LIFE INSURANCE CORP. OF INDIA VS KULWANT KUMARI, 2009 

INTRODUCTION

The case of “Life insurance Corp. of India vs Kulwant Kumari, 2009, resolved a complicated legal issue pertaining to liability of Life Insurance Corporation of India to pay the benefit amount if the insured fails to disclose all the facts related to his health and specifically it deals with effect of concealment of facts related to health during revival of policy after expiration of two years from the inception of the policy on the liability of insurance company. The case came to light when Kailash Chander (Husband of the respondent) who had obtained an insurance policy from LIC with profit and accidental benefit in the sum of Rs.1,00,000/- on 09.04.2000. The policy was revived on 07.05.2002 as it lapsed due to non-payment of the premium. Kailash Chander died on 04.04.2003 and the claim of his NOK Kulwant Kumari was repudiated on the grounds that facts related to her health were suppressed by the unsured. Aggrieved of the acts of LIC respondent filed a complaint in district forum which ruled in favour of Kulwant Kumari, LIC appealed to State commission which upheld the decision of district forum, again not being satisfied by decision of state commission LIC filed revision petition in NCDRC.

FACTS OF THE CASE

1. Kailash Chander (Husband of Respondent) had obtained an insurance policy from Life Corporation of India on 07.05.2002 with an accidental benefit of 1,00,000/-.
2. Kailash Chander died on 04.04.2003 due to heart failure. His NOK Kulwant Kumari was denied the payment of accidental benefit by LIC citing the reason that policy was lapsed due to non -payment of premium and It was revived on 07.05.2002 and at the time of revival deceased gave false statements in respect of his health and was suffering from Diabetic Mellitus two years before the time of revival of policy.
3. Respondent approached the District Forum with a complaint claiming the amount assured. The District Forum decided the complaint and ruled in favour of respondent and directed the petitioner to pay the maturity amount of the policy along with 9% interest and Rs.5,000/- as cost of litigation.
4. The petitioner being aggrieved of order of District forum filed the appeal before the State Commission, which was dismissed SCDRC, Chandigarh vide order in Appeal No. 1337/2005 dated 09.11.2005 Aggrieved of the order of state commission LIC filed revision petition in National Consumer dispute resolution commission (NCDRC).

ISSUES RAISED

1. Whether concealment of facts about personal health during revival of policy within two years of the inception of the policy will lead to non-liability of the insurer?
2. Whether the time period prescribed in Section 45 of Life Insurance Act applies during the revival or has effect from inception of the policy?
3. Whether the insurance company was liable to pay the accidental benefit amount?

CONTENTIONS OF APPELLANT 

1. The appellant accepted the issuance of the above said policy in the name of Kailash Chander and the same was lapsed due to non-payment of premium and it was again revived on 07.05.2002. 
2. The appellant submitted that at the time of revival diseased submitted his statement of personal health in which contained false statement of his health as he was operated on 08.09.2003, but this fact was not disclosed in his statement during revival.
3. The appellant submitted that at the time of revival of policy, the declaration form objectively enquired about the personal health and the answers to question No.2 were in negative in which it was asked whether the insured has any disease or had undergone treatment lasting for more than a week or more. Questionnaire enquired about any operation underwent by insured which was also answered in negative.  
4. Appellant submitted that since during the revival of the policy a new contract comes into force and as deceased has given false and incorrect statements by the insured regarding his health and thus LIC is not liable to pay.
5. Appellant contested the submission of respondent that as per Sec 45 of Life Insurance Act 1938 two years has lapsed from the inception of the policy, submitted that two years will be counted from the date of revival of the Insurance.
6. Appellant submitted that insured Mr Kailash Chander has suppressed facts with respect to his health and in view of the same prayed for the dismissal of the order passed by the state commission.

CONTENTIONS OF RESPONDENT 

1. The respondents admitted that policy issued to the Mr. kailash Chnader lapsed due to non-payment of premium on but later on revived on 07.05.2002.
2. Respondent also submitted that 02 Years have elapsed since the inception of the policy that is from 09.04.2000 and as per section 45 of the Life Insurance Act 1938 which states that no policy shall be put to question on the basis of supressed health facts after the expiration of two years from the policy of the inception.
3. Respondents relying upon the judgement delivered by Hon’ble supreme court in Mithoolal Nayak V. Life Insurance corporation of India AIR 1962 in which while interpreting Section 45 of the Life Insurance Act 1938, it was held that the period of two years will be counted from the inception of the policy but not from the time of revival prayed for the dismissal of this petition.

JUDGEMENT

National Consumer Dispute Resolution Commission after hearing both the parties and thorough and due perusal of the documents put on record to the commission opined that Kailash Chander can not be said to be suffering from diabetic mellitus as the medicines and prescription produced was of Dr. Rajesh Sharma was only B.A.M.S. and not qualified to give allopathic medicines.

NCDRC upheld the order passed by state consumer dispute resolution commission in this case dismissed  with no cost on the basis of decision of the Supreme court in the case of Mithoolal Nayak vs LIC in which it was held that for the sake of counting of time of 02 years for section  45 of Life Insurance Act 1938 the time will be counted from the date of the inception of the policy and in this case 02 years have already elapsed from the time of the inception of policy, Hence, Insurance company cannot repudiate claim.

ANALYSIS

1. Duty of the person being insured. – The case provides the insight that everyone who is adopting an insurance policy must disclose all the facts related to his personal health at the time of taking policy and even at the time of revival of policy if the policy has lapsed due to any reason. 
2. Section 45 of Life Insurance Act – case reaffirmed that for the sake of counting two years for section 45 of Life Insurance act 1938, the time will be taken from the date of the inception of the policy not of the revival of the policy.
3. Jurisdiction of Commission: Case clearly accepted that commission would not interfere into findings of district forum unless there is a question of jurisdiction of district form. National commission can only decide upon the findings of the state commission.
4. Illness of the Insured: commission opined that treatment document produced by the appellant were examined and the basis of documents produced it was held that Dr Rajesh Mishra who was only B.A.M.S. was not qualified to give medicines and thus it can not be said that deceased Kailash Chander was not suffering from diseased contended.   
5. Court’s Final Verdict – The case ultimately held that decision of the SCDRC was correct in deciding the case. NCDRC determining the liability of insurer to pay the accidental benefit amount dismissed the petition.

CONCLUSION

In conclusion, the case of Life insurance Corp. of India vs Kulwant Kumari 2009 sets a crucial legal precedent in the arena of determining the liability of the insurer in a case in which insured has suppressed the facts pertaining to his health during the time of revival and two years have elapsed from the inception of the policy .It reaffirms that section 45 of the Life Insurance act in which time period of two years is taken into account will be considered from the date of the inception of the policy. 

REFERENCES

1. https://indiankanoon.org/

This Article is written by Dhirendra Singh student of PES Modern Law College, Pune ; Intern at Legal Vidhiya.

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