IMPORTANT POINT
Insured is bound to disclose how much previous policies he has with insurer.

J.M. Malik, Presiding Member—This order shall decide two cases which pertain to two different insurance policies of the deceased insured. The main question swirls around the question “whether the suppression of the fact that the insured had previous policies with the LIC tentamounts to material fact which entitles the LIC to repudiate the claim of the insured”.

2. The facts of the cases are these. Late Shri Sheopat Ram obtained the following five insurance policies:-

“Sr. No. Policy No. Amount DOC

1. 500124519 One lakh 15.10.1996

2. 500174210 Two lakhs 2.5.2002

3. 501569559 Two lakhs 16.5.2005

4. 501601063 Two lakhs 28.2.2006

5. 501805926 Two lakhs 28.6.2006”

3. He died on 31.5.2007 in an accident. LIC repudiated his claim on 22.11.2007. Smt. Vidya Devi filed two complaints against the LIC of India and its agent Mr. Ajay Kumar. The District Forum allowed both the complaints and held in the first complaint as under:-

“Consequently the complaint of the complainant is allowed and the defendants are ordered to pay an amount of Rs.6,00,000/- (triple time of insured amount of Rs.2,00,000/) on the policy no. 501805926 on the life of her husband with one year’s bonus for Rs.10,000/- in this way a total amount of Rs.6,10,000/- with interest @9% p.a. from the date of repudiation of the claim i.e. from 22-11.2007 with Rs.1,500/- as cost of complaint within one month from the date of the order. If the payment is not paid within the stipulated period of one month, the complainant will be entitled to receive interest on this amount @12% p.a. from the date of this order.”

It was held in the second complaint.

“Consequently the complaint of the complainant is allowed and the defendants are ordered to pay an amount of Rs.2,00,000/- on the policy No. 501601063 on the life of her husband with three years bonus for Rs.30,000/- in this way a total amount of Rs.2,30,000/- with interest @ 9% p.a. from the date of repudiation of the claim e.g. from 22-11.2007 with Rs.1,500/- as cost of complaint within one month from the date of the order. If the payment is not paid within the stipulated period of one month the complainant will be entitled to receive interest on this amount @12% p.a. from the date of this order.”

4. LIC preferred appeals before the State Commission. The State Commission dismissed the appeals in one page order. Aggrieved by this order, the LIC of India filed the present revision petitions.

5. The key question is whether the insured was bound to disclose how much previous policies he had with the insurer-LIC. The main plea raised by the learned counsel for the petitioner is that the deceased paid the claim amount on the policies bearing Nos. 501569559, 500124519 and 500974210. Thereafter, the deceased made a proposal in respect of policies No. 501805926 on 21.7.2006 and policy No. 501601063 dated 26.2.2006. However, the deceased had concealed having obtained three previous policies No. 501569559, 500124519 and 500974210 and obtained the said policies by playing fraud upon the insurer and for the reasons no amount was due for payment towards the complainant. Learned counsel further argued that had the insured declared the previous policies obtained by him, He was to undergo certain medical tests such as the special report of ECG, hemogram, SBT and RAU etc.

6. On the other hand, learned counsel for the respondents contended that the above said suppression is not material. Deceased was an illiterate person. He fixed signatures on the blank papers. The agent in all the five policies was same. He was well aware of the fact that the deceased had applied for these policies.

7. Heard the arguments of learned counsel for the parties. Our attention has been invited towards para 9 of the proposal form, which reads as under:-

“9. Please give details of your previous insurance: (including Policies Surrendered/Lapsed during last 3 years)”

8. The deceased replied nil. Undoubtedly, this is a suppression of material fact. No explanation fo