D.K. Jain, President
Delay of 24 days in filing the revision petition is condoned.
2. This revision petition under Section 21(b) of the Consumer Protection Act, 1986 (for short œthe Act?) is directed against order dated 04.07.2013 passed by the Goa State Consumer Disputes Redressal Commission (for short œthe State Commission?) in FA No. 28 of 2013, whereby order dated 29.01.2013 passed by the District Consumer Disputes Redressal Forum, North Goa (for short œthe District Forum?) in Complaint No. 75 of 2010, allowing the complaint, has been reversed. The District Forum has directed the Respondent No.2, SBI Life Insurance Company Ltd. (for short œthe Insurance Company?) to pay to the Complainant a sum of `10 lakhs along with compensation of `50,000/- on account of financial loss, mental tension and agony suffered by her and a sum of `20,000/- as the cost of litigation.
3. The Complainant, the Petitioner herein, is the widow of Late Valsan Shankaran Pombally. On or about 31.01.2008, her husband had taken a housing loan of `10 lakhs from the State Bank of India, repayable in 222 monthly instalments of `10,131/- each. The Complainant stood as guarantor for repayment of the said loan. The deceased had also obtained from the Insurance Company a Group Insurance Policy known as SBI Life Super Suraksha, meant for housing loan borrowers of the State Bank of India as a protection cover in the event of death of the borrower during the tenure of the loan. Before obtaining the said policy the deceased was required and had submitted to the Insurance Company a consent-cum-authorization-cum-health declaration on 04.02.2008. A health questionnaire was also signed by the deceased on 02.04.2008. The insurance cover was available from the date of enrolment during the tenure of the loan and was to cease at the completion of 70 years of age of the borrower. In the event of death, the sum assured was to become payable to the group administrator and had to be equivalent to the outstanding loan amount including interest as per instalment schedule.
4. One of the conditions of the said policy stipulated that the insurance policy would be rendered null and void, inter alia, if it appeared that an untrue or incorrect averment had been made or mis-statement or suppression of material information was contained in the good health-cum-consent letter, medical reports, statements or any other information relating to the assured or that any of the particulars referred to above had not been truly and fairly stated; provided that the Insurance Company may, at its sole discretion, grant relief subject to such conditions as the Company may prescribe.
5. On 21.10.2008, the deceased was taken ill and was admitted in Manipal Hospital at Dona Paula, Goa. He was diagnosed with cirrhosis of liver with hepatic failure with hepato-renal shutdown. The past history of the insured was recorded as a œknown case of diabetes mellitus on regular treatment.? On request, the deceased was discharged from the said hospital on 22.10.2008 and was admitted in Manipal hospital at Mangalore for further management. On admission at Mangalore hospital, it was noticed that the patient had history of diabetes on treatment; was a smoker and chronic alcoholic for the past 20 years. The insured expired on 07.11.2008 i.e. within approximately eight months from the date of submission of the good health certificate. According to the death summary, prepared by Manipal hospital at Mangalore, the deceased was a known case of alcoholic liver disease presented with features of decompensation and was referred from Manipal Hospital Goa with anuria and features of hepatic encephalopathy. On admission he had severe renal failure and features of spontaneous bacterial peritonitis. He was treated conservatively with standard anti hepatic coma measures, parenteral antibiotics and hemodialysis. His sugar levels were strictly monitored. Though initially he responded to the treatment, subsequently his condition deteriorated and ultimately he expired on 07.11.2008. The cause of death was recorded as œhepatic encephalopathy, hepatorenal syndrome, spontaneous bacterial peritonitis with alcoholic liver disease.?
6. On the death of her husband, the Complainant preferred a claim with the Insurance Company under the said insurance policy. However, by letter dated 13.03.2009, the Insurance Company repudiated its liability on the ground that the deceased insured had given a false good health declaration at the time of joining the scheme. According to the Insurance Company, as per the information available with them, the deceased was suffering from œdiabetes mellitus? and was on treatment for the said disease prior to the enrolment in the group insurance scheme, which fact was not disclosed by the deceased. It was alleged that the cause of death was attributable to a pre-existing medical disease at the time of enrolment under the scheme and, therefore, the insurance policy was null and void.
7. Alleging deficiency of service, the Complainant filed a complaint before the District Forum impleading Insurance Company as well as the State Bank of India as the opposite parties. Upon consideration of the evidence adduced by the parties, the District Forum observed that the Insurance Company had failed to bring on record any proof in support of their plea that the deceased was suffering from any pre-existing disease at the time of obtaining the policy; there was no evidence to prove that the deceased was ever admitted for any treatment in a hospital for the alleged pre-existing disease and that the medical evidence relied upon by the Insurance Company was neither supported by any corroborative evidence not did it prove that the said treatment had any nexus with the cause of the death of the insured. The District Forum came to the conclusion that there was no suppression of any material fact by the deceased and, therefore, in not settling the claim of the Complainant, there was deficiency of service on the part of the Insurance Company, causing great hardship, financial loss and mental agony to the Complainant. The District Forum thus, allowed the complaint and awarded the aforesaid amounts as compensation to the Complainant.
8. Being aggrieved, the Insurance Company preferred an appeal before the State Commission. On a re-appraisal of the entire material on record, the State Commission came to the conclusion that the deceased had obtained the insurance policy by suppressing material information sought for by the Insurance Company, by giving false answers to the questions in the proposal form. Though the deceased was a diabetic and was on medication for the said disease for over three years, a regular smoker and drinker for the past 20 years and eventually died of cirrhosis of liver, his answers to the questionnaire relating to diabetes etc; liver disease or consumption of cigarettes and alcohol were in the negative. The State Commission has held that while answering the questions, the deceased had suppressed material facts and, therefore, the Insurance Company could not be faulted in repudiating the claim preferred by the Complainant and as such there was no question of deficiency of service on their part. Thus, the State Commission has dismissed the Complaint. Hence, this Revision Petition by the Complainant.
9. Ld. Counsel appearing for the Complainant submitted that the death of Complainants husband was admittedly not due to œdiabetes mellitus? but due to œhepatic encephalopathy, hepatorenal syndrome, spontaneous bacterial peritonitis with alcoholic liver disease? and, therefore, there being no nexus between the said two diseases, the alleged non-disclosure of the information regarding œdiabetes mellitus? was of no consequence. It was asserted that the Insurance Company did not adduce any evidence to prove that the insured was suffering from œcirrhosis of liver? prior to obtaining the policy, and, therefore, the question of suppression of any material fact did not arise. It was pleaded that if an insured is not aware of an ailment he may be suffering, non-disclosure thereof does not tantamount to suppression of material facts. To buttress the argument, Learned Counsel has placed on record copies of a number of decisions rendered by the Supreme Court and this Commission.
10. Having given our anxious consideration to the material on record, particularly the questionnaire, reproduced in the impugned order, we are of the opinion that there is no merit in this Revision Petition. It is a well settled proposition of law that a contract of insurance is based on the principle of utmost good faith “ uberrimaefidei, applicable to both the parties. The rule of non disclosure of material facts vitiating a policy still holds the field. The bargaining position of the parties in a contract of insurance is unequal. The insured knows all the facts, the insurer is unaware of anything which may be material to the risk. Very often, it is the insured who is the sole person who has this knowledge. The insurer may not even have the means to find out facts which would materially affect the risk. The law, therefore, enjoins on the insured an absolute duty to disclose correctly all material facts which are within his personal knowledge or which he ought to have known had he made reasonable inquiries. A contract of insurance, therefore, can be repudiated for non disclosure of œmaterial facts.?
11. The question for examination is as to whether in the present case the insured had suppressed any œmaterial fact,? which would have been relevant for the Insurance Company in order to decide whether to issue an insurance policy to the deceased?
12. The expression œmaterial fact? is not defined in the Insurance Act, 1938 and, therefore, as observed by the Supreme Court in SatwantKaur Sandhu vs. New India Assurance Company Ltd. (2009) 8 SCC 316, it has to be understood 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 œmaterial? and if the proposer has knowledge of such fact, he is obliged to disclose it, particularly while answering questions in the proposal form. Any inaccurate answer will entitle the insurer to repudiate their liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance.
13. In this behalf it would be useful to notice the following observations of the Supreme Court in SatwantKaurs case (supra):-
œthus it needs little emphasis that when an information on specific aspect is asked for in the proposal form, an assured is under 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 material for the purpose of the policy or not. Of course, 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.?
14. Referring to the decision in the case of Carter vs. Boehm - (1766) 3 Burr 1905, the Apex Court noted:-
œInsurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstances does not exist. The keep back such circumstance is a fraud and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risquÃ© run is really different from the risquÃ© understood and intended to be run at the time of the agreement¦. The policy would be equally void against the underwriter if he concealed ¦. Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary.?
15. Bearing in mind the aforenoted principle governing a contract of insurance, we may advert to the facts at hand. As stated above, for returning the finding that the deceased/insured had obtained the insurance policy by suppressing the information sought for by the Insurance Company, the State Commission has tabulated the answers given by the insured against questions No. 3, 4, 9(a) and (b). Briefly put, the information sought for against these questions was whether the insured had been treated for or told that he was suffering from diabetes, etc. and whether he had been treated or told that he had any liver disease. All the questions were answered in the negative. Additionally, the State Commission has also observed that the insured had given a good health declaration, wherein he had stated that he was in sound health; did not have any physical defect/deformity; was performing his routine activities independently and that he had never suffered or was suffering or was hospitalized or in critical illness or a condition requiring medical treatment for a critical illness, as on date. We are in complete agreement with the State Commission that having regard to the fact that admittedly the deceased was suffering from œdiabetes mellitus? for which ailment he was on regular medication for over three years, it was not possible to even comprehend that the insured would not know that he was suffering from diabetes as stated by him in answer to question No. 3. Undoubtedly, these were œmaterial facts? and being within the knowledge of the insured only, he was obliged to disclose the same correctly in the questionnaire issued to him for the purpose of obtaining the policy in question. Having suppressed the said facts while answering the questionnaire, we are of the opinion that the Insurance Company was within its rights to repudiate the claim of the Complainant. In that view of the matter, there was no question of any deficiency of service on their part.
16. The decision of the State Commission is based on proper appreciation of the evidence on record and correct application of the aforesaid principle of law. The impugned order does not suffer from any illegality or material irregularity warranting our interference.
Accordingly, the Revision Petition is dismissed in limine.