IMPORTANT POINT
Insurance Company must be granted proper opportunity to plead its case.

R.C. Jain, Presiding Member—Aggrieved by the order dated 20.10.2009 passed by Delhi State Consumer Disputes Redressal Commission, New Delhi (in short, ‘the State Commission’) in complaint case No. C-160 of 2007, Life Insurance Corporation of India has filed the present appeal. By the impugned order, the State Commission has allowed the complaint filed by the complainant-Shyam Avtar Gupta and passed the following order:-

“13. As a result of our above discussion we come to conclusion that the OP had acted unjustifiably and illegally in declaring the 9 policies of the complainant as null and void which tantamount to deficiency in service. Accordingly, we allow the complaint and pass the following order:-

That OP shall reinstate/restore all the above stated nine policies as stated in para 1 of this order with all the benefits of respective policy bonds subject to complainant paying the entire premiums due against these policies within one month from the date of receipt of this order by him. OP shall accept the premiums against all the nine policies without further medical examination and without charging any penal interest on due premiums. This is in lieu of compensation claimed by the complainant. OP shall also pay Rs.5000/- to the complainant towards cost of litigation.”

2. The facts and circumstances, which led to the filing of the complaint before the State Commission, have been amply noted by the State Commission in the impugned order and need no repetition at our end. To answer the present appeal, we may notice that during the period from 1994 to 2003, the complainant-Shyam Avtar Gupta had taken the following nine policies on his life:-

“Policy No. DOC Sum Assured Prem. Due date Payment mode

111842874 28.9.1994 1,00,000/- 28.9.2007 22.8.2007

111842875 28.9.1994 1,00,000/- 28.9.2007 07.8.2007

111842876 28.9.1994 1,00,000/- 28.9.2007 22.8.2007

112108159 28.5.1995 2,00,000/- 28.5.2007 16.5.2007

112112056 28.3.1996 1,00,000/- 28.3.2007 22.8.2007

112112059 28.3.1996 1,00,000/- 28.3.2007 22.8.2007

112112187 28.3.1996 1,00,000/- 28.3.2007 22.8.2007

1121597376 27.2.1999 10,00,000/- 27.2.2007 16.3.2007

113584958 25.3.2003 20,00,000/- 5.3.2007 22.8.2007”

3. The complainant submitted a proposal for taking a fresh policy in the sum of Rs. 80 lakh, having limit of Rs.1 crore. He was medically examined and declared physically fit but the appellant-Life Insurance Corporation of India not only declined to accept the proposal for the said policy but also declared the above-referred nine policies as null and void vide communication dated 11.04.2007, on the following grounds:-

“We have learnt from a reliable source that you had applied for insurance cover to one of the private insurance companies. As per the medical reports and other signed statements submitted by you to the above company you are suffering from diabetes and hypertension. However, this information was not disclosed to us at the time of current as well as earlier policies. We have therefore declined your proposals for non-disclosure.”

Aggrieved by the said decision of the LIC, the complainant filed a complaint praying for a direction to the opposite party-LIC to reinstate/restore all the nine policies declared null and void and to accept the entire due premium under those policies from the date of declaration of the policies as null and void, without any further medical examination and without charging any penal interest for late payment. Complainant also claimed a sum of Rs. 2 lakh as compensation for the mental harassment suffered by him. The complaint was resisted by the LIC, not disputing the factum of issuance of the aforesaid policies as also having received the proposal for issuance of the 10th policy in the sum of Rs. 80 lakh but justifying its action in declaring the existing policies as null and void, primarily on the ground that the complainant-insured had obtained the said policies by suppressing material facts in regard to his health status