Rejecting the repudiation of an insurance claim citing non-disclosure of a pre-existing disease, the national consumer disputes redressal commission (NCDRC) directed Life Insurance Corporation of India (LIC) to pay Rs10 lakh with 6% interest per annum (pa) and Rs50,000 as cost of litigation to the wife of the deceased life assured (DLA).
In
an order last month, the NCDRC bench of Subhash Chandra (presiding member) and Dr Sadhna Shanker (member) says, "The appellant (LIC) has not brought on record any evidence to substantiate that the DLA was under any treatment for chronic liver disease (CLD) by way of medication or hospitalization prior to his submitting a proposal for insurance to establish that although the incidence of CLD was in his knowledge, it was wilfully not disclosed in the proposal form. No details of medication for this disease while the DLA was admitted in hospital have also been brought out. The disclosure of 'material information' must necessarily be established to be in the knowledge of the person requiring to make the disclosure. In the instant case, LIC has not done so."
Delhi-based Shikha Jain, the wife of the late Sanyan Jain, had filed the original complaint after LIC rejected the death insurance claim under the Jeevan Anand policy. On 19 February 2013, Mr Jain bought the Rs10 lakh Jeevan Anand (with profits and accident benefit) policy from LIC. After an accident, he died on 8 October 2013, while undergoing treatment at Max Hospital at Patparganj in New Delhi.
When Ms Jain filed an insurance claim, LIC rejected it stating that Mr Jain had been suffering from CLD for the past four years being an alcoholic and he was admitted in a condition of jaundice which is a direct result of CLD.
Ms Jain filed a complaint before the Delhi state consumer disputes redressal commission. While allowing the complaint, the state commission directed LIC to pay Rs10 lakh, the insurance claim amount with an interest of 6%pa, Rs1 lakh as compensation for mental agony and harassment and Rs50,000 litigation costs.
LIC then approached NCDRC with its appeal. It contended that Mr Jain, the DLA, expired within seven months of taking the policy which did not disclose material facts relating to his health as required in a contract of ubberima fides. Alleging that the state commission did not appreciate the facts, LIC prayed to set aside the state commission order.
The insurer contended that Mr Jain did not make a full disclosure of his health condition and withheld material details relating to CLD as required at the time of submitting the proposal form. "The state commission erred in holding that the policy having been accepted, it was incorrect to claim that the DLA was suffering from CLD since a medical examination had been conducted, as insurance was a policy of uberima fide or contract of good faith which required the DLA to disclose all material facts. The policy had been rightly repudiated on grounds of fraud in view of non-disclosure of all material evidence."
The counsel for Ms Jain argued that Mr Jain was neither suffering from nor was treated for CLD for four years as alleged by LIC. He also contended that the burden of proof to prove the DLA suffered from CLD as a pre-existing disease was on the insurer which had not been discharged.
The NCDRC bench of Mr Chandra and Dr Shanker observed that Mr Jain, the DLA, was admitted to the hospital on 4 October 2013 as an alleged case of road traffic accident (RTA) with low general condition with one episode of hematemesis or vomiting of blood.
"The post mortem report did not express any specific opinion regarding cause of death and recorded that a definite cause could be indicated only after chemical analysis of viscera. However, the death summary recorded cause of death as 'acute on chronic liver disease with sepsis and hepatic encephalopathy with heptorenal syndrome'," the bench noted.
Referring to notes from the hospital, NCDRC observed that Mr Jain's brother-in-law stated that the DLA was a known case of CLD for four years. "The medical records thereafter continue to mention this although no record of any previous medications for this chronic condition or any tests of the liver during the stay in hospital were done or recommended. On this basis, LIC concluded that the DLA was a known case of CLD who chose not to disclose this material fact while taking a life insurance policy and was therefore not entitled to any claim."
However, the bench says, it is moot whether merely on the basis of a statement of the attendant or brother-in-law of Mr Jain, who was neither examined nor his affidavit brought on record, the fact of CLD as a pre-existing disease, as has been done in the present case, can be concluded. "Admittedly, Mr Jain had a history of RTA and poor medical condition at the time of admission. However, it is neither LIC’s case nor of the hospital that this was on account of the ‘pre-existing’ CLD. LIC has not brought on record any evidence to substantiate that Mr Jain was under any treatment for CLD by way of medication or hospitalisation prior to his submitting a proposal for insurance to establish that although the incidence of CLD was in his knowledge, it was wilfully not disclosed in the proposal form."
"The disclosure of 'material information' must necessarily be established to be in the knowledge of the person requiring to make the disclosure," NCDRC says, adding, "In the instant case, LIC has not done so. LIC is required to prove this more substantively based on evidence brought on record through affidavit rather than by relying on an unverified statement by a third person. The records of the Max Hospital have also recorded and repeated this without even mentioning in the death summary that the patient, while being conservatively managed, was also managed for CLD. Lastly, the post mortem report is also not definitive as it only records that a conclusive cause of death can only be provided after chemical analysis of the viscera which has not been brought on record."
While directing LIC to pay the Rs10 lakh insurance claim with 6% interest and Rs50,000 as litigation cost to Ms Jain, NCDRC set aside the compensation of Rs1 lakh towards mental agony and harassment.
(First Appeal No349 of 2023 Date: 19 August 2024)
