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 Order dated 24.08.2018 passed by the Haryana State Consumer Disputes Redressal Commission, Panchkula ("the State Commission") in Consumer Complaint No. 426 of 2016, whereby the Complaint was allowed.

2. For convenience, the parties are being referred to as they were before the State Commission. "Harvinder Nagpal," the husband and nominee of the Deceased Life Assured Mrs. Anju Nagpal, is the Complainant/ Respondent. The "ICICI Prudential Life Insurance Co. Ltd." (LIC) is Appellants/ Opposite Parties/Insurer.

3. Brief facts of the case, as per the complainant, are that his wife, Smt. Anju Nagpal, obtained a policy namely Loan Protect FT-Mortgage Policy from the Opposite Parties (OPs.). The life assured was insured for a sum of Rs.49,20,000 and she paid annual premium of Rs.11,513. The said policy was issued on 31.03.2015. Unfortunately, the life assured expired on 25.04.2016. The complainant notified OPs for settlement of the claim. However, vide letter dated 24.06.2016, the OPs repudiated the claim on the ground that the DLA had undergone a cervical biopsy on 02.04.2012. Aggrieved by the claim repudiation on such false and untenable grounds as deficiency in service against the OPs, the Complainant filed CC No. 426 of 2016 before the State Commission seeking settlement of the claim and compensation of Rs. 22,000 and Rs. 11,000 as costs.

4. On being issued notice, the complaint was contested by the OPs by filing a written version before the State Commission contending that the OPs received intimation of the death claim on 14.05.2016 and that the policy was issued on 31.03.2015, without conducting any medical examination. The life assured expired on 25.04.2016 and that the claim was repudiated vide letter dated 24.06.2016 on the ground of nondisclosure of material facts, namely that the life assured was suffering from cervical cancer and had been undergoing treatment since the year 2012. On the basis of the aforesaid allegations, the OPs denied any deficiency in service, raised preliminary objections regarding the maintainability of the complaint and concealment of material facts, and prayed for dismissal of the complaint.

5. The learned State Commission allowed the complaint vide Order dated 24.08.2018 and with the following observations: -

                   "7. It is a human loss, though the deceased was suffering from pre-existing serious ailment and ultimately that disease has resulted into the death of the insured. Since the Consumer Protection Act. 1986 is a liberal legislation formulated with an intention to have good relationship between consumer as well as consumer courts and basically, in the interest of justice and equity, it would be in the fitness of things, the 50% of the assured amount is allowed to the present complainant i.e. Rs. 24,60,000 alongwith the interest @ 9% per annum from the date of instituting the complaint. The entire amount be paid by the O.Ps. within a period of 90 days, from the date of receipt of the order, otherwise, it will carry interest at the rate of 18% per annum, till realization and it calls for pointed notice that under Section 27 of the Act, if the opposite party fails or omits to comply with this order, it shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to three years or with fine or with both."

6. Being aggrieved by the said order, the OPs (Appellants herein) has filed this present Appeal No. 1820 of 2018 with the following prayer:

It is therefore humbly prayed that the present appeal may please be allowed and the impugned order dated 24.08.2018 passed in CC No. 426/2016 by Ld State Commission, Haryana may please be set aside and the complaint of the respondent may be dismissed. Any other order, which is just and proper in the facts and circumstances of the case, may please be passed in the favor of the Appellants.

7. The learned counsel for the Appellants/OPs reiterated the grounds urged in the written version and the Appeal and contended that the present appeal has been preferred against the State Commission order dated 24.08.2018 wherein despite recording a categorical finding of suppression of material facts by the DLA, the State Commission erred in allowing 50% of the sum assured with interest on consideration of equity. The DLA had knowingly and deliberately concealed her long-standing and serious medical history of carcinoma cervix, diagnosed as early as 02.04.2012, along with continuous treatment, including radiotherapy and chemotherapy, while answering the medical questions in the proposal form in the negative. This is clear breach of doctrine of uberrima fides. The policy was issued solely based on such false declarations without medical examination. The death claim arose within 13 months of policy issuance, warranting investigation under Section 45 of the Insurance Act, which conclusively established material non-disclosure. The claim was therefore rightly repudiated vide letter dated 24.06.2016. In law, once suppression of material facts is proved, no relief, partial or ex gratia can be granted, as consistently held by the Hon'ble Supreme Court and this Commission. He asserted that the impugned order, which is founded on sympathy rather than settled legal principles, is arbitrary, perverse, and unsustainable, and thus liable to be set aside in toto. In support of his arguments, he relied on P.C. Chacko & Anr. vs. Chairman, Life Insurance Corporation of India & Ors., III (2008) CPJ (SC); Shriram Life Insurance Co. Ltds. & Anr. vs. E. Bhagyamma, R.P. No.2519 of 2017, decided on 16.07.2019 by NCDRC; Life Insurance Corporation of India v. Manna Devi, 2010 SCC Online NCDRC 225; Bhanwari Devi vs. Bhartiya Jeevan Bima Nigam & Anr., R.P. No.1958 of 2010, decided on 19.07.2011 by NCDRC; Dr. Poonam Makhija vs. Senior Divisional Manager, LIC of India, C.C. No.2279 of 2018, decided on 11.01.2023 by NCDRC; Reliance Life Insurance Co v Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175.

8. The learned Counsel for the Respondent/Complainant opposed the Appeal and argued that the present appeal has been preferred by the Appellants against the well-reasoned order dated 24.08.2018 passed by the State Commission, partly allowing the complaint and the directing the OPs to pay 50% of the sum assured amounting to Rs.24,60,000 along with interest @9% per annum for deficiency in service, arising out of the unjustified repudiation of the insurance claim under a Loan Protect FT-Mortgage Policy (Policy No. 1924439) issued on 31.03.2015 in the name of the DLA, late Mrs. Anju Nagpal, for a sum assured of Rs.49,20,000 against an annual premium of Rs.11,513. The Complainant being the nominee and husband of the DLA, informed the Appellants of her unfortunate demise on 25.04.2016 and submitted the claim. The claim was arbitrarily repudiated by the OPs on 24.06.2016 on the ground of suppression of medical history relating to a cervical biopsy in 2012, despite the fact that the policy was loan-linked, issued only after medical examination arranged by the OPs, and without furnishing or explaining any exclusion clauses or specific queries regarding such past medical history to the insured; the repudiation was based solely on posthumously obtained documents, without any cogent proof of willful or fraudulent concealment by the life assured, who was fit and healthy at the time of proposal and had acted in utmost good faith. The State Commission, after appreciating the evidence, medical records, and conduct of the parties, rightly held that total denial of the claim would be inequitable and, in consonance with settled law laid down by the Hon'ble Supreme Court in LIC of India v. Asha Goel, (2001) 2 SCC 160; Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316; P.C. Chacko v. LIC of India, (2008) 1 SCC 321; Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175; LIC of India v. CERC, (1995) 5 SCC 82; National Insurance Co. Ltd. vs. Seema Malhotra, (2001) CPJ 5 (NC); Ghaziabad Development Authority v. Balbir Singh, (2004)5 SCC 65; Amitabha Dasgupta v. United Bank of India, (2021) 15 SCC 430, awarded 50% of the sum assured with interest, thereby striking a just balance between equity and law. The impugned order dated 24.08.2018 is legal, fair, reasoned, and calls for no interference. The present appeal is frivolous, misconceived, and filed only to delay the lawful entitlement of the Respondent. He sought the same to be dismissed.

9. We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration of the submissions advanced by learned Counsel for both parties.

10. The core issues for determination are whether the DLA suppressed or concealed any material facts regarding his health while obtaining the policy? Whether the concealment, if any, warrants interference with the impugned order?

11. It is undisputed that the complainant's wife Smt. Anju Nagpal had obtained Loan Protect FT-Mortgage Policy from the OPs and the DLA was insured for Rs.49,20,000. She paid the annual premium of Rs.11,513 and the policy was issued on 31.03.2015. Unfortunately, the DLA expired on 25.04.2016 and the complainant intimated the OPs. for settlement of the claim. However, vide letter dated 24.06.2016, the OPs repudiated the claim on ground that the DLA had undergone a cervical biopsy on 02.04.2012. The policy had not crossed the three-year bar under Section 45 of the Insurance Act and that the DLA had suppressed material facts.

12. 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.]

13. It is undisputed that in the proposal form dated 27.03.2015, the DLA had answered "No" to Questions 4 to 7 regarding the previous ailment and present ailment and investigation done in the past. The Complainant/ Respondent contended that at the time of obtaining the policy, the insured was not suffering from any known disease and had not undergone any prior treatment warranting disclosure.

14. The insurer contended that these answers were false in view of medical records from Dharamshila Hospital indicating that the DLA had been diagnosed with serious ailments prior to the proposal. On this basis, the insurer repudiated the claim.

15. The records, however, independently established that the DLA undergone cervical biopsy on 02.04.2012 and underwent treatment at Dharamshila Hospital from 05.04.2012 to 15.04.2016, during which she was diagnosed with cancer. She was, therefore, aware of her medical condition at the time of completing the Proposal Form on 27.03.2015. Her failure to disclose these conditions at the time of proposing for the policy clearly amounts to suppression. 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. It is clear that the DLA had undergone medical treatment at Dharamshila Hospital from 05.04.2012 to 15.04.2016, during which she was diagnosed with Carcinoma Cervix. She was, therefore, aware of her medical condition at the time of submitting the Proposal Form on 27.03.2015 with respect to the extant policy. Her failure to disclose these details in the proposal clearly amounts to suppression of material facts.

19. In light of the foregoing discussion and the binding precedents, we find that the order dated 24.08.2018 passed by the learned State Commission in C.C. No. 426/2016 is unsustainable and is liable to be set aside. Accordingly, First Appeal No. 1820 of 2018 is allowed.

20. There shall be no order as to costs. All pending applications, if any, are disposed of.