ORDER
The appellants in this appeal are the parents and nominees of one Jigneshbhai Dineshbhai Chandarana in respect of the life insurance policies obtained by the latter. Jigneshbhai died an unfortunate death in a motor vehicle accident on 29.09.1997 at the age of 21. During his life time, Jignesh had taken 16 life insurance policies as detailed below: Sr. No. Policy No. Date ofcommencement Sum Assured (Rs.) 1. 871799311 28.03.1992 1,00,000 2. 871905360
28.03.1993 25,000 3. 871905361 28.03.1993 25,000 4. 871905362 28.03.1993 25,000 5.
871905363 28.03.1993 25,000 6. 871905364 28.03. 1993 25,000 7. 871905365 28.03. 1993
25,000 8. 871905366 28.03. 1993 25,000 9. 871905367 28.03. 1993 25,000 10. 871905368
28.03. 1993 25,000 11. 871905369 28.03. 1993 25,000 12. 871913554(double coverin this policy) 28.03.1994 1,00,000 1,00,000 13. 871920405 28.03.1995 1,00,000 14. 871920406
28.03.1995 1,00,000 15. 871920407 28.03.1995 1,00,000 16. 872634984 28.03.1997 5,00,000
2. The parents of Jignesh, being the nominees of these policies, filed claims with the respondent - Life Insurance Corporation of India (LIC) in January 1998. The LIC settled the claims in respect of policies at sr. no. 1 to 15 but repudiated that under the policy at sr. no. 16, which was taken on 28.03.1997 for the sum of Rs.5 lakh. 3. Against this repudiation the parents/nominees of Jignesh filed a consumer complaint before the Gujarat State Consumer Disputes Redressal Commission (in short, 'the State Commission'). By its order dated 13.04.2006, the State Commission dismissed the complaint (no. 6 of 2001) on two grounds: (i) the complaint had been filed beyond the period of limitation of two years laid down in section 24A of the Consumer Protection Act, 1986 (hereafter, 'the Act') and (ii) in the proposal form for the last policy, Jignesh did not deliberately mention the three policies taken in 1995, thus violating one of the conditions for issuance of the policy. It is against this order that the parents/nominees of Jignesh have come up in appeal. 4 (i) We have heard Mr. C. N. Trivedi, learned counsel for the appellants, and Mr. Ashok Kashyap, learned counsel for the respondent and considered the records before us. (ii) Mr. Trivedi has emphasised that the State
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Commission erred in holding the date (03.07.1998) of repudiation of the claim in respect of the last policy as the date when the cause of action for the complaint arose because the appellants had submitted a representation against the said repudiation to the Claims Review Committee, Zonal Office of LIC at Mumbai. The appellants also received a communication dated 08.03.2000 from the said Zonal Office that it was examining the matter and they would be informed of its decision through the Divisional Office at Vadodara. Finally, it was by letter dated 04.08.2000 that the Divisional Office, Vadodara of LIC finally informed the appellants that the Claims Review Committee had upheld the decision of the Divisional Office to repudiate the claim in respect of the above-mentioned policy. Thus, according to Mr. Trivedi, the cause of action continued till 04.08.2000 and, counted therefrom, the complaint (filed on 17.01.2001) was well within the period of limitation, viz., two years, laid down in section 24A of the Act. On the second ground, Mr. Trivedi would argue that according to the LIC manual, Jignesh could seek life insurance policies for a sum upto eight times his annual income which, because he was in the age bracket of 21-25, included the income received from his parents. His own annual income in 1997, when he sought the insurance policy of Rs. 5 lakh, was Rs. 56,000/- and that received from his father was Rs. 60,000/-. Clubbed together, this income of Jignesh would entitle him to seek and obtain all the 16 policies, including the last of March 1997. However, Mr. Trivedi has no clear answer as to why, if this was so, Jignesh did not mention in the proposal form for the last policy the fact that he had taken 1 policy of Rs. 1 lakh (double benefit) on 28.03.1994 and 3 policies of Rs. 1 lakh each on 28.03.1995. (iii) Mr. Kashyap, on the other hand, has argued that a contract of life insurance is based on the principle of uberrima fide (utmost good faith) on the part of the life assured, which required Jignesh to duly disclose the details of all the past life policies obtained by him when he applied for the policy of Rs. 5 lakh in March 1997. This was a 'material fact' for LIC to decide whether to accept the proposal for the last insurance policy at all. In this connection, he has invited attention to the proposal form filled in by Jignesh for the aforesaid policy of Rs. 5 lakh. Under item no. 9 of the form of the proposal for the policy of Rs. 5 lakh, viz., "Please give details of your previous insurance (including policies surrendered/lapsed during the last 3 years)", Jignesh furnished the details of policy no. 871799311 for Rs. 1 lakh and nos. 871905560 to 871905569, each of Rs. 25,000/-. In other words, he clearly omitted to mention the details of the policies at sr. nos. 12 to 15 in the table given above, taken in March 1994 and March 1995. In this context, Mr. Kashyap seeks to rely on the ratio of the Apex Court judgment in the case of Satwant Kaur Sandhu v New India Assurance Company limited [(2009) 8 SCC 316]. 5 (i) It is clear from the relevant proposal form for the policy of March 1997 that for reasons best known to the deceased and/or his father, the details of the four policies taken in March 1994 and March 1995, which were very much within the period of past 3 years with reference to the policy sought in March 1997, were specifically omitted in reply to item no. 9 of the proposal form. Non-disclosure of this material fact in the policy proposal of 1997 was certainly not a bona fide inadvertence. (ii) On this point, we may, with benefit, note what the Apex Court observed in the case of Satwant Kaur Sandhu (supra): "18. A mediclaim policy is a non-life insurance policy meant to assure the policy-holder in respect of certain expenses pertaining to injury, accidents or hospitalisations. Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. 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 true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is
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material for the purpose of the policy or not. Of course, the obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment. (See Joel v Law Union & Crown Insurance Co.)" Further, on what would constitute a "material fact" in the context of an insurance policy, the Court ruled: "22. The term "material fact" is not defined in the Act and, therefore, it has been understood and explained by the courts in general terms to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the contract of insurance and has a bearing on the risk involved would be "material". 23. As stated in Pollock and Mulla's Indian Contract and Specific Relief Acts: "any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact." [Emphasis supplied] (iii) Hence, we agree with Mr. Kashyap that in seeking the last policy for Rs. 5 lakh the assured did not act with the utmost good faith that was required of him and hence the insurer LIC was well within its rights to repudiate the claim under this policy and, in doing so, it did not commit any
"deficiency" in service within the meaning of that term under section 2(1)(g) of the Act. In this situation, the first set of arguments of Mr. Trivedi, regarding the complaint being within the period of limitation, becomes somewhat academic though we agree that the State Commission ought to have considered the facts/points as advanced by Mr. Trivedi before us. 6. As a result, the appeal fails and is dismissed, leaving the parties to bear their own costs.
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ANUPAM DASGUPTA
PRESIDING MEMBER
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