IMPORTANT POINT
Insurance cover can be vitiated on account of suppression of material facts.

Mrs. Rekha Gupta, Member—Revision Petition No. 408 of 2013 has been filed by the petitioner/complainant against the order dated 9.8.2012, passed by Madhya Pradesh State Consumer Disputes Redressal Commission, Bhopal (short, “State Commission”) in First Appeal No.2278 of 2010.

2. Brief facts of the case as per the petitioner/complainant are that the wife of petitioner Smt.Sharda Patel had obtained an insurance policy of Rs.2 lakhs from the respondents/opposite parties. On 4.11.2009 due to vomiting and fever, the policy holder Smt.Sharda Patel was admitted in the City Hospital, Jabalpur where during treatment she died. Thereafter, petitioner wrote a letter to the respondents for obtaining insurance amount. The insurance company through letter dated 26.2.2010 rejected the insurance claim stating that the insurance holder at the time of taking policy gave incorrect information regarding education and occupation. The statement of the petitioner was that she had suppressed no fact in her application form. At the time of taking policy, every information was furnished. Being aggrieved by the rejection of the insurance claim, petitioner filed an application before the District Forum and claimed for insurance amount of Rs.2 lakhs and loss of Rs.25,000/- along with interest from the date of application.

3. Respondents in their reply before the District Consumer Disputes Redressal Forum, Katni (short, ‘District Forum’) have stated that ;

“3. The policy holder deceased Smt.Sharda Patel at the time of taking policy had given incorrect information regarding educational qualification and occupation. In the proposal form private service and amount of income Rs.50,000/- was stated. On the basis of this, she had obtained an insurance policy of Rs.2 lakhs. If she had given correct information she could have granted insurance amount of Rs.40,000/- only. In this situation, on the basis of furnishing incorrect material facts respondents are not responsible to give insurance amount as the petitioner are not entitled to any relief claimed. Therefore, prayer was made to reject the application.”

4. District Forum vide order dated 30.4.2010 allowed the complaint and ordering that the respondents to pay a sum of Rs.2 lakhs alongwith interest @ 9% from 26.2.2010 in addition a sum of Rs.5,000/- as compensation as also Rs.500/- as litigation charges.

5. Being aggrieved by the order of the District Forum, respondents filed an appeal before the State Commission. State Commission while allowing the appeal of the respondents observed that:-

“On the basis of insurance policy on record, an insurance policy amounting to Rs.2 lakhs was issued to Smt.Sharda Patel on 20.5.2009 of which commencing date was 20.5.2009 and maturity date of this policy was 20.5.2024 and last payment date was 20.2.2021. According to proposal chart submitted on record in coloumn 4-A & 4-B Private service being a teacher has been mentioned by the proposer and educational qualification 8th, amount of Insurance Rs.50,000/- has been written. The applicant/respondent has not submitted any document in support of their contention to show that deceased policy holder really was doing a private service by which her annual income was Rs.50,000/-. In proposal form, coloumn no.4-B private service ‘Titar’ is written. Titar means teacher. By these words, the policy holder’s education qualification and service is doubtful.

During the arguments, the counsel for respondents stated that no incorrect information was furnished by us and only signature was taken by the agent and the policy holder did not filled up the form. Since, the agent is authorized by the insurance company, therefore, insurance company is the responsible for the act done by the agent.

A law citation LIC of India vs. Shobha Rani Shah and Anr., 1 (2011) CPJ 166 (NC) was submitted by the appellants. Collection of premium by authorized agent/non-payment of premium – claim repudiated – Vicarious Liability Forum on assumption that responden