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MAHARASHTRA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, BOMBAY
Hon’ble Mr. Justice G.G. Loney, President;
Mr. M.G. Gavai & Mrs. Ellen Dharkar, Members
DINAJI GANGADHAR DHAGE—Appellant
versus
LIFE INSURANCE CORPORATION OF INDIA & ANR.—Respondents
Appeal No. 461 of 1992—Decided on 8.4.1994
Counsel for the Parties :
For the Appellant :Mr. Batna, Advocate.
For the Respondent:Mr. Mehere, Advocate.
A nominee of an insurance policy is a consumer under the Consumer Protection Act, 1986, and the insurer bears the burden of proving suppression of material facts by the insured.
Headnote:
CONSUMER PROTECTION ACT, 1986 - INSURANCE POLICY - SECTION 2(1)(D) - NOMINEE OF INSURANCE POLICY IS A CONSUMER - BURDEN OF PROOF LIES ON INSURER TO PROVE SUPPRESSION OF MATERIAL FACTS - ACCEPTANCE OF PART PAYMENT IN FULL AND FINAL SETTLEMENT DOES NOT ESTOP CLAIMANT FROM CLAIMING BALANCE AMOUNT.
Fact of the Case:
The complainant, Dinaji Dhage, filed a complaint against the Life Insurance Corporation of India (L.I.C.) for deficiency in service in settling the insurance claim of his deceased wife, Kalubai. L.I.C. paid Rs. 12,500/- as ex-gratia payment instead of the policy sum of Rs. 50,000/-. L.I.C. repudiated the complainant's claim on the ground that Kalubai had made false declarations and suppressed material facts while obtaining the insurance policy, specifically that she was suffering from cancer at the time.
Finding of the Court:
The court held that the complainant was a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986, as he was the beneficiary of the policy amount. The court also held that L.I.C. failed to prove beyond a reasonable doubt that Kalubai suppressed material facts about her health at the time of obtaining the insurance policy. The court further held that the complainant's acceptance of Rs. 12,500/- in full and final settlement of the policy claim amount did not estop him from claiming the balance amount, as he was legally entitled to the full claim.
Issues: 1. Whether the complainant is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986? 2. Whether L.I.C. proved that Kalubai suppressed material facts about her health at the time of obtaining the insurance policy? 3. Whether the complainant's acceptance of Rs. 12,500/- in full and final settlement of the policy claim amount estops him from claiming the balance amount?
Ratio Decidendi: 1. A nominee of an insurance policy is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986, as they are the beneficiary of the services provided by the insurance company. 2. The burden of proof lies on the insurer to prove beyond a reasonable doubt that the insured suppressed material facts about their health at the time of obtaining the insurance policy. 3. Acceptance of part payment in full and final settlement of a legally admissible claim does not estop the claimant from claiming the balance amount, especially when there is no suppression of material facts.
Final Decision: The court allowed the appeal, set aside the order of the District Forum, and directed L.I.C. to refund Rs. 37,500/- to the complainant along with interest at 18% p.a. from the date of payment of Rs. 12,500/- till realization. The appellant was also awarded Rs. 1000/- costs throughout.
Mr. Justice G.G. Loney, President—This appeal is mainly against the order of District Forum, Parbhani dated 14.7.92 passed in Complaint No. 30/92. The complaint was filed by Dinaji Dhage alleging the deficiency in his service by Life Insurance Corporation of India (L.I.C.) while settling the insurance claim.
2. The facts giving rise to this consumer dispute, shortly stated, are that one Kalubai was also holder of policy for a sum of Rs. 50,000/- dated9.2.89. During the subsistence of the policy Kalubai died on 24.4.90. The complainant is a nominee as well as legal representative of deceased Kalubai and is said to be the beneficiary and legally entitled to receive the policy benefits after the death of Kalubai. Kalubai died on 24.9.90. The L.I.C. while setting the complainant’s claim paid Rs. 12500/- towards ex-gratia payment instead of the policy sum of Rs. 50,000/- with permissible benefits. The complainant made several efforts to get the full claim. However, the claim was not settled and hence he filed the complaint before the District Forum claiming the compensation for deficiency in the service of the Life Insurance Corporation of India.
3. In the written version, the Life Insurance Corporation opposed the complainant’s claim. While admitting the grant of policy of Kalubai for the sum of Rs. 50,000/-, the L.I.C. repudiated the complainant’s claim on the ground that Kalubai had made fafse declaration and suppressed the material facts while obtaining insurance policy. It is contended by the opposite party that Kalubai was suffering from cancer on the date of obtaining the insurance policy in question, and, therefore, she is not entitled to the claim made in the complaint. It is also contended by the L.I.C. that the complainant is not a consumer within the meaning of the Section 2(1)(d) of the C.P. Act, 1986.
4. The complainant’s case has been rejected by the District Forum’ on the ground, having accepted Rs. 12,500/- in full and final settlement of the claim, the complainant is legally estopped from claiming the amount of full amount under the policy. It is also contended that complainant accepted Rs. 12,500/- in full and final settlement of the claim and have given valid discharge of the policy. The District Forum also held that a nominee cannot be said to be a consumer within the meaning of Section 2(1)(d) of the C.P. Act.
5. We have heard Mr. Bafna, Advocate for the appellant and Mr. Mehere, Advocate for the respondent. The present impugned order is patently wrong for the reasons given below : —
(i) The finding of District Forum that the complainant is not a consumer with in the meaning of Section 2(1)(d) of the C.P. Act since he was a nominee of deceased Kalubai is erroneous. Under the Consumer Protection Act, 1986, the beneficiary of services is invested with the status of a consumer and, therefore, in view of the admitted facts that complainant is a beneficiary of the policy amount of Kalubai, is the consumer under C.P. Act, 1986. The finding reached by the District Forum, therefore, cannot be accepted.
(ii) The another finding reached by the District Forum is that the complainant is estopped to claim the balance amount of policy since there was suppression of material facts in the declaration about the state of health by Kalubai. When a plea is raised by the insurer about the suppression of material facts ordinarily the burden is shifted on the insurer to prove beyond the reasonable doubt the facts of alleged material suppression. In the instant case it is submitted by the L.I.C. that Kalubai was suffering from cancer at the time of obtaining insurance policy. There is no iota of evidence tendered by the L.I.C. to substantiate this fact and, therefore, it is difficult to hold that there is suppression of material fact by the insured Kalubai at the time of obtaining insurance policy.
6. It is also contended by the L.I.C. that the complainant accepted Rs. 12,500/- in full and final settlement of the policy claim amount
