3. The claim was contested by the respondent. They had filed their written version. It is alleged that complaint was liable to be dismissed as there was no deficiency in service on their part. It was contended that the insurance policy so provided to the insured was a Linked Policy. He made investment in the share market as per the policy applied for and the returns of the policy were based on the share market. It was also contended that the insured had concealed the fact that he was suffering from chronic liver disease prior to the issuance of the policy and that he was a chronic alcoholic. During investigation these facts were established. He was also diagnosed having chronic liver disease, hepatitis-B and hepatitis-C. Such type of diseases happens when a person drinks heavily for a decade or more. A sum of Rs.23,30,875/- had been paid to the complainant as per terms and conditions of the insurance policy being Unit Fund Value. This amount was paid as per settlement on 14.03.2015. It is not disputed that policy was of sum of Rs.55,00,000/-. On these contentions, it had been submitted that claim be dismissed.

4. Parties led their evidences before the State Commission. The Complainant had filed 9 documents which included affidavit, letter dated 03.09.2021, death certificate of insured, certificate of illness, letter dated 17.03.2015, declaration, letter dated 23.03.2015 and legal notice. The respondent has submitted affidavit of his Deputy Manager Amit Khanna and filed medical record / history of insured issued by Arpana Hospital, death claim investigation report, unit linked proposal form, terms and conditions of the policy, policy revival letter issued by HDFC Standard Life Insurance Company Limited, policy servicing request form 1, form J, death claim-further requirement, letter dated 17.03.2015 regarding death claim.

5. After hearing arguments of the learned counsel for the parties and perusing the relevant record, the State Commission reached to the conclusion that since insured was suffering with chronic liver disease and hence repudiation was justifiable.

6. This order is challenged by the complainant on the ground that stand taken by State Commission is based on conjectures and surmises and the respondent had not produced any evidence that insured was suffering with chronic liver disease and had underwent any treatment for the said disease when the policy was issued in the year 2011. It is submitted that insured had died almost three years after the issuance of the policy and Section 45 of the Insurance Act, 1938 debars the respondent from questioning the validity of the policy on the ground that correct information was not given in the proposal form. It is argued that respondent had not produced any evidence of illness or treatment of the insured prior to the date on which the policy was taken. It is further argued that on revival of the policy, it is the original policy which becomes effective and findings of the State Commission that on revival of the policy, a new contract has started between the parties is a finding which is contrary to the established law. Reliance has been placed on the findings of this Commission in Life Insurance Corporation of India Vs. Kulwant Kumari 2009 SCC Online NCDRC 64,

wherein this Commission has relied on the findings of Hon'ble Supreme Court in the case of

Mithoolal Nayak Vs. Life Insurance Corporation of India AIR 1962 SC 814. It is further argued that insurance company has not repudiated the claim on the ground that at the time of revival of policy. The fact that deceased was suffering with illness, had been concealed but it had repudiated it on the ground that chronic alcoholic condition and the chronic liver disease was not disclosed in the application dated 10.08.2011 i.e. when the original policy was taken. It is, therefore, argued that impugned order is liable to be set aside being illegal and respondent be directed to pay the assured amount.

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7. It is, however, argued on behalf of the respondent that insured was hospitalized at Arpana Hospital, Madhuban, Karnal on 06.01.2014 due to chronic liver disease and remained hospitalized till 18.02.2014. The insurance company was not informed about this hospitalization even at the time when 4^thyearly premium and other charges were paid on 30.01.2014 and, therefore, insured had suppressed the material fact. It is submitted that LA had filed the declaration of good health which is mandatory for revival of policy as per rules and procedure on the subject. It was submitted that insured was again hospitalized on 20.03.2014 in the same hospital where he died on 25.03.2014. It was submitted that from the investigation it was revealed that insured was even suffering with chronic liver disease at the time of taking policy in August 2011 and, therefore, on the ground of this suppression of material fact, the claim was repudiated. It was submitted that insured was suffering with chronic liver disease even on 06.01.2014. It is clear that he was suffering even during the period when he initially took the policy. It is further submitted that this Commission in the case of LIC & Anr. Vs. Kempamma & Anr. (2013) CDJ 653 NC has clearly held that on revival of policy, a new contract comes into existence and if insured had suppressed material facts or gave false declaration regarding his health, the insurance company is entitled to repudiate the claim. It is submitted that impugned order is well reasoned order and duly based on the evidence on record.

8. I have perused the file and given thoughtful consideration to the rival contentions of the parties.

9. It is settled proposition of law as held in Saurashtra Chemical Ltd. Vs. National Insurance Co. Ltd. Civil Appeal No. 2059 of 2015 decided on 13.12.2019 and Glada Power and Telecommunication Ltd. Vs. United India Ins. Co. Ltd. & Anr. Civil Appeal No. 8884-8900 of 2010 decided on 28.07.2016 that insurance company cannot travel beyond the grounds mentioned in the repudiation letter. In this case, the claim was repudiated vide letter dated 17.03.2015 for the following reasons

"However, our investigations have established that the Life Assured was suffering from Chronic Liver Disease prior to the policy issuance and also was Chronic Alcoholic which was not disclosed in the Application dated August 10, 2011. Further, the documents submitted as an income proof at proposal stage is found to be fake. Had this information been provided to the Company at the time of applying for the insurance policy, we would have declined the application."

10. It is apparent from the repudiation letter that claim was repudiated because of concealment of disease by the insured on 10.08.2011 when he applied for the issuance of the policy. The claim was not repudiated on the ground that insured had concealed his disease at the time when the policy was revived. As has already been held by the Hon'ble Supreme Court in Glada's case ( supra), insurance company cannot go beyond the reasons given in the repudiation letter.

11. The State Commission on the basis of evidence has clearly held that the Insurance Company had failed to prove that the insured had concealed his medical conditions on the date when he took the policy i.e. on 10.08.2011. Relevant para of findings are as under:

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"16. Now coming to the other ground that the life assured concealed true and material facts regarding his health. Kuldeep Singh life assured was suffering from Chronic Liver Disease before obtaining the insurance policy but concealed this fact at the time of submitting the proposal form. In this case, the opposite parties could not adduce any such document to prove that before issuance of the policy, the life assured was suffering from Chronic Liver Disease or he remained admitted in any hospital for treatment in this regard."

12. Learned counsel for the respondent has also failed to bring to our notice any evidence which could suggest even by preponderance that deceased was suffering from chronic liver disease at the time or before taking the insurance policy in August 2011.

13. It is settled proposition of law that when the policy has been revived, it revives from the date when it was originally issued. On revival of the policy, therefore, it dated back to the original date of issuance of the policy which admittedly is in the year 2011. Section 45 of the Insurance Act, 1938 bars the insurance companies to question the policy after lapse of 2 years and these two years have to be counted from the date on which the policy was originally issued and not from the date of revival of policy. In this regard reliance is placed on the findings of Hon'ble Supreme Court in Mithoolal Nayak's case (supra). It has been held as under:

"7. We shall presently consider the evidence, but it may be advantageous to read first S 45 of the Insurance Act, 1938, as it stood at the relevant time. The Section, so far as it is relevant for our purpose, is in these terms:

"No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose."

It would be noticed that the operating part of S.45 states in effect (so far as it is relevant for our purpose) that no policy of life insurance effected after the coming into force of the Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was, inaccurate or false; the second part of the section is in the nature of a proviso which creates an exception. It says in effect that if the insurer shows that such statement was on a material matter or suppressed facts which it was

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material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose, then the insurer can call in question the policy effected as a result of such inaccurate or false statement. In the case before us the policy was issued on March 18, 1945 and it was to come into effect from January 15, 1945. The amount insured was payable after January 15, 1968 or at the death of the insured, if earlier. The respondent company repudiated the claim by its letter dated October 10, 1947. Obviously, therefore, two years had expired from the date on which the policy was effected. We are clearly of the opinion that S.45 of the Insurance Act applies in the present case in view of the clear terms in which the section is worded, though learned counsel for the respondent company sought, at one stage, to argue that the revival of the policy some time in July, 1946 constituted in law a new contract between the parties and if two years were to be counted from July, 1946, then the period of two years had not expired from the date of the revival. Whether the revival of a lapsed policy constitutes a new contract or not for other purposes, it is clear from the wording of the operative part of S. 45 that the period of two years for the purpose of the section has to be calculated from the date on which the policy was originally effected; in the present case, this can only mean the date on which the policy (Ex.P-2) was effected. From that date a period of two years had clearly expired when the respondent company repudiated the claim. As we think that S. 45 of the Insurance Act applies in the present case, we are relieved of the task of examining the legal position that would follow as a result of inaccurate statements made by the insured in the proposal form or the personal statement etc. in a case where S. 45 does not apply and where the averments made in the proposal form and in the personal statement are made the basis of the contract."

(emphasis is mine)

14. It remains proved on record from the findings of the State Commission that respondent has not produced any evidence to prove that on the date of issuance of original policy, the insured was suffering with any chronic disease and this fact had been concealed by him. This finding of the State Commission has not been challenged by the insurer. There is also nothing on record to show that deceased was suffering from chronic alcoholic condition and was suffering with chronic liver disease and that he submitted fake documents at the time of obtaining the original policy.

15. In view of the established facts, it is apparent that State Commission had adopted a wrong approach while rejecting the complaint. The Appeal is allowed and impugned order is, therefore, set aside.

16. The respondent shall pay to the complainant the assured amount along with interest @ 9% p.a. from the date of filing of the claim till the date of payment . Cost of litigation of Rs.50,000/- is also awarded to the Appellant. Any amount paid towards this policy is allowed to be adjusted by the respondent.

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17. The Appeal is allowed.

......................J

DEEPA SHARMA

PRESIDING MEMBER

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