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Max New York Life Insurance Co. Ltd. v/s Gitaben Rajeshbhai Kanparia

    First Appeal No. 140 of 2018

    Decided On, 05 February 2018

    At, National Consumer Disputes Redressal Commission NCDRC


    For the Appellant: Suman Bagga, Advocate. For the Respondent: None.

Judgment Text

This appeal is directed against the order of the State Commission, Gujarat dated 10th October, 2017 in CC/57/2012 whereby the State Commission partly accepted the complaint filed by the respondent and directed as under:

“1. Complainant’s complaint No. 57/2012 is partly accepted.

2. Order is given to opponents to pay amount of Rs. 33,91,185 (Rupees thirty three lacs ninety one thousand one hundred fifty eighty five) to complainant, with interest of 8% from the date of complaint.

3. Order is given to opponents to pay compensation of Rs. 5,000 (Rupees Five Thousand) to complainant to giving mental stress and harassment and amount of Rs. 2,000 (Rupees Two Thousand) for complaint cost.

4. Opponents have to bear expenses by self.

5. Copies of this order are given to parties free of cost. Above order is given on today dated 10.10.2017.”

2. Briefly put, facts relevant for the disposal of the appeal are that husband of the respondent purchased a life insurance policy for sum of Rs. 33,91,185 from the appellant Insurance Company. The policy commenced w.e.f. 24.5.2010. During the subsistence of the insurance policy the life assured died due to Cardiac Pulmonary Arrest in Zimbabwe. The complainant being the nominee in the insurance policy as also the legal heir filed insurance claim. The insurance claim, however, was repudiated on the ground that the life assured prior to filling up of the proposal form had visited four to five countries and he had a plan to visit a foreign country in near future.

3. Being aggrieved of the repudiation of the insurance claim, the respondent filed a consumer complaint in the State Commission, Gujarat. The appellant/opposite party contested the complaint, main plank of the contest being that the insurance policy was obtained by concealing material fact.

4. The State Commission on consideration of pleadings and the evidence did not find justification in repudiation of the insurance claim by the appellant. Accordingly holding the appellant guilty of deficiency in service, the State Commission allowed the complaint and directed the appellant as stated above.

5. Being aggrieved of the order of the State Commission, Insurance Company has approached this Commission in appeal. It is pertinent to note that the appeal, however, has been filed after the expiry of 30 days period of limitation from the date of receipt of free copy of the impugned order, with a delay of 73 days. The appellant has, therefore, moved application seeking condonation of delay in filing of appeal.

6. So far as the merit of the case is concerned, learned Counsel for the appellant has contended that the State Commission has fallen in error by failing to appreciate that the insurance policy was obtained by the life assured by concealing material facts pertaining to his earlier visits to the foreign country or his plan to visit countries in the near future. It is contended that had the complainant disclosed that earlier to submission of the proposal form he made several visits to foreign countries and even after the issue of the insurance policy he intended to visit Zimbabwe, where he expired, the Insurance Company would not have issued insurance policy. In support of the contention, learned Counsel has drawn my attention to the copy to the proposal form particularly question No. 9 in part-4 of the proposal form, which deals with the foreign travel. The said column requires the proposer to answer the following questions:

“Have you in the last 5 years, or do you intend within a year, to travel or reside abroad other than on holiday? If yes, please give full details including all countries involved and duration of stay.”

7. It is submitted that although the life assured had visited foreign countries on several occasions during last five years and he was staying in Zimbabwe at the time of filing of proposal form, the life assured, however, answered the question in negative which clearly indicates that the insurance policy was obtained by giving the false information to the Insurance Company. Therefore, the Insurance Company was justified in repudiating the insurance claim. In support of her contention, learned Counsel for the appellant has relied upon the judgment of Hon’ble Supreme Court in P.C. Chacko & Anr. v. Chairman, LIC of India, III (2008) CPJ 78 (SC)=IX (2007) SLT 533=IV (2007) ACC 773 (SC)=(2008) 1 SCC 321 and Satwant Kaur Sandhu v. New India Assurance Company, IV (2009) CPJ 8 (SC)=VI (2009) SLT 338=(2009) 8 SCC 316.

8. On careful consideration of the submissions made on behalf of the appellant and the record as also the judgment relied upon by the appellant, I do not find merit in the contention of learned Counsel for the appellant. In the matter of P.C. Chacko and Satwant Kaur Sandhu (supra), Hon’ble Supreme Court has held that if the insurance policy is obtained by the assured by concealment of material fact it goes to the route of the contract of insurance and justifies the repudiation of the insurance contract by the Insurance Company.

9. In the Satwant Kaur Sandhu’s case judgment Hon’ble Supreme Court has defined the term “Material fact”. Relevant observations of Hon’ble Supreme Court are reproduced as under:

“A mediclaim policy is a non-life insurance policy meant to assure the policy holder in respect of certain expenses pertaining to injury, accidents or hospitalizations. Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment.

In United India Insurance Co. Ltd. v. M.K.J. Corporation, this Court has observed that it is a fundamental principle of insurance law that utmost faith must be observed by the contracting parties. Good faith forbids either party from non-disclosure of the facts which the party privately knows, to draw the other into a bargain, from his ignorance of that fact and his 1 [1908] 2 K.B. 863 2 (1996) 6 SCC 428 believing the contrary. (Also see: Modern Insulators Ltd. v. Oriental Insurance Co. Ltd.).

Mac Gillivray on Insurance Law (Tenth Edition) has summarised the assured’s duty to disclose as under:

“...the assured must disclose to the insurer all facts material to an insurer’s appraisal of the risk which are known or deemed to be known by the assured but neither known nor deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms.”

Over three centuries ago, in Carter v. Boehm, Lord Mansfield had succinctly summarised the principles necessitating a duty of disclosure by the assured, in the following words:

“Insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist. The keeping back such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risque run is really different from the risque understood and intended to be run at the time of the agreement...The policy would be equally void against the underwriter if he concealed...Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary.”

10. Now the question is whether or not the concealment by the life assured about his foreign travels and his stay at Zimbabwe is a material fact which could have bearing on the decision of the Insurance Company to accept or not the accept the insurance proposal or to grant insurance cover on a higher premium.

11. The State Commission has dealt with this issue in detail. Relevant observations of the State Commission are reproduced as under:

“Complainant’s husband has done foreign visits within five years but given negative answer and not declared true information regarding trips. But the question arises that the same is covered under hiding important information or case of cheating? Legally the fact reveals that the policy contract is made with good faith Policy contract is like uberrima fides. In the proposal form, insurer has to provide true and important information. Regarding the same, opponents have submitted decision given by Supreme Court IV (2009) CPJ 8 (SC). between Satwant Kaur Sandhu v. New India Assurance Co. Ltd. in presented judgment, Court has declared that insurer has to provide all important information in proposal form.

In the given decision, it was also disclosed that what is the important information? Important information are those which can decide whether to accept risk of the proposer and if accepted then how much premium should be collected. Any information can decide the above are called as important information.

Insurance proposer has to declare this kind of information. In the current case, complainant’s husband has done many foreign trips within 5 years and this information comes under important information whether the insurer able to get the policy or not? Complainant’s husband has not disclosed the same. He has not declared previous foreign trips and also not asked about premium difference in case of foreign trips. Opponent Insurance Company has not declared that if complainant’s husband has declared about foreign trips then what effect occurred about providing insurance policy.

In proposal form part ‘C” item 1 has question about other insurance policies. Hon’ble National Commission has declared in revision petition No. 3139/2015 (NC) between Bajaj Allianz Life Insurance Co. Ltd. v. Paramjit Kaur that non-disclosure of other company’s insurance policies in proposal form is not covered under hiding important information. Any questions asked in proposal form and if true answer was not given then it cannot be declared that the policy was taken with intention to cheat. It is responsibility of opponent Insurance Company to inform the proposer about important information to decide giving policy or not. Opponent has argued that complainant’s husband has visited Zimbabwe, Sierra Leone, Guinee, Israel, South Africa and Mozambican which are decline/negative countries and this is beyond the terms and conditions.

But in proposal form, list of decline/negative countries was not given. In part ‘A’ item 22 of proposal form, the question asked about dangerous working schedule in country or outside country for visiting? Regarding the same there is nothing declared in proposal form that which parts of the country or outside country are dangerous. In proposal form, nowhere information that visiting of country like Zimbabwe, Sierra Leone, etc. are beyond the policy

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conditions. So, opponent’s argument about visiting countries like Zimbabwe, Sierra Leone, Guinee, South Africa, Israel and Mozambique is beyond policy conditions, is totally baseless and seems to produce by them intensely repudiating the claim.” 12. From the above observation, it appears that it was pleaded before the State Commission that the countries which were visited by the life assured prior to filling up of the proposal form and Zimbabwe, where the life assured died because of Cardiac Pulmonary Arrest were in negative list of countries. However, on perusal of proposal form, it is seen that although information about foreign travel by the proposer life assured has been sought in the proposal form but it is not clarified as to why the said information has been sought and no information about list of negative countries is there in the proposal form. Therefore, I find no fault with the impugned order of the State Commission holding that non-furnishing of information about foreign travel amounts to concealment of material fact. Thus, I find no reason to interfere with the well-reasoned order of the State Commission. Appeal is accordingly dismissed. 13. As the appeal has been dismissed on merits, no finding on application for condonation of delay is required. Appeal dismissed.