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Maya Devi Petitioner(S) v. Life Insurance Corpn. Of India (S).
Structured Summary of the Opinion (Vineeta Rai, Member)
Factual and Procedural Background
The petition was filed by Maya Devi (Petitioner) challenging an order of the State Consumer Disputes Redressal Commission, Uttar Pradesh (State Commission) which had allowed an appeal by Life Insurance Corporation of India (Respondent). The Petitioner alleged that her husband, Uttam Singh, took an insurance policy for Rs. 50,000 on 20.04.1999 and named her as nominee. Premiums were paid up to 01.11.1999. On 20.06.1999 the husband fractured his right hip, was admitted to B.R.D. Medical College, Gorakhpur, underwent surgery with a rod implanted, and subsequently died on 17.11.1999.
The Petitioner submitted a claim and the required documents; about a year later the Respondent repudiated the claim (24.11.2000), alleging concealment of a material fact — that the deceased had been a diabetic for the last ten years. The Petitioner disputed this, contending that raised blood sugar around the time of injury did not make him a chronic diabetic and alleged wrongful repudiation; she filed a complaint before the District Forum for deficiency in service seeking indemnity with interest.
The District Forum found in favour of the Petitioner, holding that the medical case history relied on by the Respondent did not establish a ten-year history of diabetes and that the Petitioner had filed an affidavit and a report by Dr. K.C. Dubey denying diabetes; it directed payment of Rs. 50,000 with 9% interest and Rs. 500 costs. The Respondent appealed to the State Commission, which set aside the District Forum's order and concluded that the insured had concealed a long-standing diabetic condition, justifying repudiation. The present revision petition challenges the State Commission's reversal.
Legal Issues Presented
- Whether the insured (Uttam Singh) had suppressed a material pre-existing disease (diabetes) when proposing for insurance, thereby justifying repudiation of the policy claim by the insurer.
- Whether the State Commission correctly set aside the District Forum's order and applied the correct legal standard and evidence in concluding that repudiation was justified.
Arguments of the Parties
Petitioner's Arguments
- There was no credible evidence that the insured was a chronic diabetic at the time of taking the policy; therefore there was no suppression of material facts.
- The detailed case history from B.R.D. Medical College did not establish a ten-year history of diabetes, and the Respondent's own medical examination had not detected diabetes.
- Dr. K.C. Dubey provided an affidavit and a report certifying the insured did not have diabetes.
- The State Commission erred in accepting the Respondent's appeal and failing to appreciate the District Forum's findings.
Respondent's Arguments
- The B.R.D. Medical College's case history recorded the insured as a "known case of NIDDM x ten years" and laboratory tests confirmed non-insulin dependent diabetes mellitus (NIDDM); these constituted credible evidence.
- The insured had stated "No" to ailments in the proposal form, thus suppressing material facts that would have influenced the insurer's decision or premium assessment.
- Pre-policy medical examinations by the insurer were general check-ups and did not include pathological/blood tests capable of detecting diabetes; hence non-detection by those exams is not dispositive.
- Insurance contracts are uberrimae fidei (agreements in utmost good faith), and suppression of material facts justifies repudiation of a claim under settled law.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Mithoolal Nayak v. Life Insurance Corporation of India, AIR 1962 SC 814 | That an insurance policy is an agreement in utmost good faith (uberrimae fidei) between insurer and insuree and suppression of material facts by the insuree justifies repudiation of the claim by the insurer. | The court held that this precedent squarely covers the instant facts; it followed the principle and, together with the evidentiary findings, found no reason to disagree with the State Commission's conclusion that repudiation was justified. |
Court's Reasoning and Analysis
The court examined the admitted and contested facts and the evidence placed on record. Key elements of the court's analysis were:
- Undisputed facts: The insured had obtained the policy and had not disclosed any pre-existing disease on the proposal form; he subsequently suffered a hip fracture, was hospitalized at B.R.D. Medical College and later died.
- Content of hospital records: The detailed case history at B.R.D. Medical College recorded that the insured was a "known case of diabetes for the last 10 years" and laboratory tests conducted by the hospital corroborated the diagnosis of NIDDM. The court noted that such a history could have been disclosed by the insured during his hospital treatment.
- Onus and evidence: The court observed that the Petitioner bore the onus to controvert the hospital's evidence but did not produce evidence sufficient to negate it. The affidavit/report of Dr. K.C. Dubey relied upon by the Petitioner was not supported by the actual blood test reports in evidence before the fora below, reducing its evidentiary value.
- Nature of insurer's medical examination: The court accepted the Respondent's submission that the insurer's medical checks were general in nature and ordinarily do not include pathological or blood tests that would detect diabetes; therefore, the absence of detection by insurer's examiners was not determinative.
- Legal principle: The court relied on the settled legal doctrine that insurance contracts are entered into in utmost good faith and that suppression of material facts about health justifies repudiation. It specifically cited Mithoolal Nayak (AIR 1962 SC 814) and related authorities as governing law.
- Conclusion from facts and law: On the combined basis of the hospital case history, laboratory confirmation, lack of contrary admissible evidence from the Petitioner, and the established legal principle of uberrimae fidei, the court concluded that the insured had concealed his diabetic condition when applying for the policy, and the Respondent's repudiation was justified.
Holding and Implications
Holding: The revision petition is dismissed. The court upheld the State Commission's order which found that repudiation of the claim by the Life Insurance Corporation was justified.
Implications:
- Direct effect: The State Commission's decision in favour of the Respondent (insurer) stands; the insurer was entitled to repudiate the claim on the ground of suppression of a material pre-existing disease. The revision petition was dismissed "with no order as to costs" as recorded in the opinion.
- Precedential effect: The court applied established Supreme Court authority (Mithoolal Nayak) reaffirming the principle that insurance contracts are governed by utmost good faith and that suppression of material facts legitimizes repudiation. The opinion follows existing law and does not indicate the setting of a new legal precedent beyond applying settled principles to the facts of this dispute.
Vineeta Rai, Member:— The present revision petition has been filed by Maya Devi (hereinafter referred to as the ‘Petitioner’) being aggrieved by the order of the State Consumer Disputes Redressal Commission, Uttar Pradesh (hereinafter referred to as the ‘State Commission’) in favour of Life Insurance Corporation of India (hereinafter referred to as the ‘Respondent’).
The Petitioner's contention is that her husband, Uttam Singh had taken an insurance policy on 20.04.1999 for Rs. 50,000/- from the Respondent/Insurance Company and had appointed the Petitioner as his nominee. The premium of the policy to be paid on six monthly basis, had been duly paid upto 01.11.1999 On 20.06.1999, Petitioner's husband fell down and fractured his right hip bone. He was admitted in the B.R.D Medical College, Gorakhpur wherein he was operated upon and a rod was implanted. He was discharged thereafter but he died on 17.11.1999 The Petitioner being his nominee preferred the claim in respect of the policy to the Respondent/Insurance Company and also supplied all the documents requested for by the Respondent. After about a year, the Respondent repudiated the claim on 24.11.2000 on the grounds that the deceased had concealed material facts of his prior illness of being a patient of diabetes for the last 10 years in his insurance policy document. Petitioner contended that this was not factually correct and in fact the blood sugar level of her deceased husband may have gone up at the time of his injury and operation but this would not imply that he was a chronic patient of diabetes. According to the Petitioner, the insurance claim was wrong repudiated and therefore, she filed a complaint before the District Forum on grounds of deficiency in service and requested that the Respondent be directed to indemnify the insurance claim along with interest from the date of claim.
Respondent has denied the above contentions and stated that there is documentary evidence on record of the B.R.D Medical College, Gorakhpur that the deceased insuree was a chronic patient of diabetes and the material fact of this illness was concealed by the insuree in his form wherein he categorically stated “No” in the column pertaining to this or other ailments. Had the Respondent known about it, it would have materially influenced the Respondent in making the contract of insurance or in estimating the degree and character of risk, fixing the rate of premium or even declining the risk. It is now well settled, following various judgments of the Hon'ble Supreme Court as well as this Commission, that an insurance policy is a contract between the insurer and the insuree made in utmost good faith and suppression of any material information would justify repudiation of the claim by the insurer.
The District Forum after hearing both parties accepted the complaint on the grounds that the medical case history sheet of B.R.D Medical College, Gorakhpur relied upon by the Respondent does not indicate that the insuree was suffering from diabetes for the last 10 years and also no affidavit to this effect was filed. On the other hand, the Petitioner has filed an affidavit along with the report of one Dr. K.C Dubey certifying on 04.09.1999 that the insuree did not have diabetes. Even the medical examination conducted by the doctors deputed by the Respondent had not found the insuree suffering from diabetes at the time of medical examination. Therefore, in the absence of credible evidence to this effect, the policy was wrongly repudiated. The District Forum directed the Respondent/Insurance Company to pay the Petitioner Rs. 50,000/- with 9% interest from the date of filing of the complaint till the actual date of payment as well as Rs. 500/- as litigation costs.
Aggrieved by this order, Respondent filed an appeal before the State Commission which accepted the appeal and set aside the order of the District Forum by concluding that the insuree had concealed the ailment of diabetes at the time of signing his insurance proposal and, therefore, the Respondent was justified in repudiating the claim. The operative part of the order of the State Commission reads as follows:
“…in the present case, the position is that the bone of the diseased was fractured, he had to be got admitted in the Medical College, he would have to give details of all his ailments so that he could get proper treatment. In these circumstances, the individual does not lie as it is the question of his life. It is possible that the insurance agent might have written wrong facts. The insured could conceal his diseases at the time of the proposal, but when any person gets seriously injured while fracturing his bone and gets admitted in the Medical College, then all his diseases would be told to the doctor clearly so as to enable the doctor to give him appropriate treatment and this has happened in this case, about which the doctor of the Medical College has written “known case of niddm x ten years” and there is no reason to disbelieve this. The proposal was signed on 12.4.99 and within a short time he was admitted in the hospital on 29.6.99 after fracturing his bone and on 1.7.99 the report of blood sugar had come in which he was declared as suffering from serious diabetes and prior to this on 3.7.99 it was written “known case of niddm x ten years” about him. It was such a condition that the death of Uttam Singh within short time on 17.11.99 clears one doubt. In my opinion, Uttam Singh had definitely concealed the ailment of diabetes at the time of signing the proposal and, therefore, it was appropriate on the part of the Insurance Corporation to have repudiated the claim.”
Hence the present revision petition.
Learned counsel for both parties made oral submissions. Learned counsel for Petitioner reiterated that there was no credible evidence that at the time of taking the policy the insuree had been suffering from diabetes and, therefore, the question of his having suppressed any material facts did not arise. As observed by the District Forum, there was also no evidence in the case history of the B.R.D Medical College, Gorakhpur where the insuree had been admitted following the accident to confirm that patient had been suffering from for 10 years. This disease was also not detected by the doctor of the Respondent/Insurance Company who examined the insuree before finalizing the insurance policy. The State Commission erred in not appreciating these facts while accepting the appeal of the Respondent.
Counsel for Respondent on the other hand stated that the Respondent/Insurance Company had rightly repudiated the claim because there was credible evidence from a reputed institution i.e B.R.D Medical College, Gorakhpur which has clearly recorded in the case history that the insuree was suffering from diabetes and also his blood sugar and related tests indicated not just increased blood sugar as contended by Petitioner but confirmed that he had non-insulin dependent diabetes mellitus (niddm). It is obvious that the insuree himself, as observed by the State Commission, had informed the Hospital about his long standing disease. It is also to be noted that the proposal for insurance was signed on 12.04.1999 and within a short span of time, the insuree was admitted in a hospital and expired soon after. Regarding the Petitioner's contention that the insuree had been examined by the doctors of the Respondent, it was stated that these are general check-ups and do not include pathological/blood tests etc. which would have detected diabetes. Further, it is settled law that a contract of insurance is uberrima fides i.e an agreement in utmost good faith and a person seeking insurance is duty bound to disclose all material facts relating to his health because the health itself is the risk involved in the policy of insurance. In the instant case, the insuree concealed these facts and as per the provisions of the insurance policy, the Respondent/Insurance Company was fully justified in repudiating the claim.
We have considered the averments made by the learned counsel and have gone through the evidence on record.
The fact that the Petitioner's late husband had taken an insurance policy and that he had not disclosed any pre-existing disease is not in dispute. It is also not disputed that the insuree fractured his hip which required surgery and which was conducted at B.R.D Medical College, Gorakhpur wherein in the detailed case history pertaining to the insuree, it is inter alia recorded that apart from the fracture, and the required medical follow up, he was a known case of diabetes for the last 10 years. This fact could only have been disclosed at the time of his medical treatment by the insuree himself. Laboratory tests conducted by the hospital further confirmed his having diabetes (NIDDM). No evidence has been produced by the Petitioner on whom the onus was to do so to controvert this evidence. Her contention that this disease was not detected at the time of medical examination by the doctors of Respondent/Insurance Company does not carry much credibility because as is well known, these check-ups are general in nature and do not include pathological/blood tests etc. The contention of the Petitioner that one Dr. K.C Dubey had confirmed that her husband did not have diabetes after seeing his blood report at the time of insurance cannot be of much use to her case because these blood test reports have not been filed in evidence before the fora below. On the other hand, there is credible evidence from B.R.D Medical College, Gorakhpur that the insuree was a diabetic for many years.
The Hon'ble Supreme Court in Mithoolal Nayak v. Life Insurance Corporation Of India, AIR 1962 SC 814 and in a number of other cases, has held that an insurance policy is an agreement in utmost good faith between the insurer and insuree and any breach of this agreement by suppressing material facts on the part of insuree would result in repudiation of the claim by the insurer. This case is squarely covered by the above judgments. Therefore, respectfully, following the above judgments as well as on merits, we find no reason to disagree with the order of the State Commission and uphold the same.
The revision petition is dismissed with no order as to costs.
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