AVM J. RAJENDRA, AVSM, VSM (RETD.), MEMBER
1. The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 01.02.2019 passed by the State Consumer Disputes Redressal Commission, Rajasthan (hereinafter to be referred as “the State Commission”), in Consumer Complaint No. 61 of 2011, wherein the Complaint filed by the Complainant (Respondent herein) was allowed.
2. There was a delay of 183 days in filing the present Appeal. On due consideration of the reasons stated in IA/2667/2021, the delay is condoned.
3. For the sake of Convenience, the parties in the present matter being referred to as mentioned in the Complaint before the State Commission. “Geeta Devi” is identified as the Complainant who is a wife and nominee of the Life Assured Shri Narsi Lal Gupta (Since deceased). "Bajaj Allianz Insurance Company Ltd & Anr." are referred to as the Opposite Parties / Insurer (OPs in short) in this matter.
4. Brief relevant facts of the case as per the Complainant are that her husband Shri Narsi Lal Gupta, in short “the Deceased Life Assured” (DLA) obtained a Life Insurance Policy (policy No. 0153438828) with a sum assured of Rs.10,00,000/- and an additional Accident Death benefit of Rs.10,00,000/-. This policy commenced on 06.03.2010 for a term of 15 years, with a premium of Rs.5,562/-. Tragically, on 11.07.2010, the DLA met with an accident and subsequently died on 26.07.2010 while undergoing treatment at S.M.S. Hospital Jaipur. An FIR was lodged on 10.08.2010, and the final report from the investigation was presented on 31.08.2010 before the learned Judicial Magistrate. The Complainant informed the OPs/insurer about the death of the DLA within the prescribed timeframe. The OP-1 issued receipt dated 27.08.2010 of receiving all documents on letter dated 06.10.2010. It was alleged that, despite completing all necessary procedures, the insurance company failed to disburse the policy benefit to the Complainant. Distressed by the delay and failure of the OPs, the Complainant had forwarded a legal notice on 31.03.2011, explaining the case, grievances and demanding Rs.33,21,000/- from OP-1. However, no response was received. The claim of the Complainant was repudiated vide OPs letter dated 01.03.2011.
5. Being aggrieved due to the repudiation of claim and deficiency in service on the part of the OPs/Insurer, the Complainant filed a Consumer Complaint (No. 61 of 2011) before the State Commission, sought amount of Rs.33,21,000/- with interest @18% per annum.
6. The OPs/Insurer, in the written version, denied the claim of the Complainant and asserted that the Complainant did not act in good faith and engaged in fraudulent activities by providing false information regarding the insured person's circumstances and death. The insurance policy mentioned an annual income of Rs.1,50,000/- from the business and detailed two policies: one from Max New York for Rs. 1,16,049/- and another from Life Insurance Corporation of India for Rs. 1,50,000/-. Moreover, the present insurance policy's existence and risk commencement date was 06.03.2010, with a maturity date of 06.03.2025, and required the insured to pay a premium of Rs.5562/- every March 6 for 15 years. They appointed Probe India Delhi to investigate the matter. During the investigation, both the Complainant and the insured's younger brother, Shri Ashok Kumar Gupta have given their statements. The Complainant submitted an affidavit on 22.11.2010, stating that the insured worked in the business of selling ‘Pakori’ and had an annual income of 30-40 thousand Rupees. The OPs/Insurer contended that the insured met with an accident while traveling in a truck on 11.07.2010. Initially, Shri Ashok Kumar Gupta, the insured's brother had stated that the insured worked as a cleaner of the truck. However, later contradicted this, with the Complainant claiming that the insured was traveling with a friend to bring his newly married sister, and the accident occurred when the motorcycle they were riding slipped. The investigation revealed further discrepancies as regards the ownership of the truck and the insured's employment as a cleaner. The truck's owner, Shri Prahlad Gurjar, stated that he had never employed the insured as a cleaner and accused the insured's family of providing false statements to secure an insurance claim. Due to these discrepancies, the OPs/Insurer submitted that the insured's income did not meet the sum-assured limit as per the insurance policy conditions, and the investigating report raised questions about the accident's authenticity. Consequently, the OPs/Insurer declined to pay the claim and requested the dismissal of the complaint.
7. The learned State Commission upon hearing the parties and considering the facts and the circumstances of the case allowed the complaint and ordered the following:-
“Thus allowing the complaint of the complainant, it is ordered to the respondent that he is to pay Rs.10,00,000/- (Ten Lakh Rupees) insurance amount along with interest at the rate of 9 percent per annum from Date 21.09.2011 of filing the complaint to the complainant.
The respondent, due to additional benefit because of accident pay Rs.10,00,000/- (Ten Lakh Rupees) insurance amount along with interest at the rate of 9 percent per annum from Date 21.09.2011 of filing the complaint to the complainant.
The respondent is to pay Rs.1,00,000/- (One Lakh rupees) towards mental harassment to the complainant and Rs.25,000/- (Twenty Five Thousand rupees) as complaint expense to the complainant.”
(From True Translation Copy)
8. Being aggrieved by the impugned order of the State Commission, the Complainant (Appellant herein) has filed this present Appeal no. 1820 of 2019 with the following prayer:
(a). Set aside and quash the Judgment and Order dated 01.02.2019 passed by the Learned Rajasthan State Commission in complaint No.61/2011 in FA No. 1115/ 2015 and allow the present Appeal and dismiss the Complaint
(b). Pending the hearing and Final Disposal of the Appeal this Hon’ble Commission be pleased to stay the effect and operation of the Order dated 1.2.2019. passed by the Learned State Commission Bench No. 2 Jaipur in complaint no. 61/2011.
(d). Pass such other and further order (s) as this Hon’ble Commission may deem fit and proper in the facts and circumstances of the case.
9. The Appellants mainly raised the following contentions in the present Appeal:
(a) The State Commission failed to recognize the ulterior and speculative motive of the Life Assured/Complainant, who obtained a substantial policy of Rs. 10,00,000/- (with Accident Benefit of Rs. 10,00,000/-) by providing false (exaggerated) income information. Within just 4 months and 5 days of acquiring the policy, he suffered a fatal head injury and passed away, allegedly due to an accident.
(b) The learned State Commission did not consider that in response to a specific query in the proposal, the Life Assured intentionally withheld accurate and truthful details about his income and occupation. He provided incorrect and misleading information, particularly in regard to his occupation. Although he was employed as a Khalasi (Cleaner), he declared himself as self-employed, involved in selling spices and namkeen in the proposal form and acquired the policy through fraudulent and illegal means, deceiving the Appellant. Therefore, the impugned order should be set aside.
(c) The State Commission irregularly disregarded the Complainant's two affidavits dated 08.02.2011 and 21.11.2011 and her statement dated 21.11.2010 where she herself admitted that her husband's annual income ranged from 30,000/- to 40,000/-. Additionally, the statement of the Life Assured's brother indicated that the deceased had been selling Pakauri for eight months and taking on various work assignments for the remaining four months.
(d) The State Commission made a material irregularity by accepting the affidavits of Shri Salish Chander and Shri Fayaz Khan which are baseless and fabricated, revealing an attempt to obtain money through questionable means.
10. Upon the notice on the memo of Appeal, the Respondent/ Complainant has not filed any reply. However, she reiterated the facts of the case and contended that grounds taken by the Appellants are not justifiable and maintainable. All the grounds advanced relate to overstatement of income of the deceased, profession, circumstantial facts of death etc which are irrelevant and being raised to delay the process of law. Further, the Appellant had caused an investigation into the claim through an agency whose report failed to prove that the life assured had committed suicide. Whereas, the police investigation report and post-mortem clearly proved that his death was due to head injuries caused in the accident. The Complainant contended that there was nothing new in this Appeal that had not been previously brought before and considered by the learned State Commission. Therefore, they urged that the Appeal should be rejected.
11. The learned counsel for the Appellant reiterated the grounds stated in the Appeal and forcefully argued that the life assured had suppressed material facts, thereby breaching the principle of uberrima fides, which involves the duty of utmost good faith. He specifically pointed out that there was an overstatement of income and occupation was misrepresented. The Respondent fabricated circumstantial information concerning the death of the life assured in an attempt to claim accidental benefits under the Policy. He asserted that there was no evidence of any unfair trade practice, negligence, or deficiency in the services by the Appellant. The claim was repudiated based on cogent facts and the evidence. He placed reliance on the following judgements:-
a) Reliance Life Insurance Company Limited & Anr. Versus Rekhaben Naeshbhai Rathod, Reported in (2019) 6 SCC 175 [Relevant Para 30].
b) Umarpur Rice Mill (P) Ltd. Through Its Director Vs. New India Assurance Co. Ltd. and Others, reported in 2019 SCC OnLine NCDRC 1630, [Relevant Para 14-15]
12. The learned Counsel for the Respondent reiterated the facts of case and argued that that the death of the life insured occurred due to head injuries in an accident. This is established by the medical certificates and post-mortem report. Therefore, there is no reason to doubt the cause of death. By denying a genuine claim the insurer displayed deficiency in service. The proposal form was in English, which the insured did not understand well. This raises questions about whether the terms of the policy were properly explained to him. He has also argued that as per the declaration in Point No. 24 of the proposal form, the insurance cover was to commence after the consideration of the application and the realization of the required premium. Therefore, once the insurance policy was issued, Section 45 of the Insurance Act, which deals with repudiation of claims, should not be applicable to deny the claim of the nominee after the death of the life assured. He further argued that the insurance company failed to provide reasonable evidence to support their position, whereas the Respondent/ Complainant had consistently maintained that the deceased had not concealed any relevant facts about his income or occupation. The learned counsel cited the judgment of this Commission in Smt. Smt. Asha Garg vs M/S. National Insurance Company, decided on 24.11.2005 to support his assertion.
13. We have examined the pleadings and associated documents paced on record and thoughtfully heard the arguments advanced by learned Counsels for both the Parties.
14. The primary issue and objections raised by the Appellants/ OPs are that the insured deliberately concealed vital information while obtaining the insurance policy, including overstating his income and misrepresenting occupation. These actions, according to the Appellants, breach the principle of utmost good faith in insurance contracts. They also objected that the Respondent had manipulated circumstances surrounding the life assured's death to make it appear as an accident to claim accidental benefits. On the other hand, the Respondent/Complainant’s vehemently opposed the contentions and allegations of the Appellants.
15. It is an established and admitted position that Shri Narsi Lal Gupta, the insured, had met with an accident on 11.07.2010 and sustained injuries, including serious head injury as a consequence of which he died on 25.07.2010. The insurance claim preferred by his wife was repudiated by the Appellants/Opposite Parties vide letter dated 01.03.2011. The said repudiation letter states as follows:-
“We would like to inform you that the company had covered the risk for the above said policy on the basis of the facts mentioned in the proposal form. However, on receiving the death claim intimation for the above said policy, the various investigations done, the various medical records received reveal certain facts, which were known to the deceased life assured/claimant and were not disclosed to us and/or wrongly made. Hence the death claim under above mentioned policy has been declined for the following reason/s:
1. Fabricated circumstantial information relating to death of Life assured,
2. Over statement of income and
3. Misrepresentation of occupation.
16. As regards fabricating circumstantial information relating to death of life assured, the Appellants/ OPs mainly relied upon the certain investigation. Intriguingly, as part of the said investigation, statements of the widow and brother of the deceased were recorded and made basis for repudiation of the Complainant’s claim. Perusal of the said statements the deceased's brother and wife, brought on record by the Appellant indicates that the widow had stated that the income of her husband was about Rs.30,000/- to Rs.40,000/- in a year. On 11.07.2010 during morning hours, he went on truck from home at about 0950 Hrs. On the same day, her brother in law Sri Ashok Kumar Gupta told her that her husband had met with an accident. Her husband subsequently died due to injuries on 25.07.2010. Further, she had also stated on an affidavit obtained by the OPs that, her husband used to sell Pakora in Jaipur and did some other work in other time. Her husband had total annual income of Rs.36,000/- from all sources. He used to meet his and his family livelihood by selling Pakora and other retail items from a kiosk at Ramganj Bazar earning about Rs.40,000/- per year. He was always ready to do any work and was never shy in earning money by working. He also kept money to save. On 11.07.2010 at 0830 Hrs, he and their neighbor went by motorcycle to bring his sister. On the way his motorcycle slipped and her husband got grievously injured. He was rushed to SMS Hospital Jaipur where he subsequently died. As they were attending to him, the police report was made late.
17. Shri Ashok Kumar, the younger brother of the deceased had stated that his brother died on 25.07.2010 in a road accident. His brother used to run a kiosk of Pakori for 7 to 8 months and the rest four months he used to do whatever works he gets. 15 days prior to the accident, he is started working of cleaner in a truck. On 11.07.2010 about 0950 Hrs he came to know that his brother had met with an accident. While going to Toda Bhim in the vehicle he down to pass urine and was dashed against by a motorcycle. He was rushed to SMS Hospital Jaipur where he died on 25.07.2010. He was cremated on 26.7.2010.
18. It is evident that these statements were recorded privately post the unfortunate demise of the insured. While it is not stated as to whether they were apprised of the scope and purpose of recording their statements, the motive of such recording is clear. In any case, they were not the eyewitnesses to the accident happened at on 11.07.2010. The variation in the statements of the widow and the brother of the deceased, who were nowhere near the accident site has, however, been made basis for repudiation of the claim terming it as fabrication of circumstantial information relating to death of life assured. In any case further, the insurance obtained by the insured was on his life. It has neither been established nor even by averred by the Appellants that the cause of the death falls under any exclusion clause of the insurance contract. Without doubt the insured died and the death was due to certain serious injuries suffered by him in an accident. This having been substantially established and admitted by both the parties, the deliberation pertaining to the purpose of presence at the site was on account of the work he was doing or personal commitment or otherwise are of very limited consequence. Therefore, the so called circumstances and fabrication of the circumstances relating to the death of the insured is entirely untenable and baseless.
19. As regards the issue stated in the letter repudiating the claim on the grounds that the deceased insured had overstated the income and misrepresented the occupation, it is an admitted and established that the insured had paid the premium in time and the policy is valid. Scrutiny of the proposal form for life insurance in the case revealed that the same was filled in English. The Agent is Shri Ramkesh Kumar, STM Code 2110002664, FSC Code 2300026264 at Jaipur. In the said form, the insured Shri Narsi Lal Gupta had clarified that he passed matriculation and preferred language is Hindi. He signed the form also in Hindi. Therefore, evidently the individual had stated the details and the said insurance agent filled the form. The same also reveals that the individual is in the occupation of business and has annual income of Rs. 1.5 Lac. He has also stated in the proposal form regarding details of insurance policies held by him. After taking the policy which is valid from 06.03.2010 to 06.03.2025, he died as a consequence of an accident on 25.07.2010. When the death claim was preferred, the Appellants went in detailed scrutiny including an investigation into the matter which included personal statements of the widow and brother of the deceased. Evidently, the widow and brother were not informed of their scope and purpose of tasking their statements and the impact on them. It is also clear that they are poor people and the young widow and family were dependent on the deceased. Their statements to the investigators, who obviously identified themselves as the representatives of the Insurance company, were eager to tell them how poor they are and the impact of the death of the insured on their family, thereby expecting the Insurance Company to settle the claim with due sensitivity. Even for the sake of argument, it was the insured who had stated that his annual income to be 1.5 Lakhs a year. He was referring to his own earnings in the business he was doing and the other sundry work he was performing. It was he who had the knowledge to confirm the same. The oral account of his wife and brother about his income is hearsay, with limited understanding and knowledge. They apparently stated their version and understanding for an entirely different purpose. It cannot be a conclusive proof against his own stand of his income and form a basis to repudiate the claim of his wife and family for whom he has taken insurance for. He has stated that he is in the business. This has been corroborated by his wife as well as his brother that he ran a kiosk of snacks at Jaipur. In addition she has also stated that he was ever willing and used to do sundry jobs. Further, he was looking after the family and had paid the premium.
20. In addition it is also part of the so called investigation that the insured deceased had a house where he kept his family and maintaining and he had a motorcycle. With about Rs. 3,000 income per month it is highly unlikely that he would be residing at a place with a family at an identifiable address and pay the premium for insurance, which he did. These visible facts were not considered by the investigator. The insured individual was truthful about the details he stated and there is no reason to disbelieve his income. In any case, nothing contrary has been brought on record independently to establish that what the deceased insured and stated was false. Thus, there is neither overstatement of income nor any misrepresentation of his occupation. When once his policy is valid and he is truthful of the facts and he has stated, the benefit thereof cannot be denied.
21. Based on the overall facts and circumstances of the case, we are deeply concerned to notice the casual and mischievous manner in which the claim is repudiated, leaving no scope for the poor survivors of the family but to run around judicial fora by spending their precious money. Further, the case is prolonged by filing appeals on frivolous and mischievous grounds in a mechanical manner.
22. First and foremost in the chain, is the grounds/reasons mentioned in repudiation letter (reproduced in Para-15 above), which are very vague, cryptic and does not in any manner explain to the poor dependent survivors, the actual reasons, based on which the claim was repudiated. They could not even fathom why the claim is rejected. The very purpose of obtaining life insurance, most importantly in the present case, by such a poor person who worked hard to earn dignified livelihood through a small business possible for him and added with sundry jobs, as established, was to make a provision for the financial stability and future wellbeing of his dependents in the unfortunate incidence of his demise. The practice of conducting unscrupulous enquiries with no factual, reliable basis and then repudiating the claim with vague reasons and then initiating and protracted, frivolous and vexatious litigations based on such unscrupulous inquiries with unethical intentions to repudiate the claims is highly deplorable.
23. The Punjab & Haryana High Court, expressing it’s anguish over such unscrupulous practices of insurance companies, in New India Assurance Company…. Vs Usha Yadav and Others ((2008) 151 PLR 313) held:
6. Before parting, I wish to express anguish over the method and mode adopted by Insurance Companies in somehow declining the claim of claimants, be it under such type of policy or other life insurance claims or those arising out of insurance of vehicles etc. It seems that the Insurance Companies are only interested in earning the premiums, which are rather too stiff now a days, but are not keen and are found to be evasive to discharge their liability. In large number of cases, the Insurance Companies make the effected people to fight for getting their genuine claims. The Insurance Companies in such cases rely upon clauses of the agreements, which a person is generally made to sign on dotted lines at the time of obtaining policy. This is, thus, pressed into service to either repudiate the claim or to reject the same. The Insurance Companies normally build their case on such clauses of the policy, but would adopt methods which would not be governed by the strict conditions contained in the policy. It would be seen that in the present case also, some sort of investigations were got conducted from a medical officer to know the causes of diseases which would not be covered by any condition of the policy, which the parties had agreed to at the time of obtaining the policy. Even investigations by private detectors are seen to have been ordered in cases of theft of vehicles etc. These tactics on the part of the Insurance Companies are only aimed at somehow finding way and means to decline the claims. This leads to an unwarranted and uncalled harassment of those persons, who either have lost their bread earner or some young persons, whose lives etc. are insured with the Insurance Companies. This situation must change. There is a need to put a system in place, to ensure that all clauses of the insurance policy are specifically brought to the notice of the persons concerned and they are apprised of all these conditions before they are made to agree to accept such insurance policies. In fact, all these conditions, which generally are hidden, need to be simplified so that these are easily understood by a person at the time of buying any policy. These activities on the part of Insurance Companies, which are money rich, must be checked.
24. It is deeply concerning to note from the records that while the validity of the life insurance contract and death of the insured in an accident were admitted facts, the Appellant Insurance Company staff did everything possible to split hairs into the proposal form for life insurance post his death, obtained the statements of his widow and brother without informing them of the scope and purpose of taking their statements, created non-existing contradictions out of versions of such uneducated and uninformed persons and repudiated the claim of destitute family for over 13 years. The claimant needs to be specifically compensated for such gross misdemeanor.
25. The views expressed by Punjab and Haryana High Court while expressing its anguish and such wrong-doings are clearly visible in the present case. The Appellants have not provided any substantial and legally sustainable evidence as to the deficiencies/ misrepresentations based on which the claim has been repudiated in the first place, based on the innocent answers given based on their own limited understanding. Ultimately, due to such unethical practices by the wealthy Insurance Companies who can easily afford these ‘luxury litigations’, the poor surviving dependents, who are in dire need of that money are deprived of the proceeds of the claim when it mattered them the most. The death in this case occurred in 2010. Had this money been provided to the needy family, instead of repudiating on mischievous grounds and then making them to run from pillar to post, their lives could have been better. That was the original intention of the deceased policy holder. To set a deterrent to Appellant for adopting such dubious practices in settlement of claims and also to compensate for the harassment meted out to the Respondent, we deem it fit to award Rs. 5 Lahks as compensation.
26. As regards the rate of interest applicable for delay in payment, the Hon’ble Supreme Court in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, in Civil Appeal No.6044 of 2019 decided on 07.04.2022 has held that:-
“We are of the opinion that for the interest payable on the amount deposited to be restitutionary and also compensatory, interest has to be paid from the date of the deposit of the amounts.The Commission in the Order impugned has granted interest from the date of last deposit.We find that this does not amount to restitution. Following the decision in DLF Homes Panchkula Pvt. Ltd. Vs. DS Dhanda and in modification of the direction issued by the Commission, we direct that the interest on the refund shall be payable from the dates of deposit. Therefore, the Appeal filed by purchaser deserves to be partly allowed. The interest shall be payable from the dates of such deposits.
At the same time, we are of the opinion that the interest of 9% granted by the Commission is fair and just.”
27. In view of the above discussions, the order of the learned State Commission dated 01.02.2019 is modified as follows:
- The Appellants /Opposite Parties are directed to pay the Respondent a sum assured of Rs.10 Lakhs along with accidental death benefit of Rs.10 Lakhs under the Insurance Policy together with interest @ 9% per annum from the date of repudiation of the claim on 01.03.2011, within a period of one month. In the event of delay, the rate of interest applicable shall be @ 12% per annum from the date of expiry of one month till the realization of the entire amount.
- The Appellants /OPs are directed to pay the Respondent a sum of Rs. 5 Lakhs as compensation for harassment caused to the widow and family of the insured who are poor and uneducated by denying their rightful claim. This shall be made within one month from the date of this order. In the event of delay, the interest applicable shall be @ 12% per annum from the date of expiry of one month till the realization of the entire amount.
- The Appellants/Opposite Parties shall pay the Respondent cost of litigation quantified as Rs.50,000/-, within one month from the date of this order.
28. All pending Application, if any, stand disposed of. The Registry is directed to release the Statutory deposit amount, if any in favour of the Appellants after due compliance of this order.