Judicial Analysis Court Copy Headnote Facts Arguments Court observation

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
R.K. Agrawal, President and Dr. S.M. Kantikar, Member
Smt. Sunita – Appellant
versus
HDFC Standard Life Insurance Co. Ltd. and Anr. – Respondent
First Appeal No.475 of 2016
(Against the Order dated 20/01/2016 in Complaint No. 14/2012 of the State Commission Maharashtra)
Decided on 25.10.2021

Advocates:
Counsel for the Parties:
For the Appellant:Mr. Prakash Ranjan, Advocate
For the Respondents:Mr. Joy Dip Bhattacharya, Advocate

IMPORTANT POINTS
1) Per Sec. 45 of Insurance Act, claim can be repudiated, if it is proved that the assured knowingly and fraudulently suppressed the material facts.
2) Contractual duty so imposed on the Insured is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer.
3) There is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance, each representation or statement may be material to the risk

Headnote:
Consumer Protection Act, 1986 – Section 19 - First Appeal [Consumer Protection Act, 2019 – Section 51] – Against Order dt. 20.01.2016 passed by State Commission - Not in dispute that Appellant Insured failed to disclose fact at the time of obtaining this policy that the deceased did have 2 previous insurance policies with assured sum of Rs.12,50,000/- and another with assured sum of Rs.75,00,000/- - During validity of the Policies, Appellant’s husband/Deceased was murdered by Naxalites - Non-disclosure of earlier policy amounted to suppression of a material fact – Agent had filled the Proposal Form – Appellant filed complaint before the State Commission as the claim was repudiated – Complaint filed before State Commission to direct Respondent Insurance Co. to release Rs.87,50,000/-, sum assured in both the policies, along with accrued interest, to pay Rs.5,00,000/- towards mental agony and harassment and Rs.1,00,000/- as costs of litigation – Complaint dismissed by State Commission as no evidence was shown that agent filled the proposal form, obtained signature of the insured on proposal form without explaining contents - Per Sec. 45 of Insurance Act, claim can be repudiated, if it is proved that the assured knowingly and fraudulently suppressed the material facts – First appeal filed by the appellant complainant – Findings of this Commission: Reliance Life Insurance Company Ltd. Vs. Rekhaben Nareshbhai Rathod – (2019) 6 SCC 175 laid down the principle that a contractual duty so imposed on the Insured is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer - Duty of mutual fair dealing requires all parties to a contract to be fair and open with each other, to create and maintain trust between them - In contract of insurance, insured can be expected to have information of which she/he has knowledge - Held in Satwant Kaur (supra) “there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance, each representation or statement may be material to the risk - Two months before the contract of insurance was entered with the Appellant, Appellant had obtained another insurance cover for life of Rs. 11 lakhs - Failure of the Appellant insured to disclose policy of insurance obtained earlier in the proposal form entitled the Respondent insurer to repudiate the claim under the policy (Paras 2, 4, 7, 17, 26, & 29)
Result: First Appeal dismissed as devoid of any merits.

ORDER

R. K. Agrawal, President.—Delay condoned.

2. Challenge in this First Appeal is to the Order dated 20th January, 2016 passed by the State Consumer Disputes Redressal Commission, Maharashtra, Circuit Bench at Nagpur (for short, “the State Commission”) in Complaint Case No. 14 of 2012 whereby the Complaint filed by the Complainant/Appellant herein, was dismissed holding that there was no deficiency in service on the part of the Opposite Parties/Respondents herein in repudiating the claim preferred by the Complainant.

3. Concisely put, the facts leading to the filing of the Complaint before the State Commission are that the Husband of the Complainant (for short, the “Deceased”), during his life time, had obtained two Insurance Policies from the Opposite Party No.1, namely, HDFC Standard Life Insurance Company Ltd. (for short, the “Insurance Company”) bearing No.12992586 on 30.06.2009 with assured sum of Rs.12,50,000/- and HDFC Term Assurance Policy bearing No.13006145 dated 25.08.2009 with assured sum of Rs.75,00,000/-. During the validity of the said Policies, the Deceased was murdered by the Naxalites and a case was registered by the Police on 01.05.2011. The Complainant, being legal heir of the Deceased submitted the Claim under the said two Policies with the Insurance Company along with all necessary documents, which were acknowledged by the Insurance Company vide their letter dated 13.09.2011. By the said letter, the Complainant was also informed that since the death of the Deceased has taken place within two years of issuance of Policies, the Claim is an early Claim and the Insurance Company would verify certain facts before deciding the Claim and may call additional information or clarifications to be provided by the Complainant. However, subsequently, vide two separate Letters both dated 12.10.2011, the Complainant was informed by the Insurance Company that they were not able to accept the Claim of the Complainant under the said two Policies inasmuch as the Deceased had not disclosed the information regarding ‘Existing Insurance Covers’ at the time of applying for the subject Insurance Policies. Consequently, Complainant approached the Grievance Committee of the Insurance Company and the Insurance Ombudsman Office. The Grievance Committee, vide letter dated 21.12.2011, informed the Complainant that her claim had been repudiated by the Insurance Company as at the time of taking the aforesaid Policies her husband has not disclosed the material information about the existing Policies taken from the other Insurance Companies. The Insurance Ombudsman also, vide its letter dated 19.12.2011, informed the Complainant that she may approach any Appropriate Forum like Consumer Forum or Civil Court since the amount of compensation claimed was more than Rs.20,00,000/- which was beyond their pecuniary jurisdiction.

4. Complainant further averred in the Complaint that the Proposal Form for obtaining the Policy bearing No.12992586 dated 30.06.2009 for Rs.12,50,000/-, was filled by the Agent of the Insurance Company and her husband had only signed the Proposal Form. The Proposal Form for taking the second policy for Rs.75,00,000/- was also filled by the Agent of the Insurance Company, however, in the said Proposal Form, the Agent has specifically disclosed the information about the earlier Policy for a sum of Rs.12,50,000/- taken by her husband on 30.06.2009. Since, her husband had disclosed the information about taking of the first policy for Rs.12,50,000/- in the Proposal Form for taking the second Policy for Rs.75,00,000/-, the Insurance Company was not justified in repudiating the claims.

5. It is further stated in the Complaint that in view of Section 45 of the Insurance Act, 1938, a Policy can be repudiated within two years from the date of its commencement for the reason of suppression of material fact and not afterwards.

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Cases Referred (1)