IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:08.06.2009 CORAM: THE HON'BLE MR.JUSTICE P.JYOTHIMANI WRIT PETITION NOs.46518 of 2006 and 14536 of 2007 and connected miscellaneous petitions. ..
Life Insurance Corporation of India
rep. By its Regional Manager (L&HPF)
Southern Zonal Office
LIC Building, Anna Salai
Chennai 600 002. .. Petitioner in WP.46518/2006
vs.
1. The Insurance Ombudsman
Office of the Insurance Ombudsman
Chennai.
2. C.Hemalatha .. Respondents inWP.46518/2006
C.Hemalatha .. Petitioner in WP.14536/2007
vs.
1. Life Insurance Corporation of India
rep. By its Regional Manager (L&HPF)
Southern Zonal Office
LIC Building, Anna Salai
Chennai 600 002.
2. The Insurance Ombudsman
Office of the Insurance Ombudsman
Chennai. .. Respondents inWP.14536/2007
Writ Petitions filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari as stated therein.
For petitioner & : Mr.Manoj Sreevalsan
R.1 in Wps.46518/06 &
14536/07 respectively.
For petitioner & : Mr.R.Gandhi,Sr.Counsel
R.2 in WP..14536/07 & for Mr.R.G.Narendhiran
46518/06 respectively.
..
COMMON ORDER
The writ petitions are directed against the award of the Insurance Ombudsman dated 30.8.2005, by which the claim of the second respondent in W.P.No.46518 of 2006, who is the petitioner in W.P.No.14536 of 2007 for a sum of Rs.10 lakhs under Anmol Jeevan Policy in respect of the death of her husband, late J.Chezian was partly allowed, awarding an amount of Rs.5 lakhs in full and final settlement of the claim. While the Life Insurance Corporation of India has filed the former writ petition challenging the award, the claimant has filed the other writ petition against the denial of remaining sum of Rs.5 lakhs.
2. The facts leading to the passing of award by the Tribunal are that the said J.Chezian had taken Anmol Jeevan Policy for a sum of Rs.10 lakhs for a term of 20 years as per the proposal dated 21.12.2002, which was accepted on 28.1.2003 being the date of commencement of risk. The life assured died within one month i.e., on 21.2.2003 due to heart attack and the claimant being the wife-nominee, approached the Life Insurance Corporation of India for settlement of the sum assured. The said claim was repudiated by the Life Insurance Corporation on the ground that the life assured had withheld correct information regarding his health condition in the proposal dated 21.12.2002. The repudiation was on the basis that the assured had given wrong information which prompted the Corporation to accept the risk and therefore, the contract has become void.
3. An appeal was filed to the Zonal Office of the Corporation by the nominee/claimant which was also rejected on 24.3.2005. It was thereafter, the claimant preferred a complaint to the Insurance Ombudsman. It was, after hearing the parties, the Insurance Ombudsman passed an award dated 30.8.2005, granting 50% of the risk sum to the claimant viz., Rs.5 lakhs in full and final settlement of the claim on ex-gratia basis.
4. The Life Insurance Corporation has challenged the award on the ground that the Insurance Ombudsman has failed to take note that the life assured had given false information in the Proposal to questions 11(a), (e), (g), (h) and (i) relating to his suffering from diabetes and accidental injuries, about his habits of alcoholism and smoking and his general state of health. The Corporation relied upon the discharge summary issued by the Christian Medical College Hospital, Vellore apart from the letter issued by Dr.Kannappan of Hosur dated 27.10.2003. According to the Corporation, the life assured died within 62 days from the date of submitting the proposal and the claim is an early claim and therefore, the repudiation by the Corporation is justified on the ground of suppression of material facts. The Insurance policy being a contract of utmost good faith, the suppression of material facts will render the contract null and void. The life assured had deliberately suppressed the fact that he was suffering from diabetes, which was established by the letter of Dr.Kannappan and therefore, according to the Corporation, the award of Ombudsman is liable to be set aside.
5. On the other hand, the claimant is challenging the award against the denial of remaining part of the sum claimed viz., Rs.5 lakhs on the ground that the life assured had not suppressed any material fact in the proposal dated 21.12.2002 and the letter of Dr.Kannappan cannot be a basis for reducing the amount of claim inasmuch as the said letter dated 27.10.2003 was obtained much after the death of the life assured and it has no evidentiary value. It is also the case of the claimant that there was no notice issued before repudiating the claim by the Life Insurance Corporation of India.
6. Mr.R.Gandhi, learned senior counsel appearing for the claimant who is the petitioner in W.P.No.14536 of 2007, would submit that there was no suppression inasmuch as it has been the case of the claimant that the life assured was not suffering from diabetes. He would rely upon the judgment of the Supreme Court in P.C.Chacko v. Chairman, LIC of India [(2008) 1 SCC 321] and the judgment of Kerala High Court in P.Sarojam v. L.I.C. of India (AIR 1986 Kerala 201), to substantiate his contention that mere misstatement itself is not reason for rescission of the policy unless the same has the material value. It is his submission that diabetes is not a disease or not a serious ailment and it may attack a patient at any time. According to him, merely because one Dr.Kannappan had given letter much after the death of life assured indicating certain ailment about the deceased person, the same cannot be treated as a proper medical certificate since the same has not been done by examining the said person.
7. On the other hand, it is the contention of the learned counsel appearing for the Insurance Corporation Mr.Manoj Sreevalsan that the contract of insurance policy being “uberrima fides” is a contract of utmost good faith and therefore, any doubt about the correctness of proposal given by the life assured, especially when a medical certificate has been produced on the facts of the case, must go in favour of the Insurance Corporation, particularly in cases where the life assured died within a very short period of time from the date of proposal. He would rely upon the judgments in Kamla Wanti v. L.I.C. of India (AIR 1981 Allahabad 366), Ratan Lal v. Metropolitan Insurance Co. (AIR 1959 Patna 413) and Punithavalli v. The Life Insurance Corporation of India (1999 (2) MLJ 1).
8. Before going into the award passed by the Insurance Ombudsman, some of the factual aspects are to be narrated first. The admitted facts are that the claimant’s husband Chezian made a policy proposal with the Life Insurance Corporation of India on 21.12.2002 for a sum of Rs.10 lakhs and the age of the life assured at that time was stated to be 32 years and his date of birth was mentioned as 22.1.1971. Clause 11 of the proposal relates to the personal history of the life assured which is as follows:
Personal History
Answer ‘Yes’ or ‘No’
(a) During the last five years did you consult a Medical Practitioner for any ailment requiring treatment for more than a week?
NO
(b) Have you ever been admitted to any hospital or nursing home for general check-up, observation, treatment or operation?
NO
(c) Have you remained absent from place of work on grounds of health during the last 5 years?
NO
(d) Are you suffering from or have you ever suffered from ailments pertaining to Liver, Stomach, Heart, Lungs, Kidneys, Brain or Nervous system?
NO
(e) Are you suffering from or have you ever suffered from Diabetes, Tuberculosis, High Blood Pressure, Low Blood Pressure, Cancer, Epilepsy, Hernia, Hydrocele, Leprosy or any other disease?
NO
(f) Do you have any bodily defect or deformity?
NO
(g) Did you ever have any accident or injury?
NO
(h) Do you use or have you ever used (i) Alcoholic drinks (ii) Narcotics (iii) Any other drugs? (iv) Tobacco in any form?
NO
(i) What has been your usual state of health?
GOOD
(j) Have you ever received or at present availing/under-going medical advice, treatment or tests in connection with Hepatitis B or an AIDS related condition?
NO
9. It is true that in respect of the above sub-clauses, the life assured answered ‘no’ except for sub-clause (i) relating to ‘usual state of health’ to which he answered ‘good’. The main contention of the Insurance Corporation is that in respect of clause 11(a) which relates to consultation with a Medical Practitioner by the life assured regarding ailment requiring treatment for more than a week for which he answered ‘no’. Again, in respect of clause 11(e) relating to suffering from Diabetes, Tuberculosis, High Blood Pressure, Low Blood Pressure, Cancer, Epilepsy, Hernia, Hydrocele, Leprosy, etc., the life assured answered ‘no’. Similarly for clause 11(g) relating to accident or injury, the life assured answered ‘no’. That apart, for clause 11(h) which relates to use of alcoholic drinks, narcotics, any other drugs or tobacco in any form, the life assured answered ‘no’.
10. It is also seen that pursuant to the abovesaid proposal dated 21.12.2002, the life assured was examined by the authorised Medical Examiner of the Life Insurance Corporation, Dr.S.Ravichandran, Katpadi and in the confidential report submitted by him, in clause (5) pertaining to any abnormality of the Cardiovascular system, after examination, he has stated ‘no’. Again, in respect of defects in Thyroid, ear, nose, mouth, etc. including abnormality in respiratory system under clauses (6), (7), (8) and (9), in the confidential report the Medical Examiner has given answers in favour of the life assured. Again, in respect of enlargement of liver or spleen, abnormality in abdomen, hernia, disease of Central or Peripheral nervous system, as seen in clauses (10) to (13), the Medical Examiner, after examination, has given negative answers. In respect of evidence of operation and accident under clauses (14) and (15), he has stated that there is no such evidence. Under clause (16), ‘is there any other adverse feature in health and habit, past or present, which you consider relevant? if so give details’, the Medical Examiner answered ‘no’. A perusal of the proposal as well as the Medical Examiner’s confidential report filed along with the typed-set of papers show that the said report has been given by the authorised Medical Examiner not only based on the statement of the life assured, but also after examination on the life assured.
11. In the repudiation order of the Life Insurance Corporation dated 18.11.2003 addressed to the claimant it is stated that the Corporation has indisputable proof to show that the life assured was an alcoholic and smoker and about one and half years before the proposal for the policy, he had suffered from lacerated injury on forehead and cut injury over chin due to road traffic accident and he had suffered from diabetes since 2 months before he proposed for the policy and therefore, the particulars given by the life assured are contrary to the facts and accordingly, the Corporation decided to repudiate the claim made by the claimant.
12. It is seen from the award of the Insurance Ombudsman, the outpatient record issued by the C.M.C. Hospital, Vellore dated 24.6.2001 was relied upon by the Insurance Corporation. In the said outpatient record, it is stated that on that date, the life assured was under the influence of alcohol and he fell down due to skid of a two wheeler in which he was travelling. Obviously, this outpatient record dated 24.6.2001 was relied upon by the Insurance Corporation to oppose the claim on the ground that the fact of two wheeler accident which took place on 24.6.2001 was not disclosed under clause 11(g) of the proposal.
13. Again, the other material record stated to have been produced by the Insurance Corporation to repudiate the claim is the letter dated 27.10.2003 issued by Dr.Kannappan, Hosur. In the said letter dated 27.10.2003, which has been issued after 8 months from the date of death of life assured, Dr.Kannappan has certified that Thiru J.Chezian M/32 years of C-25, Thaly, Hudco, Hosur was suffering from diabetes and he was a known smoker. He has also stated that the life assured has died of massive heart attack on 21.2.2003 on the way to his clinic and he knew him for the past 3 months only as patient who was taking treatment for diabetes. Apart from the fact that the said letter of Dr.Kannappan was not issued on the basis of any medical examination of the life assured, it is the version of the said doctor in the letter dated 27.10.2003 that he knew the life assured for the last three months as his patient, whereas the life assured died much earlier on 21.2.2003.
14. The other materials on the basis of which repudiation of claim is stated to have been made is the claim inquiry reports given by Thiru S.Jeyaraj, Manager (Sales), Vellore and Thiru R.Sreenivasan, Manager (P & IR), Salem. A reference to the inquiry reports filed by the Insurance Corporation in the typed-set of papers show that in the inquiry it was concluded that the life assured was a diabetic and alcoholic based on the above said letter of Dr.Kannappan dated 27.10.2003. The inquiry reports further show that one Dr.Sivakumar who was stated to have treated the life assured for diabetes has refused to furnish any details. The details of such illness were not ascertained in the inquiry. While explaining about short history of the case, in the claim inquiry reports, as found in page 47 of the typed-set of papers, it is stated as follows:
“The deceased belongs to Vellore. He with his four other partners purchased an industry four years back. Due to lack of capital, the production was not started. Nearly 1.5 crores was already invested on it. Because of the financial crisis he became tense. Added to it he drinks and smokes. Further he was diabetic. All added he had a massive heart attack on 26.02.2003 at about 6.30 or 6.00 a.m. He died before he was taken to Dr.Kannappan. However he made his trials but in vain, as he was his patient.”
In respect of one of the columns, viz., column No.18(viii),
“What was the exact history given? After tactfully persuading the doctor to go through his registers and records. Certified copies should be obtained,”
The answer given is as follows:
” He was under gone all tests (check-up) few days before his death as per doctors statement and at the time was also found diabetic.”
While arriving at the conclusion in the report, as found in page 52 of the typed-set of papers, it is stated as follows:
“Since his ill health diabetes, smoking and drinking was not revealed, there is suppression of facts. It is not known whether the incident of accident was mentioned in the report. If not mentioned it adds to the pre-illness and the claim may be repudiated on the basis of the letters dated 27.10.2003 and 28.10.2003 given by Dr.Kannappan and administrative officer Shri N.Dhanasekaran.”
15. Therefore, the reports make it clear that the decision that the life assured has suppressed about diabetes, etc. has been arrived at solely based on the letter of Dr.Kannappan. It is relevant to point out that the reports themselves reveal that no record of examination was available. It is also stated that the said Dr.Kannappan issued the letter on 27.10.2003 stating that the life assured died due to massive heart attack on 21.2.2003. Admittedly, in the said letter which was issued at a later point of time, there is nothing about the history of the life assured which is mentioned in the claim inquiry reports. It is, in those circumstances, the Insurance Ombudsman has correctly come to the conclusion that there is no information available regarding the ailment of diabetes which can be decided on the basis of sugar level of the patient and even though the life assured was stated to have involved in a two wheeler accident two years prior to the date of death, it is not stated what was the effect of such accident to the death of the life assured. Further, there is no other record to show that at the time when the life assured died, he was under the influence of alcohol. In those circumstances, the Insurance Ombudsman has held that it cannot be concluded that there was material suppression in the disclosure of facts capable of vitiating the contract of insurance.
16. Further, the Insurance Ombudsman, finding that the non-disclosure would definitely place the insurer in a disadvantageous position to have a proper assessment of risk, directed payment of 50% of the claim amount. The relevant portion of the order of the Insurance Ombudsman is as follows:
” 9. It emerges from the above that the assured suffered injuries over forehead and chin during a road traffic accident in Vellore while he was driving under the influence of alcohol. He even had treatment in the plastic surgery department in C.M.C. But no further and more detailed information was available to conclusively establish as to how far his accidental injuries left a lastingly deleterious effect on his general health. Though it was clearly recorded in the C.M.C Hospital report that the accident occurred when the assured was under the influence of alcohol, no further information was forthcoming to ascertain as to how serious and life-threatening his habit of alcoholism was. But the fact cannot be denied that the assured suffered accidental injuries when he was driving a two-wheeler, being under the influence of alcohol. Coming to his ailment of diabetes as reported by Dr.Kannappan, though the doctor had stated in his letter that the assured was receiving treatment for about three months for diabetes, it was also not clear as to how serious was his ailment, what were his sugar levels, the nature of treatment etc to decide about the gravity of the ailment. Thus the evidence was only sketchy and not conclusive, though the fact that the assured suffered from accidental injuries and from diabetes cannot be brushed aside totally. The investigation officials’ report also failed to throw further light on these aspects, though they also confirm that the assured suffered from alcoholism, diabetes and accidental injuries.
For a Contract of Insurance to be set aside, mere suppression of information is not sufficient and it should be material suppression. We observe from the C.M.C. Hospital records that the assured was discharged on the same day of treatment for accidental injuries. Though there was a reference that he visited plastic surgery department, which could only be made out by markings ‘plastic surgery’ on specific dates, no detailed treatment particulars were available, which could have thrown clear light on the severity of the accidental injuries. It also could be observed that no C.T.Scan was taken to suggest that the injuries were serious in nature affecting his skull. The assured was medically examined by the L.I.C. Panel doctor at the time of proposing and this doctor also evidently did not notice any marks of major injury, as his report was silent about the same even though there was a specific question eliciting information relating to the same, which points to the non-severity of the injuries sustained. Even relating to his ailment diabetes, no information regarding sugar levels, treatment taken etc was available to conclude that his diabetes was serious enough to have caused his death due to massive heart attack. In the absence of any evidence about his habit of alcoholism, extent of alcoholism, it could also be not concluded that his habit of alcoholism resulted in general deterioration of his health. In the circumstances, it could not be concluded that non-disclosure of information as discussed above could be deemed ‘material suppression’ capable of vitiating a contract of insurance. But there was clear-cut non-disclosure of information relating to accidental injuries and diabetes, about which there were specific questions in the proposal to elicit this information that too by a person who could understand the real significance of this information.
10. The evidence made available to this forum throws out a situation, where this forum could not conclude that the information not disclosed was material enough to vitiate the contract, whereas the non-disclosure did definitely place the Insurer in a disadvantageous position to have a proper assessment of risk. Thus keeping the circumstances of the case in mind and after due deliberation, this forum comes to the considered conclusion that it is enjoined upon this forum to consider the case keeping the best interests of both the contending parties in mind and also to ensure that the ends of ‘equity and natural justice’ are made applicable to both the parties in a fair measure. As such, this forum decides that an amount equal to 50% of the basic sum under the policy, i.e., an amount of Rs.5,00,000/- be awarded to the complainant as full and final settlement of the claim under the policy on an ex-gratia basis. The Insurers are, therefore, directed to pay the complainant an amount of Rs.5,00,000/- in full and final settlement of the claim.”
17. In the conditions to Anmol Jeevan Policy certificate issued to the life assured, condition No.6 relates to forfeiture in certain events, which is as follows:
” 6. Forfeiture in certain events: In case the premiums shall not be duly paid or in case any conditions herein contained or endorsed hereon shall be contravened or in case it is found that any untrue or incorrect statement is contained in the proposal personal statement, declaration and connected documents or any material information is withheld, then and in every such case but subject to the provisions of Section 45 of the Insurance Act,1938, wherever applicable, this policy shall be void and all claims to any benefit in virtue hereof shall cease and determine and all moneys, that have been paid in consequence hereof shall belong to the Corporation, excepting always in so far as relief is provided in terms of Privileges herein contained or may be lawfully granted by the Corporation.”
18. The above said condition is subject to section 45 of the Insurance Act, 1938 which is as follows:
“45. Policy not to be called in question on ground of mis-statement after two years.-
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]:
[Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal.]”
19. A reading of the section makes it clear that while it is true that after the expiry of two years from the date on which it was effected, the insurance policy cannot be questioned on the basis of inaccurate or false statement unless the insurer shows that there was material suppression of fact or a fraudulent statement made about a fact which was within the knowledge of the person who was expected to make the said statement, there is no difficulty to conclude that even in respect of policies made within the period of two years, the same can be repudiated by the Insurance Corporation on the ground of suppression of material fact or for making a fraudulent statement, the contract of insurance being one of utmost good faith viz., uberrima fides since the insurer believes the statement of the assured and accepts to become a party.
20. The question to be decided in this case is, as to whether there was any suppression of fact which materially affects the contract of insurance. Even assuming that the life assured was involved in a road accident two years before the proposal, it is a mere non-disclosure of accident and that would not vitiate the contract as it cannot be considered to be one that would materially affect the contract of insurance. If such accident that took place two years ago, would not have the effect of refusal of the proposal for insurance policy in the case of its disclosure, as it was found by the Insurance Ombudsman in the impugned award, the non-disclosure of such accident cannot be held to be a suppression of material fact.
21. Now, it is useful to refer to the meaning of the expression, ‘material fact’. The term, ‘material fact’ in the context of Insurance Law has been defined in Mac Gillivray & Parkington on Insurance Law, Seventh Edition, at page 583, as follows:
“583. The authorities were once not wholly consistent in their definitions of a “material fact”, but this may now be defined in general terms, and for all insurances as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk.”
21. In Chitty on Contracts, 24th Edition, while explaining about insurance contracts as uberrima fides, it is narrated in para-3924 as follows:
“An insurance contract is a contract uberrima fidei. It is a contract based on the utmost good faith and if the utmost good faith is not observed by either party the contract may be avoided by the other party. The reason for this principle of insurance law is that contracts of insurance are founded on facts which are nearly always in the exclusive knowledge of one party (usually the assured) and, unless this knowledge is shared, the risk insured against may be different from that intended to be covered by the party in ignorance. The duty which arises is three fold: a duty to disclose material facts; a duty not to misrepresent material facts; and a duty not to make fraudulent claims.”
22. That apart, the view of Cheshire and Fifoot in Law of Contract, 10th edition, at page 268, is as follows:
“In certain contracts where, from the very necessity of the case, one party alone possesses full knowledge of all the material facts, the law requires him to show uberrima fides. He must make full disclosure of all the material facts known to him, otherwise the contract may be rescinded.”
23. The author Anson in his Law of Contract, 25th Edition, at page 261, states that,
“The general principles of law applicable to contracts of insurance do not differ in essence from those applicable to other kinds of contracts and the rule with regard to the disclosure of material facts and the penalty for non-disclosure is rather a rule of construction for a particular type of contract. The rule imposing an obligation to disclose upon the intending assured does not rest upon a general principle of common law, but arises out of an implied condition, contained in the contract itself, precedent to the liability of the underwriter to pay. The insurer contracts on the basis that all material facts have been communicated to him; and it is an implied condition of the contract that the disclosure shall be made and that if there has been non-disclosure he shall be entitled to avoid.”
24. In Kamla Wanti v. L.I.C. of India (AIR 1981 Allahabad 366) relied upon by the learned counsel for the Insurance Corporation, the Allahabad High Court, while construing sections 18 and 19 of the Contract Act, 1872, has held that on the facts and circumstances of the case wherein the claimant was aged 56 years while such proposal was accepted by the Insurance Corporation, the non-disclosure of suffering of the injured/life assured from diabetic and carbuncle cannot be a ground to repudiate the contract under section 18 of the Contract Act, on the basis that the contract is voidable at the option of the Insurance Corporation.
25. Again, the Patna High Court in Ratan Lal v. Metropolitan Insurance Co. (AIR 1959 Patna 413), relied upon by the learned counsel for the Insurance Corporation, has explained the well-settled law of insurance that the contract being uberrima fides, every material fact must be disclosed, otherwise the same can be a ground for rescission. In fact, the term, ‘material fact’ is susceptible to different meanings based on the facts and circumstances of the case and unless it is shown that there has been suppression of material fact, the question of exercising option by the Insurance Corporation to rescind the contract by treating it voidable does not arise. The duty of disclosure would arise in cases where such fact was within the knowledge of the person who has obligation to disclose, apart from that it must be a material fact affecting the very basis of the contract. This being the well-settled law as it was held by the Patna High Court way back in 1959, one has to consider about the applicability of the celebrated concept on the facts and circumstances of the case, particularly when the Insurance Ombudsman found that there was no material to show that the life assured was suffering from diabetes and that there was no proof to show that a minor accident occurred two years back would have repercussion on the contract of insurance. I am therefore unable to accept the case of the Insurance Corporation that there was either suppression of material facts or suggestion of false facts.
26. In the present case, there is no positive suggestion of false fact made in the proposal and the only point raised is about the suppression of material fact and hence, it cannot be held that the Insurance Corporation can have a right of repudiation of contract. It is most unfortunate that the Insurance Corporation having taken a stand that the claim of the claimants is an early claim since the death had taken place within a very a short period from the date of acceptance of proposal, no steps have been taken for the purpose of proving that the life assured had suffered from diabetes with any acceptable material evidence. The only evidence that is relied upon by the Insurance Corporation is that the letter of Dr.Kannappan who had issued the same in October, 2003, nearly eight months after the death of life assured, wherein he has very strangely stated that he was treating the life assured for the past three months and it is not known as to how the doctor would have given such a letter stating that he was treating the life assured for the past three months when the life assured died eight months back. Relying upon such a baseless letter which cannot be accepted in any prudent manner on the face of it, it is not possible to arrive at a safe conclusion that the life assured was suffering from diabetes. It is not possible to conclude that the repudiation by the Insurance Corporation was well with reason.
27. Unfortunately, the Insurance Corporation has not taken any steps even to examine the doctor pertaining to his statement, in the presence of the claimant, in the manner known to law, to substantiate its allegation and therefore, there is no difficulty to conclude that the letter of Dr.Kannappan dated 27.10.2003 cannot be admissible in evidence to prove that the life assured was suffering from diabetes. That was also the view taken by V.Kanagaraj,J. in Punithavalli v. The Life Insurance Corporation of India (1999 (2) MLJ 1).
28. The Hon’ble Supreme Court in P.C.Chacko v. Chairman, L.I.C. of India [(2008) 1 SCC 321] has held that section 45 of the Insurance Act, 1938 postulates that a policy cannot be called in question on misrepresentation after two years and the same is applicable to the Insurance Corporation to repudiate within the period of two years. The Supreme Court has also prescribed three conditions to be applied in the case of repudiation. The relevant portion of the judgment of the Supreme Court is as follows:
” 13. Section 45 postulates repudiation of such policy within a period of two years. By reason of the aforementioned provision, a period of limitation of two years had, thus, been specified and on the expiry thereof the policy was not capable of being called in question, inter alia, on the ground that certain facts have been suppressed which were material to disclose or that it was fraudulently been made by the policy-holder or that the policy-holder knew at the time of making it that the statement was false. Statute, therefore, itself provides for the limitation for valid repudiation of an insurance policy. It takes into account the social security aspect of the matter.
14. There are three conditions for application of second part of Section 45 of the Insurance Act which are:
“(a) the statement must be on a material matter or must suppress facts which it was material to disclose;
(b) the suppression must be fraudulently made by the policy-holder; and
(c) the policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.”
29. In the well settled principles of law of Insurance as enumerated above, applying the same to the facts of the case, I am in full agreement with the findings of the Insurance Ombudsman in the impugned order including the finding of granting 50% of the sum assured on the basis of equity and the principles of natural justice. In such view of the matter, the impugned order of the Insurance Ombudsman dated 30.8.2005, stands confirmed and the writ petitions stand dismissed. No costs. Connected miscellaneous petitions are closed.
kh
To
1. The Insurance Ombudsman
Office of the Insurance Ombudsman
Chennai.
2. The Regional Manager (L&HPF)
Life Insurance Corporation of India
Southern Zonal Office
LIC Building, Anna Salai,
Chennai 600 002