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2011(1) CPR 63 (NC)
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION,
NEW DELHI
R.C. Jain, Presiding Member and Mr. Anupam Dasgupta, Member
Dineshbhai Chandarana & Anr. — Appellants
versus
Life Insurance Corporation
& Anr. — Respondents
First Appeal No. 242 of 2006
Decided on : 27-7-2010
Counsel for the Parties:
For the Appellant:Mr. C.N. Trivedi, Advocate.
For the Respondent:Mr. Ashok Kashyap, Advocate.
IMPORTANT POINT
A contract of life insurance is based on the principle of uberrima fide (utmost good faith) on the part of life assured. When an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge.
Headnote:Consumer Protection Act,1986-Section 2(1)(g)-Insurance-Life Policy –Repudiation of insurance claim-Complaint alleging deficiency in service-Dismissed by State Commission-Appeal- A contract of life insurance is based on the principle of uberrima fide (utmost good faith) on the part of life assured, which required assured to duly disclose the details of all the past life policies obtained by him when he applied for the policy of Rs. 5 lakh in March 1997- For reasons best known to deceased, the details of four policies taken in March 1994 and March 1995, which were very much within the period of past 3 years with reference to the policy sought in March 1997, were specifically omitted in reply to item No. 9 of proposal form- Non-disclosure of this material fact in the policy proposal of 1997 was certainly not a bona fide inadvertence-Held in seeking the last policy for Rs. 5 lakh assured did not act with the utmost good faith that was required of him - Hence insurer LIC was well within its rights to repudiate the claim under said policy and, in doing so, it did not commit any “deficiency” in service within the meaning of that term under Section 2(1)(g) of Act- Appeal dismissed. (Paras 5, 6)
Anupam Dasgupta, Member — The appellants in this appeal are the parents and nominees of one Jigneshbhai Dineshbhai Chandarana in respect of the life insurance policies obtained by the latter. Jigneshbhai died an unfortunate death in a motor vehicle accident on 29.9.1997 at the age of 21. During his life time, Jignesh had taken 16 life insurance policies as detailed below:
2. The parents of Jignesh, being the nominees of these policies, filed claims with the respondent- Life Insurance Corporation of India (LlC) in January 1998. The LlC settled the claims in respect of policies at Sr. No. 1 to 15 but repudiated that under the policy at Sr. No. 16, which was taken on 28.3.1997 for the sum of Rs. 5 lakh.
Sr. Policy No. Date of Commencement Sum No. Assured (Rs.)
1. 871799311 28.3.1992 1,00,000
2. 871905360 28.3.1993 25,000
3. 871905361 28.3.1993 25,000
4. 871905362 28.3.1993 25,000
5. 871905363 28.3.1993 25,000
6. 871905364 28.3.1993 25,000
7. 871905365 28.3. 1993 25,000
8. 871905366 28.3. 1993 25,000
9. 871905367 28.3. 1993 25,000
10. 871905368 28.3. 1993 25,000
11. 871905369 28.3. 1993 25,000
12. 871913554 28.3.1994 1,00,000 (double cover 1,00,000 in this policy)
13. 871920405 28.3.1995 1,00,000
14. 871920406 28.3.1995 1,00,000
15. 871920407 28.3.1995 1,00,000
16. 872634984 28.3.1997 5,00,000
3. Against this repudiation the parents/ nominees of Jignesh filed a consumer complaint before the Gujarat State Consumer Disputes Redressal Commission (in short, ‘the State Commission’). By its order dated 13.4.2006, the State Commission dismissed the complaint (No.6 of 2001) on two grounds: (i) the complaint had been filed beyond the period of limitation of two years laid down in Section 24A of the Consumer Protection Act, 1986 (hereafter, ‘the Act’) and (ii) in the proposal form for the last policy, Jignesh did not deliberately mention the three policies taken in 1995, thus violating one of the conditions for issuance of the policy. It is against this order that the parents/nominees of Jignesh have come up in appeal.
4. (i) We have heard Mr. C. N. Trivedi, learned Counsel for the appellants, and Mr. Ashok Kashyap, learned Counsel for the respondents and considered the records before us.
(ii) Mr. Trivedi has emphasised that the State Commission erred in holding the date (3.7.1998) of repudiation of the claim in respect of the last policy as the date when the cause of action for the complaint arose because the appellants had submitted a representation against the said repudiation to the Claims Review Committee, Zonal Office of LIC at Mumbai. The appellants also received a communication dated 8.3.2000 from the said Zonal Office that it was examining the matter and they would be informed of its decision through the Divisional Office at Vadodara. Finally, it was by letter dated 4.8.2000 that the Divisional Office, Vadodara of LIC finally informed the appellants that the Claims Review Committee had upheld the decision of the Divisional Office to repudiate the claim in respect of the above-mentioned policy. Thus, according to Mr. Trivedi, the cause of action continued till 4.8.2000 and, counted therefrom, the complaint (filed on 17.1.2001) was well within the period of limitation, viz., two years, laid down in Section 24A of the Act. On the second ground, Mr. Trivedi would argue that according to the LIC manual, Jignesh could seek life insurance policies for a sum upto eight times his annual income which, because he was in the age bracket of 21-25, included the income received from his parents. His own annual income in 1997, when he sought the insurance policy of Rs. 5 lakh, was Rs. 56,000 and that received from his father was Rs. 60,000. Clubbed together, this income of Jignesh would entitle him to seek and obtain all the 16 policies, including the last of March 1997. However, Mr. Trivedi has no clear answer as to why, if this was so, Jignesh did not mention in the pr
