NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
V.K. Jain, Presiding Member
PNB Metlife India Insurance Company Ltd.
& Anr. —Petitioners
versus
Sunita Goyal & Ors. —Respondents
Revision Petition No.1729 of 2016
(Against the Order dated 08/04/2016 in Appeal No. 233/2016 of the State Commission Punjab)
Decided on 26.8.2016

IMPORTANT POINT
Insured must make honest disclosures in proposal form.

Headnote:Consumer Protection Act, 1986—Sections 15, 17, 19 and 21—Insurance—Repudiation of death claim on ground of suppression of pre-existing disease by insured—Complaint allowed by Fora below—Deceased had disclosed in document that he was an alcoholic and was consuming wine—There is no evidence of deceased consuming an alcoholic drink other than wine—There was no misrepresentation by deceased as regards his being an alcoholic—However, in proposal form deceased gave a false answer as regards his habit of smoking—However, policy of the insurer was not to deny insurance to a smoker though it would have charged a higher premium while insuring the life of such a person—Insurer should pay 75% of insured amount to complainants without any interest on that amount provided payment is made in a time-bound manner.

       Held: It has been noted in the medical record of Dayanand Medical College & Hospital, Ludhiana as well as in the record of Medanta Hospital that the deceased was an alcoholic and a smoker for 30 years. The history of the patient in the record of the hospital is recorded on the basis of the information supplied either by the patient himself or by a friend or relative who accompanies him and, therefore, is not likely to be incorrect. There can be no reason for the doctor who treats the patient in the hospital to make a false record of the history of the patient. An accurate recording of the history of the patient is necessary for giving an appropriate treatment to him and, therefore, the doctor, in my opinion, is not likely to record a false history of the illness of the patient. Therefore, I have no hesitation in holding that the deceased was a smoker as well as an alcoholic at the time the proposal was submitted by him.

       A perusal of the proposal shows that the deceased had disclosed in the aforesaid document that he was an alcoholic and was consuming wine. There is no evidence of the deceased consuming an alcoholic drink other than wine. Therefore, there was no misrepresentation by the deceased as regards his being an alcoholic. However, in the proposal form the deceased gave a false answer as regards his habit of smoking. He replied in negative as to consumption of tobacco and smoking and therefore, to this extent a misrepresentation was made by him to the proposal form.

       The next question which arises for consideration is as to whether a false statement as regards his smoking habit amounts to misrepresentation on a material fact or not. If the policy of the insurer is to deny insurance to a person who has been smoking or a person who has been smoking for a long period, the concealment of the smoking habit particularly when a person has been smoking for such a long duration would amount to concealment of a material fact since in the event of the aforesaid habit being disclosed, the insurance would be denied to him. If, however, the policy of the insurer is not to deny the insurance even to a person who has been smoking for a long duration, it would be difficult to say that such a misrepresentation was on a material fact.

       When this petition came up before this Commission on 4.7.2016, the petitioner was directed to file an affidavit stating therein as to whether the policy would have been granted to the deceased or not had he disclosed that he had been smoking for more than 5 years before submitting the proposal. The petitioner company, in compliance of the aforesaid direction, has filed an affidavit of Motty John who has stated that had the policyholder disclosed the fact that he had been smoking for more than 5 years before submitting the proposal, the policy would have been issued but the premium would have been on higher side. Thus the policy of the insurer was not to deny insurance to a smoker though it would have charged a higher premium while insuring the life of such a person. The affidavit filed by the petitioner company does not indicate the extent to which the premium would have increased in the case of a smoker. Considering all the facts and circumstances of the case, I am of the considered view that the insurer should pay 75% of the insured amount to the complainants, without any interest on that amount, provided payment is made in a time-bound manner. Such an order, in my view, would meet the ends of justice since there will be some penalty for not disclosing the habit of smoking to the insurer and at the same time it will not fully deny the benefit of the insurance policy to the legal heirs of a person who did not pay the full premium applicable in his case. For the reasons stated hereinabove, the revision petition is disposed of (Paras 7 to 11)

       Result: Revision Petition disposed of with directions.