While asking the Life Insurance Corporation of India (LIC) to pay Rs2 lakh as a claim for death insurance, the national consumer disputes redressal commission (NCDRC) reiterated that it is upon the insurer who has rejected the claim to prove that the deceased life assured (DLA) suppressed material information or provided false information material while buying the policy.
In an order last week
, the NCDRC bench of Subhash Chandra (presiding member) says, "The onus of proof lies on the insurer to prove that the insured suppressed material information or provided false information material to the grant of the insurance cover. In the absence of any cogent evidence to prove suppression of material information pertaining to a pre-existing illness or impersonation at the medical examination, this revision petition in liable to succeed."
Azamgarh, Uttar Pradesh (UP)-based Vimal Kumar Rai had filed the revision petition challenging an order passed by the UP state consumer disputes redressal commission.
In March 2002, his wife obtained a Rs2 lakh life insurance policy approved and issued by LIC after it was satisfied with a medical check-up. He was the nominee. However, on 12 May 2002, his wife died due to cardio-respiratory arrest.
Mr Rai filed a claim under the insurance policy. However, it was rejected by LIC on 31 March 2005, stating the DLA was ill before taking the policy and she had not personally presented herself for medical examination, and the signatures in the offer letter and medical check-up form did not match.
Mr Rai then filed a complaint against LIC for the rejection of the insurance claim, which was allowed by the Azamgarh district consumer disputes redressal forum, but set aside by the state commission.
The district forum observed that the fact that the DLA suffered from a pre-existing illness was not revealed in the application form and had only stated that she was not well, with no evidence filed to support this argument by LIC. While allowing the complaint, the district forum directed LIC to pay Rs2 lakh death insurance claim with a bonus.
LIC challenged the order before the state commission. In its ruling on 21 October 2016, the state commission allowed the appeal and set aside the order of the district forum. In this case, the state commission observed that complex facts and disputable questions are involved. "The reason for cancellation stated by LIC was that the insured had not appeared before the clinical examiner, and hence, the policy was obtained by committing fraud. Both the parties presented their own handwriting experts before the district forum to prove that the signature at the time of medical examination was or was not that of the DLA and their reports were contradictory."
Aggrieved by the order, Mr Rai approached NCDRC, stating that no relevant evidence had been brought on record by LIC to prove that his wife was suffering from any pre-existing disease at the time of taking the policy. Further, he contended that repudiation of the claim was illegal as his wife was thoroughly and medically examined by an expert doctor prior to issuance of the policy.
LIC argued that evidence given by the handwriting expert shows that the signatures on the proposal form and the signature on the medical examination report do not match which proves fraud. "The insured concealed the fact that she was not in good health and had not disclosed the full facts of her health and therefore misled the insurance company, which rendered the agreement or contract void between the parties," it says.
The bench of Mr Chandra observed that LIC relied upon the statements of the village sarpanch and another person to contend that the DLA had a pre-existing medical condition for which she visited Kolkata. "However, this averment is not supported by any documentary evidence and must, therefore, be disregarded as being unsubstantiated. No document from any hospital has been filed by LIC to prove that the insured was ill prior to taking the policy."
"As regards the reliance on LIC vs GM Channabasamma case in the Supreme Court, regarding ubbermia fides (utmost good faith) the fact that it has not been proved that there was withholding of facts required to be disclosed, it is upon LIC to establish this, as held in Reliance Life Insurance Co Ltd vs Rekhaben Nareshbhai Rathod case," NCDRC says.
While setting aside the order passed by the state commission and upholding the district forum's order, NCDRC directed LIC to pay the Rs2 lakh death insurance claim with a bonus to Mr Rai.
(Revision Petition No183 of 2017 Date: 3 November 2023)