The Allahabad High Court has dismissed the petition of Life Insurance Corporation of India against the decision of Permanent Lok Adalat, Azamgarh.
A single-judge bench of Justice Kshitij Shailendra passed this order while hearing a petition filed by LIC and Another.
The LIC petition challenged the judgment dated 15.02.2016, whereby the Permanent Lok Adalat (PLA) allowed the claim of respondent No 2 directing the LIC to pay to the claimant-respondent a sum of Rs 14 lakh along with interest @ 9% per annum as covered by the Insurance Policy held by the insured, who was the brother of the claimant-respondent.
The facts of the case are that Thakur Prasad Singh, the brother of respondent No 2, aged 47 years, was insured by an LIC Policy dated 28-11-2011. LIC accepted the proposal of the said insured and policy dated 28-11-2011 was issued to him for life insurance. Unfortunately, Thakur Prasad Singh died on 10-09-2012. On receipt of information about the death of Thakur Prasad Singh, along with claim papers, the LIC made inquiries in the matter, whereupon, it stood revealed that prior to submitting the proposal for Policy dated 28-11-2011, the assured was suffering from Enteric Fever and Urinary Tract Infection and was being treated for the same in Chitransh Hospital and Surgical Care Centre, Shivpur, Varanasi. Accordingly, the LIC, by its letter dated 28-11-2013, repudiated the claim of respondent No 2.
After the claim was repudiated, respondent No 2 filed a case before the Permanent Lok Adalat at Azamgarh for recovery of the sum of Rs 14 lakh towards the death claim of late Thakur Prasad Singh.
Having coming to know about the filing of complaint, the LIC filed its reply, denying the averments made by respondent No 2 in his application and stating therein that the Corporation had repudiated the claim of respondent No 2 on account of wrong declaration made in the proposal form.
It was further stated that the repudiation was rightly done by LIC for breach of utmost good faith and payment of premium by the brother of respondent No 2 and revival of policies by the LIC has no relevance qua the repudiation of policy.
It was further stated that Section 45 of the Insurance Act authorizes the LIC to repudiate the claim on the ground of fraud, misrepresentation or concealment of fact.
Since the contract of insurance is a contract of utmost good faith, everything starts from submission of proposal form issued by the insurance company. The proposal form issued by LIC contains a declaration that statements made in the form are true and correct to the best of the knowledge of the insured.
Accordingly, the proposer/insured should not hide any fact in the proposal form. If the insured gives wrong information in the proposal form, the contract of insurance is vitiated. Further, on account of misstatement made by the deceased life-assured in reply to the questions in the proposal form with regard to his previous ailment, the life-assured had suppressed the facts, which were material for him to disclose. Accordingly, the contract of insurance became void and nothing was payable to the respondent No 2. It was further stated that the LIC was not willing to settle the matter with the claimant.
After the parties led evidences in support of their respective claim and defence, the PLA, Azamgarh, by the judgment dated 15.02.2016, has allowed the claim and directed the LIC to pay to the claimant-respondent a sum of Rs 14 lakh and 9% interest per annum as covered by Insurance Policy.
The Court observed,
From perusal of the entire facts and material available on record regarding physical ailment of the assured, I find substance in the arguments of J.P. Singh, counsel for respondent No 2, that the sufferance of the deceased from fever in October, 2011 and five days’ hospitalization due to the same at Chitransh Hospital and Surgical Care Centre, Shivpur, Varanasi, could not be taken as a ground for repudiating the claim of respondent No 2 after the death of assured, which occurred after one year on 12.09.2012, particularly, when the Fever or Enteric Fever cannot be treated as a life threatening disease, more so, when cause of death has been described by the Investigating Official of the Corporation itself, as sudden severe pain in the chest of the deceased on 10.09.2012, when he died the same day during treatment in a Hospital situated in front of his house.
Insofar as the judgement cited by Shri Nagar regarding period of death or the opinion of the Doctor, in the case of Mithoolal Nayak (supra) is concerned, there the Supreme Court was dealing with the matter and examining the provisions of section 45 of the Insurance Act, in the light of peculiar facts of that case, where challenge was made in respect of a lapsed policy with reference to two years period. The effect of concealment of material fact was also examined and repudiation of claim by the Life Insurance Corporation was found to be justified. However, with due respect the case of Mithoolal Nayak (supra) would be of no help to the petitioner as the case in hand is neither a case of lapsed policy nor in view of the aforesaid discussion, the Court finds that non-mentioning of sufferance of fever one year prior to death of the assured was a fact material to decide the claim. Therefore, section 45 of Insurance Act, cannot come in the way of respondent No 2 to claim desired relief in the factual matrix of the present case.
However, in the case, it has elaborately been discussed that medical opinion furnished by the Doctor of the Corporation as contained in the certificate filed to the counter affidavit, when compared to the subsequent report of the Investigating Official of the Corporation, clearly established that cause of death, which occurred on 10.09.2012, had absolutely no correlation with the fever suffered by the assured one year ago, and therefore, non-disclosure of such a Fever/Enteric Fever/Urinary Tract Infection cannot be treated as suppression of a material fact while deciding the claim made by the respondent No 2. Therefore, the facts of the case in the case of Mithoolal Nayak (supra) and Smt Krishna Wanti Puri (supra) are distinguishable.
While I am fully satisfied that grounds raised by the petitioner Life Insurance Corporation of India challenging the impugned award of Permanent Lok Adalat do not have any substance, the claim made by the respondent No 2 has rightly been allowed by the Permanent Lok Adalat under the order impugned.
“In view of the above discussion, I do not find any good ground to interfere with the impugned judgement and award of Permanent Lok Adalat dated 15.02.2016,” the Court further observed while dismissing the petition.
“In the petition, an interim order was passed on 06.05.2016 staying the operation of the award dated 15.02.2016 subject to condition of making deposit of the entire amount by the LIC as awarded along with up to date interest with a further stipulation that the amount so deposited shall be kept in a fixed deposit with a nationalized Bank. Therefore, the amount deposited by the Life Insurance Corporation under the said interim order shall positively be released in favour of respondent No 2 within a period of two months from the date a certified copy of this judgment and order is produced before the court below. The court below shall also ensure that nationalized Bank, in which the amount has been invested in pursuance of the interim order dated 06.05.2016, shall be directed and informed to release the same along with interest accrued up to date in favour of respondent No 2 within a period of two months,” the order reads.