AVM Jonnalagadda Rajendra, AVSM, VSM (Retd), Presiding Member

The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 ("the Act") against the Maharashtra State Consumer Disputes Redressal Commission, Circuit Bench at Nagpur ("the State Commission") Order dated 17.11.2017 in Consumer Complaint No. CC/16/10, wherein the complaint filed by the Respondent herein was partly allowed.

2. As per the report of the Registry, there was 35 days delay in filing the present appeal. For the reasons stated in I.A. No. 2814/2018, the delay was condoned by this Commission vide order dated 16.03.2018.

3. For convenience, the parties are referred to as they were arrayed before the State Commission. "Meeradevi," the wife and nominee of the Deceased Life Assured (DLA) Mr. Vinodkumar Ghanshyamdas Agrawal, is the Complainant/ Respondent. The "HEFC Standard Life Insurance Co. Ltd." is Appellant/ Opposite Party (OP)/Insurer.

4. Brief facts of the case, as per the complainant, are that the DLA, Late Shri Vinodkumar Ghanshyamdas Agrawal, obtained Life Insurance Policy No. 16380973 from the OP for a sum assured of Rs.25,00,000. The proposal form was submitted on 23.10.2013, and Rs.26,852 premium was paid. The Complainant, being the wife of the DLA, was the nominee under the policy. Pursuant to the proposal, the OP subjected the DLA to medical examination at its authorised diagnostic centre. Upon being satisfied with the medical reports, the OP accepted and issued the policy on 24.12.2013. During the subsistence of the policy, the DLA expired on 04.03.2014 at Nagpur. The Death Certificate issued by Nagpur Municipal Corporation recorded the cause of death as cardiac arrest. Thereafter, the Complainant submitted a death claim with OP. The insurer sought additional medical records, which, according to the Complainant, were not available as the DLA had not undergone any prior medical treatment. However, vide letter dated 03.09.2014, the OP repudiated the claim alleging suppression of material facts, namely that the DLA was suffering from liver cancer prior to issuance of the policy. Aggrieved by the repudiation, the Complainant approached the State Commission alleging deficiency in service and unfair trade practice, and sought payment of the sum assured along with interest, compensation, and litigation costs.

5. On being issued notice, OP contested the complaint by filing a written version and contended that upon investigation it was revealed that the DLA was suffering from liver cancer and had taken treatment at Rashtrasant Tukdoji Regional Cancer Hospital & Research Centre, Nagpur. This was well prior to the submission of the proposal form for the policy in question. However, the DLA deliberately supressed this material health condition and answered "No" to specific questions in the proposal form relating to serious illness, hospitalization, and medical investigations. He thus suppressed material facts. On this basis, the insurer justified repudiation of the claim.

6. The learned State Commission vide Order dated 17.11.2017 partly allowed the complaint with the following observations: -

                   "6. On the other hand, it is contended on behalf of the complainant that the deceased has undergone medical test at the diagnostic center referred by the opposite party and there was no conclusive diagnosis of cancer by the Magnam Life, Science Centre conducted one Dr. Vedant Rathi and further requirement insisted by the opposite party after the proposal of insurance was complied with thereafter and on 18/12/2013 proposal was accepted by the opposite party by their communication annexure-3 dated 24/12/2013. Municipal Corporation in their registration of death notice bearing No. 47192, dated 04/03/2014 mentioned cause of death of said Vinod Kumar Agrawal as heart attack and not liver cancer or cancer which has taken as ground of repudiation by the opposite party. Under these circumstances, in the absence of any affidavit by a doctor concerned that deceased was suffering from lever cancer and in the face of document, notification and certificate issued by Municipal Corporation, Nagpur regarding death of Vinod Kumar Agrawal, he died due to heart attack. We feel that denying, claim as there is no justification for the opposite party to avoid liability to award benefit under life insurance policy to the widow of the deceased or defendant of the deceased represented by Smt. Miradevi Vinod Kumar Agrawal as widow of the deceased Vinod Kumar Agrawal.

                   7. We may also add that the opposite party had taken precaution to insist upon this medical examination of the deceased by the diagnostic centre recognized by it, for this reason also repudiation cannot be justified. When life insurance policy was accepted and proposal for life insurance became contract enforceable at law, there would be no justification for the opposite party to avoid its liability on the grounds after thought such as the policy holder did not disclose the ailment suffered. The deceased aged about 57 years only. Repudiation in the facts and circumstances of the present case is found unreasonable. We therefore direct the opposite party to pay sum of life insurance cover of Rs. 25,00,000/- together interest at the rate of 6% p. a. from the date of the complaint till realization. The award amount be paid within 45 days from the date of this order, failing which the outstanding amount payable shall carry interest at the rate of 9% p.a. till realization.

                   8. We also hold that the opposite party responsible for deficiency in service and order compensation payable in the sum of Rs. 5,000/- for mental and physical harassment and litigation cost in the sum of Rs. 5,000/- only. The amount of compensation and cost shall be paid in addition in award of compensation on account of life insurance cover in the present case. We allow the complaint accordingly."

7. Being aggrieved by the said order, the OP (Appellant herein) filed the present Appeal No.1820 of 2018 with the following prayer:

In the aforementioned facts and circumstances, it is most respectfully prayed that this Commission may graciously be pleased to:-

                   a) Set aside the Order dated 17.11.2017 passed by the Hon'ble State Commission, Nagpur in Complaint Case No. CC/16/10.

                   b) Pass any other Order (s) deemed fit and proper in the interest of justice.

8. The learned counsel appearing for the Appellant/OP reiterated the grounds raised in the Written Version and Appeal and contended that the DLA Shri Vinod Kumar Ghanshyamdas Agrawal had obtained an HDFC Term Assurance Policy for a sum assured of Rs.25,00,000. He submitted a proposal dated 10.10.2013 for the same. Pursuant to which, the policy in question was issued commencing from 14.11.2013. In the proposal form, the DLA answered "No" to the specific questions relating to his health pertaining to history of suffering from cancer, prior hospitalization, and medical investigations. However, within five months after the issue of the policy, the DLA died on 04.03.2014. Upon receipt of the death claim from his wife, the nominee, an investigation was conducted by the OP insurer, which revealed that, prior to submitting the proposal form, the DLA was suffering from advanced Stage-IV Liver Metastasis Adenocarcinoma and had been examined and advised palliative chemotherapy at Govt Cancer Hospital. These facts were corroborated by hospital records and a certificate issued by the treating doctor, were deliberately concealed by the DLA at the time of proposal. On account of such suppression of material facts, the insurer repudiated the claim vide letter dated 03.09.2014. It was further contended that the State Commission erred in allowing the complaint and directing payment of the sum assured solely on the basis of the death certificate mentioning the cause of death as cardiac arrest, without appreciating the material evidence regarding preexisting disease. Being aggrieved by the order dated 17.11.2017, the Appellant has preferred the present appeal seeking its setting aside.

9. Per contra, the learned counsel for the Respondent/Complainant opposed the Appeal and supported the impugned order passed by the State Commission in CC No. 10 of 2016 dated 17.11.2017. It was contended that the complaint was rightly allowed as there was no credible or legally admissible medical evidence on record to disbelieve the Death Certificate issued by the Nagpur Municipal Corporation, which unequivocally recorded the cause of death as cardiac arrest. It was contended that the DLA had obtained the insurance policy only after undergoing several medical examinations at an authorised diagnostic centre of the Appellant, and the policy was issued only after the insurer was fully satisfied regarding his health condition. The DLA died suddenly on 04.03.2014 due to a heart attack, and thereafter the Complainant, being the nominee, duly lodged the claim. The repudiation dated 03.09.2014, alleging suppression of cancer, was asserted to be baseless and unsupported by cogent evidence. She consistently denied that her husband ever suffered from cancer or underwent any treatment therefor. It was further argued that the Appellant's defence before the State Commission was vague and that alleged investigation reports of a private and unauthorised agency, along with an unsubstantiated doctor's certificate, were produced belatedly after completion of pleadings, without being supported by Affidavits or being proved in accordance with law. These documents suffer from material contradictions and lack authenticity, rendering them unreliable and inadmissible. In view of the absence of credible medical evidence and in light of the statutory death certificate, it was contended that the impugned order is well-reasoned and does not call for any interference by this Commission.

10. We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned counsels for both parties.

11. The main issues for consideration are whether the DLA suppressed or concealed any material fact relating to his health at the time of submitting the proposal form? And whether the claim repudiation by the Appellant/ OP was in terms of the insurance contract?

12. It is not in dispute that the husband of the Complainant had obtained Life Insurance Policy No.16380973 from OP for a sum assured of Rs.25,00,000. He submitted the proposal form on 23.10.2013 and the premium of Rs.26,852 was also paid. The Complainant was named as the nominee under the policy. Pursuant to the proposal, the OP subjected the DLA to a medical examination at its designated medical centre and, upon being satisfied with his health condition, accepted the proposal and issued the policy on 24.12.2013. During the subsistence of the policy, the life assured expired on 04.03.2014 at Nagpur. The Death Certificate issued by Nagpur Municipal Corporation recorded the cause of death as cardiac arrest. Upon submission of the claim, the OP sought certain additional medical records, to which the Complainant responded that no such records were available, as the DLA had not undergone any prior medical treatment. Notwithstanding the representations made by the Complainant, the OP repudiated the claim on the grounds that the DLA had suppressed a pre-existing disease, namely liver cancer. It is an admitted position that the policy had not completed three years from the date of issuance policy and, therefore, the repudiation was sought to be justified by the insurer under Section 45 of the Insurance Act, 1938 on the ground of alleged suppression of material facts.

13. Section 45 of the Insurance Act, 1938, as amended, governs the circumstances under which a life insurance policy may be questioned. The provision is reproduced hereinabove for ready reference as under:

                   45. Policy not be called in question on ground of misstatement after three years. - (1) No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e., from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.

                   (2) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud:

                   Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision is based.

                   Explanation I. -For the purposes of this sub-section, the expression "fraud" means any of the following acts committed by the insured or by his agent, with intent to deceive the insurer or to induce the insurer to issue a life insurance policy:

                   (a) the suggestion, as a fact of that which is not true and which the insured does not believe to be true;

                   (b) the active concealment of a fact by the insured having knowledge or belief of the fact;

                   (c) any other act fitted to deceive; and

                   (d) any such act or omission as the law specially declares to be fraudulent.

                   Explanation II. -Mere silence as to facts likely to affect the assessment of the risk by the insurer is not fraud, unless the circumstances of the case are such that regard being had to them, it is the duty of the insured or his agent keeping silence, to speak, or unless his silence is, in itself, equivalent to speak.

                   (3) Notwithstanding anything contained in sub-section (2), no insurer shall repudiate a life insurance policy on the ground of fraud if the insured can prove that the misstatement of or suppression of a material fact was true to the best of his knowledge and belief or that there was no deliberate intention to suppress the fact or that such misstatement of or suppression of a material fact are within the knowledge of the insurer:

                   Provided that in case of fraud, the onus of disproving lies upon the beneficiaries, in case the policyholder is not alive.

                   Explanation. - A person who solicits and negotiates a contract of insurance shall be deemed for the purpose of the formation of the contract, to be the agent of the insurer.

                   (4) A policy of life insurance may be called in question at any time within three years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground that any statement of or suppression of a fact material to the expectancy of the life of the insured was incorrectly made in the proposal or other document on the basis of which the policy was issued or revived or rider issued:

                   Provided that the insurer shall have to communicate in writing to the insured or the legal representatives or nominees or assignees of the insured the grounds and materials on which such decision to repudiate the policy of life insurance is based:

                   Provided further that in case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums collected on the policy till the date of repudiation shall be paid to the insured or the legal representatives or nominees or assignees of the insured within a period of ninety days from the date of such repudiation.

                   Explanation. -For the purposes of this sub-section, the misstatement of or suppression of fact shall not be considered material unless it has a direct bearing on the risk undertaken by the insurer, the onus is on the insurer to show that had the insurer been aware of the said fact no life insurance policy would have been issued to the insured.

                   (5) Nothing in this section shall prevent the insurer from calling for proof of age at 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.]

14. It is an admitted position that the DLA answered "No" to the specific questions relating to previous ailments, existing illnesses, and any medical investigations undergone in the past in the Proposal Form dated 10.10.2013,. The Respondent/Complainant contended that at the time of obtaining the policy, the insured was not suffering from any known diseases and had not undergone any prior medical treatment requiring disclosure. Per contra, the OP - insurer asserted that the said declarations were false and incorrect, inasmuch the medical records obtained from Rashtra Sant Tukdoji Regional Cancer Hospital, Manewada Road, Nagpur clearly revealed that the DLA had been diagnosed with a serious and life-threatening ailment and he was aware of the same well prior to submission of the proposal form to the OP. He, however, did not disclose the same at the time of proposing for the policy. On the basis of such non-disclosure of material facts pertaining to his health condition, the insurer repudiated the claim.

15. Upon careful examination of the medical records placed on record, it stands independently established that the DLA had undergone medical consultation and treatment at Rashtra Sant Tukdoji Regional Cancer Hospital, Manewada Road, Nagpur on 27.05.2013, during which he was diagnosed with "Liver Metastasis - Adenocarcinoma, Occult Primary." The said diagnosis precedes the submission of the Proposal Form dated 10.10.2013 by several months. It can therefore be reasonably inferred that the DLA was aware of his medical condition at the time of completing the proposal form and failed to disclose the said ailment in response to specific queries in the proposal form. This clearly amounts to suppression of material facts. The Hon'ble Apex Court in Bajaj Allianz Life Insurance Company Ltd v Dalbir Kaur, 2020 SCC OnLine SC 848 decided on 09.10.2020 wherein it was observed as under:

                   "A contract of insurance is one of utmost good faith. A proposer who seeks to obtain a policy of life insurance is duty bound to disclose all material facts bearing upon the issue as to whether the insurer would consider it appropriate to assume the risk which is proposed. It is with this principle in view that the proposal form requires a specific disclosure of pre-existing ailments, so as to enable the insurer to arrive at a considered decision based on the actuarial risk."

16. The principle has been reaffirmed in Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175, wherein it has been held as under:

                   "31. 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 VK Srinivasa Setty v Messers Premier Life and General Insurance Co Ltd where it was held:

                   - 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 therefrom 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.

                   - 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."

17. The Hon'ble Supreme Court in Mahaveer Sharma v. Exide Life Insurance Company Limited & Anr., 2025 LiveLaw (SC) 253, decided on 25.02.2025 observed that:

                   "11. In the case of Satwant Kaur Sandhu (supra), there was suppression of material fact relating to health of the insured and in those circumstances, the respondent insurance company was held to be justified in repudiating the insurance contract. ..."

18. In view of the foregoing discussion, it is evident that the DLA had undergone medical treatment at Rashtra Sant Tukdoji Regional Cancer Hospital, Manewada Road, Nagpur on 27.05.2013 and was diagnosed with "Liver Metastasis - Adenocarcinoma, Occult Primary." The DLA was thus fully aware of his medical condition at the time of submitting the proposal form on 10.10.2013. His failure to disclose the said material facts, despite specific questions in the proposal form, constitutes suppression of material facts, thereby vitiating the contract of insurance.

19. In light of the aforesaid findings and the binding precedents laid down by the Hon'ble Supreme Court, we are of the considered view that the order dated 17.11.2017 passed by the learned State Commission in Complaint Case No. CC/16/2010 suffers from legal infirmity and cannot be sustained. Accordingly, First Appeal No. 254 of 2018 is allowed and the impugned order is set aside and the complaint is dismissed.

20. There shall be no order as to costs.

21. All pending applications, if any, also stand disposed of.