In life insurance policies, where acceptance or rejection of risk depends upon state of health, a distinction must be drawn between illness and a simple disorder. When a claim is repudiated by the LIC on the ground that suppression of ailment, LIC has also to establish that it was a serious ailment or remotely had nexus with the cause of death.

Mr. Justice S.K. Dubey, President—This is a complainant’s appeal under Section 15 of the Consumer Protection Act, 1986 (for short the ‘Act’) against the order dated 16.9.1998 passed in Case No. 101/Forum/98 by the District Consumer Disputes Redressal Forum, Satna (for short the ‘District Forum’).

2. Late Smt. Sangeeta Gupta (Sethiya) wife of the complainant, an Upper Division Teacher aged about 31 years gave a proposal form No. 3872370 dated 13.2.1996 for assuring her life. The proposal was accepted by the Life Insurance Corporation (for short ‘LIC’) and Policy No. 375069703 on 15.2.1996 was issued for a sum of Rs. 1 lac. The table and terms 111-20, of payment of yearly premium of Rs. 1,499/-, the maturity date of which was 15.2.2016. On 22.4.1996 the assured felt breathlessness and restlessness, while she was taken for medical help to the doctor, on way she died. A report was lodged and autopsy was performed. On post-mortem, the cause of death was shock due to Pulmonary Infarction. The complainant being the nominee of the deceased claimed the amount of the sum assured and other benefits arising out of the policy from the LIC. The claim was not settled for about one year and eight months. Ultimately, vide letter dated 24.12.1997 the claim was repudiated and the policy was called in the question as on investigation conducted it was found that the life assured had suffered from the disease of Bronchitis C Pneumonia for which she remained under treatment in between the period from 25.6.1995 to 6.7.1995. But, in the proposal form this fact was knowingly suppressed by giving false answer “no” to the queries in the proposal form of Clause (11) (Ka) (Gha) and (Jha), which we quote thus :

“xxx

xxx

xxx

xxx”

3. The complainant challenged the repudiation as arbitrary and on unjustifiable grounds amounting to deficiency in service and claimed the amount of the sum assured Rs. 1 lac with interest thereon at the rate of 18% per annum from 22.4.1996 and Rs. 5,000/- for mental pain and sufferings. The complaint was resisted. The District Forum after appreciation of evidence on record dismissed the complaint holding that the life assured was suffering from bronchitis and pneumonia and remained on medical leave from 25.6.1995 to 6.7.1995 which was a material suppression of fact and was breach of the condition of the policy, hence, placing reliance on a decision of the National Commission in case of LIC v. Smt. Lili Rani Roy, I (1997) CPJ 46 (NC)=1997 CLC 161, held that the repudiation of the claim was bona fide.

4. It is well settled that when the policy is called in question on the ground of false and inaccuracy of the statement and the claim is repudiated, the burden is cast upon the insurer to show that the statement was on material matter which was inaccurate from the point of view from the policy and not at the point of view of the assured, whether it was relevant or material or not. While accepting the contract of insurance, the contract can be repudiated for non-disclosure of material facts. What are material facts that is every circumstance which could be relevant for a prudent insurer to fix premium or to decide whether he should take the risk. The text to determine materiality is, whether the facts has any bearing on the risk undertaken by the insurer. If the fact has any bearing on the risk it is a material fact, if not it is not material. See Mithoolal Nayak v. Life Insurance Corporation of India, AIR 1962 SC 814, and the recent decision of this Commission in Appeal No. 660/97, decided on 27.1.1999; Branch Manager, LIC of India & Anr. v. Bhagwati Prasad Tiwari, II (1999) CPJ 656, followed in Appeal No. 751/97 decided on 8.2.1999, LIC of India v. Smt. Lalita Tiwari.

5. However, in Life Insurance Policies where acceptance or rejection of risk depends upon state of health, a distinction must be drawn between illness and a simple disorder. When a claim is repudiated by the LIC on the ground that suppression of ailment, LIC has also to e