LIC OF INDIA Vs. N PNAGARATHNA

JUDGEMENT

(1.) This revision petition has been filed by Life Insurance Corporation of India (hereinafter referred to as the 'Petitioner') being aggrieved by the order of the State Consumer Disputes Redressal Commission, Karnataka (hereinafter referred to as the 'State Commission') in Appeal No. 1811/2006 decided in favour of N.P. Nagarathna, Respondent herein who was the original complainant before the District Forum. In her complaint before the District Forum, Respondent had contended that her deceased husband, Pundalika Rao (hereinafter referred to as the 'insuree') has purchased one Mediclaim insurance policy from the Petitioner/Insurance Company on 24.7.2002 for a sum of Rs. 2 lakh. Unfortunately, the insuree passed away on 16.9.2002 and as nominee of the insuree. Respondent filed a claim with the Petitioner/Insurance Company enclosing the required documents including the death certificate, etc. and although the Petitioner assured her that the claim would be duly settled, Respondent was shocked to receive a letter dated 24.10.2003 informing her that the claim had been repudiated on the grounds that her late husband has withheld information regarding his health at the time submitting his proposal for insurance since he was suffering from a pre-existing disease. The repudiation was challenged by the Respondent since at the time of purchasing the policy and before it was issued, the insuree was subjected to a series of medical tests by a qualified medical doctor appointed by the Petitioner/Insurance Company and it was only thereafter that the insurance policy was issued to him. She further contended that prior to 15.9.2002, her husband enjoyed good health and on that date he was rushed to the hospital with breathing problems and despite the doctors' best efforts, he passed away the next day i.e. 16.9.2002 due to Cardiac respiratory arrest as certified by the doctor. Therefore, aggrieved by the repudiation of her claim, she filed a complaint before the District Forum on grounds of deficiency in service and requested that Petitioner/Insurance Company be directed to pay her the sum assured under the policy with interest @ 21% per annum from the date of claim till realization, Rs. 50,000 as general damages and Rs. 1,000 as litigation costs.

(2.) Petitioner challenged these contentions and stated that there was credible proof on record that prior to his having taken the insurance policy, the insuree had been admitted to Karnataka Cancer Therapy & Research Institute, Hubli on 1.6.2002 for treatment of Non-Hodgkin's Lymphoma but he suppressed this fact by replying in the negative to a specific query whether he had consulted a medical practitioner for any ailment requiring treatment for more than a week or if he had been admitted to any hospital or a nursing home for treatment, etc. during the last 5 years, whether he had suffered from any diseases etc. Since, this amounted to suppression of a material fact and breach of utmost good faith on which a contract of insurance is based, the claim was rightly repudiated.

(3.) The District Forum allowed the complaint by observing that the insuree died due to cardiac respiratory arrest and not due to Non-Hodgkin's Lymphoma and therefore, there was no relation between the two and, therefore, no material facts were suppressed. Petitioner was directed to pay the Respondent Rs. 2 lakh along with interest @ 6% per annum from 27.7.2002 till realization.