- (1.) THIS appeal arises from order dated 11.3.2003 rendered by the learned Consumer Disputes Redressal Forum, Bhavnagar in Consumer Disputes Case No. 179 of 1998 directing the opponent LIC of India to pay to the complainant policy amount of the disputed policies coupled with all benefits and bonus and interest @ 12% p.a. from 11.12.1998 till payment and compensation and cost respectively in the sum of Rs. 7,000/ - and Rs. 3,000/ -.
(2.) WE have heard the learned Advocates for the parties. We have gone through the material placed on record. We have gone through the impugned order. Brief facts of the case which are not in dispute and which can hardly be disputed by either of the parties might be stated.
(3.) THE life assured, since deceased, Haresh Thakker had filed in proposal form for obtaining life insurance policy in the sum of Rs. 30,000/ - in May 1989 at Bhavnagar. The proposed life assured was medically examined. As his height, weight and medical reports were contra -indicative of grant of cover of insurance, he was declared unfit for the same and his proposal for insurance was rejected. After having waited for a period of three years, he submitted proposal form for obtaining life insurance policy in the sum of Rs. 50,000/ - in the year 1992 at Sihor, a town away from Bhavnagar, though in Bhavnagar district. In the proposal form, the said life assured did not disclose the fact that he had earlier applied for LIC policy at Bhavnagar in May, 1989 and the proposal form was rejected on medical grounds after due examination. On the contrary, he answered the relevant column requiring disclosure of fact of earlier proposal and approval/rejection thereof by saying no . The exercise was repeated in 1993 for further insurance cover of Rs. 50,000/ - and in 1994 for cover of Rs. 10,000/ -. Thus, all the three proposals for insurance policies were submitted in the years 1992, 1993 and 1994 respectively for Rs. 50,000/ -, Rs. 50,000/ - and Rs. 10,000/ - at Sihor. It is no doubt true that on all the three occasions the proposed life assured was medically examined. One additional feature is that in the proposal form of May, 1989 which was rejected, the proposed life assured had disclosed the fact that he was operated for hernia but the said fact was also not disclosed in the proposal forms submitted in the years 1992, 1993 and 1994 at Sihor. The policies were issued by the opponent Life Insurance Corporation of India, (LIC of India) and the life assured died on 16.12.1997. The complainants being heirs and legal representatives of deceased life assured submitted claim under all the aforesaid three policies of insurance. Opponent LIC of India rejected the claim but offered ex -gratia payment of Rs. 55,000/ - on or around 14.12.1998. The complainant, however, did not accept the ex -gratia payment and approached the learned Forum. The learned Forum, after considering the decisions submitted to it came to the conclusion that it was for the opponent LIC of India to enquire into the matter more particularly concerning the alleged suppression of material fact and suggestion of false fact with regard to submission of earlier proposal form and rejection thereof since the life assured died after passage of two years as envisaged by Section 45 of the Insurance Act. The learned Forum, therefore, came to the conclusion that repudiation of claim after passage of more than two years in respect of all the three policies amounted to deficiency in service. It, therefore, directed payment of the policy amounts with interest, cost and compensation as stated above. The Life Insurance Corporation of India has grown in size by passage of time and it is one of the largest public sector financial undertakings having its offices and branch offices at various places. It would, therefore, be easy for a wrong -doer to take advantage of such a situation and that exactly appears to have happened in the present case. Proposed life assured very well knew that his earlier proposal form for policy of insurance was rejected on medical grounds in the year 1989 when he submitted the proposal form for life insurance in the sum of Rs. 30,000/ - at Bhavnagar. It is not in dispute that he happened to be inhabitant of Bhavnagar and also carried on business there. There was no reason for him to obtain life insurance policy at Sihor, a town distant from the city of Bhavnagar. Merely because some agent had prompted him to play fraud he was not justified in such fraud being practised on the opponent LIC of India. It is settled law that agents are agents of the insured and not the LIC of India. That apart, the fact that earlier policy of insurance was not issued and the proposal form in that respect was rejected by the opponent LIC of India on medical grounds would be a material fact in the facts and circumstances of the case. It was within the knowledge of the life assured that his proposal form was rejected. His height was not approved, his weight was not approved, the pathology reports and other medical examination reports were contra -indicative for grant of life insurance policy in his favour. Besides, he was operated for hernia in the past. All these facts were well within the knowledge of proposed life assured. It was he who is expected to tell all these facts when he filled in the fresh proposal form after passage of 3 -5 years. In our considered opinion, there cannot be more conscious attempt on the part of a person to state false fact and to suppress a correct fact by giving an answer in the negative to a positively asked in respect of whether the life assured had any occasion to submit a proposal form and whether such proposal form was accepted or rejected. In our considered opinion, that was a material fact which would have affected the decision of the LIC of India whether to grant insurance upon fresh proposal form. In fact, had the fact been available before the opponent LIC of India at the relevant point of time, it could never have accepted the proposal. Under such circumstances, decision of the Apex Court in the case of Mithoolal Nayak V. Life Insurance Corporation of India, 1962 AIR(SC) 814 will stare at the face of the complainants. The Apex Court was concerned with provisions of Section 45 of the Insurance Act. It is no doubt true that in the present case also there was passage of more than three years so far as first two policies were concerned and passage of nearly three years and not complete three years in so far as last policy was concerned when the life assured died and the opponent LIC of India was required to consider the claim under the three policies of insurance in question. That, however, is not material for the purpose of deciding the present case. What is material is whether there was fraudulent suppression of material fact or not. As stated above, it was a conscious attempt on the part of the proposed life assured in obtaining three policies of insurance. Simply because the policies of insurance, after they had been taken were transferred to Bhavnagar, it cannot be said that the opponent LIC of India was posted with the knowledge about earlier submission of proposal form and rejection thereof. It is not the case of the complainant that the life assured had an occasion to make amendment to his three proposals that life insurance policies obtained by him at Sihor have been submitted by suppressing the aforesaid fact. It is not the case of either of the parties that the life assured had brought to the notice of opponent LIC of India about the mis -statements made by the life assured when the three policies of insurance were transferred to Bhavnagar. Therefore, transfer of the three policies to Bhavnagar will not have any redeeming effect on the case of the complainant. In this light what the Apex Court has stated in para 7 of the citation would assume importance. After setting out the provisions contained in Section 45 of the Insurance Act, the Apex Court has observed as under : "It would be noticed that the operating part of Section 45 states in effect (so far as it is relevant for our purpose) that no policy of life insurance effected after the coming into force of the Act shall, after the expiry of two years from the date on which it was affected, 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; the second part of the section is in the nature of a proviso which creates an exception. It says in effect that if 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, then the insurer can call in question the policy effected as a result of such inaccurate or false statement....";