is

extracted herein under:-

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"(5) The Insurers shall ensure, that a sale executed over distance-marketing modes such as Internet, SMS, Tele Marketing, interactive electronic medium etc., shall be undertaken by authorized and qualified sales persons who are specified in this behalf by the Authority. It is mandatory that the consent of the prospect be obtained before canvassing. Care should be exercised to ensure that the prospect contacted has clarity as to the identity of the insurer, the distribution channel, the product, benefits and conditions of offer etc. The canvassing so made shall not involve compulsion, inconvenience or nuisance of any kind to the prospect." It is the specific case of the 3rd respondent that the whole of the process of insurance was a act of compulsion mis-selling.

8. The learned counsel for the petitioner places reliance

on the judgment of Apex Court reported in (2019) 6

Supreme Court Cases 175, dated 24.04.2019 in Reliance

Life Insurance Company Ltd., and another vs. Rekhaben

Nareshbhai Rathod and contends that the Writ Petition

has to be allowed as per the observations, in particular at

paragraph 36, which reads as under:-

36. Finally, the argument of the respondent that the signatures of the assured on the form were taken without explaining the details cannot be accepted.

A similar argument was correctly rejected in a decision of a Division Bench of the Mysore High Court in V.K Srinivasa

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Setty vs Premier Life and General Insurance Co Ltd where it was held:

"80. Now it is clear that a person who affixes his signature to a proposal which contains a statement which is not true, cannot ordinarily escape from the consequence arising there from by pleading that he chose to sign the proposal containing such statement without either reading or understanding it. That is because, in filling up the proposal form, the agent normally, ceases to act as agent of the insurer but becomes the agent of the insured and no agent can be assumed to have authority from the insurer to write the answers in the proposal form.

81. If an agent nevertheless does that, he becomes merely the amanuensis of the insured, and his knowledge of the untruth or inaccuracy of any statement contained in the form of proposal does not become the knowledge of the insurer. Further, apart from any question of imputed knowledge, the insured by signing that proposal adopts those answers and makes them his own and that would clearly be so, whether the insured signed the proposal without reading or understanding it, it being irrelevant to consider how the inaccuracy arose if he has contracted, as the plaintiff has done in this case that his written answers shall be accurate."

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9. The learned counsel appearing on behalf of the 3rd

respondent, on the other hand relies upon a recent Apex

Court judgment reported in (2021) 13 Supreme Court

Cases 561, dated 05.10.2015 passed in Sulbha Prakash

Motegonkar and others vs. Life Insurance Corporation of

India and contends that diabeties and hypertension which

reflected in discharge summery and which has been

alleged by the petitioner herein as having been

suppressed by the 3rd respondent are not life threatening

diseases, which could or did cause the death of the

insurer, that would disentitle the deceased from getting

his life insured, and hence, the repudiation of the claim

was incorrect and not justified. The Apex Court in the said

judgment and in particular paras 5 and 6 observed as

under:

"5. It is not the case of the Insurance Company that the ailment that the deceased was suffering from was a life threatening disease which could or did cause the death of the insured. In fact, the clear case is that the deceased died due to ischaemic heart disease and also because of myocardial infarction. The concealment of lumbar spondylitis with PID with sciatica persuaded the respondent not to grant the insurance claim.

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6. We are of the opinion that the National Commission was in error in denying to the appellants the insurance claim and accepting the repudiation of the claim by the respondent. The death of the insured due to ischaemic heart disease and myocardial infarction had nothing to do with his lumbar spondilitis with PID with sciatica. In our considered opinion, since the alleged concealment was not of such a nature as would disentitle the deceased from getting his life insured, the repudiation of the claim was incorrect and not justified."

10. The relevant portion of the impugned award, dated

04.10.2018 passed by the 2nd respondent reads as under:-

"The insurer has established the materiality of the information not disclosed but failed to prove any fraudulent intent on the part of the insured in not disclosing his treatment details as the main intention of the insured was not to take the insurance policy but to take housing loan.

From the occurrences of the events it is evident that the insurer took undue advantage of the ignorance of the insured. The insured was not even aware that a policy was issued in his name till housing loan was disbursed after deducting premium. There was no scope for him to see the proposal form and suppress the information regarding his health. Apparently the proposal form was filled by the agent of the insurer without taking the insured into confidence."

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11. This Court opines that the reasoning given by the 2nd

respondent in the above referred paras of the award

impugned, dated 04.10.2018 passed by the 2nd

respondent clearly indicates that the same is justified and

it cannot be said that the 3rd respondent had fraudulent

intent in not disclosing the discharge summary dated

29.01.2015 issued by the Department of Nephrology, Care

Hospitals, Banjara Hills, Hyderabad. This Court opines

that the judgments relied upon by the learned counsel for

the petitioner do not apply to the facts of the case by

virtue of the clear observations made in the operative