Sunday, 14 February 2016

How to appreciate evidence in case of repudiation of insurance policy?

 I have perused the record and considered submissions as well as case law cited with the able assistance of learned counsel for the parties. It emerges that neither the affidavit of the doctor was produced on the record by the petitioner for reasons best known to it nor of the investigator. Non filing of affidavit of the investigator and more importantly of the doctor demolishes the case of the petitioner as in the absence of affidavit of the doctor and investigator, suppression of material facts and consequentially, grounds of repudiation are legally unsustainable.
The doctor on whose alleged statement reliance has been placed mentioning therein a number of ailments which the insured was stated to have been suffering from made the statement before the investigator Kundan Singh. However, neither Kundan Singh nor Dr. B.A. Butt were examined nor their affidavits produced.
 In the circumstances, the affidavit of the Vice President of the Company, which had been given the task of investigating the claim, is of no avail on account of the fact that the Vice President, who filed the affidavit, had no personal knowledge with regard to the recording of statement of the doctor and the signatures on the said statement etc.
 In the circumstances, neither the report of the investigator nor the statement of Dr. B.A. Butt relied upon by the petitioner can be looked into. For the same reasons, even suppression of material facts is also not established. 
Equivalent Citation: 2015(3)JKJ301,AIR 2016(NOC)145 J&K.
IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
OWP No. 77/2010 and CMA No. 83/2010
Decided On: 27.07.2015
Appellants: Kotak Mahindra Old Mutual Life Insurance Ltd.
Vs.
Respondent: J & K State Consumer Disputes Redressal Commission, Jammu and Ors.
Hon'ble Judges/Coram:B.S. Walia, J.


1. Kotak Mahindra Old Mutual Life Insurance Ltd., (hereinafter to be referred to as the 'petitioner') has filed this petition under Article 226 of the Constitution of India read with Section 103 of the Constitution of Jammu & Kashmir for quashing of order and judgment dated 23.09.2009 passed by the J & K State Consumer Disputes Redressal Commission, Jammu i.e. Respondent No. 1 in Appeal No. 2884/2007 titled as 'Kunti Devi v. Kotak Mahindra Old Mutual Life Insurance Ltd.' wherein the petitioner has been directed to pay to Respondent No. 2 a sum of Rs. 3,00,000/- along with interest @ 9% per annum w.e.f. 16.05.2005 till date of payment as also litigation expenses to the tune of Rs. 6,000/-. Vide order of this Court dated 31.07.2014, application for impleading legal heirs of deceased Respondent No. 2 was allowed and the two sons and one daughter of deceased Respondent No. 2 through their legal guardian were brought on record. Brief facts necessary for the adjudication of the instant petition are that:-
Insurance Policy was taken by the husband of Respondent No. 2 (hereinafter referred to as the life insured) on 21.09.2004 from the petitioner, but on 07.10.2004, the life insured unfortunately died. Claim was filed by Respondent No. 2 i.e. widow of the deceased life insured, but the same was repudiated by the petitioner on the grounds as mentioned in the Letter of Repudiation i.e. Annexure P-5A. Relevant extract of the same is reproduced hereunder:-
"The information, now available in our possession, reveals that:
1. The Life Insured Mr. Swarn Singh had in his Proposal not disclosed that he was suffering from Cardio Respiratory Infection since past 1-2 years and was also suffering from moderate hypertension;
2. He had an attack of infective hepatitis 5-6 months prior to his death; (in both the above instances prior to the date of the said Proposal/Policy.
The above facts were not conveyed by the life insured to the Company in the referred Proposal Form. It be noted that, all the health questions in the Proposal Form specifically dealing with the state of health of the life insured were answered/responded to in the negative. We reproduce, hereunder, Questions from the Proposal Form in response to which there has been material non-disclosure by the Life Insured. All these questions have been replied/responded to in the negative/incorrectly:-
Under Clause 15(a) of Proposal Form:
Has the Life to be Insured consulted a Medical Practitioner for any ailment/injury requiring treatment for more than 7 days? (during the last, three years)
Under Clause 15(c) of Proposal Form:
Has the Life to be Insured undergone any cardiological/pathological or radiological tests? (during the last three years)
Under Clause 16(a) of Proposal Form:
During the lifetime, has the Life to be Insured ever suffered from:
High or low blood pressure, rheumatic fever, chest pain, myocardial infraction or any other disease or disorder of the heart or arteries?
Since material information, as detailed above, was not disclosed, by the Life Insured at the point of submission of the said Proposal, the Company was not able to correctly assess the risk that it was asked to undertake there under. Had the Life Insured disclosed the above facts, the Company would not have accepted the proposal for insurance at that point of time."
2. Pursuant to the repudiation of the claim by the petitioner, Respondent No. 2 filed a complaint before the Divisional Forum Jammu, which relegated Respondent No. 2 to avail remedy, if so advised, before the Civil Court in the background of alleged suppression of material facts, order of repudiation not being said to have been passed in a mechanical and routine manner, questions involved being such which could not be decided in a summary manner etc. In directing Respondent No. 2 to avail remedy if so advised before the Civil Court, the Divisional Forum relied on the decision of the Hon'ble Supreme Court in case titled as 'Oriental Insurance Co. Ltd. v. Munimahesh Patel' MANU/SC/8485/2006 : (2006) 7 SCC 655.
3. Appeal was filed by Respondent No. 2 before the J & K State Consumer Disputes Redressal Commission Jammu, which vide its orders dated 23.09.2009 allowed the appeal, reversed the decision of the Divisional Forum and directed payment of amount as per details given in the opening part of this order by holding that neither the doctor nor the investigator had been examined, besides, suppression of material facts had not been established etc.
4. As per certificate dated 07.10.2004 issued by Dr. B.A. Butt, cause of death of the insured has been mentioned as Cardio Respiratory Failure.
5. Learned counsel for the petitioner contends that repudiation of the insurance claim of Respondent No. 2 on ground of suppression of material facts was justified, therefore the State Consumer Dispute Redressal Commission ought not to have interfered with the order of the Divisional Consumer Disputes Redressal Forum dismissing the complaint and relegating Respondent No. 2 to agitate her grievance if so advised before the Civil Court, that too without differentiating the judgment of the Hon'ble Supreme Court in 'Oriental Insurance Co. Ltd. v. Munimahesh Patel' (Supra) and further that in reversing the decision of the Divisional Forum and deciding the claim of Respondent No. 2, the State Commission usurped the power of the Divisional Forum, besides deprived the petitioner of its right of appeal.
6. Learned counsel for the petitioner while relying on the decision of the Hon'ble Supreme Court in 'P.J. Chacko and another v. Chairman, Life Insurance Corporation of India and Others' MANU/SC/8115/2007 : 2008 (1) SCC 321 contended that in the said case, insurance policy was repudiated on the ground that the insured had suppressed material facts by giving incorrect answers about his health as well as surgery undergone. Learned counsel states that repudiation of the claim in terms of Section 45within two years was upheld on the ground that a contract of life assurance was a contract 'uberrima fides' wherein every material fact was required to be disclosed otherwise there was good ground for rescission of the contract.
7. Learned counsel for the petitioner further relied upon the decision of the Hon'ble Supreme Court in 'Mithoolal Naik v. Life Insurance Corporation of India' AIR 1962 SCC 814 to contend that the Hon'ble Supreme Court had laid down law that where the policy holder was guilty of fraudulent suppression of material facts, the corporation was entitled to avoid the contract under Section 45 of the Insurance Act, 1938 and the claimant was not even entitled to a refund of the money paid as premium.
8. Learned counsel for the petitioner next relied upon the decision of the Hon'ble Supreme Court in 'Satwant Kaur Sandhu v. New India Assurance Company Limited' MANU/SC/1164/2009 : 2009 (8) SCC 316 to contend that the insurer is not liable to pay anything on establishment of suppression of material facts and on account of the insured being under obligation to disclose truthfully information within his knowledge.
9. Learned counsel for Respondent No. 2 on the other hand contends that neither the affidavit of Dr. B.A. Butt nor the investigator Kundan Singh was produced on the record by the petitioner. To counter the said submission, learned counsel for the petitioner contends that the affidavit of the Vice President of the Company, which investigated the matter was produced on record since it was not possible to produce the affidavit of the investigator on account of the investigator having left the service of the investigating company. However, no reason whatsoever has been spelt out for non production of the affidavit of Dr. B.A. Butt.
10. Learned counsel for Respondent No. 2 states that as per record, the brother-in-law of the deceased, on receiving telephonic intimation from his sister of her husband having suffered some problem, en route to check up the life insured stopped at Nai Basti and took a doctor i.e. Dr. B.A. Butt, along with him, who, on reaching found that the insured had already died. It is this very doctor whose certificate has been attached by the petitioner as Annexure P/5 mentioning therein a number of ailments which the life insured was stated to have been suffering from. The ailments are stated to have been mentioned by Dr. B.A. Butt before the investigator Kundan Singh. However, neither the investigator, Kundan Singh nor Dr. B.A. Butt were examined nor their affidavits produced.
11. Learned counsel for Respondent No. 2 states that in the circumstances, the affidavit of the Vice President of the Investigating Company, is of no avail on account of the fact that the Vice President, who filed the affidavit, had no personal knowledge with regard to the recording of the statement of the doctor and the alleged signatures of the doctor on the said statement before the investigator.
12. Learned counsel for Respondent No. 2 contends that in view of the above, neither the statement of Dr. B.A. Butt and the report of the investigator can be relied upon nor alleged suppression of material facts be said to be proved.
13. Learned counsel for the petitioner next submitted that on setting aside of the order of the Divisional Forum, the State Commission did not have the right to adjudicate and decide the claim of Respondent No. 2. On the other hand, learned counsel for Respondent No. 2 contended that the plea was misconceived as the Divisional Forum considered all aspects of the matter i.e. alleged suppression of material facts, order of repudiation not being said to have been passed in a mechanical and routine manner, questions involved being such which could not be decided in a summary manner, therefore, on it being held that there was no suppression of material facts, the natural consequence of the same was to set aside the erroneous order relegating Respondent No. 2 to the Civil Court. Learned counsel contends that in the circumstances, there was no bar on the State Consumer Disputes Redressal Commission in passing an order reversing the decision of the Divisional Forum and allowing the complaint.
14. Learned counsel for Respondent No. 2 has relied upon the decisions of the Hon'ble Supreme Court in case titled as 'Life Insurance Corporation of India V.G.M. Channabasemma' reported in MANU/SC/0095/1991 : AIR 1991 SCC 392; and 'L.I.C. and Ors. V. Asha Goel' reported in MANU/SC/0804/2000 : (1) 2001 SLT 89 to contend that the Hon'ble Supreme Court has laid down law that the burden of proving that the insured had made false representations and suppressed material facts is undoubtedly on the person who alleges the same i.e. Insurance Company.
15. Learned counsel for the petitioner has then relied upon the decision of the Hon'ble Supreme Court in case titled as 'Oriental Insurance Co. Ltd. v. Munimahesh Patel' (Supra) to contend that proceedings before the Commission are essentially summary in nature and issues which involve disputed factual questions should not be adjudicated upon by forums under the Consumer Protection Act.
16. A perusal of the decision of the Hon'ble Supreme Court in Munimahesh Patel's (Supra) case reveals that the dispute therein was about the disclosure made in the proposal form and the information given therein. In the said case, the Hon'ble Supreme Court took into account copy of the proposal form brought on record by the appellant in which it was mentioned that the insured was a teacher and that the same was at variance with the actual copy of another form which had also been produced and which showed that the insured had accepted that she was a housewife. In the aforementioned circumstances, the State Commission had dismissed the complaint in view of disputed factual position and directed the complainant to seek remedy if any available in any other appropriate forum. It was in the aforementioned circumstances that the Hon'ble Supreme Court held that proceedings before the Commission were essentially summary in nature and issues which involved disputed factual questions ought not to be adjudicated in proceedings under the Consumer Protection Act. The Hon'ble Supreme Court also noticed that the Commission accepted the fact that the insured was not a teacher whereas the complainant raised a dispute as to the genuineness of the documents i.e. proposal forms produced by the appellant i.e. Oriental Insurance Company Limited. In the aforementioned background, the Hon'ble Supreme Court held that the Commission having accepted that there was wrong declaration of the nature of occupation of the insured person, relief should not have been granted in the matter as the nature of proceedings before the Commission were essentially summary in nature, factual position was required to be gone into to establish the documents. It was in the aforementioned background that the Hon'ble Supreme Court held that the State Commission was right in its view that complex factual position required that the matter should be examined by an appropriate Court of Law and not by the Commission. In the aforementioned background it was held that the National Commission was not justified to interfere in the matter as was done and the directions of the State Commission were more appropriate keeping in line the nature of the dispute.
17. In the instant case the factual position is otherwise. The Divisional Forum relied upon the alleged statement of Dr. B.A. Butt made on 23rd December 2004 before the investigator of the life insured already having suffered from cardio respiratory infection/disease for the last 1-2 years, besides having suffered an attack of infective hepatitis about 5-6 months prior to his death as also suffering from moderate hypertension and occasional tachycardia. However the fact remains that Dr. B.A. Butt was the doctor who issued the death certificate dated 07.10.2004 of the life insured having died on 07.10.2004 on account of cardio respiratory arrest. The Divisional Forum relegated Respondent No. 2 if so advised to the Civil Court for redressal of her grievances on the ground of statement of the doctor before the investigator as has been referred to above. However the fact remains that the so-called statement of Dr. B.A. Butt before the investigator of the deceased life insured suffering from ailments and having been treated for the same prior to his death were not proved by the insurance company by producing the investigator or for that matter the doctor who gave the statement. Production of affidavit of the Vice President of the investigative company is of no avail since the statement of the doctor was not given before the Vice President of the company.
18. Thus suppression of material facts does not stand proved and was accordingly so held by the State Consumer Disputes Redressal Commission.
19. Having failed to establish suppression of material facts on account of not leading any credible evidence in support thereof, it was not open to the Divisional Forum to rely on the alleged statement of the doctor stated to have been made before the investigator to relegate Respondent No. 2 to avail her remedy before the Civil Court. Instead of holding suppression of material facts not to have been established in accordance with law by the person alleging suppression of material facts, the learned Divisional Forum proceeded otherwise and observed as under:-
"The complainant if so chooses can approach the Civil Court for redressal of her grievances and to establish that there was no suppression of material fact while filling up the proposal form and the Dr. B.A. Butt was not the doctor who had attended the deceased on early occasions. Either the doctor has made a false statement or the assured has submitted wrong information in the Proposal Form pertaining to his health."
20. The State Consumer Disputes Redressal Commission Jammu reversed the decision of the Divisional Forum on the ground of non establishment of suppression of material facts as no evidence was led by either of the two star witnesses i.e. investigator or for that matter the doctor who made the statement before the investigator and on whose statement the investigator based his report. Secondly, the claim was repudiated on the ground of the life insured suffering from a number of ailments prior to taking of the insurance policy and not disclosing the same and not on any other ground. The State Commission observed that the fact that the deceased life insured had taken another independent insurance policy did not imply that there was material suppression in respect of the diseases which were stated to have been suppressed in the insurance policy in question as mention had been made by Respondent No. 2 in the complaint of her deceased husband having taken another policy in order to prove the fact that he was not suffering from any ailment. Besides, a perusal of Annexure P-5A i.e. letter of repudiation reveals that repudiation was on grounds of non disclosure of existence of diseases prior to issuance of insurance policy and not on ground of non disclosure of taking out of another independent policy of insurance by the deceased life insured.
21. Learned counsel for Respondent No. 2 has relied on the decision of Life Insurance Corporation of India v. Smt. G.M. Channabassama - MANU/SC/0095/1991 : (1991) 1 SCC 357 to contend that it was well settled law that contract of insurance was a contract 'uberrima fides' requiring complete good faith on the part of the life insured and that the life insured was under obligation to disclose all material facts which may be relevant to the insurer and that after issuing insurance policy, the burden of proving that the insured had made a false representation and suppressed material facts was undoubtedly on the insurance company. In the aforesaid case, the Supreme Court upheld the finding of the High Court that the Corporation had failed to prove that the insured was suffering from diabetes or tuberculosis at the time of filing of proposal forms or had suppressed any material facts by observing as under:-
"We, therefore, agree with the High Court that the defendant Corporation has failed to discharge the burden of proving the defence story about the serious illness of the insured at the time of taking out the insurance policies and knowingly suppressing the material information."
22. Learned counsel for Respondent No. 2 also relied on paragraph No. 16 of the decision in Life Insurance Corporation of India & Ors. v. Smt. Asha Goel & others - MANU/SC/0804/2000 : 2001 (2) SCC 160 to contend that Respondent No. 2 has been put to untold harassment by the mechanical and routine approach of the LIC. Relevant extract is reproduced hereunder:-
"16. In course of time the Corporation has grown in size and at present it is one of the largest public sector financial undertakings. The public in general and crores of policy-holders in particular look forward to prompt and efficient service from the Corporation. Therefore the authorities in-charge of management of the affairs of the Corporation should bear in mind that its credibility and reputation depend on its prompt and efficient service. Therefore, the approach of the Corporation in the matter of repudiation of a policy admittedly issued by it should be one of extreme care and caution. It should not be dealt with in a mechanical and routine manner."
23. I have perused the record and considered submissions as well as case law cited with the able assistance of learned counsel for the parties. It emerges that neither the affidavit of the doctor was produced on the record by the petitioner for reasons best known to it nor of the investigator. Non filing of affidavit of the investigator and more importantly of the doctor demolishes the case of the petitioner as in the absence of affidavit of the doctor and investigator, suppression of material facts and consequentially, grounds of repudiation are legally unsustainable.
24. The doctor on whose alleged statement reliance has been placed mentioning therein a number of ailments which the insured was stated to have been suffering from made the statement before the investigator Kundan Singh. However, neither Kundan Singh nor Dr. B.A. Butt were examined nor their affidavits produced.
25. In the circumstances, the affidavit of the Vice President of the Company, which had been given the task of investigating the claim, is of no avail on account of the fact that the Vice President, who filed the affidavit, had no personal knowledge with regard to the recording of statement of the doctor and the signatures on the said statement etc.
26. In the circumstances, neither the report of the investigator nor the statement of Dr. B.A. Butt relied upon by the petitioner can be looked into. For the same reasons, even suppression of material facts is also not established. Accordingly, the judgments relied upon by learned counsel for the petitioner are not applicable in the facts of the instant case as suppression of material facts has not been proved.
27. The plea of the petitioner that on setting aside of the order of the Divisional Forum, the State Commission did not have the right to adjudicate and decide the claim of Respondent No. 2 is without any basis. The Divisional Forum considered all aspects of the matter including involvement of suppression of material facts, order of repudiation not being said to have been passed in a mechanical and routine manner, questions involved being such which could not be decided in a summary manner. In the circumstances, on the setting aside of the erroneous decision of the Divisional Forum relegating Respondent No. 2 if so advised to the Civil Court, there was no bar on the State Consumer Disputes Redressal Commission in deciding the claim of Respondent No. 2 on the basis of the evidence on record on it holding that there was no suppression of material facts.
28. Thus, in the absence of evidence of the Investigator or Doctor on the basis of which the petitioner repudiated the insurance claim of Respondent No. 2, it was not open to the petitioner to repudiate the claim of Respondent No. 2.
29. Once the State Consumer Disputes Redressal Commission found that there was no suppression of material facts, the very edifice on the basis of which Respondent No. 2 had been relegated to avail her remedy before the Civil Court vanished. Consequentially, the decision of the Hon'ble Supreme Court in 'Oriental Insurance Co. Ltd. v. Munimahesh Patel's case (Supra) has no applicability in the facts of the instant case. Allowing the complaint filed by Respondent No. 2 was the natural corollary on reversal of the decision of the Divisional Forum on recording of finding that there was no suppression of material facts. On account of petitioner being aggrieved with the decision of the State Consumer Disputes Redressal Commission, it has challenged the same by way of the instant writ petition. No prejudice can be said to have been caused to the petitioner on account of decision of the State Consumer Disputes Redressal Commission in view of the same being in accordance with law. No circumstances exist warranting interference with the decision of the J & K State Consumer Disputes Redressal Commission allowing the complaint. No other point has been argued. In the circumstances, finding no merit in the writ petition, the same is dismissed. Interim order stands vacated.


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