IMPORTANT POINT
Insured must disclose all material facts.

ORDER

V.K. Jain, Presiding Member

Late Shri Umashankar Tyagi, husband of the complainant obtained an insurance policy from the respondent LIC of India, for a sum assured of Rs.2 lacs on 26.12.2013. Late Sh. Umashankar Tyagi having died on 17.02.2015, within two years of taking the insurance policy, a claim for payment in terms of the insurance policy was submitted by the complainant with the respondent. The claim however, was repudiated on the ground that the insured had concealed a material fact while obtaining the insurance policy. It was pointed out in the written version filed by the respondent that the deceased was suffering from Fracture Hip, Hip Pus, T.B., Pott’s Spine (T.B. Spine) even before taking the policy and treatment had also been taken by him for the said disease. He had also availed unpaid medical leave from 01.02.2011 to 01.08.2011 for his treatment. The claim was therefore, rejected on account of the aforesaid concealment.

2. The District Forum having allowed the complaint, the respondent LIC of India approached the concerned State Commission by way of an appeal. Vide impugned order date 04.12.2018, the State Commission allowed the appeal and dismissed the consumer complaint noticing that the deceased was suffering from Tuberculosis at the time the proposal was submitted by him on 24.12.2013. The discharge ticket issued by SMS Medical College and Hospital which was Annexure R-4 before the District Forum, also shows that the diseased was suffering from Pott’s Spine and ATT for last three years.

3. It is submitted by the learned counsel for the petitioner that a blank form was signed by the insured and given to the agent who had filled up the said form. However, the agent was not impleaded as a party to the consumer complaint to confirm the aforesaid averment. Moreover, the insured having signed the proposal form, he was bound by the information contained therein. The insured was not an illiterate person, he being an employee of Rajasthan State Road Transport Corporation. Therefore, he was not likely to sign a blank proposal form. In any case, if wrong information in the proposal form signed by the insured was filled up by the agent, it is the insured who has to take the responsibility for the said incorrect information being provided to the insurer since the decision of the insurer on whether to accept the proposal or not was based upon the information given in the proposal. Had correct information been disclosed in the proposal, the insurer might have either rejected the proposal or would have required the insured to submit additional documents including the record of his previous treatment and could also have asked him to undergo extensive medical examination.

4. The learned counsel for the petitioner submits that the previous ailments were disclosed by the insured to the doctor who had examined him before issuance of the policy. However, no such averment was made in the consumer complaint and the doctor was not impleaded as a party. Therefore, the plea taken in this regard seems to be only an after-thought.

5. In LIC of India Vs. Manish Gupta – Civil Apeal No.3944 of 2019, decided on 15.04.2019, the proposal form required a disclosure as to whether the proposer had suffered from Cardiovascular disease, he responded in negative to the said question. The complainant underwent a surgery, submitted a claim which was repudiated on the ground that he was suffering from a pre-existing illness. Upholding the repudiation of the claim, the Hon’ble Supreme Court interalia held as under:-

“Moreover, non-disclosure of any health event is specifically set out as a ground for excluding the liability of the insurer.”

“A contract of insurance involves utmost good faith. In Satwant Kaur Sandhu Vs. New India Assurance Company Ltd., this Court has held thus:

“...Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a