The duty of the insured to disclose all material facts at the time of obtaining an insurance policy, the significance of material facts in influencing the decision of a prudent insurer, and the consequences of non-disclosure or suppression of material information.

JUDGMENT :

Sanjeev Kumar J.

1. Life Insurance Corporation of India, the petitioner herein, invokes the writ jurisdiction of this Court vested in it by Article 226 of the Constitution of India to assail an order and judgment dated 11.11.2009 passed by the Jammu and Kashmir State Consumer Disputes Redressal Commission [“the Commission”] in Appeal No.2600 titled “Life Insurance Corporation of India vs Smt. Padma Sharma whereby the Commission has dismissed the appeal of the petitioner and upheld an order dated 12.12.2003 passed by the Divisional Forum, Jammu [“the Divisional Forum”].

Factual Matrix:

2. A complaint under Section 10 of the Jammu and Kashmir Consumer Protection Act, 1987 [“the Act of 1987”] was filed by respondent No.3 before the Divisional Forum alleging therein that her husband late Sh. Joginder Lal Sharma had obtained an LIC policy bearing No. 140754977 covering the risk w.e.f 28.08.1997 to 28.08.2017. It was alleged that the husband of respondent No.3 died on 19.09.1999 and despite intimation of death of the insured, the petitioner-insurer repudiated the claim on the ground that the deceased husband of respondent No.3 had suppressed material information with respect to ailments he was suffering from at the time of entering into contract of insurance with the petitioner-insurer. It was submitted that the repudiation of claim of respondent No.3 by the petitioner-insurer amounted to denial of service, as such, respondent No.3 was entitled to the assured amount together with compensation.

3. The aforesaid complaint was, of course, contested by the petitioner. In the objections filed by the petitioner-insurer, it was claimed that late Sh. Joginder Lal Sharma was suffering from Adult Polycystic disease and cancer at the time of entering into the contract of insurance, but the deceased did not disclose this fact against the column raising a specific query as to whether he was suffering from cancer. It was contended that the suppression of the fact by the deceased husband of respondent No.3 was tantamount to violation of trust between the parties, as such, the petitioner was well within its right to repudiate the claim. It was also brought to the notice of the Divisional Forum that the fact that the deceased husband of respondent No.3 was suffering from various ailments including Cancer was substantiated by the leave account of the deceased, a perusal whereof would indicate that the deceased had been taking several spells of sick leave from his employer prior to obtaining the insurance cover.

4. The Divisional Forum did not accept the stand of the petitioner-insurer and vide its order dated 12.12.2003 allowed the complaint. Feeling aggrieved, the petitioner approached the Commission by way of an appeal. The appeal was heard in ex parte by the Commission and decided in terms of judgment impugned in this writ petition.

5. The impugned judgment is assailed by the petitioner, inter alia, on the following grounds:

(i) That both the Forum as well as the Commission erred in law in not appreciating the fact that the contract between an insured and the insurer is of utmost good faith and the insured is required to give true and full information as is requisitioned by the insurer at the time of obtaining insurance policy. Both the Forum and the Commission below did not appreciate that the deceased, by suppression material information about his health condition at the time of entering into contract of insurance, breached this faith and, thus, disentitled his nominee to claim the assured amount;

(ii) That the Commission could not have disposed of the appeal on merits when, for some reasons, the counsel appearing for the petitioner-insurer before it could not show up in time. It is contended that the Commission, despite having been requested for adjournment, proceeded to decide the appeal filed by the petitioner on merits without affording an opportunity of being heard to it; and,

(iii) That there is no application of mind by the Commission wh